SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 16, 1998
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PROPERTY CAPITAL TRUST
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(Exact name of registrant as specified in its charter)
Massachusetts I-7003 04-2452367
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(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation)
101 Federal Street
Boston, Massachusetts 02110
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 737-0100
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
Page 1
This document consists of 21 pages.
The exhibit index is contained on page 5 of this document.
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Item 2. Acquisition or Disposition of Assets.
On June 17, 1998, the Board of Trustees (the "Trustees") of Property
Capital Trust, a Massachusetts Business Trust (the "Trust"), announced the sale
of its last real estate investment, the land underlying the Cincinnati Marriott
Inn, and the repayment of its two leasehold mortgages thereon. The Trust
received approximately $7,900,000 net proceeds from this transaction. As a
result, the Trustees declared an $.80 per Share (as defined herein) special
dividend (the "Special Dividend") payable on July 10, 1998 to shareholders of
record on July 1, 1998.
As reported previously, the American Stock Exchange (the "AMEX") will
halt trading in the Trust's Shares at the end of the day on Friday, July 10,
1998, as a result of the Trust's divestment of its last real estate investment.
It is unlikely that there will be a ready market to buy or sell the Trust's
Shares after such time.
Furthermore, because of the magnitude of the Special Dividend declared
by the Trustees and the expected halt of trading on the AMEX, the Trust's Shares
will not trade ex-dividend on the AMEX. Any shareholder of the Trust
("Shareholder") who sells its Shares on or before July 10, 1998 forfeits its
right to receive the Special Dividend.
A copy of the press release issued by the Trust announcing this
transaction is attached hereto as Exhibit 99.1 and is incorporated herein by
reference.
Item 5. Other Events.
On June 18, 1998, the Trustees announced that the Trust had entered
into an Agreement and Plan of Merger (the "Merger Agreement") with Maryland
Property Capital Trust, Inc., a Maryland Corporation ("the Corporation"),
pursuant to which the Trust will merge with and into the Corporation and the
Corporation shall be the surviving entity (the "Merger").
The Merger is conditioned upon, among other things, the approval of
two-thirds of the Trust's Shareholders.
As a result of the Merger, each share of beneficial interest, no par
value per share, of the Trust (a "Share") outstanding as of the Merger will be
converted into the right to receive, upon surrender of such Share, (i) a cash
payment equal to each Share's pro rata portion of all cash and cash equivalents
held by the Trust at the time of the Merger; (ii) one-sixtieth of a share of the
common stock, par value $.01 per share, of the Corporation; and (iii) each
Share's pro rata portion, less reasonable costs, of any additional amount
payable to the Corporation by the Department of Transportation of the State of
Florida as compensation for the taking of a portion of the Trust's property in
Aventura, Florida.
Page 2
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Simultaneously with the execution of the Merger Agreement, the Trust
and the Corporation entered into a series of related transactions (the "Related
Transactions") with affiliates of The Beal Companies, L.L.P., a Boston based
real estate development and investment company. These transactions will
culminate with a subsidiary of the Corporation merging with and into Beal
Properties Pine Hill Limited Partnership, a Massachusetts limited partnership
("BPPH"), (the "Final Merger"). BPPH, which will become a shareholder of the
Corporation pursuant to the Related Transactions, will be the surviving entity
of the Final Merger.
The consummation of each of these Related Transactions is conditioned
upon, among other things, the consummation of all of the Related Transactions.
The Merger Agreement and the Related Transactions will not affect the
AMEX's decision to halt trading of the Trust's Shares after the close of
business on July 10, 1998.
The Merger Agreement and a copy of the press release issued by the
Trust announcing these transactions are attached hereto as exhibits and are
incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(a) Exhibits.
2 Agreement and Plan of Merger, dated June 18, 1998, by and
between Property Capital Trust and Maryland Property Capital
Trust, Inc.
99.1 Press Release, dated June 17, 1998, of Property Capital Trust,
announcing the sale of its last real estate investment and the
leasehold mortgages thereon, the declaration of a special
dividend and the halt of trading on the American Stock
Exchange.
99.2 Press Release, dated June 18, 1998, of Property Capital Trust,
announcing the entering into of a series of related
transactions culminating in the merger of an affiliate of
Property Capital Trust with an affiliate of The Beal Companies,
L.L.P.
