EXHIBIT 10.1
INVESTMENT AGREEMENT
by and among
Framingham York Associates Limited Partnership,
as
the Purchaser
and
Property Capital Trust
as
the Trust
and
Maryland Property Capital Trust, Inc.
as
the Company
Dated as of June 18, 1998
TABLE OF CONTENTS
Page
ARTICLE 1. ISSUANCE AND SALE OF SHARES...................................................................... 1
Section 1.1 Issuance of Shares................................................................ 1
Section 1.2 Closing........................................................................... 2
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS................................................. 2
Section 2.1 Existence; Power; Authorization................................................... 2
Section 2.2 Binding Agreement; No Violation................................................... 3
Section 2.3 Purchase for Purpose of Investment................................................ 3
Section 2.4 Accredited Investor Status........................................................ 3
Section 2.5 Legend............................................................................ 3
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE TRUST AND THE COMPANY...................................... 4
Section 3.1 Existence; Power; Authorization................................................... 4
Section 3.2 Binding Agreement; No Violation................................................... 4
Section 3.3 Consents and Approvals............................................................ 4
Section 3.4 Shares............................................................................ 5
Section 3.5 SEC Documents..................................................................... 5
Section 3.6 Financial Documents............................................................... 5
Section 3.7 No Litigation..................................................................... 5
Section 3.8 Subsidiaries...................................................................... 5
Section 3.9 Absence of Certain Changes or Events.............................................. 6
Section 3.10 No Undisclosed Liabilities........................................................ 6
Section 3.11 Capital Structure................................................................. 6
Section 3.12 Taxes............................................................................. 7
Section 3.13 No Default........................................................................ 8
Section 3.14 Solvency.......................................................................... 8
Section 3.15 Compliance with Laws.............................................................. 8
Section 3.16 No Restrictions on Equity Securities.............................................. 8
Section 3.17 Employee Benefit Plans............................................................ 9
Section 3.18 Debt Instruments.................................................................. 9
Section 3.19 Vote Required..................................................................... 9
Section 3.20 Transactions with Affiliates...................................................... 10
Section 3.21 Proxy Statement................................................................... 10
Section 3.22 REIT Qualification................................................................ 10
Section 3.23 No Other Agreements to Sell....................................................... 10
Section 3.24 Insurance......................................................................... 10
Section 3.25 Unlawful payments................................................................. 11
Section 3.26 Real Property..................................................................... 11
Section 3.27 Disclosure........................................................................ 12
ARTICLE 4. COVENANTS........................................................................................ 12
Section 4.1 Conduct of the Business of the Trust and the Company.............................. 12
Section 4.2 Proxy Statement; Special Meeting.................................................. 13
Section 4.3 Sale of Real Property............................................................. 14
(i)
Section 4.4 Other Actions..................................................................... 14
Section 4.5 Cooperation....................................................................... 14
Section 4.6 Public Announcements.............................................................. 14
Section 4.7 Government Filings................................................................ 15
Section 4.8 Listing of Shares................................................................. 15
Section 4.9 Registration of Shares............................................................ 15
Section 4.10 Option Plans; Options............................................................. 15
Section 4.11 Benefits Plans.................................................................... 15
Section 4.12 Rights Agreement.................................................................. 15
Section 4.13 Resignation of Trustees........................................................... 15
Section 4.14 Charter and By-laws of the Company................................................ 15
Section 4.15 FYA Merger Agreement and PCT LP Merger Agreement.................................. 15
Section 4.16 No Solicitation................................................................... 15
Section 4.17 Confidentiality................................................................... 16
Section 4.18 Time of Closing................................................................... 16
ARTICLE 5. CLOSING.......................................................................................... 16
Section 5.1 Deliveries at the Closing by the Purchasers....................................... 16
Section 5.2 Deliveries at the Closing by Trust and the Company................................ 16
ARTICLE 6. CONDITIONS PRECEDENT TO CLOSING.................................................................. 17
Section 6.1 Conditions to Obligations of the Purchasers....................................... 17
Section 6.2 Conditions to Obligations of the Trust and the Company............................ 18
ARTICLE 7. INDEMNIFICATION.................................................................................. 19
Section 7.1 Indemnification by the Trust and the Company...................................... 19
Section 7.2 Indemnification by the Purchasers................................................. 19
Section 7.3 Notice; Defense of Claims......................................................... 20
ARTICLE 8. NO BROKERS....................................................................................... 20
ARTICLE 9. TERMINATION...................................................................................... 20
Section 9.1 Termination....................................................................... 20
Section 9.2 Effect of Termination............................................................. 21
ARTICLE 10. NOTICE.......................................................................................... 21
ARTICLE 11. MISCELLANEOUS................................................................................... 22
Section 11.1 Survival of Representation and Warranties......................................... 22
Section 11.2 Entire Agreement; Succession and Assignment;
No Third Party Rights............................................................. 22
Section 11.3 Amendment......................................................................... 23
Section 11.4 Governing Law..................................................................... 23
Section 11.5 Headings.......................................................................... 23
Section 11.6 Severability...................................................................... 23
Section 11.7 Counterparts...................................................................... 23
Section 11.8 Construction...................................................................... 23
Section 11.9 Representatives................................................................... 23
Section 11.10 Expenses.......................................................................... 23
(ii)
Section 11.11 Interpretation.................................................................... 24
Section 11.12 Exculpation....................................................................... 24
(iii)
SCHEDULES
Schedule 1.1 List of Purchasers
Schedule 3.8 Subsidiaries
Schedule 3.10 Undisclosed Liabilities
Schedule 3.11 Options/Deferred Shares
Schedule 3.16 Restrictions on Securities
Schedule 3.17 Employee Benefit Plans
Schedule 3.18(a) Defaults
Schedule 3.20 Transactions with Affiliates
Schedule 3.23 Agreements relating to properties or assets
Schedule 3.26 Environmental
Schedule 4.3 Permitted Investments
EXHIBITS
Exhibit A Form of Joinder
* Exhibit B Form of Real Property Sale Agreement
Exhibit C Form of Registration Rights Agreement
** Exhibit D Form of Charter of the Company
** Exhibit E Form of By-laws of the Company
Exhibit F Form of opinion of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
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* Exhibit B has been omitted, but will be furnished supplementally to the
Securities and Exchange Commission upon request.
** The Charter of the Company and the By-laws of the Company have been filed
as Exhibits 3.1 and 3.2, respectively, to the Registration Statement on
Form S-4 of Maryland Property Capital Trust, Inc. filed with the Securities
and Exchange Commission on November 20, 1998.
(iv)
INVESTMENT AGREEMENT
This INVESTMENT AGREEMENT (including all exhibits, hereinafter referred to
as this "Agreement") dated as of June 18, 1998 (the "Effective Date") is made
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and entered into by and among Framingham York Associates Limited Partnership, a
Massachusetts limited partnership ("FYA") (the "Purchaser" and, together with
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all parties who execute a joinder to this Agreement in the form of Exhibit A
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attached hereto, the "Purchasers"), Property Capital Trust, a Massachusetts
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Business Trust (the "Trust"), and Maryland Property Capital Trust, Inc., a
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Maryland corporation (the "Company").
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RECITALS
A. The Trust is a Massachusetts business trust with transferable shares
of beneficial interest of the type described in Massachusetts General Laws,
Chapter 182, Section 1. The Company is a Maryland corporation and a wholly-owned
subsidiary of the Trust.
B. Pursuant to an Agreement and Plan of Merger entered into on the date
hereof by and between the Trust and the Company (the "PCT Merger Agreement"),
--------------------
the Trust will merge with and into the Company with the Company surviving (the
"PCT Merger").
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C. Subject to the consummation of the PCT Merger and the other conditions
stated herein, the Purchasers and the Company have each determined to enter into
this Agreement pursuant to which the Purchasers have agreed to purchase from the
Company, and the Company has agreed to issue and sell to the Purchasers, the
Shares at the Closing (each as defined herein).
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and of other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound hereby, do hereby agree as follows:
ARTICLE I
ISSUANCE AND SALE OF SHARES
1.1 Issuance of Shares. Upon the terms and subject to the conditions set
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forth in this Agreement, and in reliance upon the representations and warranties
hereinafter set forth, on the Closing Date (as defined in Section 1.2), the
Company will issue, sell and deliver to the Purchasers, and the Purchasers will
purchase from the Company, (i) an aggregate of 331,671 shares (the "Initial
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Shares") of common stock of the Company, par value $.01 per share (the "Common
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Stock"), for an aggregate purchase price of one million one hundred thousand
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dollars ($1,100,000) (the "Initial Purchase Price") and (ii) such number of
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shares (the "Additional Shares" and together with the Initial Shares, the
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"Shares") of Common Stock as determined by dividing (x) the aggregate amount of
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cash paid to the shareholders of the Trust pursuant to Section 4.2(e) of the PCT
Merger Agreement by (y) $3.13, for an aggregate purchase price equal to the
amount paid to the shareholders of the Trust pursuant to Section 4.2(e) of the
PCT Merger Agreement (the "Fractional Shares Purchase Price" and, together with
--------------------------------
the Initial Purchase Price, the "Aggregate Purchase Price"). Subject to the
------------------------
provisions of Section 1.3, at the Closing (as defined in Section 1.2), each
Purchaser will purchase from the Company, and the Company will issue, sell and
deliver to such Purchaser, the number of shares set forth opposite such
Purchaser's name on Schedule 1.1 attached hereto and such Purchaser will deliver
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to the Company the portion of the Aggregate Purchase Price set forth opposite
such Purchaser's name on Schedule 1.1.
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1.2 Closing.
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(a) The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place at the offices of ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP,
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, 10:00 a.m. Boston, Massachusetts time, on the
business day of the satisfaction or concurrent satisfaction or, if permissible,
waiver of the conditions set forth in Sections 6.1 and 6.2 hereof (the "Closing
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Date") or at such other time and place as the parties may agree.
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(b) At the Closing (i) the Company will deliver to each Purchaser a
certificate or certificates representing the Shares purchased by such Purchaser,
as set forth on Schedule 1.1, against payment of the portion of the Aggregate
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Purchase Price to be paid by such Purchaser, as set forth on Schedule 1.1,
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registered in the name of such Purchaser, together with the other documents and
certificates to be delivered pursuant to Section 6.1 hereof, and (ii) each
Purchaser, in full payment for the Shares purchased by such Purchaser, as set
forth on Schedule 1.1, will deliver to the Company an amount equal to the
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portion of the Aggregate Purchase Price to be paid by such Purchaser, as set
forth on Schedule 1.1, in immediately available funds by wire transfer to the
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account designated by the Company, or by such other means as may be agreed by
the parties, together with the other documents and certificates to be delivered
pursuant to Section 6.2 hereof.
1.3 Additional Purchasers. Notwithstanding anything else herein to the
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contrary, at any time following the execution of the Agreement, but prior to the
date on which the Proxy Statement (as defined in Section 4.2) is filed with the
Securities and Exchange Commission (the "SEC"), FYA may assign to one or more
---
third parties a portion of its investment commitment under the Agreement, and
all rights and obligations associated therewith; provided, however, that FYA may
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not assign, in the aggregate, a portion of its investment commitment greater
than $100,000; and provided, further, that such assignment shall not relieve FYA
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of its obligations hereunder. Any party to whom FYA assigns a portion of its
investment commitment, and all rights and obligations associated therewith, and
any party who purchases all or a portion of the Additional Shares shall execute
a joinder to the Agreement in the form of Exhibit A attached hereto. All
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references to "Purchasers" contained in the Agreement shall be deemed to refer
to any party who executes such a joinder and Schedule 1.1 shall be amended to
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reflect the execution of such a joinder.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser, severally with respect to itself, himself or herself and
not jointly, hereby represents and warrants to, and agrees with, the Company as
follows:
2.1 Existence; Power; Authorization. FYA is a limited partnership duly
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organized and in good standing under the laws of the Commonwealth of
Massachusetts and has all requisite partnership power and authority to execute
and deliver this Agreement and all other documents and instruments to be
executed and delivered by it hereunder, and to perform its obligations hereunder
and thereunder in accordance with the terms and conditions hereof and thereof.
The execution, delivery and performance by such Purchaser of this Agreement and
the other agreements and documents to be executed in connection with the
transactions contemplated hereunder (including, but not limited to, the
Agreement and Plan of Merger (the "PCT Merger Agreement") by and between the
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Company and the Trust, the Contribution and Merger Agreement (the "FYA Merger
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Agreement") by and between FYA and ▇▇▇▇ Properties Pine Hill Limited
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Partnership, a Massachusetts limited partnership ("BPPH"), and the Contribution
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and Merger Agreement (the "PCT LP Merger Agreement") by and between BPPH and
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Property Capital Trust, L.P., a Massachusetts limited
2
partnership ("PCT LP")) (collectively, the "Transaction Documents"), have been
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duly authorized by all necessary action, including, for FYA, all necessary
action by the limited partners of FYA.
2.2 Binding Agreement; No Violation. Assuming the due and valid
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authorization, execution and delivery of this Agreement by the Trust and the
Company, this Agreement, and the other Transaction Documents, will be the legal,
valid and binding obligation of such Purchaser, enforceable against such
Purchaser in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, moratorium or similar laws relating to creditors' rights
and general principles of equity. The performance by such Purchaser of its
duties and obligations under the Transaction Documents to be executed and
delivered by it hereunder will not (i) conflict with, or result in a breach of,
or default under, any provision of any of the organizational documents of such
Purchaser or any agreement, instrument, decree, judgment, injunction, order,
writ, law, rule or regulation, or any determination or award of any court or
arbitrator, to which such Purchaser is a party or by which its assets are or may
be bound, except for any of the foregoing matters that, individually or in the
aggregate, would not reasonably be expected to have a material adverse effect on
such Purchaser, or (ii) require any consent, approval or authorization of, or
declaration, filing or registration with, any domestic governmental or
regulatory authority, except where the failure to obtain any such consent,
approval or authorization of, or filing or registration with, any governmental
or regulatory authority would not reasonably be expected to have a material
adverse effect on the ability of such Purchaser to consummate or to perform its
obligations under the Transaction Documents to be executed and delivered by it
hereunder.
