EXHIBIT 10.3
__________ AMENDMENT TO AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
BRANDYWINE OPERATING PARTNERSHIP, L.P.
THIS ________ AMENDMENT, dated as of _________, 1998 (the
"Amendment"), amends the Amended and Restated Agreement of Limited Partnership
Agreement (as heretofore amended to date, the "Partnership Agreement") of
BRANDYWINE OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (the
"Partnership"). Capitalized terms used herein but not defined herein shall
have the meanings given to such terms in the Partnership Agreement.
BACKGROUND
Pursuant to the Partnership Agreement, Brandywine Realty
Trust (the "General Partner"), as the general partner of the Partnership, has
the power and authority to issue additional Partnership Interests and Units in
one or more newly created classes of Partnership Interests to persons on such
terms and conditions as the General Partner may deem appropriate.
The General Partner, pursuant to the exercise of such power
and authority and in accordance with the Partnership Agreement, has determined
to execute this Amendment to the Partnership Agreement to create a new class
of Partnership Interests to be designated as Series B Preferred Units and to
evidence the issuance of such additional Partnership Interests and the
admission of the other signatories hereto as Limited Partners of the
Partnership in exchange for certain contributions of interests in real estate
and real estate related assets that are being made to the Partnership on the
date hereof pursuant to that certain Purchase and Contribution Agreement,
dated as of ________ , 1998, among the Partnership and the other signatories
thereto.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby amend the Partnership
Agreement as follows:
1. In accordance with the Partnership Agreement, the
Partnership Agreement is hereby amended to establish, and to issue to the
Persons set forth on Schedule A attached hereto, the Series B Preferred Units
having the designations, preferences and other rights set forth below:
A. Designation and Number. A class of Partnership
Interests designated as Series B Preferred Units is hereby established. The
number of Series B Preferred Units shall be ________ . The stated value of a
Series B Preferred Unit shall be $50.00 (the "Stated Value").
B. Rank. The Series B Preferred Units shall, with respect
to distribution rights and rights upon liquidation, dissolution or winding up
of the Partnership, rank (i) senior to the Class A Units and to all
Partnership Interests ranking junior to the Series B Preferred Units; (ii) on
a parity with all Partnership Interests issued by the Partnership the terms of
which specifically provide that such Partnership Interests rank on a parity
with the Series B Preferred Units including the Partnership Interests
designated as Series A Preferred Mirror Units; and (iii) junior to all
Partnership Interests the terms of which specifically provide that such
Partnership Interests rank junior to the Series B Partnership Units.
C. Distributions.
(i) Pursuant to Section 6.1 of the Partnership
Agreement, the holders of Series B Preferred Units shall be entitled to
receive, out of funds legally available for that purpose, cumulative
distributions payable in cash in an amount per Series B Preferred Unit equal
to the greater of (a) $0.9063 per quarter (equivalent to $3.625 per annum) or
(b) the cash distributions paid or payable on the number of Class A Units, or
portion thereof, into which a Series B Preferred Unit is convertible, in each
case with appropriate proration for partial quarters. The amount referred in
clause (b) of this subsection C(i) with respect to each Distribution Period
(as defined in subsection J below) shall be determined as of the applicable
Distribution Payment Date (as defined in subsection J below) by multiplying
the number of Class A Units, or portion thereof calculated to the fourth
decimal point, into which a Series B Preferred Unit would be convertible at
the opening of business on such Distribution Payment Date (based on the
Conversion Price (as defined in subsection G below) then in effect) by the
quarterly cash distribution payable or paid by the Partnership for such
Distribution Period in respect of a Class A Unit outstanding as of the record
date for the payment of distributions on the Class A Units with respect to
such Distribution Period or, if different, with respect to the most recent
quarterly period for which distributions with respect to the Class A Units
have been declared by the Partnership. Such distributions shall be cumulative
from the Issue Date (as defined in subsection J below), whether or not in any
Distribution Period or Periods such distributions shall be authorized or there
shall be funds of the Partnership legally available for the payment of such
distributions, and shall be payable quarterly in arrears on the Distribution
Payment Dates, commencing on the first Distribution Payment Date after the