Page 3
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
PROPERTY CAPITAL TRUST
By: /s/ ROBERT M. MELZER
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Robert M. Melzer
President and Chief Executive Officer
Dated: June 29, 1998
Page 4
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EXHIBIT INDEX
PROPERTY CAPITAL TRUST
Exhibit
Number Description Page Number
- ------ ----------- -----------
2 Agreement and Plan of Merger, dated June
18, 1998, by and between Property Capital
Trust and Maryland Property Capital
Trust, Inc.
99.1 Press Release, dated June 17, 1998, of
Property Capital Trust, announcing the sale
of its last real estate investment and the
leasehold mortgages thereon, the
declaration of a special dividend and the
halt of trading on the American Stock
Exchange.
99.2 Press Release, dated June 18, 1998, of
Property Capital Trust, announcing the
entering into of a series of related
transactions culminating in the merger of
an affiliate of Property Capital Trust with
an affiliate of The Beal Companies, L.L.P.
Page 5
EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
by and between
PROPERTY CAPITAL TRUST
and
MARYLAND PROPERTY CAPITAL TRUST, INC.
Dated as of June 18, 1998
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TABLE OF CONTENTS
Page
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ARTICLE 1. THE MERGER......................................................2
Section 1.1 The Merger...................................................2
Section 1.2 The Closing..................................................3
Section 1.3 Effective Time...............................................3
ARTICLE 2. CHARTER AND BY-LAWS OF SURVIVING CORPORATION....................3
Section 2.1 Charter......................................................3
Section 2.2 By-laws......................................................3
ARTICLE 3. DIRECTORS AND OFFICERS OF SURVIVING CORPORATION.................3
Section 3.1 Directors....................................................3
Section 3.2 Officers.....................................................3
ARTICLE 4. EFFECT ON SECURITIES............................................4
Section 4.1 Conversion of Shares of the Trust............................4
Section 4.2 Exchange of Certificates Representing Shares.................6
ARTICLE 5. CONDITIONS TO CLOSING...........................................8
Section 5.1 Shareholder Approval.........................................8
Section 5.2 Investment Agreement.........................................8
Section 5.3 Merger Agreements............................................8
ARTICLE 6. INDEMNIFICATION.................................................8
Section 6.1 No modification..............................................8
Section 6.2 Indemnification..............................................8
Section 6.3 Additional coverage.........................................10
Section 6.4 Third-party rights..........................................10
ARTICLE 7. TERMINATION....................................................10
ARTICLE 8. MISCELLANEOUS..................................................10
Section 8.1 Entire Agreement............................................10
Section 8.2 Succession and Assignment; Third-Party Rights...............10
Section 8.3 Counterparts................................................10
Section 8.4 Headings....................................................11
Section 8.5 Governing Law...............................................11
Section 8.6 Amendments..................................................11
Section 8.7 Severability................................................11
Section 8.8 Expenses....................................................11
Section 8.9 Service of Process..........................................11
Section 8.10 Exculpation.................................................11
(i)
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER dated as of June 18, 1998 (including
all exhibits, hereinafter referred to as this "Agreement") is made and entered
into by and between Property Capital Trust, a Massachusetts business trust (the
"Trust"), and Maryland Property Capital Trust, Inc., a Maryland corporation (the
"Corporation").
RECITALS
A. The Trust was organized pursuant to a Declaration of Trust dated
June 9, 1969 (as amended and restated, the "Declaration of Trust").
B. Section 3.1 of the Declaration of Trust provides that the Trustees
serving under said Declaration of Trust
"without other or further authorization, shall have the
absolute power and exclusive control, management and authority
over the Trust Property, the disposition of the Trust Property
and the conduct of the business of the Trust, to the same
extent as if the Trustees were the sole owners of the Trust
Property and the sole persons interested in the Trust in their
own right, subject only to the limitations expressly stated in
this Declaration. Such powers may be exercised without order
of or resort to any court or to the Shareholders. Without
restricting or limiting the generality of the foregoing
powers, authority and discretion conferred by this Declaration
or which the Trustees may have by law, the Trustees shall have
power:
F. To acquire by purchase or otherwise, or to organize under
the laws of any jurisdiction, one or more corporations,
associations, trusts or other business entities, and, subject
to Sections 10.1, 10.2 and 10.3 herein, to dissolve,
terminate, reorganize or liquidate the Trust or any business
entity acquired or organized hereunder, to merge or
consolidate the Trust with any business entity and to merge or
consolidate any business entity with the Trust."