2.3 Purchase for Purpose of Investment. Such Purchaser is acquiring the
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Shares under this Agreement for its own account solely for the purpose of
investment and not with a view to, or for sale in connection with, any
distribution thereof in violation of the Securities Act of 1933, as amended (the
"Securities Act"). Such Purchaser acknowledges that the shares of Common Stock
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to be acquired by it or any other Purchaser have not been registered under the
Securities Act and may be sold or disposed of in the absence of such
registration only pursuant to an effective registration statement or any
exemption from such registration.
2.4 Accredited Investor Status. Such Purchaser is knowledgeable,
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sophisticated and experienced in business and financial matters and fully
understands the limitations on transfer described in Section 2.3. Such
Purchaser, and in the case of FYA, each general and limited partner of such
Purchaser, is an "accredited investor" as such term is defined in Rule 501(a) of
Regulation D under the Securities Act.
2.5 Legend. Such Purchaser hereby acknowledges that each certificate
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representing the Shares shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT MAY NOT
BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR (B) IF THE COMPANY HAS BEEN FURNISHED WITH A SATISFACTORY OPINION
OF COUNSEL FOR THE HOLDER THAT SUCH TRANSFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT AND THE RULES AND
REGULATIONS
3
THEREUNDER AND UNDER APPLICABLE STATE SECURITIES OR "BLUE SKY LAWS."
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE TRUST AND THE COMPANY
The Trust and the Company hereby represent and warrant to, and agree with,
the Purchasers as follows:
3.1 Existence; Power; Authorization. The Trust is a business trust duly
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organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Maryland.
Each of the Trust and the Company is duly authorized to transact business under
the laws of any state in which the character of the properties owned or leased
by it therein or in which the transaction of its business makes such
qualification necessary, except where the failure to be so qualified would not
have a material adverse effect on the Trust or the Company, has all requisite
power and authority to execute and deliver the Transaction Documents to be
executed and delivered by it hereunder, and to perform its obligations hereunder
and thereunder in accordance with the terms and conditions hereof and thereof.
The Board of Trustees of the Trust and the Board of Directors of the Company
have each approved the execution, delivery and performance of the Transaction
Documents to which it is a party and the consummation of the transactions
contemplated thereby.
3.2 Binding Agreement; No Violation. Assuming the due and valid
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authorization, execution and delivery of the Transaction Documents by the
parties other than the Trust and the Company, the Transaction Documents to be
executed and delivered by the Trust and the Company hereunder, when duly
executed and delivered, will be the legal, valid and binding obligation of each
of the Trust and the Company, enforceable against each of the Trust and the
Company in accordance with their respective terms, subject to (i) limitations
under applicable law on rights to indemnification, (ii) the effects of any
applicable bankruptcy, reorganization, moratorium or similar laws, and (iii)
general principles of equity. To the knowledge of the Company and the Trust,
the performance by the Trust and the Company of its respective duties and
obligations under the Transaction Documents will not (x) conflict with, or
result in a breach of, or default under, any provision of any of the
organizational documents of the Trust or the Company or any agreements,
instruments, decrees, judgments, injunctions, orders, writs, laws, rules or
regulations, or any determination or award of any court or arbitrator, to which
the Trust or the Company is a party or by which the assets of either are or may
be bound, except for any of the foregoing matters that, individually or in the
aggregate, would not have a material adverse effect on the Trust or the Company,
or (y) require any consent, approval or authorization of, or declaration, filing
or registration with, any domestic governmental or regulatory authority, except
for (a) such consents, approvals, authorizations, registrations or
qualifications as may be required under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), any applicable state securities laws or the rules
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of the American Stock Exchange or (b) where the failure to obtain such consent,
approval or authorization of, or filing or registration with, any governmental
or regulatory authority would not have a material adverse effect on the Trust or
the Company.
3.3 Consents and Approvals. To the knowledge of the Company and Trust, no
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consent, waiver, approval or authorization of any third party is required to be
obtained by the Company or the Trust in connection with the execution, delivery
and performance of this Agreement and the other Transaction Documents except (a)
the approval by the holders of two-thirds of the shares of beneficial interest
of the Trust, (b) any consent, waiver, approval or authorization of any third
party that shall have been satisfied
4
prior to the Closing or (c) where the failure to obtain such consent, waiver,
approval or authorization would not have a material adverse effect on the Trust
or the Company.
3.4 Shares. The Shares to be issued to the Purchasers are duly authorized
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and, when issued by the Company, will be fully paid and non-assessable, free and
clear of any mortgage, pledge, lien, encumbrance, security interest, claim or
rights of interest of any third party of any nature whatsoever. The form of
Share certificate to be used to evidence the Common Stock will be in due and
proper form and will comply with all applicable legal requirements.
3.5 SEC Documents. The Trust or the Company has caused to be delivered or
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made available to the Purchasers copies of all registration statements and
related prospectuses and supplements filed by the Trust and declared effective
under the Securities Act since December 31, 1995 (the "SEC Documents") and will
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cause to be delivered to the Purchasers copies of such additional documents as
may be filed by the Company or the Trust pursuant to the Securities Act or the
Exchange Act, on or prior to the Closing Date. As of their respective dates,
such SEC Documents were, and those additional documents filed between the
Effective Date and the Closing Date have been and will be, prepared and filed in
compliance with the rules and regulations promulgated by the SEC, and do not and
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein in order to make the statements
contained therein, in light of the circumstances under which they were made or
will be made, not misleading.
3.6 Financial Documents. The consolidated financial statements included
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in the SEC Documents have been prepared in accordance with generally accepted
accounting procedures ("GAAP") applied on a consistent basis during the period
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involved (except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-Q) and present fairly (subject, in
the case of the unaudited statements, to normal, recurring year-end audit
adjustments) the consolidated financial position of the Trust and its
consolidated Subsidiaries at the dates thereof and the consolidated results of
operations and cash flows for the periods then ended. For purposes of this
Agreement, the terms "Subsidiary" and "Subsidiaries" shall mean (i) any entity
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of which the Trust or the Company (or other specified entity) shall own directly
or indirectly through a subsidiary, a nominee arrangement or otherwise (x) at
least a majority of the outstanding capital stock (or other shares of beneficial
interest) or (y) at least a majority of the partnership, joint venture or
similar interests, and (ii) any entity in which the Trust or the Company (or
other specified entity) is a general partner or joint partner.
3.7 No Litigation. To the knowledge of the Company or the Trust, no
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action, suit, claim, investigation or proceeding, whether legal or
administrative or in mediation or arbitration, is pending or threatened, at law
or in equity, against the Trust or the Company before or by any court or
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality which would prevent the Trust or the Company
from performing its respective obligations pursuant to this Agreement or which,
if determined adversely, would have a material adverse effect on the Trust or
the Company. To the knowledge of the Company or the Trust, there is no
outstanding order, writ, injunction or decree of any court, government,
governmental entity or authority or arbitration against or affecting the Company
or the Trust, which in any such case would impair the ability of the Company or
the Trust to enter into and perform all of its obligations under the Transaction
Documents and the transactions contemplated thereby.
3.8 Subsidiaries. Except as set forth on Schedule 3.8, neither the Trust
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nor the Company has any Subsidiaries nor any interest or investment in any
partnership, trust or other entity or organization. Each Subsidiary of the Trust
or the Company listed on Schedule 3.8 has been duly organized, is validly
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existing and in good standing under the laws of the jurisdiction in which it was
organized, has the power
5
and authority to own its properties and to conduct its business and is duly
registered, qualified and authorized to transact business and is in good
standing in each jurisdiction under the laws of any state in which the character
of the properties owned or leased by it therein or in which the transaction of
its business makes such qualification necessary, except where the failure to be
so qualified would not have a material adverse effect on the Trust, the Company
or such Subsidiary; all of the outstanding equity or other participating
interests of each Subsidiary listed on Schedule 3.8 have been duly authorized
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and validly issued, are fully paid and non-assessable.
3.9 Absence of Certain Changes or Events. Except as disclosed in the SEC
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Documents or as contemplated by the Transaction Documents, since December 31,
1997, (i) there has been no material adverse change in the financial condition,
results of operation or business of the Trust or the Company, whether or not
arising in the ordinary course of business, (ii) there have been no transactions
or acquisitions entered into by the Trust or the Company, which are material
with respect to such entity (including, but not limited to, the purchase or sale
of any interests in real property), (iii) there has been no dividend or
distribution of any kind declared, paid or made by the Trust or the Company on
any class of its capital stock and (iv) there has been no change in the capital
stock of the Trust or the Company or any increase in the indebtedness of the
Trust or the Company.
3.10 No Undisclosed Liabilities. Except as set forth on Schedule 3.10,
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none of the Trust, the Company or any Subsidiary has any material liabilities or
obligations of any nature (whether absolute, accrued, contingent or otherwise)
required by GAAP to be disclosed and that are not set forth in the financial
statements contained in the SEC Documents except for current liabilities
incurred in the ordinary course of business.
3.11 Capital Structure.
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(a) As of the Effective Date, (i) the authorized capital stock of the
Trust consists of an unlimited number of shares of beneficial interest, no par
value per share; (ii) the authorized capital stock of the Company consists of
100 shares of common stock, par value $.01 per share; (iii) the issued and
outstanding shares of capital stock of the Trust consist of 9,584,220 shares of
beneficial interest, 144,900 shares of beneficial interest reserved for issuance
upon the exercise of options granted pursuant to the Trust's 1992 Employee Stock
Option Plan, and 52,000 shares of beneficial interest reserved for issuance upon
the exercise of options granted pursuant to the Trust's 1994 Stock Option Plan
for Non-Employee Trustees all as further set forth on Schedule 3.11, and (iv)
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the issued and outstanding shares of capital stock of the Company consist of 100
shares of common stock, all of which are held by the Trust. Immediately prior
to the Closing, the Trust shall have merged into the Company and (i) the
authorized capital stock of the Company shall consist of 10,000,000 shares of
common stock, par value $.01, 5,000,000 shares of preferred stock, par value
$.01 per share, and 15,000,000 shares of excess stock, par value $.01 per share,
and (ii) the issued and outstanding shares of capital stock of the Company shall
consist of 159,737 shares of common stock. All outstanding shares of beneficial
interest of the Trust and shares of common stock of the Company are validly
issued, fully paid and non-assessable and have been offered and sold in
compliance with all applicable laws (including, without limitation, federal and
state securities laws). No shares of capital stock of the Trust or the Company
are reserved for any purpose other than (a) the transactions contemplated by
this Agreement, (b) as specifically set forth on Schedule 3.11, and (c) the
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possible issuance of shares of Common Stock of the Company upon conversion of
certain partnership units to be issued pursuant to certain of the Transaction
Documents.
6
(b) All options to purchase shares of beneficial interest of the Trust
as set forth on Schedule 3.11 have been canceled prior to the Effective Date,
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such cancellation conditioned upon the consummation of the transactions
contemplated by this Agreement.
(c) There are no shares of beneficial interest, common stock or any
other equity security of the Trust or the Company issuable upon conversion or
exchange of any security of the Trust or the Company or any Subsidiary of either
of them. Other than pursuant to the Rights Agreement (the "Rights Agreement")
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dated September 28, 1990 between the Trust and State Street Bank and Trust
Company, no shareholder of the Trust or the Company is entitled to any
preemptive or similar rights to subscribe for shares of capital stock of the
Trust or the Company. Prior to the execution of this Agreement, the Trustees of
the Trust shall exempt from the provisions of the Rights Agreement, the
Transaction Documents and all transactions contemplated by the Transaction
Documents. In addition, the Trustees of the Trust shall terminate the Rights
Agreement in accordance with its terms, such termination to be conditioned upon
and immediately following the Closing.
3.12 Taxes.
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(a) The Trust and the Company and each Subsidiary has paid or caused
to be paid all federal, state, local, foreign, and other taxes, and all
deficiencies, or other additions to tax, interest, fines and penalties
(collectively, "Taxes"), owed or accrued by it and due and payable through the
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date hereof, including, without limitation any taxes payable pursuant to
Sections 857(b), 860(c) and 4981 of the Internal Revenue Code of 1986, as
amended, (the "Code"), except where failure to pay would not have a material
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adverse effect on the Trust, the Company or any Subsidiary.
(b) The Trust, the Company and each Subsidiary has timely filed all
federal, state, local and foreign tax returns (collectively "Tax Returns")
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required to be filed by any of them through the date hereof, and all such
returns accurately set forth the amount of any Taxes relating to the applicable
period.
(c) The Trust, the Company and each Subsidiary has withheld and paid
all Taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor, creditor, shareholder or
other party.
(d) The most recent financial statements contained in the SEC
Documents reflect adequate reserves for Taxes payable by the Trust, the Company
and each Subsidiary for all taxable periods and portions thereof through the
date of such financial statements.
(e) Since the date of the most recent financial statements included in
the SEC Documents, the Trust, the Company and each Subsidiary has not incurred
any liability for taxes under Sections 857(b), 860(c) or 4981 of the Code and
have made sufficient accrual for Taxes in accordance with GAAP with respect to
periods for which Tax Returns have not been filed.
(f) There are no outstanding agreements, waivers of arrangements
extending the statutory period of limitations applicable to any claim for, or
the period for the collection or assessment of, Taxes due from the Trust, the
Company or any Subsidiary for any taxable period and there have been no
deficiencies proposed, assessed or asserted for such Taxes.
7
(g) No audit or other proceedings by any court, governmental or
regulatory authority or similar authority has occurred or been asserted and is
pending and none of the Trust, the Company or any Subsidiary has received notice
that any such audit or proceeding may be commenced.