Issue Date. Each such distribution shall be payable in arrears to the holders
of record of the Series B Preferred Units, as they appear on the records of
the Partnership at the close of business on a record date which shall be not
less than 10 and not more than 60 days prior to the applicable Distribution
Payment Date and shall be fixed by the Partnership, acting through the General
Partner, to coincide with the record date for the regular quarterly
distributions, if any, payable by the Partnership with respect to the Class A
Units. Accumulated, accrued and unpaid distributions for any past Distribution
Periods may be authorized and paid at any time, without reference to any
regular Distribution Payment Date, to holders of record on a given date, which
date shall not precede by more than 45 days the payment date thereof, as may
be fixed by the Partnership, acting through the General Partner. The amount of
accumulated, accrued and unpaid distributions on any Series B Preferred Unit,
or fraction thereof,
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at any date shall be the amount of any distributions thereon calculated at the
applicable rate to and including such date, whether or not earned or
authorized, which have not been paid in cash. The amount of distributions
payable per Series B Preferred Unit for the initial Distribution Period, or
any other period shorter or longer than a full Distribution Period, shall be
computed ratably on the basis of four 90-day quarters and a 364-day year.
(ii) No distribution on the Series B Preferred Units
shall be authorized or paid or set apart for payment by the Partnership at
such time as the terms and provisions of any agreement of the Partnership,
including any agreement relating to its indebtedness, prohibits such
authorization, payment or setting apart for payment or provides that such
authorization, payment or setting apart for payment would constitute a breach
thereof, or a default thereunder, or if such authorization or payment shall be
restricted or prohibited by law. No interest, or sum of money in lieu of
interest, shall be payable in respect of any distribution payment or payments
on the Series B Preferred Units which may be in arrears.
Notwithstanding the foregoing, distributions on the Series B
Preferred Units shall accumulate whether or not any of the foregoing
restrictions exist, whether or not there are funds legally available for the
payment thereof and whether or not such distributions are authorized.
Accumulated but unpaid distributions on the Series B Preferred Units shall not
bear interest and holders of the Series B Preferred Units shall not be
entitled to any distributions in excess of full cumulative distributions. Any
distribution payment made on the Series B Preferred Units shall first be
credited against the earliest accumulated but unpaid distribution due with
respect to such Series B Preferred Units which remains payable.
(iii) Except as provided in subsection C(iv) below, no
distributions (other than in Class A Units or Partnership Interests ranking
junior to the Series B Preferred Units as to distributions and upon
liquidation, dissolution or winding up of the Partnership) shall be authorized
or paid or set aside for payment nor shall any other distribution be
authorized or made upon the Class A Units or any other Partnership Interests
ranking, as to distributions or upon liquidation, dissolution or winding up of
the Partnership, on a parity with or junior to the Series B Preferred Units
for any period unless full cumulative distributions have been or
contemporaneously are authorized and paid or authorized and a sum sufficient
for the payment thereof set apart for such payment on the Series B Preferred
Units for all past distribution periods and the then current distribution
period, nor shall any Class A Units, or any Partnership Interests ranking
junior to or on a parity with the Series B Preferred Units as to distributions
or upon liquidation, dissolution or winding up of the Partnership, be
redeemed, purchased or otherwise acquired for any consideration (or any monies
be paid to or made available for a sinking fund for the redemption of any such
Partnership Interests) by the Partnership or any other entity controlled
directly or indirectly by the Partnership (except by conversion into or
exchange for Partnership Interests ranking junior to the Series B Preferred
Units as to distributions and upon liquidation, dissolution or winding up of
the Partnership or for the repurchase of Class A Units held by employees,
officers or consultants of the
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Partnership (or their permitted transferees) that are subject to restrictive
share purchase agreements under which the Partnership has the option or
obligation to repurchase such shares upon the occurrence of certain events,
such as termination of employment).