C. The Trustees presently serving under the Declaration of Trust (the
"Trustees") have determined that it is in the interest of the Trust and of the
shareholders of the Trust that the business heretofore conducted by the Trust be
conducted by, and the properties and assets of the Trust (subject to all of the
liabilities and obligations of the Trust) be owned by, a corporate entity in
which the shareholders of the Trust will, immediately following such
reorganization, have the same pro rata interest as stockholders of said
corporation as such shareholders have as shareholders of the Trust.
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D. The Trustees of the Trust have determined that a corporation
organized under the Maryland General Corporation Law (the "MGCL") is a proper
and advantageous form of corporate entity to carry on the business of the Trust.
E. The Trustees have caused the organization of the Corporation, which
is a qualified REIT subsidiary, under the MGCL and the Corporation currently has
100 shares of common stock outstanding, all of which are owned and held by the
Trust.
F. The consummation of the Merger (as defined below) is conditioned
upon approval of the holders of two-thirds of the shares of beneficial interest
of the Trust.
G. A special meeting of the shareholders of the Trust shall be called
by the President of the Trust on such day and at such time and place as he
determines, for the purpose of approving the Merger (as defined below) pursuant
to this Agreement and for such other business as he may determine is appropriate
to be considered at such meeting.
H. The appropriate officers and representatives of the Trust shall
prepare and file with the Securities and Exchange Commission and distribute to
shareholders of the Trust notice of and a proxy statement with respect to such
special meeting of shareholders in combination with, if appropriate, a
prospectus relating to the shares of stock of the Corporation to be issued in
exchange for shares of the Trust.
I. Contemporaneously with the execution of this Agreement, the
Corporation and the Trust have entered into an Investment Agreement (the
"Investment Agreement") with the Purchasers (as such term is defined therein)
which provides for, subject to the consummation of the Merger (as defined
below), the purchase of (i) 331,672 shares of common stock of the Corporation
and (ii) the number of Additional Shares (as such term is defined in the
Investment Agreement), by the Purchasers at a price of $3.31653 per share.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Trust and the Corporation hereby agree as
follows:
ARTICLE 1. THE MERGER
Section 1.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 1.3 hereof), the Trust
shall be merged with and into the Corporation in accordance with this Agreement
and the separate existence of the Trust shall thereupon cease (the "Merger").
The Corporation shall be the surviving entity in the Merger and shall change its
name to "Property Capital Trust, Inc." (sometimes hereinafter referred to as the
"Surviving Corporation"). The Merger shall have the effects specified in Section
3-114 of the MGCL.
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Section 1.2 The Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place (a) at the
offices of Goodwin, Procter & Hoar, Exchange Place, Boston, Massachusetts 02109
at 9:59 a.m., local time, on the business day on which the last of the
conditions set forth in Article 5 shall be fulfilled or waived in accordance
herewith or (b) at such other time, date or place as the parties hereto may
agree. The date on which the Closing occurs is hereinafter referred to as the
"Closing Date."
Section 1.3 Effective Time. If all the conditions to the Merger set
forth in Article 5 shall have been fulfilled or waived in accordance herewith
and this Agreement shall not have been terminated as provided in Article 7, the
parties hereto shall cause Articles of Merger satisfying the requirements of the
MGCL to be properly executed, verified and delivered for filing in accordance
with the MGCL on the Closing Date. The Merger shall become effective upon the
acceptance for record of the Articles of Merger by the State Department of
Assessments and Taxation of Maryland in accordance with the MGCL or at such
later time which the parties hereto shall have agreed upon and designated in
such filing in accordance with applicable law as the effective time of the
Merger (the "Effective Time").
ARTICLE 2. CHARTER AND BY-LAWS OF SURVIVING CORPORATION
Section 2.1 Charter. The Charter (as defined in the MGCL) of the
Corporation in effect immediately prior to the Effective Time shall be the
Charter of the Surviving Corporation, until duly amended in accordance with
applicable law.
Section 2.2 By-laws. The By-laws of the Corporation in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Corporation, until duly amended in accordance with applicable law.