(h) Except as required by GAAP, none of the Trust, the Company or any
Subsidiary have agreed to, or filed application for, and are not required to
make any changes or adjustment to the accounting method.
(i) There is no contract, agreement, plan or arrangement covering any
person that, individually or collectively, could give rise to the payment of any
amount that would not be deductible by the Trust, the Company or any Subsidiary
by reason of Section 280G of the Code.
3.13 No Default. None of the Trust, the Company or any Subsidiary of
----------
either of them is in default under, or in violation of, any provision of its
organizational documents.
3.14 Solvency. There does not exist in effect with respect to either the
--------
Trust or the Company nor has the Trust or the Company made (i) any general
assignment for the benefit of creditors, (ii) any voluntary petition in
bankruptcy, (iii) any involuntary petition by either of the Trust's or the
Company's creditors, or suffered the appointment of a receiver to take
possession of all, or substantially all, of the Trust's or the Company's assets,
(iv) any attachment or other judicial seizure of all, or substantially all, of
the Trust's or the Company's assets, (v) any admission in writing of its
inability to pay its debts as they come due or (vi) any offer of settlement,
extension or composition to its creditors generally.
3.15 Compliance with Laws.
--------------------
(a) To the knowledge of the Company or the Trust, none of the Company,
the Trust or any Subsidiary of either of them is in violation in any material
respects of any applicable laws, ordinances, rules and regulations, whether
federal, state or local, foreign, statutory or common, and neither the Company
nor the Trust has been informed of any material violation of any such laws,
rules or regulations which would have a material adverse effect on the operation
of the Company or the Trust.
(b) To the knowledge of the Company or the Trust, all material
notices, licenses, permits, certificates and other authorizations (collectively,
"Permits") required in connection with the current construction, use, occupancy,
-------
management, leasing and operation of the properties of the Company or the Trust,
or any Subsidiary of either of them, have been obtained. To the knowledge of
the Company or the Trust, neither the Company nor the Trust has received written
notice that it or any third party has taken any action that would (or failed to
take any action the omission of which would) result in the revocation of such
Permits, that would have a material adverse effect on the Company or the Trust
or the ownership or operation of the properties of either of them, that in each
case has not been cured or otherwise resolved to the satisfaction of such third
party.
3.16 No Restrictions on Equity Securities. Except as set forth on
------------------------------------
Schedule 3.16, there are no shareholders' agreements, voting trust agreements or
-------------
other restrictive agreements relating to the sale or voting of the Shares.
8
3.17 Employee Benefit Plans.
----------------------
(a) Except as disclosed in the SEC Documents or in Schedule 3.17,
-------------
since the date of the most recent audited financial statements included in the
SEC Documents, there has not been any adoption or amendment by the Trust or the
Company, or any Subsidiary of either of them, of any bonus, pension, profit
sharing, deferred compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other employee benefit
plan, arrangement or understanding (whether or not legally binding, or oral or
in writing) providing benefits to any current or former employee, officer or
director of the Trust, the Company or any Subsidiary of either of them, or any
person affiliated with the Trust or Company under section 414(b), (c), (m) or
(o) of the Code (collectively, "Benefit Plans").
-------------
(b) Except as described in the SEC Documents or in Schedule 3.17 or as
-------------
would not have a material adverse effect on the Trust or the Company, (a) all
Benefit Plans, including any such plan that is an "employee benefit plan" as
defined in section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), are in compliance with all applicable requirements of law,
-----
including ERISA and the Code, and (b) none of the Trust, the Company or any
Subsidiary of either of them has any liability or obligation with respect to any
such Benefit Plan, whether accrued, contingent or otherwise, or to the knowledge
of the Trust and the Company, are any such liabilities or obligations expected
to be incurred. Except as set forth in Schedule 3.17, the execution of, and
-------------
performance of the transactions contemplated in, this Agreement will not (either
alone or upon the occurrence of any additional or subsequent event) constitute
an event under any Benefit Plan, policy, arrangement, or agreement or any trust
or loan that will or may result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits with respect to any employee
or director. The only severance agreements or severance policies applicable to
the Trust, the Company or any Subsidiary of either of them are the agreement and
policies specifically referred to in Schedule 3.17.
-------------
3.18 Debt Instruments.
----------------
(a) None of the Trust, the Company or any Subsidiary of either of them
is in violation of or in default under (nor does there exist any condition which
upon the passage of time or the giving of notice or both would cause such a
violation of or default under) any material loan or credit agreement, note,
bond, mortgage, indenture, lease, permit, concession, franchise, license or any
other material contract agreement, arrangement or understanding, to which it is
a party or by which it or any of its properties or assets is bound, except as
set forth in Schedule 3.18(a) and except for violations or defaults that would
----------------
not, individually or in the aggregate, result in a material adverse effect to
the Trust or the Company.
(b) None of the Trust, the Company or any Subsidiary of either of them
is subject to any indebtedness. For purposes of this Agreement, "indebtedness"
------------
shall mean, with respect to any person, without duplication, (a) all
indebtedness of such person for borrowed money, whether secured or unsecured,
(b) all obligations of such person under conditional sale or other title
retention agreements relating to property purchased by such person, (c) all
capitalized lease obligations of such person, (d) all obligations of such person
under interest rate or currency hedging transactions (valued at the termination
value thereof) and (e) all guarantees of such person of any such indebtedness of
any other person.
3.19 Vote Required. The affirmative vote of at least two-thirds of the
-------------
outstanding shares of beneficial interest of the Trust and of at least a
majority of the outstanding shares of Common Stock of the Company are the only
votes of the holders of any class or series of the Trust's or Company's capital
stock
9
necessary (under applicable law or otherwise) to approve this Agreement and the
transactions contemplated hereby.
3.20 Transactions with Affiliates. Except for such items set forth in
----------------------------
the SEC Documents, set forth in Schedule 3.20 is a list of all arrangements,
-------------
agreements, and contracts entered into by the Trust, the Company or any
Subsidiary of either of them with (i) any person who is an officer, director or
affiliate of the Trust, the Company or any Subsidiary of either of them, any
relative of any of the foregoing or any entity of which any of the foregoing is
an affiliate or (ii) any person who acquired securities of the Trust in a
private placement. Such documents, copies of all of which have previously been
delivered or made available to the Purchasers, are listed in Schedule 3.20.
-------------
3.21 Proxy Statement. None of the Proxy Statement (as defined in Section
---------------
4.2), if required under applicable law, or any other document filed or to be
filed by or on behalf of the Trust or the Company with the SEC or any other
governmental authority or any other document required to be prepared and
distributed in connection with the transactions contemplated hereby will contain
when filed, or shall contain, at the respective time filed with the SEC or other
governmental authority, and, in addition in the case of the Proxy Statement, if
required under applicable law, at the date it or any amendment or supplement
thereto is mailed to shareholders of the Trust or Company to solicit the vote of
such shareholders on the PCT Merger and the issuance of the Shares, any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided that the
foregoing shall not apply to information supplied by the Purchasers in writing
specifically for inclusion or incorporation by reference in any such document.
The Proxy Statement, if required under applicable law, shall comply as to form
in all material respects with the provisions of the Exchange Act and the rules
and regulations thereunder.
3.22 REIT Qualification. For its taxable year ending July 31, 1989 and at
------------------
all times thereafter up to and including the date hereof, the Trust (i) has
qualified to be treated as a REIT within the meaning of Sections 856-860 of the
Code, including, without limitation, the requirements of Sections 856 and 857 of
the Code, (ii) has operated, and intends to continue to operate through the
Closing Date in such a manner as to qualify as a REIT for its taxable year
ending December 31, 1998 and (iii) has not taken or failed to take any action
which could result in a challenge to its status as a REIT and no such challenge
is pending or threatened. For the periods described in the preceding sentence,
the Trust has met all requirements necessary to be treated as a REIT for
purposes of the income tax provisions of those states in which the Trust is
subject to income tax and which provide for the taxation of a REIT in a manner
similar to the treatment of REITs under Sections 856-860 of the Code.
3.23 No Other Agreements to Sell. Except pursuant to the Transaction
---------------------------
Documents or as set forth on Schedule 3.23, neither the Trust nor the Company
-------------
has made any agreement with, nor will it enter into any agreement with, and it
does not have any obligation (absolute or contingent) to, any other person or
firm to sell, transfer or in any way encumber any of its properties or assets or
to enter into any agreement with respect to a sale, transfer or encumbrance of,
or put or call right with respect to, any of its properties or assets.
3.24 Insurance. The Trust and the Company, and the Subsidiaries of each
---------
of them, carry or are covered by, insurance in such amounts and covering such
risks as is adequate for the conduct of their respective business and the value
of their assets and as is customary for companies engaged in similar businesses
in similar industries; none of the Trust, the Company or any Subsidiary of
either of them has
10
received from any insurance company notice of any material defects or
deficiencies affecting the insurability of any such assets and operations.
3.25 Unlawful payments. To the knowledge of the Trust and the Company,
-----------------
none of the Trust, the Company or any Subsidiary of either of them, nor any
director, officer, agent, employee or other person associated with or acting on
behalf of the Trust, the Company or any Subsidiary of either of them, has used
any corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977; or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
3.26 Real Property. To the knowledge of the Trust and the Company, except
-------------
as disclosed in the Environmental Reports (as defined below) or on Schedule
--------
3.26, (i) the properties of the Trust and the Company are not in violation of
----
any Environmental Laws (as defined below), (ii) no written notices of any
violation or alleged violation of any Environmental Laws relating to such
properties or their use have been received by the Trust or the Company, whether
such notices relate to actions or omissions by the Trust or the Company or by a
prior owner, operator or occupant of the applicable property and (iii) there are
no writs, injunctions, decrees, orders or judgments outstanding or any claims,
actions, investigations or other proceedings, whether civil or criminal, at law
or in equity or before any arbitrator or governmental entity ("Environmental
-------------
Claims"), pending or threatened in writing, relating to any violation or alleged
------
violation of any Environmental Laws relating to such properties or their use,
except for violations or Environmental Claims that individually or in the
aggregate would not have a material adverse effect on the financial condition or
results of operations of the Trust or the Company.
For the purposes hereof:
"Environmental Laws" shall mean federal, state, local or administrative
------------------
agency ordinance, law, rule, regulation, order or requirement relating to
environmental conditions or Hazardous Material, including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Sections 9601 et seq.; Resource Conservation and Recovery Act, 42 U.S.C.
-- ---
Sections 6901 et seq.; Federal Water Pollution Control Act, 33 U.S.C. Sections
-- ---
1251 et seq.; Clean Air Act, 42 U.S.C. Sections 7401 et seq.; Hazardous
-- --- -- ---
Materials Transportation Act, 49 U.S.C. Sections 1471 et seq.; Toxic Substances
-- ---
Control Act, 15 U.S.C. Sections 2601 et seq.; Refuse Act, 33 U.S.C. Sections 407
-- ---
et seq.; Emergency Planning and Community Right-To-Know Act, 42 U.S.C. Sections
-- ---
11001 et seq.; and Occupational Safety and Health Act, 29 U.S.C. Sections 65 et
-- --- --
seq., to the extent it includes the emission of any Hazardous Material;
---
"Hazardous Material," shall mean any substance, chemical, waste or other
------------------
material which is listed, defined or otherwise identified as "hazardous" or
"toxic" under any Environmental Laws, including without limitation or any
regulation, order, rule or requirement adopted thereunder, as well as any
formaldehyde, urea, polychlorinated biphenyls, petroleum, petroleum product or
by-product, crude oil, natural gas, natural gas liquids, liquefied natural gas
or synthetic gas usable for fuel or mixture thereof, radon, asbestos and
"source," "special nuclear," and "by-product" material as defined in the Atomic
Energy Act of 1985, 42 U.S.C. Sections 3011 et seq.;
-- ---
"Environmental Reports," as used in this Agreement, shall mean written
---------------------
Phase I, Phase II or other similar environmental assessment reports, evidencing
the results of certain environmental assessments
11
performed for the purpose of assessing the environmental condition of the
properties of the Trust or the Company, in the possession or control of the
Trust or the Company or its affiliates.
3.27 Disclosure. The representations, warranties and statements contained
----------
in this Agreement and in the Transaction Documents, and in the certificates,
exhibits and schedules delivered by the Company and the Trust to the Purchasers
pursuant to this Agreement or any of the Transaction Documents, do not contain
any untrue statement of a material fact, and, when taken together, do not omit
to state a material fact required to be stated therein or necessary in order to
make such representations, warranties or statements not misleading in light of
the circumstances under which they were made. There are no facts (other than
changes in general economic or market conditions) which presently or can
reasonably be expected to in the future have a material adverse effect on the
condition (financial or otherwise), properties, assets, liabilities, business,
operations or prospects of the Trust or the Company.
ARTICLE IV
COVENANTS
4.1 Conduct of the Business of the Trust and the Company. The Trust and
----------------------------------------------------
the Company covenant and agree that between the Effective Date and the Closing
Date, unless the Purchasers have consented (such consent not to be unreasonably
withheld, conditioned or delayed) in writing to any other act or omission, the
Trust and the Company shall perform or observe the following:
(a) The Company and the Trust shall, and shall cause each of its
Subsidiaries and affiliates to, conduct their operations according to their
usual, regular and ordinary course in substantially the same manner as
heretofore conducted.
(b) Neither the Company nor the Trust shall amend its respective
articles of incorporation, bylaws, declaration of trust or other charter
document, except as contemplated by the Transaction Documents.
(c) Neither the Company nor the Trust shall (except as required by the
Transaction Documents), issue any interests or shares of its capital stock,
effect any stock split, reverse stock split, stock dividend, recapitalization or
similar transaction.
(d) Neither the Company nor the Trust shall (i) declare, set aside or
pay any dividend or make any other distribution or payment with respect to any
shares of its capital stock (other than the distribution of the net proceeds
from the sale of the Cincinnati Property and cash on hand as of the Effective
Date or as contemplated by the Transaction Documents) or (ii) directly or
indirectly redeem, purchase or otherwise acquire any shares of its capital stock
or capital stock of any of its affiliates, or make any commitments for any such
action.