(iv) When distributions are not paid in full (or a sum
sufficient for such full payment is not so set apart) upon the Series B
Preferred Units and any other Partnership Interests ranking on a parity as to
distributions with the Series B Preferred Units, all distributions authorized
with respect to the Series B Preferred Units and any other Partnership
Interests ranking on a parity as to distributions with the Series B Preferred
Units shall be authorized pro rata so that the amount of distributions
authorized with respect to the Series B Preferred Units and such other
Partnership Interests shall in all cases bear to each other the same ratio
that accumulated distributions with respect to the Series B Preferred Units
and such other Partnership Interests (which shall not include any accumulation
in respect of unpaid distributions for prior distribution periods if such
Partnership Interests do not have a cumulative distribution) bear to each
other.
(v) Holders of Series B Preferred Units shall not be
entitled to any distribution, whether payable in cash, property or shares, in
excess of full cumulative distributions on the Series B Preferred Units as
described above. Accumulated but unpaid distributions on the Series B
Preferred Units will accumulate as of the Distribution Payment Date on which
they first become payable.
D. Liquidation Preference.
(i) Upon any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Partnership, the holders of
the Series B Preferred Units shall be entitled to receive out of the assets of
the Partnership available for distribution to the Partners pursuant to Section
13.5(a) of the Partnership Agreement a liquidation preference equal to the
Stated Value per Series B Preferred Unit, plus an amount equal to any
accumulated and unpaid distributions to the date of payment, before any
distribution of assets is made to holders of Class A Units, GP Units or any
other Partnership Interests that rank junior to the Series B Preferred Units
as to liquidation rights.
(ii) If upon any such voluntary or involuntary
liquidation, dissolution or winding up of the Partnership, the assets of the
Partnership are insufficient to pay the amount of such liquidating
distributions on all outstanding Series B Preferred Units and the
corresponding amounts payable on all other Partnership Interests ranking on a
parity with the Series B Preferred Units in the distribution of assets, then
such assets shall be allocated among the Series B Preferred Units, as a class,
and each class or series of such other Partnership Interests, as a class, in
proportion to the full liquidating distributions to which they would otherwise
be respectively entitled.
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(iii) Written notice of any such liquidation,
dissolution or winding up of the Partnership, stating the payment date or
dates when, and the place or places where, the amounts distributable in such
circumstances shall be payable, shall be given by first class mail, postage
pre-paid, not less than 30 nor more than 60 days prior to the payment date
stated therein, to each record holder of the Series B Preferred Units at the
respective addresses of such holders as the same shall appear on the records
of the Partnership.
(iv) After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of Series B
Preferred Units shall have no right or claim to any of the remaining assets of
the Partnership.
(v) None of a consolidation or merger of the
Partnership with or into any other partnership, corporation, trust or entity
or of any other partnership, corporation, trust or other entity with or into
the Partnership, or the sale, lease or conveyance of all or substantially all
of the property or business of the Partnership shall be considered a
liquidation, dissolution or winding up of the Partnership.
E. Redemption.
(i) Cash Redemption Right. On and after January 2,
2004 and, in addition, at any time after the Issue Date that the Current
Market Price (as defined in subsection J below) of the Common Shares (as
defined in subsection J below) has equaled or exceeded 120% of the Conversion
Price for any 60 consecutive Trading Days (as defined in subsection J below),
the Partnership, upon giving notice as provided below, may redeem the Series B
Preferred Units, in whole or in part, for a redemption price per Series B
Preferred Unit payable in cash equal to the Stated Value (the "Cash Redemption
Right").
(ii) Class A Unit Redemption Right. If (i) at any time
during the period commencing on the Issue Date and ending on January 1, 2004,
the Current Market Price of the Common Shares has equaled or exceeded 120% of
the Conversion Price for any 60 consecutive Trading Days or (ii) at any time
on or after January 2, 2004, the Current Market Price of the Common Shares has
equaled or exceeded 110% of the Conversion Price for 60 consecutive Trading
Days, the Partnership, upon giving notice as provided below, may redeem the
Series B Preferred Units, in whole or in part, for such number of Class A
Units as equals the Stated Value of the Series B Preferred Units to be
redeemed divided by the Conversion Price as of the opening of business on the
date set for such redemption (the " Class A Unit Redemption Right").