ARTICLE 3. DIRECTORS AND OFFICERS OF SURVIVING CORPORATION
Section 3.1 Directors. The directors of the Surviving Corporation in
office at and as of the Effective Time to serve for terms expiring at the annual
meeting of shareholders of the Surviving Corporation held in the calendar year
indicated shall be those persons identified below:
1999 2000 2001
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Bruce A. Beal Robert L. Beal Michael A. Manzo
Christopher H. Browne Scott Bessent
Section 3.2 Officers. The officers of the Surviving Corporation in
office at and as of the Effective Time to serve until their successors have been
duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the charter and the by-laws of the
Surviving Corporation shall be those persons identified below:
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Bruce A. Beal, President
Michael A. Manzo, Treasurer
Robert L. Beal, Secretary
ARTICLE 4. EFFECT ON SECURITIES
Section 4.1 Conversion of Shares of the Trust.
(a) At the Effective Time, each share of beneficial interest,
no par value per share, of the Trust (the "Shares") outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the Trust, the Corporation or the holders of any of the
securities of either entity, be converted into the right to receive (i) a cash
payment equal to the quotient obtained by dividing the sum of (x) all cash and
cash equivalents held by the Trust on the Effective Date, including rent and
interest received in respect of the land underlying the Cincinnati Marriott and
the subordinate leasehold mortgages thereon (the "Cincinnati Property"), and (y)
the proceeds from the sale of the Cincinnati Property, if such property is sold
by the Effective Date but the proceeds of such sale have not been distributed,
net of all expenses reasonably related thereto except overhead and similar
expenses, by the number of shares of the Trust outstanding on the Effective Date
(together, the "Cash Consideration"); (ii) one-sixtieth of a share of the common
stock, par value $.01 per share, of the Corporation (the "Corporation Common
Stock") and (iii) one Contingent Payment Right (as defined below) (the Cash
Consideration, the Corporation Common Stock and the Contingent Payment Right are
collectively referred to as the "Merger Consideration").
(b) A "Contingent Payment Right" represents the right of a
shareholder of the Trust (who is such immediately prior to the Effective Time)
to receive such shareholder's pro-rata share (based on the number of shares of
the Trust held by such shareholder immediately prior to the Effective Time) of
the sum of (x) the net proceeds (as such are described in subsection (a)) from
the sale of the Cincinnati Property, if such sale is effected on or after the
Effective Date, and (y) the amount payable to the Trust or the Corporation,
subject to reduction for reasonably related costs (other than overhead and
similar expenses), by the Department of Transportation of the State of Florida
as compensation for the taking of a portion of Loehmann's Fashion Island located
in Aventura, Florida, less any expenses incurred by the Holders' Representative
as set forth in the following paragraph (such sum hereinafter referred to as the
"Contingent Payment"). Immediately prior to the Effective Time, the Trust will
assign all of its rights to the Contingent Payment to an escrow agent (the
"Escrow Agent") and provide such Escrow Agent with a list of shareholders of the
Trust entitled to Contingent Payment Rights as of the Effective Time. The Escrow
Agent, promptly after its receipt of any distributions in respect of such
Contingent Payment, will distribute such distributions, net of any fees of such
Escrow Agent and net of such Escrow Agent's costs and expenses in acting as
escrow agent, pro rata to the holders of Contingent Payment Rights. The rights
of the holders of the Contingent Payment Rights to receive funds from the Escrow
Agent shall be represented by the Escrow Agreement (the "Escrow Agreement") to
be executed by and between the Trust
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and the Escrow Agent. The Contingent Payment Rights will not be assignable or
transferable except by operation of law and will not be evidenced by any
certificate or other instrument. The Contingent Payment Rights will not pay any
dividends or bear any stated rate of interest and will have no voting or other
rights. The Contingent Payment Rights will represent only the contingent right
to receive a pro rata portion of the Contingent Payment as described in this
Section 4.1(b).