(e) Neither the Company nor the Trust shall, and shall not permit, any
of its respective Subsidiaries or their respective affiliates to, sell or
otherwise dispose of, except in the ordinary course or business, any of their
assets that are material, individually or in the aggregate (other than as
indicated on Schedule 3.23 or as otherwise contemplated by the Transaction
-------------
Documents).
(f) Neither the Company nor the Trust shall, and shall not permit any
of its respective Subsidiaries or affiliates to, make any loans, advances or
capital contributions to, or investments in, any
12
unaffiliated third party other than contemplated by this Agreement or in the
ordinary course of business consistent with past practice.
(g) Neither the Company nor the Trust shall make any tax election
(unless required by law or necessary to preserve the Trust's or, following the
consummation of the transactions contemplated by the Transaction Documents, the
Company's status as a REIT or the status of any Subsidiary as a partnership for
federal income tax purposes).
(h) Neither the Company nor the Trust shall (i) change in any
material manner any of its methods, principles or practices of accounting in
effect at the Effective Date, or (ii) make or rescind any express or deemed
election relating to Taxes, settle or compromise any claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to Taxes, except in the case of settlements or compromises, relating to
Taxes on real property in an amount not to exceed, individually or in the
aggregate, $50,000, or change any of its methods of reporting income or
deductions for federal income tax purposes from those employed in preparation of
its federal income tax return for the most recently completed taxable year
except, in the case of clause (i), as may be required by the SEC, applicable law
or GAAP.
(i) Neither the Company nor the Trust shall, except as provided in
this Agreement, adopt any new employee benefit plan, incentive plan, severance
plan, stock option or similar plan, grant new stock appreciation rights or amend
any existing plan or rights, except such changes as are required by law.
(j) Neither the Company nor the Trust shall enter into or amend or
otherwise modify any agreement or arrangement with persons that are affiliates
or, as of the Effective Date, are executive officers, directors or Trustees of
the Company, the Trust or any Subsidiary.
(k) Neither the Company nor the Trust shall, and shall not permit any
of its respective Subsidiaries or affiliates to, pay, discharge or satisfy any
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction in
the ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the notes
thereto) of the Company included in the Trust's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997 or incurred in the ordinary course of
business consistent with past practice or obligations referred to in Section 5.4
of the PCT Merger Agreement.
(l) Except as contemplated by the Transaction Documents, neither the
Company nor the Trust shall merge or consolidate with any person.
(m) Neither the Company nor the Trust shall, and shall not permit any
of their respective Subsidiaries or affiliates to, enter into any commitments
that, individually or in the aggregate, may result in total payments or
liability by or to the Company or the Trust in excess of $10,000, other than
commitments entered into in the ordinary course of business consistent with past
practice.
(n) The Trust shall and, following the consummation of the PCT Merger,
the Company, shall continue to qualify as a real estate investment trust for
federal income tax purposes.
4.2 Proxy Statement; Special Meeting. The Trust and the Company shall
--------------------------------
file with the SEC within forty-five (45) days of the Effective Date a proxy
statement (the "Proxy Statement") under the
---------------
13
Exchange Act with respect to the Special Meeting (as defined below) and will
cause the Proxy Statement to comply as to form in all material respects with the
applicable provisions of the Exchange Act and the rules and regulations
promulgated thereunder. The Purchasers will cooperate with the Company in the
preparation of the Proxy Statement and to provide the Company with such
information as the Company may reasonably request. In connection with the
issuance of the Shares and the approval of the PCT Merger, the Trust, acting
through its Board of Trustees, shall, as required under and in accordance with
the regulations of the American Stock Exchange, duly call, give notice of,
convene and hold a special meeting of shareholders (the "Special Meeting") as
---------------
soon as practicable after the Proxy Statement is cleared by the SEC, for the
purpose of voting upon the approval of such issuance and the PCT Merger. The
Trust and the Company shall include in the Proxy Statement the recommendation of
its Board of Trustees and its Board of Directors, respectively, that
shareholders vote in favor of approval of such issuance and the PCT Merger.
4.3 Sale of Real Property.
---------------------
(a) In the event the Trust enters into an agreement relating to the
sale of land underlying the Cincinnati Marriott and the subordinate leasehold
mortgages thereon (the "Cincinnati Property") prior to the Closing, such
-------------------
agreement shall be substantially in the form of Exhibit B attached hereto. In
---------
the event such agreement is not substantially in the form of Exhibit B, the
---------
Purchasers must consent to the form of such agreement, such consent not to be
unreasonably withheld.
(b) In the event the sale of the Cincinnati Property is consummated
prior to the Closing, the Trust and the Company shall cause an amount equal to
$300,000 to be invested in one or more investments identified on Schedule 4.3
------------
attached hereto.
4.4 Other Actions. Each of the Purchasers, on the one hand, and the
-------------
Company and the Trust, on the other hand, shall not take, and shall use
commercially reasonable efforts to cause its respective Subsidiaries to refrain
from taking, any action that would result in (i) any of the representations and
warranties of such party set forth in this Agreement that are qualified as to
materiality becoming untrue, (ii) any of such representations and warranties
that are not so qualified becoming untrue in any material respect or (iii) any
of the conditions precedent to Closing set forth in Article 6 not being
satisfied.
4.5 Cooperation. Subject to the terms and conditions herein provided, the
-----------
parties to this Agreement shall (a) use their best efforts to cooperate with
each other in (i) determining which filings are required to be made prior to the
Closing Date with, and which consents, approvals, permits or authorizations are
required to be obtained prior to the Closing Date from governmental authorities
and (ii) timely making all such filings and timely seeking all such consents,
approvals, permits or authorizations; (b) use their best efforts to obtain in
writing any consents required from third parties necessary to effectuate the
transactions contemplated hereby; and (c) use their best efforts to take, or
cause to be taken, all other actions and do, or cause to be done, all other
things necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement. If, at any time after the Closing
Date, any further action is necessary or desirable to carry out the purpose of
this Agreement, the proper officers and directors and other duly authorized
representatives of the parties shall take all such necessary action.
4.6 Public Announcements. The initial press release relating to this
--------------------
Agreement shall be a joint press release, approved by all parties and thereafter
the parties shall, subject to their respective legal obligations (including
requirements of stock exchanges and similar regulating bodies), consult with
each other, and use reasonable efforts to agree upon the text of any press
release, before issuing any such press release or otherwise making public
statements with respect to the transactions contemplated hereby and in
14
making any filing with any federal or state governmental or regulatory agency of
with any national securities exchange with respect thereto.
4.7 Government Filings. The Company shall use its best efforts to make,
------------------
prior to the Closing Date, all necessary filings with all governmental
authorities to carry out the transactions contemplated by this Agreement and
will pay, subject to Section 11.10, all expenses incident thereto.
4.8 Listing of Shares. Subject to the consent of the American Stock
-----------------
Exchange regarding continued listing of the Company's Shares, the Company shall,
as promptly as practicable following the Effective Date, prepare and file with
the American Stock Exchange a listing application covering the Shares to be
issued hereunder and shall use its reasonable commercial efforts to obtain,
prior to the Closing Date, approval of the listing of such Shares, subject to
official notice of issuance. The obligations of this Section 4.8 shall survive
the Closing.
4.9 Registration of Shares. The Company and the Purchasers shall enter
----------------------
into a registration rights agreement (the "Registration Rights Agreement"),
-----------------------------
substantially in the form of Exhibit C, on or prior to the Closing Date.
---------
4.10 Option Plans; Options. The Trust shall terminate all stock option
---------------------
plans and deferred compensation plans, including without limitation, the Trust's
1992 Employee Stock Option Plan and the Trust's 1994 Stock Option Plan for Non-
Employee Trustees and all options outstanding under such plans shall be
canceled.
4.11 Benefits Plans. Subject to applicable law, the Trust shall take all
--------------
action necessary to cause all Benefit Plans identified on Schedule 3.17 to
-------------
terminate as of the Closing.
4.12 Rights Agreement. The Trustees shall take all action necessary to
----------------
cause the Rights Agreement to terminate immediately following the Closing.
4.13 Resignation of Trustees. The Trust shall accept the resignation of
-----------------------
all of the Trustees of the Trust, effective upon the consummation of the PCT
Merger.
4.14 Charter and By-laws of the Company. The Company shall amend and
----------------------------------
restate its charter and by-laws substantially in the form attached hereto as
Exhibit D and Exhibit E, respectively.
--------- ---------
4.15 FYA Merger Agreement and PCT LP Merger Agreement. Each of the General
------------------------------------------------
Partners of FYA shall recommend that the limited partners of FYA vote in favor
of approval of the FYA Merger Agreement. The General Partner of BPPH shall
recommend that the limited partners of BPPH vote in favor of (i) approval of the
FYA Merger Agreement and (ii) approval of the PCT LP Merger Agreement. Such
General Partners shall use commercially reasonable efforts in making such
recommendations.
4.16 No Solicitation. Except with respect to the properties that are
---------------
listed on or are the subject of the agreements identified on Schedule 3.23 and
-------------
pursuant to the Transaction Documents, neither the Trust nor the Company shall
directly or indirectly, enter into, solicit, initiate or continue any
discussions or negotiations with, or encourage or respond to any inquiries or
proposals by, or participate in any negotiations with, or provide any
information to, or otherwise cooperate in any other way with, any person or
entity concerning any sale of all or a portion of the Company's or Trust's
assets, or any merger, consolidation, liquidation, dissolution or similar
transaction involving the Company or the Trust.
15
4.17 Confidentiality. The Purchasers shall ensure that all confidential
---------------
information which each such party or any of its respective representatives may
now possess or may hereafter create or obtain relating to the Company or the
Trust, the transactions contemplated hereby or the financial condition, results
of operations, business, properties, assets, liabilities or future prospects of
the Company or the Trust, shall not be published, disclosed or made accessible
by any of them without the prior written consent of the Company and the Trust;
provided, however, that the restrictions of this sentence shall not apply: (i)
-------- -------
to the extent the disclosure may otherwise be required by applicable law, court
process or by obligations pursuant to any listing agreement with any national
securities exchange or (ii) to the extent such information shall have otherwise
become publicly available.
4.18 Time of Closing. Each of the parties hereto shall use its best
---------------
efforts to consummate the transactions contemplated hereby on or prior to the
Closing Date.
4.19 Additional Property Acquisitions. The parties acknowledge that,
--------------------------------
pursuant to the FYA Merger Agreement and the PCT LP Merger Agreement, each of
which shall have been executed prior to Closing, PCT LP will own certain real
properties. The parties understand that affiliated parties of the Purchasers
may wish, prior to Closing, to enter into agreements with the appropriate
entities to contribute, following the Closing, additional real properties to PCT
LP in exchange for the issuance of units of partnership interest in PCT LP. The
Trust and the Company agree that they will not unreasonably withhold their
consent to such contribution and will negotiate in good faith with any such
parties with respect to the terms and conditions of such potential contributions
on a basis comparable to the terms and conditions of the Transaction Documents.
ARTICLE V
CLOSING
5.1 Deliveries at the Closing by the Purchasers. At the Closing, the
-------------------------------------------
Purchasers will deliver or cause to be delivered to the Company the following
and, where appropriate, duly executed on behalf of all necessary parties thereto
other than the Trust and the Company:
(a) The Aggregate Purchase Price as described in Section 1.2.
(b) Affidavits and other instruments, including but not limited to
all organizational documents of the Purchasers and their general partners, as
applicable, including partnership agreements, operating agreements, bylaws,
articles of incorporation and certificates of good standing and/or existence
reasonably requested by the Company evidencing the power and authority of such
entities to enter into and perform this Agreement and any documents to be
delivered hereunder.
(c) A certificate executed by each Purchaser, or a duly authorized
representative of such Purchaser, as applicable, stating that the
representations and warranties made by such Purchaser in this Agreement are true
and correct in all material respects as of the Closing Date, or if there have
been any changes, a description thereof.
(d) Such other documents as may be reasonably required or appropriate
to effectuate the consummation of the transactions contemplated by this
Agreement.
5.2 Deliveries at the Closing by Trust and the Company. At the Closing,
--------------------------------------------------
the Trust and the Company shall deliver or cause to be delivered by authorized
officers of the Trust and the Company to the
16
Purchasers the following and, where appropriate, duly executed by all necessary
parties thereto other than the Purchasers:
(a) The certificates representing Shares to be issued at the Closing
properly issued to the appropriate party.
(b) A certificate executed by a duly authorized representative of
each of the Trust and the Company, executed on behalf of such entity and not
individually, stating that the representations and warranties made by the Trust
and the Company in this Agreement are true and correct in all material respects
as of the Closing Date, or if there have been any changes, a description
thereof.
(c) Affidavits and other instruments, including but not limited to
all organizational documents of the Trust and the Company including Declaration
of Trust, articles of organization, and certificates of good standing and
existence, reasonably requested by the Purchasers evidencing the power and
authority of the Trust and the Company to enter into and perform this Agreement
and any documents to be delivered hereunder.
(d) An opinion from ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, dated
as of the Closing Date, in the form attached hereto as Exhibit F. In rendering
such opinion, ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ may require and rely upon
customary assumptions, representations and covenants including those contained
in certificates of officers of the Trust and others, reasonably satisfactory in
form and substance to such counsel. Such opinion shall include a provision that
expressly permits counsel for the Company to rely on such opinion on and after
the Closing Date.
(e) The Registration Rights Agreement pursuant to Section 4.9.