(iii) Limitations on Redemption.
(a) The Partnership may exercise the Cash
Redemption Right provided that the redemption price (other than the portion
thereof consisting of accumulated
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and unpaid distributions) is payable solely out of the sale proceeds of other
Partnership Interests (or of rights or options to purchase Partnership
Interests) or proceeds contributed to the Partnership from the sale of equity
securities of the General Partner, and from no other source. For purposes of
the preceding sentence, "equity securities" means any equity securities,
shares, interest, participation or other ownership interests (however
designated) and any rights (other than debt securities convertible into or
exchangeable for equity securities) or options to purchase any of the
foregoing.
(b) If fewer than all of the outstanding Series
B Preferred Units are to be redeemed, the Series B Preferred Units to be
redeemed shall be determined pro rata or by lot or in such other manner as
determined by the Partnership, acting through the General Partner.
(c) Notwithstanding anything to the contrary
contained herein, unless full cumulative distributions on all Series B
Preferred Units shall have been or contemporaneously are authorized and paid
or authorized and a sum sufficient for the payment thereof set apart for
payment for all past distribution periods and the current distribution period,
no Series B Preferred Units shall be redeemed unless all outstanding Series B
Preferred Units are simultaneously redeemed or exchanged; provided, however,
that the foregoing shall not prevent the purchase or acquisition of Series B
Preferred Units pursuant to a purchase or exchange offer made on the same
terms to holders of all outstanding Series B Preferred Units. In addition,
unless full cumulative distributions on all outstanding Series B Preferred
Units have been or contemporaneously are authorized and paid or authorized and
a sum sufficient for the payment thereof set apart for payment for all past
distributions periods and the then current distribution period, the
Partnership shall not purchase or otherwise acquire directly or indirectly any
Series B Preferred Units or any Partnership Interests ranking junior to or on
a parity with the Series B Preferred Units as to distributions or upon
liquidation, dissolution or winding up of the Partnership (except by
conversion into or exchange for Partnership Interests ranking junior to the
Series B Preferred Units as to distributions and upon liquidation, dissolution
or winding up of the Partnership or for the repurchase of Class A Units held
by employees, officers or consultants of the Partnership (or their permitted
transferees) that are subject to restrictive share purchase agreements under
which the Partnership has the option or obligation to repurchase such shares
upon the occurrence of certain events, such as termination of employment).
(d) Immediately prior to any redemption of
Series B Preferred Units, the Partnership shall pay, in cash, any accumulated
and unpaid distributions through the Redemption Date (as defined in subsection
E(iv) below), unless a Redemption Date falls after a Distribution Record Date
and on or prior to the corresponding Distribution Payment Date, in which case
each holder of Series B Preferred Units at the close of business on such
Distribution Record Date shall be entitled to the distribution payable on such
Series B Preferred Units on the corresponding Distribution Payment Date
notwithstanding the redemption of such Series B Preferred Units on or prior to
such Distribution Payment Date. Except as provided above, the
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Partnership will make no payment or allowance for unpaid distributions,
whether or not in arrears, on Series B Preferred Units for which a notice of
redemption has been given.
(iv) Procedures for Redemption.
(a) Notice of redemption shall be mailed, not
less than 30 nor more than 60 days, prior to the date fixed for redemption set
forth in such notice (the "Redemption Date") to each holder of record of
Series B Preferred Units to be redeemed, notifying such holder of the
Partnership's election to redeem such Series B Preferred Units. Such notice
shall mailed to such holder's address as the same appears on the records of
the Partnership. No failure to give such notice or any defect therein or in
the mailing thereof shall affect the validity of the proceedings for the
redemption of any Series B Preferred Units except as to the holder to whom
notice was defective or not given.