By approving the Merger, the recipients of Contingent Payment Rights
designate Robert M. Melzer as their representative (the "Holders'
Representative") and authorize him to take all action necessary in connection
with the distribution of the Contingent Payment, or the settlement of any
dispute related thereto. All decisions and actions by the Holders'
Representative shall be binding upon all of the holders of Contingent Payment
Rights, and no Holder shall have the right to object, dissent, protest or
otherwise contest the same. The Surviving Corporation shall be able to rely
conclusively on the instructions and decisions of the Holders' Representative as
to any actions required or permitted to be taken by the holders of Contingent
Payment Rights or the Holders' Representative hereunder, and no holder of
Contingent Payment Rights hereunder shall have any cause of action against the
Surviving Corporation for any action taken by the Surviving Corporation in
reliance upon the instructions or decisions of the Holders' Representative. All
expenses incurred by the Holders' Representative in connection with the
collection of amounts from the State of Florida and the distribution of the
Contingent Payment shall be deducted from the Contingent Payment before the
Contingent Payment is distributed to the holders of the Contingent Payment
Rights and such amount shall be used to reimburse the Holders' Representative
for such expenses. In addition, the Holders' Representative shall be
indemnified, to the extent permitted by the Charter of the Surviving
Corporation, by the Surviving Corporation for all loss, expense or liability
(including reasonable attorney's fees and expenses) that (i) prior to the
distribution of the Contingent Payment, exceeds the amount of the Contingent
Payment and (ii) following the distribution of the Contingent Payment, arises
out of or in connection with such distribution to the extent and in the same
manner as if the Holders' Representative was acting as an officer of the
Surviving Corporation. The Holders' Representative shall be deemed to be an
express third party beneficiary of the provisions of this Section 4.1(b).
(c) As a result of the Merger and without any action on the
part of the holder thereof, at the Effective Time, all Shares of the Trust shall
cease to be outstanding, shall be canceled and retired and shall cease to exist
and each holder of a certificate representing any Shares shall thereafter cease
to have any rights with respect to such Shares, except the right to receive,
without interest, the Merger Consideration and cash in lieu of fractional shares
of Corporation Common Stock in accordance with Sections 4.1(a), 4.1(b) and
4.2(e) upon the surrender of such certificate.
(d) Each outstanding option to purchase Shares of the Trust
shall be either exercised and exchanged for Shares of the Trust prior to the
Effective Time or canceled in accordance with its terms prior to the Effective
Time. The provisions in any plan, program or
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arrangement providing for the issuance or grant of any interest in respect of
the Shares of the Trust shall be canceled as of the Effective Time.
(e) Each Share issued and held in the Trust's treasury at the
Effective Time, if any, by virtue of the Merger, shall cease to be outstanding,
shall be canceled and retired and shall cease to exist and no payment of any
consideration shall be made with respect thereto.
(f) At the Effective Time, each share of Corporation Common
Stock issued and outstanding immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of the Corporation or
the holder of such shares, be canceled and retired without payment of any
consideration therefor.
Section 4.2 Exchange of Certificates Representing Shares.
(a) As of the Effective Time, the Corporation shall deposit,
or shall cause to be deposited, with an exchange agent selected by the
Corporation on or prior to the Effective Time (the "Exchange Agent"), for the
benefit of the holders of Shares, for exchange in accordance with this Article
4, certificates representing the shares of Corporation Common Stock, the Cash
Consideration and cash in lieu of fractional shares of Corporation Common Stock
(such cash and certificates being hereinafter referred to as the "Exchange
Fund") to be issued pursuant to Section 4.1 and paid pursuant to this Section
4.2 in exchange for outstanding Shares.
(b) Promptly after the Effective Time, the Corporation shall
cause the Exchange Agent to mail to each holder of record of a certificate or
certificates representing Shares (i) a letter of transmittal which shall specify
that delivery shall be effected, and risk of loss and title to such certificates
shall pass, only upon delivery of such certificates to the Exchange Agent and
shall be in such form and have such other provisions as the Corporation may
reasonably specify, (ii) any other required documents, (iii) instructions for
use in effecting the surrender of such certificates in exchange for certificates
representing shares of Corporation Common Stock, the Cash Consideration and cash
in lieu of fractional shares, (iv) a description of the Contingent Payment Right
and (v) a description of the Escrow Agreement. Upon surrender of a certificate
representing Shares for cancellation to the Exchange Agent together with such
letter of transmittal, duly executed and completed in accordance with the
instructions thereto, the holder of such certificate shall be entitled to
receive in exchange therefor (x) a certificate representing the number of whole
shares of Corporation Common Stock to which such holder shall be entitled and
(y) a check representing the Cash Consideration and the amount of cash in lieu
of fractional shares, plus the amount of any dividends, or distributions, if
any, pursuant to paragraph (c) below, after giving effect to any required
withholding tax, and the certificate for Shares so surrendered shall forthwith
be canceled. No interest will be paid or accrued on the cash in lieu of
fractional shares or on the dividend or distribution, if any, payable to holders
of certificates representing Shares pursuant to this Section 4.2. In the event
of a transfer of ownership of Shares which is not registered in the transfer
records of the Trust, a certificate representing the proper number of shares of
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Corporation Common Stock, together with a check for the Cash Consideration and
the cash to be paid in lieu of fractional shares plus, to the extent applicable,
the amount of any dividend or distribution, if any, payable pursuant to
paragraph (c) below, may be issued to such a transferee if the certificate
representing Shares of the Trust is presented to the Exchange Agent, accompanied
by all documents required to evidence and effect such transfer and to evidence
that any applicable stock transfer taxes have been paid.