(f) Such other documents as may be reasonably required or appropriate
to effectuate the consummation of the transactions contemplated by this
Agreement.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.1 Conditions to Obligations of the Purchasers. The obligations of the
-------------------------------------------
Purchasers to pay the Aggregate Purchase Price and to perform the other
covenants and obligations to be performed by the Purchasers on the Closing Date
shall be subject to satisfaction of the following conditions (all or any of
which may be waived, in whole or in part, by the Purchasers):
(a) The representations and warranties made by the Trust and the
Company herein shall be true and correct in all material respects with the same
force and effect as though such representations and warranties had been made on
and as of the Closing Date; provided, however, that a failure of any
representations or warranties to be true and correct in all material respects
shall not give rise to a claim or right of termination by the Purchasers
hereunder so long as such matters do not have a material adverse effect on the
transactions contemplated herein.
(b) The Trust and the Company shall have executed and delivered to
the Purchasers all of the items and documents provided herein for said delivery.
17
(c) The Trust and the Company shall have performed all covenants and
obligations undertaken by the Trust and the Company herein in all material
respects and materially complied with all conditions required by this Agreement
to be performed or complied with by them on or before the Closing Date.
(d) The Trust shall have been taxed as a real estate investment trust
in its most recent federal income tax return, shall be in compliance with all
applicable laws, rules and regulations, including the Code, necessary to permit
it to be so taxed and the statements set forth in subsection (i), (ii) and (iii)
of Section 3.22 shall be true and correct through the Closing Date. The Trust
shall not have taken any action or have failed to take any action which could be
expected to, alone or in conjunction with any other factors, result in the loss
of its (or following the consummation of the transactions contemplated by the
Transaction Documents, the Company's) status as a real estate investment trust
for federal income tax purposes.
(e) Except those actions contemplated by the Transaction Documents,
including, but not limited to, the consummation of any agreement listed on
Schedule 3.23, from the date of this Agreement through the Closing Date, there
-------------
shall not have occurred any changes concerning the Trust or the Company that,
when combined with all other changes, have had or would reasonably be expected
likely to have a material adverse effect on the Trust or the Company.
(f) The charter and by-laws of the Company in effect immediately
prior to the Closing shall be substantially the charter and by-laws attached
hereto as Exhibit D and Exhibit E, respectively .
--------- ---------
(g) The following agreements shall have been terminated in accordance
with their terms and no party shall have any further rights or obligations
thereunder: (i) Incentive Compensation Agreement made as of August 25, 1995 by
and between the Trust and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Termination Agreement made as of
October 19, 1992 by and between the Trust and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as amended; (ii)
Termination Agreement made as of October 19, 1992 by and between the Trust and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, as amended; and (iii) Subcontract and Option Agreement made as
of August 1, 1992 by and between PCA Institutional Investors and the Trust.
(h) All conditions to closing set forth in Article 5 of the PCT
Merger Agreement as in effect on the date hereof shall have been satisfied;
provided, however, that no such conditions shall have been waived by either
party to such agreement without the consent of the Purchasers.
(i) The partners of FYA and BPPH shall have approved, pursuant to the
terms of their respective partnership agreements, the FYA Merger Agreement and
the partners of BPPH shall have approved, pursuant to the terms of its
partnership agreement, the PCT LP Merger Agreement and such partners shall have
executed the necessary addendums to such agreements.
(j) Articles of Merger to effect the PCT Merger shall have been filed
with and accepted for recording by the Department of Assessments and Taxation of
the State of Maryland or as otherwise required under the Maryland General
Corporation Law.
6.2 Conditions to Obligations of the Trust and the Company. The
------------------------------------------------------
obligations of the Company to issue the Shares and the Trust's and the Company's
obligation to perform the other covenants and obligations to be performed by the
Trust and the Company on the Closing Date shall be subject to satisfaction of
the following conditions (all or any of which may be waived, in whole or in
part, by the Trust and the Company):
18
(a) The representations and warranties made by the Purchasers herein
shall be true and correct in all material respects with the same force and
effect as though such representations and warranties had been made on and as of
the Closing Date; provided, however, that a failure of a representation or
warranty to be true and correct in all material respects shall not give rise to
a claim or right of termination by the Trust or the Company hereunder so long as
such matters do not have a material adverse effect on the transactions
contemplated herein.
(b) The Purchasers shall have performed all covenants and obligations
undertaken by the Purchasers herein in all material respects and materially
complied with all conditions required by this Agreement to be performed or
complied with by them on or before the Closing Date.
(c) From the date of this Agreement through the Closing Date, there
shall not have occurred any changes concerning the Purchasers that, when
combined with all other changes, have had or would reasonably be expected likely
to have a material adverse effect on the Purchasers.
(d) The Purchasers shall have executed and delivered to the Trust and
the Company all of the items and documents provided herein for said delivery.
(e) Articles of Merger to effect the PCT Merger shall have been filed
with and accepted for recording by the Department of Assessments and Taxation of
the State of Maryland or as otherwise required under the Maryland General
Corporation Law.
(f) Since December 31, 1997, there shall not have occurred any
material adverse change to FYA's financial condition, results of operation or
otherwise that would materially impair the ability of FYA to perform its
obligations hereunder.
(g) The PCT Merger Agreement shall have been approved by the holders
of two-thirds of the shares of beneficial interest of the Trust.
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification by the Trust and the Company. The Trust and the
--------------------------------------------
Company jointly and severally agree subsequent to the Closing to indemnify and
hold the Purchasers and their respective Subsidiaries and affiliates and persons
serving as officers, directors, partners, stockholders or employees thereof
(individually a "Purchaser Indemnified Party" and collectively the "Purchaser
--------------------------- ---------
Indemnified Parties") harmless from and against any damages, liabilities, losses
-------------------
(including, without limitation, diminution in value), taxes, fines, penalties,
costs, and expenses (including, without limitation, reasonable fees of counsel)
of any kind or nature whatsoever (whether or not arising out of third-party
claims and including all amounts paid in investigation, defense or settlement of
the foregoing), which may be sustained or suffered by any of them arising out of
or based upon any breach of any representation, warranty or covenant of the
Company or the Trust under this Agreement or under any other Transaction
Document, or in any certificate, schedule or exhibit delivered pursuant hereto
or thereto, or by reason of any claim, action or proceeding asserted or
instituted growing out of any matter or thing constituting such a breach.
7.2 Indemnification by the Purchasers. Each Purchaser agrees to indemnify
---------------------------------
and hold the Company and the Trust and their respective trustees, directors,
officers, employees, agents and shareholders (in connection with the affairs of
the Trust) harmless from and against any damages, liabilities, losses, taxes,
fines, penalties, costs and expenses (including, without limitation, reasonable
fees of counsel) of any
19
kind or nature whatsoever (whether or not arising out of third-party claims and
including all amounts paid in investigation, defense or settlement of the
foregoing) which may be sustained or suffered by the Company or the Trust
arising out of or based upon any breach of any representation, warranty or
covenant made by such Purchaser in this Agreement or in any agreement, document
or instrument contemplated hereby, or in any certificate, schedule or exhibit
delivered pursuant hereto or thereto, or by reason of any claim, action or
proceeding asserted or instituted growing out of any matter or thing
constituting such a breach.
7.3 Notice; Defense of Claims. An indemnified party may make claims for
-------------------------
indemnification hereunder by giving written notice thereof to the indemnifying
party within the period in which indemnification claims can be made hereunder.
If indemnification is sought for a claim or liability asserted by a third party,
the indemnified party shall also give written notice thereof to the indemnifying
party promptly after it receives notice of the claim or liability being
asserted, but the failure to do so shall not relieve the indemnifying party from
any liability except to the extent that it is prejudiced by the failure or delay
in giving such notice. Such notice shall summarize the bases for the claim for
indemnification and any claim or liability being asserted by a third party.
Within twenty (20) days after receiving such notice the indemnifying party shall
give written notice to the indemnified party stating whether it disputes the
claim for indemnification and whether it will defend against any third party
claim or liability at its own cost and expense. If the indemnifying party fails
to give notice that it disputes an indemnification claim within twenty (20) days
after receipt of notice thereof, it shall be deemed to have accepted and agreed
to the claim, which shall become immediately due and payable. The indemnifying
party shall be entitled to direct the defense against a third party claim or
liability with counsel selected by it (subject to the consent of the indemnified
party, which consent shall not be unreasonably withheld) as long as the
indemnifying party is conducting a good faith and diligent defense. The
indemnified party shall at all times have the right to fully participate in the
defense of a third party claim or liability at its own expense directly or
through counsel; provided, however, that if the named parties to the action or
-------- -------
proceeding include both the indemnifying party and the indemnified party and the
indemnified party is advised that representation of both parties by the same
counsel would be inappropriate under applicable standards of professional
conduct, the indemnified party may engage separate counsel at the expense of the
indemnifying party. If no such notice of intent to dispute and defend a third
party claim or liability is given by the indemnifying party, or if such good
faith and diligent defense is not being or ceases to be conducted by the
indemnifying party, the indemnified party shall have the right, at the expense
of the indemnifying party, to undertake the defense of such claim or liability
(with counsel selected by the indemnified party), and to compromise or settle
it, exercising reasonable business judgment. If the third party claim or
liability is one that by its nature cannot be defended solely by the
indemnifying party, then the indemnified party shall make available such
information and assistance as the indemnifying party may reasonably request and
shall cooperate with the indemnifying party in such defense, at the expense of
the indemnifying party.
ARTICLE VIII
NO BROKERS
The Purchasers, the Trust and the Company covenant and agree one with the
other that no real estate commissions, finders' fees or brokers' fees have been
or will be incurred in connection with this Agreement or the transaction
contemplated hereby.
20
ARTICLE IX
TERMINATION
Section 9.1 Termination. At any time prior to the Closing, this
-----------
Agreement may be terminated as follows:
(a) by mutual written consent of all of the parties to this
Agreement;
(b) by the Purchasers, pursuant to written notice by the Purchasers
to the Company, if (i) the Trust or the Company has failed to consummate the
transactions contemplated by the Transaction Documents by the later of (x)
September 30, 1998 and (y) following notice to the Trust and the expiration of a
ten (10) day period; (ii) all other conditions to Closing, other than any
condition within the control of the Company, have been satisfied or waived by
the party entitled to waive the same; and (iii) the Purchasers have not (x)
breached any representation or warranty contained herein or in any of the
Transaction Documents except for such breaches that would not, individually or
in the aggregate with any other such breaches, have a material adverse effect or
(y) failed to comply in all material respects with the covenants and agreements
required to be complied with by the Purchasers pursuant to the Transactions
Documents;
(c) by the Trust, pursuant to written notice by the Trust to the
Purchasers, if (i) the Purchasers have failed to consummate the transactions
contemplated by the Transaction Documents by the later of (x) September 30, 1998
and (y) following notice to the Purchasers and the expiration of a ten (10) day
period; (ii) all other conditions to Closing, other than any condition within
the control of the Purchasers, have been satisfied or waived by the party
entitled to waive the same; and (iii) neither the Trust nor the Company has (x)
breached any representation or warranty contained herein or in any of the
Transaction Documents except for such breaches that would not, individually or
in the aggregate with any other such breaches, have a material adverse effect,
or (y) failed to comply in all material respects with the covenants and
agreements required to be complied with by the Trust and the Company pursuant to
the Transaction Documents; or
(d) by the Trust or the Purchasers, if FYA shall have failed to
obtain any required approvals under its partnership agreement and/or BPPH shall
have failed to obtain any required approvals under its partnership agreement.
Section 9.2 Effect of Termination. In the event of termination pursuant
---------------------
to this Article 9, the rights and obligations of the parties under this
Agreement shall cease; provided, however, that the provisions of Section 4.6 and
-------- -------
Section 11.10 shall survive such termination. Notwithstanding anything herein
to the contrary, (i) if this Agreement is terminated pursuant to Section 9.1(c),
then promptly following such termination, the Purchasers shall pay to the Trust,
in addition to any amounts payable pursuant to Section 11.10, an amount equal to
$250,000 (the "Termination Fee") as liquidated damages hereunder, (ii) if this
Agreement is terminated pursuant to Section 9.1(b), then promptly following such
termination, the Trust and the Company shall pay to the Purchasers the
Termination Fee as liquidated damages hereunder, and (iii) if this Agreement is
terminated pursuant to Section 9.1(d), then promptly following such termination,
the Purchasers shall pay to the Trust the Termination Fee as liquidated damages.
The parties hereto expressly acknowledge and agree that, with respect to any
termination of this Agreement pursuant to Section 9.1(d), the payment of any
amount pursuant to Clause (iii) of this Section shall constitute liquidated
damages with respect to any claim for damages or any other claim which the Trust
would otherwise be entitled to assert against any of the Purchasers with respect
to this Agreement and the transactions contemplated hereby and shall constitute
the sole and exclusive remedy available to the Trust.
21
ARTICLE X
NOTICE
All notices, demands, requests, or other writings in this Agreement
provided to be given, made or sent, or which may be given, made or sent, by
either party hereto to the other, shall be in writing and shall be delivered by
depositing the same with any nationally recognized overnight delivery service,
or by telecopy or fax machine, in either event with all transmittal fees
prepaid, properly addressed, and sent to the following addresses:
If to the Trust
or the Company: Property Capital Trust
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to: ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
If to the Purchasers: The ▇▇▇▇ Companies
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇, P.C.
or to such other address as either party may from time to time designate by
written notice to the other. Notices given by (i) overnight delivery service as
aforesaid shall be deemed received and effective on the first business day
following such dispatch and (ii) telecopy or fax machine shall be deemed given
at the time and on the date of machine transmittal provided same is sent prior
to 5:00 p.m., Boston, Massachusetts time, on a business day (if sent later, then
notice shall be deemed given on the next business day) and if the sending party
receives a written send confirmation on its machine and forwards a copy thereof
by regular mail accompanied by such notice or communication. Notices may be
given by counsel for the parties described above, and such notices shall be
deemed given by said party, for all purposes hereunder.
22
ARTICLE XI
MISCELLANEOUS
11.1 Survival of Representation and Warranties. Unless otherwise
-----------------------------------------
expressly provided herein, the representations and warranties in this Agreement
or in any instrument delivered pursuant to this Agreement shall survive the
Closing Date for a period of one (1) year.