(b) In addition to any information required by
law, such notice shall state: (1) the Redemption Date, (2) with respect to the
Cash Redemption Right, the cash redemption price per Series B Preferred Unit
and, with respect to the Class A Unit Redemption Right, the number of Class A
Units to be issued with respect to each Series B Preferred Unit, (3) the
number of Series B Preferred Units to be redeemed (and, if fewer than all the
Series B Preferred Units are to be redeemed from such holder, the number of
Series B Preferred Units to be redeemed from such holder), (4) the place or
places where certificates for such Series B Preferred Units are to be
surrendered for payment of the redemption price in cash, with respect to the
Cash Redemption Right, and in certificates representing Class A Units, with
respect to the Share Redemption Right, (5) that distributions on the Series B
Preferred Units to be redeemed will cease to accumulate on such Redemption
Date and (6) the date upon which the holder's conversion rights, if any, as to
such Series B Preferred Units shall terminate.
(c) On or after the Redemption Date, each holder
of Series B Preferred Units to be redeemed shall present and surrender the
certificates evidencing its Series B Preferred Units to the Partnership at the
place designated in the notice of redemption and thereupon the redemption
price (in cash or Class A Units, as applicable) of such Series B Preferred
Units shall be paid to or on the order of the person whose name appears on
such certificate evidencing Series B Preferred Units as the owner thereof and
each surrendered certificate shall be canceled. If fewer than all the Series B
Preferred Units evidenced by any such surrendered certificate are to be
redeemed, a new certificate shall be issued evidencing the unredeemed Series B
Preferred Units.
(d) From and after the Redemption Date (unless
the Partnership defaults in payment of the redemption price), all
distributions on the Series B Preferred Units designated for redemption in
such notice shall cease to accumulate and all rights of the holders thereof,
except the right to receive the redemption price thereof (including all
accumulated and
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unpaid distributions up to the Redemption Date), shall cease and terminate and
such Series B Preferred Units shall not thereafter be transferred (except with
the consent of the General Partner) on the Partnership's books, and such
Series B Preferred Units shall not be deemed to be outstanding for any purpose
whatsoever. At its election, the Partnership, acting through its General
Partner, prior to a Redemption Date, may irrevocably deposit the redemption
price (including accumulated and unpaid distributions) of the Series B
Preferred Units so called for redemption in trust for the holders thereof with
a bank or trust company, in which case the redemption notice to holders of the
Series B Preferred Units to be redeemed shall (i) state the date of such
deposit, (ii) specify the office of such bank or trust company as the place of
payment of the redemption price and (iii) require such holders to surrender
the certificates evidencing such Series B Preferred Units at such place on or
about the date fixed in such redemption notice (which may not be later than
the Redemption Date) against payment of the redemption price (including all
accumulated and unpaid distributions to the Redemption Date). At the close of
business on a Redemption Date relating to the Partnership's Class A Unit
Redemption Right, each holder of Series B Preferred Units to be so redeemed
(unless the Trust defaults in the delivery of the Class A Units payable on
such Redemption Date) shall be deemed to be the record holder of the number of
Class A Units into which such Series B Preferred Units are to be so redeemed,
regardless of whether such holder has surrendered the certificates evidencing
the Series B Preferred Units. Any monies or Class A Units so deposited which
remain unclaimed by the holders of the Series B Preferred Units at the end of
two years after the Redemption Date shall be returned by such bank or trust
company to the Trust.
F. Voting Rights.
(i) Holders of the Series B Preferred Units shall not
have any voting rights, except as described below.
(ii) Whenever distributions on any Series B Preferred
Units shall be in arrears for six or more quarterly periods (a "Preferred
Distribution Default"), the holders of the outstanding Series B Preferred
Units shall be entitled to elect two individuals (the "Preferred Unit
Representatives"), which individuals shall be entitled to vote on their behalf
on the matters set forth in subparagraph (iv) below. Such election shall be
held at a special meeting called by the holders of record of at least 10% of
the outstanding Series B Preferred Units.