(c) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions on Corporation Common Stock shall be paid with
respect to any Shares represented by a certificate until such certificate is
surrendered for exchange as provided herein; provided, however, that subject to
the effect of applicable laws, following surrender of any such certificate,
there shall be paid to the holder of the certificates representing whole shares
of Corporation Common Stock issued in exchange therefor, without interest, (i)
at the time of such surrender, the amount of dividends or other distributions
with a record date after the Effective Time theretofore payable with respect to
such whole shares of Corporation Common Stock and not paid, less the amount of
any withholding taxes which may be required thereon, and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of Corporation Common Stock,
less the amount of any withholding taxes which may be required thereon.
(d) At and after the Effective Time, there shall be no
transfers on the stock transfer books of the Trust of the Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, certificates representing Shares are presented to the Surviving
Corporation, they shall be canceled and exchanged for certificates for shares of
Corporation Common Stock and cash in lieu of fractional shares in accordance
with this Section 4.2.
(e) No fractional shares of Corporation Common Stock shall be
issued pursuant hereto. In lieu of the issuance of any fractional share of
Corporation Common Stock pursuant to Section 4.1(a), each holder of Shares upon
surrender of a certificate for exchange shall be paid an amount in cash (without
interest), equal to the product of (i) the fraction of a share of Corporation
Common Stock which such holder would otherwise be entitled to receive under this
Article 4 and (ii) $3.13.
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ARTICLE 5. CONDITIONS TO CLOSING
The respective obligations of the Trust and the Corporation to
consummate the Merger are subject to the following conditions:
Section 5.1 Shareholder Approval. This Agreement shall be approved (i)
by the holders of two-thirds of the Shares of beneficial interest of the Trust
and (ii) by the Trust as sole stockholder of the Corporation, in accordance with
applicable law and the charter and the by-laws of the Corporation.
Section 5.2 Investment Agreement. The Investment Agreement shall have
been executed by all parties thereto.
Section 5.3 Merger Agreements. The following agreements shall have been
executed: (i) Contribution and Merger Agreement by and between Framingham York
Associates Limited Partnership, a Massachusetts limited partnership ("FYA"), and
Beal Properties Pine Hill Limited Partnership, a Massachusetts limited
partnership ("BPPH"), pursuant to which FYA shall merge into BPPH and (ii)
Contribution and Merger Agreement by and between Property Capital Trust, L.P., a
Massachusetts limited partnership ("PCT LP"), and BPPH pursuant to which PCT LP
shall merge into BPPH.
Section 5.4 Satisfaction of Obligations. Prior to the Effective Time,
the Trust shall have satisfied all obligations of the Trust related to (i) the
bonus plans, compensation plans and other employee benefit plans listed on
Schedule 3.17 of the Investment Agreement and (ii) any out of pocket expenses
incurred by the Trust in connection with the transactions contemplated hereunder
and under the other Transaction Documents that are not reimbursable pursuant to
Section 11.10 of the Investment Agreement. In the event cash and cash
equivalents held by the Trust as of the Effective Time are insufficient to
satisfy such obligations of the Trust, the Contingent Payment shall be reduced
by the amount of such obligations.
ARTICLE 6. INDEMNIFICATION
Section 6.1 No modification. The Surviving Corporation's Charter and
the Surviving Corporation's By-laws and the operating partnership agreement (the
"Partnership Agreement") of PCT LP shall contain provisions with respect to
indemnification, which provisions shall not be amended, repealed or otherwise
modified for a period of six (6) years from the Effective Time in any manner
that would adversely affect the rights thereunder of individuals who at or
before the Effective Time were trustees, officers, employees, shareholders or
agents of the Trust, unless such modification is required by law.