11.2 Entire Agreement; Succession and Assignment; No Third Party
-----------------------------------------------------------
Rights. This Agreement (including the documents referred to herein) constitutes
------
the entire agreement between the parties and supersedes any prior
understandings, agreements, or representations by or between the parties,
written or oral, to the extent they related in any way to the subject matter
hereof. This Agreement shall be binding upon and inure to the benefit of the
parties named herein and their respective successors and permitted assigns. No
party may assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the other Party.
Nothing in this Agreement, express or implied, is intended to confer upon any
other person any rights or remedies of any nature whatsoever under or by reason
of this Agreement.
11.3 Amendment. No amendment of any provision of this Agreement
---------
shall be valid unless the same shall be in writing and signed by each party
hereto.
11.4 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the domestic laws of The Commonwealth of Massachusetts
without giving effect to any choice or conflict of law provision or rule
(whether of the Commonwealth of Massachusetts or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the
Commonwealth of Massachusetts.
11.5 Headings. The section headings contained in this Agreement are
--------
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.6 Severability. Any term or provision of this Agreement that is
------------
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
11.7 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
11.8 Construction. All references herein to any Section, or Exhibit
------------
shall be to the Sections of this Agreement and to the Exhibits annexed hereto
unless the context clearly dictates otherwise. All of the Exhibits annexed
hereto are, by this reference, incorporated herein.
11.9 Representatives. Any approval, consent, mutual satisfaction or
---------------
similar determination required to be made hereunder by the Purchasers or any
person included within such term shall be granted exclusively by any one of the
"Purchaser Representatives," who for purposes of this Agreement, until further
-------------------------
notice to the Company Representative, shall be ▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇.
Any approval, consent, mutual satisfaction or similar determination required to
be made hereunder by the Company or the Trust shall be granted exclusively by
the "Company Representative," who for purposes of this Agreement, until further
----------------------
notice to the Purchaser Representatives, shall be ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
23
11.10 Expenses.
--------
(a) Except as set forth in subparagraph (b), each of the
parties hereto will pay all fees and expenses incurred by such party in
connection with this Agreement and the other Transaction Documents and the
transactions contemplated hereunder and thereunder.
(b) The Purchasers agree to reimburse the Trust for all
reasonable legal expenses (excluding legal expenses relating to any litigation
between any of the Purchasers and the Company or Trust relating to this
Agreement, the other Transaction Documents or any transaction contemplated
hereunder or thereunder) incurred by the Trust prior to the termination of this
Agreement pursuant to Article 9, whether or not the transactions contemplated by
this Agreement or the other Transaction Documents are consummated.
Notwithstanding the foregoing, the Purchasers shall in no event be obligated to
the Trust for legal expenses exceeding $150,000. In connection with the
obligation of the Purchasers under this Section 11.10, ▇▇▇▇ Properties Inc. has
deposited $100,000 in an account designated by the Trust for the purpose of
satisfying all or a portion of such obligation. In the event legal expenses of
the Trust are less than $100,000 as of the earlier of (i) the termination of
this Agreement pursuant to Article 9 and (ii) the consummation of the
transactions contemplated under this Agreement, the Trust shall cause any
remaining funds to be returned promptly to ▇▇▇▇ Properties Inc.
The provisions of this Section 11.10(b) shall survive the Closing.
11.11 Interpretation. Whenever used herein, the singular number
--------------
shall include the plural, the plural shall include the singular, and the use of
any gender shall be applicable to all genders.
11.12 Exculpation. The parties to this Agreement acknowledge and
-----------
agree that the obligations of the Trust hereunder do not and shall not
constitute personal obligations of the Trustees, officers, employees or
shareholders of the Trust, or any of them, and shall not involve any claim
against or personal liability on any of them, and the parties to this Agreement
agree to look only to the assets of the Trust in respect thereof and not to seek
recourse against such Trustees, officers, employees or shareholders or any of
them or their personal assets for such satisfaction.
Remainder of Page Intentionally Left Blank
24
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.
PURCHASERS: FRAMINGHAM YORK ASSOCIATES LIMITED PARTNERSHIP
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇, as General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇, as General Partner
TRUST: PROPERTY CAPITAL TRUST
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and
Chief Executive Officer
COMPANY: MARYLAND PROPERTY CAPITAL
TRUST, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇, President
25
SCHEDULES
---------
SCHEDULE 1.1
------------
Purchasers
Framingham York Associates Limited Partnership
26
SCHEDULE 3.8
------------
Subsidiaries of the Trust:
PCT Office Company
PCT Biscayne Center, Inc.
PCT Shopping Center Company
PCT ▇▇▇▇▇▇▇, Inc.
PCT Friendship Avenue Office Company, Inc.
PCT Biscayne Boulevard Partnership
27
SCHEDULE 3.10
-------------
None
28
SCHEDULE 3.11
-------------
Issued and outstanding shares of beneficial interests of the Trust - 9,584,220.
Shares reserved for issuance upon exercise of options granted pursuant to the
Trust's 1992 Employee Stock Option Plan - 144,900.
Shares reserved for issuance upon exercise of options granted pursuant to the
Trust's 1994 Stock Option Plan for Non-Employee Trustees - 52,000. None of
these will be exercised and management will deliver confirmation of cancellation
of these options prior to the Effective Date.
29
SCHEDULE 3.16
-------------
None
30
SCHEDULE 3.17
-------------
Bonus Annual Incentive Compenstaion Program as described
in PCT's proxy dated 11/8/5 (p. 13)
Pension N/A
Profit-Sharing PCT 401(k) Plan and Trust
Deferred compensation N/A
Incentive compensation Incentive Compensation Agreement between PCT and
▇▇▇▇▇▇ ▇▇▇▇▇▇ - 8/25/95.
Stock ownership N/A
Stock purchase N/A
Stock option plan 1994 Stock Option Plan for Non-Employee Trustees
1992 Employee Stock Option Plan
Phantom stock N/A
Retirement N/A
Vacation Employee Handbook - 1/1/93
Severance Property Capital Trust Severance Plan (all
employees except ▇▇▇▇▇▇ ▇▇▇▇▇▇)
Termination Agreement - dated 10/19/92 and amended
8/25/95 (applies to ▇▇▇▇▇▇ ▇▇▇▇▇▇ only)
Disability Employee Handbook - 1/1/93
Death benefit Employee Handbook - 1/1/93
Hospitalization N/A
Medical Employee Handbook - 1/1/93
Shareholders Rights Plan Plan adopted 9/28/90
31
SCHEDULE 3.18
-------------
None
32
SCHEDULE 3.20
-------------
None
33
SCHEDULE 3.23
-------------
Letter dated February 4, 1998, between Property Capital Trust and Interstate
Hotels Corporation regarding Cincinnati Marriott, Sharonville, Ohio and any
subsequent agreements relating to such properties.
Property Capital Trust may sell or otherwise dispose of all office furniture and
equipment and similar personal property and distribute the proceeds, if any, to
Property Capital Trust's shareholders.
34
SCHEDULE 3.26
-------------
None
35
SCHEDULE 4.3
------------
There shall be no restrictions on the nature of the investments made by Property
Capital Trust except that if the merger shall not have occurred prior to either
of June 30, 1998 and September 30, 1998, then the short-term investments of the
Trust on such dates shall not be such as to cause the Trust to fail the 75%
Asset Test.
36
Exhibit A
Form of Joinder
The undersigned hereby joins in the Investment Agreement (the "Agreement")
dated as of June 18, 1998 by and among Framingham York Associates Limited
Partnership, a Massachusetts limited partnership, Property Capital Trust, a
Massachusetts business trust, and Maryland Property Capital Trust, Inc., a
Maryland corporation and agrees that it/he/she shall have all of the rights and
obligations of a Purchaser under the Agreement as if it/he/she had executed the
Agreement as of the Effective Date.
At the Closing, the undersigned will purchase from the Company, and the
Company will issue and sell to the undersigned, the number of shares set forth
opposite the undersigned's name on the attached Schedule 1.1 (which shall also
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be attached to the Agreement) and the undersigned will deliver to the Company
the portion of the Aggregate Purchase Price set forth opposite the undersigned's
name on Schedule 1.1.
------------
In addition, the undersigned hereby makes, severally with respect to
itself/himself/herself and not jointly, the representations and warranties
contained in Article 2 of the Agreement.
Any term used herein and not defined shall have the meaning ascribed to
such term in the Agreement.
__________________________________
By:
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Exhibit C to Investment Agreement
---------------------------------
FORM OF
REGISTRATION RIGHTS AGREEMENT
(Shares issued at Closing)
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into as of
---------
____________, 1998 by and among Maryland Property Capital Trust, Inc., a
Maryland corporation (the "Company"), and the Holders (as hereinafter defined).
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This Agreement is made pursuant to a certain Investment Agreement (the
"Investment Agreement") dated June 18, 1998 and as amended on August 7, 1998 and
---------------------
October __, 1998 by and among the Purchasers (as such term is defined therein),
Property Capital Trust, a Massachusetts business trust, and the Company.
Pursuant to the Investment Agreement, the Company shall issue to the Purchasers
on the date hereof (the "Closing Date") shares of the Company's common stock,
------------
$.01 par value (the "Common Stock") issued without registration under the
------------
Securities Act of 1933, as amended (the "Securities Act"). Following the Closing
--------------
Date, FYA intends to distribute the shares of Common Stock held by it to its
partners. The execution of this Agreement is a condition to the closing of the
transactions contemplated by the Investment Agreement.
NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein, and other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. CERTAIN DEFINITIONS.
-------------------
As used in this Agreement, the following capitalized defined terms shall
have the following meanings:
"Holder" or "Holders" means any holder of outstanding Registrable Shares
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who is (i) a Purchaser; (ii) a partner of FYA; or (iii) any other Person to
which the registration rights provided for in this Agreement shall have been
properly assigned or otherwise transferred in accordance with Section 13 hereof.
"Person" means a natural person, partnership (whether general or limited),
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trust, estate, association, corporation, limited liability company,
unincorporated organization, custodian, nominee or any other individual or
entity in its own or representative capacity.
"Prospectus" means the prospectus included in a Registration Statement,
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including any preliminary prospectus, as amended or supplemented by any
prospectus supplement with respect to the terms of the offering of any portion
of the Registrable Shares covered by such Registration Statement, and by all
other amendments and supplements to such prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
therein.
"Registrable Shares" means shares of Common Stock issued or to be issued to
------------------
the Holder upon the Closing Date, excluding (A) Common Stock for which a
Registration Statement relating to the sale thereof shall have been declared
effective under the Securities Act and which have been disposed of under such
Registration Statement, (B) Common Stock sold pursuant to Rule 144 (or any
successor provision) under the Securities Act or (C) Common
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Stock eligible for sale pursuant to Rule 144(k) (or any successor provision)
under the Securities Act.
"Registration Expenses" means any and all expenses incident to performance
---------------------
of or compliance with this Agreement, including, without limitation: (i) all
SEC, stock exchange or National Association of Securities Dealers, Inc. ("NASD")
----
registration or filing fees; (ii) all fees and expenses incurred in connection
with compliance with state securities or "blue sky" laws (including reasonable
fees and disbursements of counsel in connection with "blue sky" qualification of
any of the Registrable Shares and the preparation of a Blue Sky Memorandum) and
compliance with the rules of NASD; (iii) all expenses of any Persons in
preparing or assisting in preparing, word processing, printing and distributing
any Registration Statement, any Prospectus, certificates and other documents
relating to the performance of and compliance with this Agreement; (iv) all fees
and expenses incurred in connection with the listing, if any, of the Registrable
Shares on any securities exchange or exchanges pursuant to Section 3(i) hereof,
and (v) the fees and disbursements of counsel for the Company and the
independent public accountants of the Company, including the expenses of any
special audit or "cold comfort" letters required by or incident to such
performance and compliance. Registration Expenses shall specifically exclude
underwriting discounts and commissions relating to the sale or disposition of
Registrable Shares by a selling Holder, the fees and disbursement of counsel
representing the selling Holder, and stamp, transfer, sales and similar taxes,
if any, relating to the sale or disposition of Registrable Shares by a selling
Holder, all of which shall be borne by such Holder in all cases.
"Registration Statement" means any registration statement of the Company
----------------------
which covers the issuance or resale, as applicable, of any Registrable Shares on
an appropriate form under Rule 415 promulgated under the Securities Act, or any
similar rule that may be adopted by the SEC, and all amendments and supplements
to such registration statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto and all
materials incorporated by reference therein.
2. REGISTRATION.
------------
(a) Filing of a Shelf Registration Statement. Subject to the conditions
----------------------------------------
set forth in this Agreement, and notwithstanding the last five (5) sentences of
Section 3(b), not later than the later to occur of (i) the 30th day following
the date on which the Company becomes eligible to file a Registration Statement
on Form S-3 or a similar "short form" registration statement or (ii) the first
anniversary of the date hereof (the "Required Filing Date"), the Company shall
--------------------
prepare and file with the Securities and Exchange Commission (the "SEC"), a
"shelf" registration statement (the "Shelf Registration Statement") providing
----------------------------
for the sale by the Holders of the Registrable Shares in accordance with the
terms hereof. Subject to the last five (5) sentences of Section 3(b), the
Company shall use all commercially reasonable efforts to cause the Shelf
Registration Statement to be declared effective by the SEC no later than the
date which is 45 days after the earlier of (i) the Required Filing Date or (ii)
the date on which the Shelf Registration Statement is actually filed with the
SEC and to keep such Shelf Registration Statement continuously effective for a
period ending on the earliest of (a) the date on which such no Holder holds any
of the Registrable Shares, (b) three (3) years after the date such Shelf
Registration Statement was declared effective or (c) the date on which all of
the Registrable Shares held by the Holders have become eligible for sale
pursuant to Rule 144 (k) (or any successor provision) promulgated under the
Securities Act (the "Shelf Expiration Date").
---------------------
(b) Demand Registration. (i) Subject to the conditions set forth in this
-------------------
Agreement, at any time after the Shelf Expiration Date, and, in each case, while
Registrable Shares are outstanding, any Holder or Holders of at least one-
quarter ( 1/4) of the Registrable Shares issued on the Closing Date may request
that
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the Company cause to be filed a Registration Statement providing for the sale by
such Holders of all or part of such Holders' Registrable Shares in the manner
specified in such request, including an underwritten offering in accordance with
the terms hereof (each a "Demand Registration"). Within ten (10) days after
-------------------
receipt of a request for a Demand Registration, the Company shall promptly give
written notice of such proposed registration to all other Holders. Such Holders
shall have the right, by giving written notice to the Company within fifteen
(15) days after such notice referred to in the preceding sentence has been given
by the Company to elect to have included in the Registration Statement pursuant
to a Demand Registration such of their Registrable Shares as each Holder may
request in such notice of election. Thereupon, the Company shall use all
commercially reasonable efforts to cause such Registration Statement to be
declared effective by the SEC for all Registrable Shares which the Company has
been requested to register no later than ninety (90) days following the
expiration of such fifteen (15) day period. The Company agrees to use all
commercially reasonable efforts to keep the Registration Statement pursuant to a
Demand Registration continuously effective until the earliest of (a) the date on
which the Holders no longer hold any Registrable Shares registered under such
Registration Statement, (b) the date on which the Registrable Shares are
eligible for sale by the Holders pursuant to Rule 144(k) (or any successor
provision) promulgated under the Securities Act or (c) the date which is six (6)
months from the effective date of such Registration Statement; provided,
however, that such six (6) month period shall be tolled during the period the
Holders' disposition of Registrable Shares pursuant to a Demand Registration is
suspended because of an event described in Section 3(b). The Company shall not
be obligated under this Section 2(b): (i) to effect more than one Demand
Registration in any twelve-month period, (ii) to effect more than three Demand
Registrations, in the aggregate, on behalf of the Holders.
(ii) If the method of disposition specified by the Holder or Holders
requesting a Demand Registration shall be an underwritten public offering, the
Company may designate the managing underwriter of such offering, subject to the
approval of such Holder or Holders which approval shall not be unreasonably
withheld, delayed or conditioned and shall, in connection therewith, (i) enter
into agreements customary in connection therewith (including an underwriting
agreement in customary form) and reasonably acceptable to the Company, (ii)
promptly make available to the Holder or Holders all financial and other records
as shall be reasonably necessary to enable them to exercise their due diligence
responsibilities, (iii) furnish to each Holder and each underwriter, if any, a
signed counterpart, addressed to such Holder or underwriter of (A) an opinion or
opinions of counsel to the Company and (B) a cold comfort letter or letters from
the Company's independent public accountants and (iv) incorporate in a
Prospectus supplement or post effective amendment such information as such
managing underwriter or underwriters requests. If the managing underwriters
advise the Company in writing that in their opinion the number of Registrable
Shares requested to be included in such offering exceeds the maximum number
which can be included in such offering (1) at a price reasonably related to the
then current market value of the Company's Common Stock or (2) without adversely
affecting the marketability of the offering (the "Maximum Number"), then the
--------------
Company will limit the number of Registrable Shares included in such offering to
the Maximum Number, and the Registrable Shares offered shall be selected in the
following order of priority (A) first, the Registrable Shares, if any, to be
offered for the account of the Holders (including the Holder or Holders making
the Demand Registration); provided, however, that such number of Registrable
-------- -------
Shares shall be reduced pro-rata on the basis of relative number of any
Registrable Shares requested by each such Holder to be included in such
registration to the extent necessary to reduce the total number of securities of
the Holders offered to the Maximum Amount and (B) second, the securities the
Company proposes to sell pursuant to Section 7.
(c) Notwithstanding any thing to the contrary set forth herein, no Holder
shall have any rights under this Section 2 to request the Company, and the
Company shall have no obligation, to use all commercially reasonable efforts to
cause a Registration Statement to be declared effective by the SEC at any
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time after the Common Stock issued to such Holder is (A) sold pursuant to Rule
144 (or any successor provision) under the Securities Act or (B) is eligible for
sale pursuant to Rule 144(K) or any successor provision under the Securities
Act.
(d) If after a Demand Registration Statement has been declared effective,
the offering of Registrable Shares pursuant to such Demand Registration
Statement is interfered with by any stop order, injunction or other order or
requirement of the SEC or any other governmental agency or court, such Demand
Registration Statement will be deemed not to have become effective during the
period of such interference until the offering of Registrable Shares pursuant to
such Demand Registration Statement may legally resume.
(e) In the event that the Company shall default in its obligation to file a
Registration Statement within the time period specified in Section 2(a) other
than as a result of any act or omission of a Holder and a Holder shall be
required to undertake any steps to cause the Company to comply with this
Agreement with respect thereto following such default, the Company shall
promptly reimburse such Holder for all reasonable out-of-pocket costs
(including, without limitation, all reasonable attorneys' fees and expenses)
incurred by such Holder in connection with the enforcement of the Company's
obligation to so file (including the reasonable out-of-pocket costs of legal and
other professional advice preparatory to such enforcement).
3. REGISTRATION PROCEDURE.
----------------------
Whenever required under Section 2 to use all commercially reasonable
efforts to effect the registration of any Registrable Shares, the Company shall,
to the extent applicable:
(a) subject to the last five sentences of Section 3(b), prepare and file
with the SEC a Registration Statement with respect to such Registrable Shares
and use all commercially reasonable efforts to cause such Registration Statement
to become and remain effective for the applicable period as provided in Section
2.
(b) subject to the last five sentences of this Section 3(b), prepare and
file with the SEC from time to time such amendments and supplements to the
Registration Statement and Prospectus used in connection therewith as may be
necessary to keep the Registration Statement effective and to comply with the
provisions of the Securities Act with respect to the disposition of all the
Registrable Shares throughout the applicable period. Notwithstanding anything
to the contrary contained herein, the Company shall not be required to take any
of the actions described in the previous sentence, in Section 3(a), 3(d) or
Section 3(g) to the extent that (i) in the reasonable opinion of the Company (A)
securities laws applicable to such sale would require the Company to disclose
material non-public information ("Non-Public Information") and (B) the
---------- -----------
disclosure of such Non-Public Information would materially adversely affect the
Company; (ii) such sale would occur during the measurement period for
determining the amount of Common Stock in connection with the acquisition of a
business or assets by the Company (the "Measurement Period"); or (iii) the
------------------
Company is contemplating an underwritten or non-underwritten public offering of
its securities and in the reasonable opinion of the underwriters (or the
Company, in the case of a non-underwritten public offering) such sale would
interfere materially with such public offering by the Company (a "Financing
---------
Period"); and in the event of (i), (ii) or (iii) the Company simultaneously
------
delivers written notice to the Holders to the effect that the Holders may not
make offers or sales under the applicable Registration Statement for a period
not to exceed sixty (60) days from the date of such notice; provided, however,
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that the Company may only deliver two such notices within any twelve-month
period and shall not deliver such notices consecutively in any twelve-month
period. In the event the sale by the Holders is suspended because of the
existence of
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Non-Public Information, the Company will notify the Holders promptly upon such
Non-Public Information being included by the Company in a filing with the SEC,
being otherwise disclosed to the public (other than through the action of any
Holder), or ceasing to be material to the Company, and upon such notice being
given by the Company, the Holders shall again, subject to the last paragraph of
this Section 3, be entitled to sell Registrable Shares as provided herein. In
the event the sale by the Holders is suspended because it is proposed to be made
during the Measurement Period or the Financing Period, as applicable, the
Company shall specify, in notifying the Holders of the suspension of the sale,
when the Measurement Period or Financing Period, as applicable, will end, at
which time the Holders shall again, subject to the last paragraph of this
Section 3, be entitled to sell Registrable Shares as provided herein. If the
Measurement Period or the Financing Period, as applicable, is thereafter changed
(but in no event to a date after the applicable sixty (60) day period), the
Company will promptly notify the Holders of such change and upon the end of the
Measurement Period or Financing Period as so changed, the Holders shall again,
subject to the last paragraph of this Section 3, be entitled to sell Registrable
Shares as provided herein. If an agreement to which such Measurement Period or
Financing Period, as applicable, relates is terminated prior to the end of the
Measurement Period or Financing Period, as applicable, the suspension period
hereunder shall end immediately and the Company shall promptly notify the
Holders of the end of the suspension period.
(c) furnish to the Holders such numbers of copies of the Registration
Statement and Prospectus included therein in conformity with the requirements of
the Securities Act and such other documents and information as they may
reasonably request.
(d) use all commercially reasonable efforts to register or qualify, and
maintain the registration and qualification of, the Registrable Shares covered
by such Registration Statement under such other securities or "blue sky" laws of
such jurisdictions within the United States and its territories as shall be
reasonably appropriate for the distribution of the Registrable Shares covered by
a Registration Statement; provided, however, that the Company shall not be
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required in connection therewith or as a condition thereto to qualify to do
business in or to file a general consent to service of process in any
jurisdiction wherein it would not but for the requirements of this paragraph (d)
be obligated to do so; and provided further, that the Company shall not be
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required to subject itself to taxation in any jurisdiction or to qualify such
Registrable Shares in any jurisdiction in which the securities regulatory
authority requires that any Holder submit any of its Registrable Shares to the
terms, provisions and restrictions of any escrow, lockup or similar agreement(s)
for consent to sell Registrable Shares in such jurisdiction unless such Holder
agrees to do so.
(e) promptly notify each Holder for whom Registrable Shares are covered by
the applicable Registration Statement, and confirm in writing (i) when the
Registration Statement and any post-effective amendments thereto have become
effective, (ii) when any amendment or supplement to the Prospectus contained in
such Registration Statement has been filed with the SEC, (iii) of the issuance
by the SEC of any stop order suspending the effectiveness of such Registration
Statement or the initiation of any proceedings for that purpose, or the
suspension of any qualification under "blue sky" laws, (iv) at any time when a
Prospectus relating to such Registration Statement is required to be delivered
under the Securities Act, of the happening of an event as a result of which the
Prospectus included in such Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they were made.
(f) use all commercially reasonable efforts to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the earliest
possible moment.
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(g) subject to the last five sentences of Section 3(b), upon the occurrence
of any event contemplated by clause (iv) of Section 3(e), use all commercially
reasonable efforts promptly to prepare and file an amendment or a supplement to
the Prospectus contained in the applicable Registration Statement or any
document incorporated in such Prospectus by reference or prepare, file and
obtain effectiveness of a post-effective amendment to such Registration
Statement, or file any other required document, in any case to the extent
necessary so that, as thereafter delivered to the purchasers of such Registrable
Shares, such Prospectus shall not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances under
which they were made.
(h) otherwise use all commercially reasonable efforts to comply with all
applicable rules and regulations of the SEC.
(i) use all commercially reasonable efforts to list the Registrable Shares
covered by a Registration Statement with any securities exchange on which the
Common Stock of the Company is then listed.
(j) If the Company shall hereafter enter into any registration rights or
similar agreement which grants any holder of Common Stock liquidated damages or
similar penalties for failure of the Company to file a registration statement
and/or cause a registration statement to become or remain effective with respect
to such Common Stock, the Holders hereunder shall be entitle to comparable and
proportionate rights and penalties (taking into account the relative number of
shares of Common Stock) with respect to Registrable Shares then outstanding
hereunder.
In connection with and as a condition to the Company's obligations with
respect to any Registration Statements required to be filed pursuant to Section
2 and this Section 3, each Holder agrees that (i) it will not offer or sell its
Registrable Shares under any Registration Statement until it has received copies
of the Prospectus as then supplemented or amended as contemplated by Section
3(c) and receives notice from the Company that the Registration Statement and
any post-effective amendment thereto have become effective as contemplated in
Section 3(e), (ii) upon receipt of any notice from the Company contemplated by
Section 3(e)(iii), such Holder will forthwith discontinue disposition of the
Registrable Shares pursuant to the applicable Registration Statement until the
Company obtains the withdrawal of any order suspending the effectiveness of such
Registration Statement, (iii) upon receipt of any notice from the Company
contemplated by Section 3(b), such Holder will forthwith discontinue disposition
of the Registrable Shares pursuant to the applicable Registration Statement
until (a) the expiration of the Measurement Period or Financing Period, as
applicable, or the receipt of a notice from the Company that the Non-Public
Information has been included in a filing with the SEC or has otherwise been
disclosed to the public or has ceased to be material to the Company as provided
in Section 3(b) and (b) if applicable, the Holder receives copies of the
supplemented or amended Prospectus contemplated by Section 3(g) and receives
notice that any post-effective amendment has become effective, and (iv) upon
receipt of any notice from the Company contemplated by Section 3(e)(iv) (in
respect of the occurrence of an event contemplated therein), such Holder will
forthwith discontinue disposition of the Registrable Shares pursuant to the
applicable Registration Statement until such Holder receives copies of the
supplemented or amended Prospectus contemplated by Section 3(g) and receives
notice that any post-effective amendment has become effective, and in the case
of clause (iii) and (iv) of this paragraph, if so directed by the Company, such
Holder will deliver to the Company all copies in its possession, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Registrable Shares current at the time of receipt of such notice.
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4. EXPENSES.
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The Company shall bear all Registration Expenses incurred in connection
with the registration of the Registrable Shares pursuant to this Agreement,
except that each Holder shall be responsible for any brokerage or underwriting
commissions relating and taxes of any kind (including, without limitation,
stamp, transfer, sales and similar taxes) with respect to the sale, disposition
or transfer of Registrable Shares sold by it and for any legal, accounting and
other expenses incurred by it.