Section 6.2 Indemnification. The Surviving Corporation, to the fullest
extent permitted under the Surviving Corporation's Charter or the Surviving
Corporation's By-laws, and PCT LP, to the fullest extent permitted under the
Partnership Agreement, shall indemnify
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and hold harmless, each present and former trustee, officer, employee or
shareholder (in connection with the affairs of the Trust) of the Trust
(collectively, the "Indemnified Parties") against any costs or expenses
(including attorneys fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, (i) arising out of or pertaining to the transactions contemplated
by this Agreement or (ii) otherwise with respect to any acts or omissions
occurring at or prior to the Effective Time for a period of six (6) years after
the date hereof. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (x) the
Surviving Corporation shall promptly pay expenses in advance of the final
disposition of any claim, suit, proceeding or investigation to each Indemnified
Party to the fullest extent permitted by law, (y) at its election, the Surviving
Corporation shall be entitled to control the defense of any claim, suit,
proceeding or investigation, provided that the Surviving Corporation shall
acknowledge liability to the Indemnified Party for such claim, suit, proceeding
or investigation under this Section 6.2, and, to the extent the Surviving
Corporation so elects, it may select the counsel for such purpose (provided that
such counsel shall be reasonably satisfactory to the Indemnified Party and that
the Indemnified Party shall have the right to employ separate counsel, but the
fees and expenses of such counsel shall be at the Indemnified Party's expense
unless in such claim or action the Indemnified Party reasonably concludes, based
upon advice of legal counsel, that there is a conflict between the positions of
the Surviving Corporation and the Indemnified Party, or between the Indemnified
Party and other Indemnified Parties that would preclude or render inadvisable
joint or multiple representation of such parties, in which case if the
Indemnified Party notifies the Surviving Corporation, the Surviving Corporation
shall not have the right to assume such defense of such action on behalf of the
Indemnified Party and the Surviving Corporation shall pay the reasonable fees
and expenses of counsel for the Indemnified Party; provided, however, that the
Surviving Corporation shall not be required to pay the fees and expenses of more
than one separate counsel for all Indemnified Parties unless there is under
applicable standards of professional conduct, a conflict between the positions
of any two or more Indemnified Parties that would preclude or render inadvisable
joint or multiple representation of such parties). Any Indemnified Party wishing
to claim indemnification under this Section 6.2, upon learning of any such
claim, action, suit, proceeding or investigation, shall notify the Surviving
Corporation thereof, provided that the failure to so notify shall not affect the
obligations of the Surviving Corporation except to the extent such failure to
notify materially prejudices such party; and (z) the Indemnified Parties and the
Surviving Corporation will cooperate in the defense of any such matter;
provided, however, that the Surviving Corporation shall not be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld) and the Surviving Corporation shall not enter into a
settlement without the consent of the Indemnified Party unless such settlement
contains complete exoneration of the Indemnified Party; and provided; further,
that in the event that any claim or claims for indemnification are asserted or
made within such ten-year period, all rights to indemnification in respect of
any such claim or claims shall continue until the disposition of any and all
such claims.
9
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Section 6.3 Additional coverage. At or prior to the Effective Time, the
Corporation shall purchase or keep in effect directors' and officers' liability
insurance coverage for the Trust's trustees and officers in a form reasonably
acceptable to the Trust which shall provide such Trustees and officers with
so-called tail or other coverage for six (6) years following the Effective Time
of not less than the existing coverage under, and have other terms not
substantially less favorable to the insured persons than, the directors' and
officers' liability insurance coverage presently maintained by the Trust.
Section 6.4 Third-party rights. This Article 6 is intended for the
irrevocable benefit of, and to grant third party rights to, the Indemnified
Parties and shall be binding on all successors and assigns of the Surviving
Corporation. Each of the Indemnified Parties shall be entitled to enforce the
covenants contained in this Article 6. The provisions for indemnification
contained in this Section Article 6 are not intended to be exclusive and are
without prejudice to any other rights to indemnification or advancement of funds
which any Indemnified Party may otherwise have.
ARTICLE 7. TERMINATION
The parties may terminate this Agreement by mutual written consent at
any time prior to the Effective Time. Upon such termination, no party hereunder
shall have any further rights or obligations pursuant to this Agreement.
ARTICLE 8. MISCELLANEOUS
Section 8.1 Entire Agreement. 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.
Section 8.2 Succession and Assignment; Third-Party Rights. 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. Except as
expressly provided in Article 6 and Section 4.1(b), 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.
Section 8.3 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.
10
<PAGE>
Section 8.4 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.
Section 8.5 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.
Section 8.6 Amendments. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by both parties.
Section 8.7 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.