5. INDEMNIFICATION BY THE COMPANY.
------------------------------
(a) The Company agrees to indemnify each of the Holders, their respective
officers, directors, employees, agents, representatives and affiliates, each
other Person who participates as an underwriter in the offer or sale of
Registrable Shares, and each Person, if any, that controls a Holder or any such
underwriter within the meaning of the Securities Act against any and all losses,
claims, damages, actions, liabilities, costs and expenses (including without
limitation reasonable attorneys' fees, expenses and disbursements documented in
writing), joint or several, to which they may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities, (or actions or proceeding in respect thereof) costs or expenses
arise out of or are based upon any untrue or alleged untrue statement of
material fact contained in any Registration Statement on the effective date
thereof or any Prospectus contained therein, or any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the indemnity agreement contained
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in this Section 5(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company, provided further that the Company shall not be
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liable to any Holder, such Holder's directors, officers, employees, agents,
representatives and affiliates or participating or controlling Person in any
such case to the extent that any such loss, claim, damage, liability (or action
or proceeding in respect thereof) or expense arises out of or is based upon (i)
an untrue statement or alleged untrue statement or omission or alleged omission
made in such Registration Statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement thereto in reliance upon
and in conformity with written information furnished to the Company for use in
connection with the Registration Statement or the Prospectus contained therein
by such Holder, such Holder's directors, officers, employees, agents,
representatives and affiliates or participating or controlling Person or (ii)
such Holder's, such Holder's directors', officers', employees', agents',
representatives' and affiliates' or participating or controlling Person's
failure to send or give a copy of the final Prospectus furnished to it by the
Company at or prior to the time such action is required by the Securities Act to
the Person claiming an untrue statement or alleged untrue statement or omission
or alleged omission if such statement or omission was corrected in such final
prospectus. The obligations of the Company under this Section 5 shall survive
the completion of any offering of Registrable Shares pursuant to a Registration
Statement under this Agreement or otherwise and shall survive the termination of
this Agreement.
(b) Each Holder requesting or joining in any Registration Statement
severally and not jointly shall indemnify and hold harmless the Company, each of
its directors, officers, employees, agents, representatives and affiliates, each
Person, if any, who controls the Company within the meaning of the Securities
Act, and each agent and any underwriter for the Company (within the meaning of
the Securities Act) against any losses, claims, damages or liabilities, costs
and expenses (including without limitation reasonable attorneys' fees, expenses
and disbursements documented in writing), to which the Company or any such
director, officer, employee, agent, representative, affiliate, controlling
Person, agent or underwriter may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) costs, or expenses arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in such Registration Statement or any Prospectus contained therein or
arise out of or are based upon the omission or
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alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, (i) that such untrue statement or alleged untrue
statement or omission or alleged omission was made in such Registration
Statement, preliminary or final prospectus, summary prospectus or amendments or
supplements thereto, in reliance upon and in conformity with written information
furnished by or on behalf of such Holder for use in connection with such
Registration Statement or the Prospectus contained therein or (ii) such Holder's
failure to send or give a copy of the final prospectus furnished to it by the
Company at or prior to the time such action is required by the Securities Act to
the Person claiming an untrue statement or alleged untrue statement or omission
if such statement or omission was corrected in the final prospectus; provided,
--------
however, that the indemnity agreement contained in this Section 5(b) shall not
-------
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of such Holder.
(c) Promptly after receipt by an indemnified party under this Section 5 of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against any indemnifying party under this
Section 5, notify the indemnifying party in writing of the commencement thereof
and the indemnifying party shall have the right to participate in and assume the
defense thereof with counsel selected by the indemnifying party and reasonably
satisfactory to the indemnified party; provided, however, that an indemnified
-------- -------
party shall have the right to retain its own counsel, with all fees and expenses
thereof to be paid by such indemnified party, and to be apprised of all progress
in any proceeding the defense of which has been assumed by the indemnifying
party; and provided further, that in the event of a conflict of interest between
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an indemnifying party and an indemnified party, an indemnified party shall have
the right to retain its own counsel, with all fees and expenses thereof to be
paid by the indemnifying party. The failure to notify an indemnifying party
promptly of the commencement of any such action, if and to the extent
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
5, but the omission so to notify the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than under
this Section 5. An indemnifying party shall be entitled to compromise or settle
such action, without the consent of an indemnified party if such compromise or
settlement shall dismiss the action without prejudice and shall consist solely
of monetary payments and such indemnifying party shall make such payments, or
with the consent of an indemnified party in all other cases. An indemnified
party shall not compromise or settle any action without the consent of an
indemnifying party.
(d) To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and indemnified party in connection with the actions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of such indemnifying
party and indemnified party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of material fact or omission or alleged omission to state a material
fact, has been made by, or relates to information supplied by, such indemnifying
party or indemnified party, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such action. The amount
paid or payable by a party as a result of the losses, claims, damages or
liabilities referred to above shall be deemed to include any legal or other fees
or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation which does not
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take account of the equitable considerations referred to in the immediately
preceding paragraph. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11 (f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
6. FURNISH INFORMATION: DELIVERY OF PROSPECTUS.
-------------------------------------------
(a) It shall be a condition precedent to the obligations of the Company to
take any action pursuant to this Agreement that the Holders shall furnish to the
Company such information regarding themselves, the Registrable Shares held by
them, and the intended method of disposition of such securities as the Company
shall reasonably request and as shall be required in connection with the action
to be taken by the Company.
(b) Each of the Holders hereby agrees to deliver or cause delivery of the
Prospectus contained in the applicable Registration Statement to any purchaser
of the shares covered by the Registration Statement from the Holder.
7. ADDITIONAL SHARES. The Company, at its option, may register, under any
-----------------
Registration Statement and any filings with any state securities commissions
filed pursuant to this Agreement, any number of unissued shares of Common Stock
or any shares of Common Stock owned by any other shareholder or shareholders of
the Company.
8. UNDERWRITING REQUIREMENTS. In connection with any underwritten offering,
-------------------------
the Company shall not be required under Section 2(c) to include Registrable
Shares in such underwritten offering unless the Holders of such Registrable
Shares accept the terms of the underwriting of such offering that have been
reasonably agreed upon between the Company and the underwriters selected by the
Company.
9. NO OTHER OBLIGATION TO REGISTER. Except as otherwise expressly provided in
-------------------------------
this Agreement, the Company shall have no obligation to the Holders to register
the Registrable Shares under the Securities Act.
10. RULE 144 SALES. The Company covenants that it will use all commercially
--------------
reasonable efforts to timely file the reports required to be filed by the
Company under the Securities Act and the Securities Exchange Act of 1934, as
amended, so as to enable the Holders to sell Registrable Shares pursuant to Rule
144 under the Securities Act. In connection with any sale, transfer or other
disposition by a Holder of any Registrable Shares pursuant to Rule 144 under the
Securities Act, the Company shall cooperate with such Holder to facilitate the
timely preparation and delivery of certificates representing the Registrable
Shares to be sold and not bearing any Securities Act legend, and enable
certificates for such Registrable Shares to be for such number of shares and
registered in such names as such Holder may reasonably request at least ten (10)
business days prior to any sale of the Registrable Shares.
11. AMENDMENTS AND WAIVERS. The provisions of this Agreement, including the
----------------------
provisions of this sentence, may not be amended, modified, supplemented or
waived, nor may consent to departures therefrom be given, without the written
consent of the Company and the Holders of a majority of the outstanding
Registrable Shares. Notice of any such amendment, modification, supplement,
waiver or consent adopted in accordance with this Section 11 shall be provided
by the Company to each Holder of Registrable Shares at least thirty (30) days
prior to the effective date of such amendment, modification, supplement, waiver
or consent.
12. NOTICES. All notices and other communications provided for or permitted
-------
hereunder shall be made in writing by hand-delivery, registered first-class
mail, telex, telecopier, or any courier guaranteeing
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overnight delivery, (i) if to a Holder, at such Holder's registered address
appearing on the share register of the Company or (ii) if to the Company, at ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, with a copy to: ▇▇▇▇▇▇▇, Procter &
▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇.
▇▇▇▇, P.C.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; or at
the time delivered if delivered by an air courier guaranteeing overnight
delivery.
13. TRANSFER OF REGISTRATION RIGHTS. Except as otherwise provided herein, the
-------------------------------
rights to cause the Company to register the securities granted by the Company
under Section 2 may be assigned or otherwise conveyed to a transferee, assignee
or successor of Registrable Shares, who shall be considered a "Holder" for
purposes of this Agreement; provided that (i) such transfer is effected in
accordance with applicable federal and state securities laws, and (ii) the
Company is given written notice by such Holder of said transfer, stating the
name and address of said transferee, assignee or successor and identifying the
securities with respect to which such registration rights are being assigned.
14. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and
----------------------
be binding upon the successors, assigns and transferees of each of the parties,
including, without limitation and without the need for an express assignment,
subsequent Holders. If any successor, assignee or transferee of any Holder
shall acquire Registrable Shares, in any manner, whether by operation of law or
otherwise, such Registrable Shares shall be held subject to all of the terms of
this Agreement, and by taking and holding such Registrable Shares such Person
shall be entitled to receive the benefits hereof and shall be conclusively
deemed to have agreed to be bound by all of the terms and provisions hereof.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement except as expressly provided in this Agreement.
15. COUNTERPARTS. This Agreement may be executed in any number of counterparts
------------
and by the parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
16. GOVERNING LAW. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the Commonwealth of Massachusetts applicable to
contracts made and to be performed wholly within said State.
17. SEVERABILITY. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.
18. ENTIRE AGREEMENT. This Agreement is intended by the parties as a final
----------------
expression of their agreement and intended to be the complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
with respect to such subject matter. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first written above.
COMPANY:
MARYLAND PROPERTY CAPITAL TRUST, INC.
By:_________________________________
▇▇▇▇▇ ▇. ▇▇▇▇, President
HOLDERS:
FRAMINGHAM YORK ASSOCIATES LIMITED PARTNERSHIP
By:__________________________________
▇▇▇▇▇ ▇. ▇▇▇▇, as General Partner
By:__________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇, as General Partner
[OTHER SIGNATURE BLOCKS TO COME]
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Exhibit F to the Investment Agreement
-------------------------------------
FORM OF OPINION OF
▇▇▇▇, WEISS, RIFKIND, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ __________________, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ York Associates Limited Partnership
c/o The ▇▇▇▇ Companies
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
We have acted as special tax counsel to Property Capital Trust, a
Massachusetts Business Trust (the "Trust"), in connection with the Investment
Agreement, dated as of June __, 1998 (the "Investment Agreement"), by and among
the Trust, Property Capital Trust, Inc., a Maryland corporation (the "Company"),
and the Purchaser (as defined therein). Capitalized terms used herein and not
otherwise defined have the respective meanings specified in the Investment
Agreement. This opinion is being furnished to you pursuant to Section 5.2(d) of
the Investment Agreement.
In rendering the opinion expressed herein, we have examined the
Investment Agreement and the Agreement and Plan of Merger, dated as of June __,
1998, by and between the Trust and the Company.
In addition, we have examined the Declaration of Trust of the Trust,
dated June 9, 1969, and each amendment thereto, and such other documents,
records and instruments as we have deemed necessary in order to enable us to
render the opinion expressed herein.
In our examination of documents, we have assumed, without independent
investigation, that (i) all documents submitted to us are authentic originals,
or if submitted as photocopies, that they faithfully reproduce the originals
thereof; (ii) all such documents have been duly authorized and executed and each
document represents the entire agreement (including amendments) among the
parties with respect to the subject matter thereto; (iii) all representations
and statements set forth in such documents are true and correct; (iv) any
representation or
statement made as a belief or made "to the knowledge of," or similarly qualified
is correct and accurate without such qualification; and (v) all obligations
imposed by any such documents on the parties thereto have been or will be
performed or satisfied in accordance with their terms.
For purposes of rendering the opinion expressed herein, we have, with
your permission, assumed the accuracy of the representations contained in the
letter from the Trust addressed to us, dated __________, 1998, relating to the
organization, income, assets, distributions and ownership of the Trust and the
operation of the Trust as a real estate investment trust (a "REIT"), and relied
upon the officer's certificates and other certificates dated the date hereof
certifying that the representations in such letter from the Trust have continued
to be true and accurate until the date hereof.
Based upon the foregoing, and subject to the assumptions, exceptions
and qualifications set forth herein, we are of the opinion that, for the taxable
year of the Trust ended July 31, 1989 and at all times thereafter up to and
including the date of the disposition by the Trust of its ownership interest in
the Cincinnati Marriott, the Trust has qualified to be treated as a REIT within
the meaning of Sections 856 through 860 of the Code; including, without
limitation, the requirements of Section 856 and 857 of the Code; provided, that
--------
this opinion is made without regard to Section 856(c)(4)(B) of the Code, as such
provision was in effect prior to its removal from the Code pursuant to P.L. 105-
34.
This opinion is given as of the date hereof and is based on various
Code provisions, Treasury Regulations promulgated under the Code and
interpretations thereof by the Internal Revenue Service and the courts having
jurisdiction over such matters, all of which are subject to change either
prospectively or retroactively. Further, the Trust's qualification and taxation
as a REIT depends upon the Trust's ability to meet, through actual annual
operating results, requirements under the Code regarding its organization,
income, assets, distribution levels and diversity of stock ownership. Because
the Trust's satisfaction of these requirements for periods beginning after
December 31, 1997 will depend upon future events, no assurance can be given that
the actual results of the Trust's operations for its taxable year ending
December 31, 1998 will satisfy the tests necessary to qualify as or be taxed as
a REIT under the Code.
We express no opinion as to any federal income tax issue or other
matter except that set forth above.
This letter is furnished by us solely for your benefit in connection
with the transactions referred to in the Investment Agreement, and may not,
without our prior written consent, be circulated to, or relied upon by, any
other person except counsel for the Company.
Very truly yours,
▇▇▇▇, WEISS, RIFKIND, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
F-2