Section 8.8 Expenses. Subject to Section 11.10 of the Investment
Agreement, each of the parties will bear its own costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby.
Section 8.9 Service of Process. The Corporation may be served with
process in the State of Maryland in any proceeding for the enforcement of any
obligation of the Trust, as well as for enforcement of any obligations of the
Corporation arising from the Merger, and it does hereby irrevocably appoint the
Secretary of State of the State of Maryland as its agent to accept service of
process in any such suit or other proceedings. The address to which a copy of
such process shall be mailed by the Secretary of State to the Corporation is 101
Federal Street, Boston, MA 02110.
Section 8.10 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.
11
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
as of the date first above written.
PROPERTY CAPITAL TRUST
By: /s/ Robert M. Melzer
--------------------
Robert M. Melzer, President and
Chief Executive Officer
MARYLAND PROPERTY CAPITAL
TRUST, INC.
By: /s/ Bruce A. Beal
-----------------
Bruce A. Beal, President
12
EXHIBIT 99.1
NEWS RELEASE
- --------------------------------------------------------------------------------
PROPERTY CAPITAL TRUST
Contact:
Robert M. Melzer, President
and Chief Executive Officer
617/737-0100
PROPERTY CAPITAL TRUST SELLS LAST INVESTMENT AND DECLARES DIVIDEND
BOSTON, JUNE 17, 1998--Property Capital Trust (ASE-PCT) announced today that its
last real estate investment, the land underlying the Cincinnati Marriott Inn,
has been sold and its two leasehold mortgages on the hotel have been repaid. The
net proceeds from this transaction were approximately $7,900,000.
As a result of the sale, the Trustees have declared an $.80 per share special
dividend payable on July 10, 1998 to shareholders of record on July 1, 1998.
This special dividend brings to $13.65 per share the total amount of dividends
declared from the proceeds of sales since the 1995 announcement of the Trust's
business plan to dispose of its investments.
Robert M. Melzer, President of the Trust, also reported that the previously
announced merger negotiations with an unrelated third party are continuing but
that no definitive agreement has been entered into and no assurance can be made
that such an agreement will be executed. However, as the Trust has disposed of
all of its real estate investments, the American Stock Exchange has determined
that the last day for trading the Trust's Common Shares on the AMEX will be
Friday, July 10, 1998. Shareholders should understand that after that time it is
unlikely that there will be a ready market to buy or sell the Trust's Common
Shares. Further, even if the merger negotiations are successful, there is no
assurance that trading on the AMEX will resume.
Because of the magnitude of the dividend declared today in relation to the
Trust's share price and the halting of trading after July 10, the Trust's shares
will not trade ex-dividend on the American Stock Exchange. Shareholders are
advised that if they sell their shares on or before July 10, they will
relinquish their right to receive the $.80 dividend.
- --------------------------------------------------------------------------------
101 Federal Street, Boston, Massachusetts 02110-1817 - Phone 617/737-0100 - Fax
617/737-0228
EXHIBIT 99.2
NEWS RELEASE
- --------------------------------------------------------------------------------
PROPERTY CAPITAL TRUST
Contact:
Robert M. Melzer, President
and Chief Executive Officer
617/737-0100
PROPERTY CAPITAL TRUST ANNOUNCES PLAN TO MERGE
BOSTON, JUNE 18, 1998--Property Capital Trust (ASE-PCT) announced today that the
Trust has entered into an agreement to merge with an affiliate of The Beal
Companies, LLP, a Boston based real estate development and investment company.
The merger is subject to the approval of the Trust's shareholders and, if
approved, is expected to close in September 1998. Immediately before the
closing, the Trust expects to distribute to its then existing shareholders
substantially all of its net worth, which is estimated to be $.23 per share.
Following the closing, such existing shareholders will retain only a nominal
interest in the Trust, which at that point will hold only those assets
contributed by the new controlling shareholders. In addition, such existing
shareholders will be entitled to receive the net proceeds from litigation
currently underway to determine the full compensation due for certain land that
was condemned at Loehmann's Fashion Island prior to its sale (which amount is
not expected to exceed $.10 per share and, in fact, might be nothing). The
entering into of the merger agreement will not affect the American Stock
Exchange's decision to halt trading of the Trust's Common Shares after July 10,
1998.
- --------------------------------------------------------------------------------
101 Federal Street, Boston, Massachusetts 02110-1817 - Phone 617/737-0100 - Fax
617/737-0228