(iii) If and when all accumulated distributions and
the distribution for the current distribution period on the Series B Preferred
Units shall have been paid in full or set aside for payment in full, the
holders of Series B Preferred Units, acting through the Preferred Unit
Representatives, shall be divested of the voting rights set forth in
subsection F(iv) below (subject to revesting in the event of each and every
Preferred Distribution Default) and the term of office of each Preferred Unit
Representative so elected shall terminate. So long as a Preferred Distribution
Default shall continue, any vacancy in the office of a Preferred Unit
Representative may be filled by written consent of the Preferred Unit
Representative remaining in office, or if there is no such remaining
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representative, by vote of holders of a majority of the outstanding Series B
Preferred Units. Any Preferred Unit Representative may be removed at any time
with or without cause by the vote of, and shall not be removed otherwise than
by the vote of, the holders of record of a majority of the outstanding Series
B Preferred Units when they have the voting rights set forth in subsection
F(iv) below.
(iv) For so long as a Preferred Distribution Default
shall continue, any action to be taken by the Partnership at the direction of
the General Partner and as to which the General Partner may act only upon
authorization by its Board of Trustees (the "Board") may only be taken if such
action is approved by a majority in number of the members of Board and the
Preferred Unit Representatives voting together as a group.
(v) So long as any Series B Preferred Units remain
outstanding, the Partnership shall not, without the affirmative vote or
consent of the holders of at least two-thirds of Series B Preferred Units
outstanding at the time, given in person or by proxy, either in writing or at
a meeting, (a) authorize or create, or increase the authorized or issued
amount of, any class or series of Partnership Interests ranking prior to
Series B Preferred Units with respect to the payment of distributions or the
distribution of assets upon voluntary or involuntary liquidation, dissolution
or winding up of the Partnership or reclassify any previously designated
Partnership Interests into such Partnership Interests, or create, authorize or
issue any obligation or Partnership Interests convertible or exchangeable into
or evidencing the right to purchase any such Partnership Interests; or (b)
amend, alter or repeal the provisions of the Partnership Agreement, whether by
merger, consolidation or otherwise, or consummate a merger or consolidation
involving the Partnership (any such merger or consolidation, an "Event"), so
as to materially and adversely affect any right, preference, privilege or
voting power of such Series B Preferred Units or the holders thereof;
provided, however, with respect to the occurrence of any of the Events set
forth in (b) above, the occurrence of any such Event shall not be deemed to
materially adversely affect such rights, preferences, privileges or voting
powers of holders of Series B Preferred Units if immediately after any such
Event (i) in which the Partnership is the surviving entity, there are
outstanding no equity securities ranking as to distribution rights or
liquidation preference senior to the Series B Preferred Units other than the
securities of the Partnership outstanding prior to such Event, (ii) in which
the Partnership is not the surviving entity, as a result of the Event, the
holders of the Series B Preferred Units receive shares of stock or other
equity securities with preferences, rights and privileges substantially
similar to the preferences, rights and privileges of the Series B Preferred
Units and there are outstanding no shares of stock or other equity securities
of the surviving entity ranking as to distribution rights or liquidation
preference senior to the Series B Preferred Units other than the securities
issued in respect of securities of the Partnership outstanding prior to such
Event or (iii) whether or not the Partnership is the surviving entity, there
are no outstanding equity securities of the Partnership or its successor
(other than securities of the Partnership outstanding prior to such Event, or
securities issued in respect of securities of the Partnership outstanding
prior to such Event) ranking as to distribution rights or liquidation
preference senior to the Series B Preferred Units; and
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provided further that any increase in the amount of authorized Preferred Units
or the creation or issuance of any class or series of Preferred Units (other
than the Series B Preferred Units), in each case ranking on a parity with or
junior to the Series B Preferred Units with respect to payment of
distributions and the distribution of assets upon voluntary or involuntary
liquidation, dissolution or winding up of the Partnership, shall not be deemed
to materially and adversely affect such rights, preferences, privilege or
voting powers.
(vi) Notwithstanding anything to the contrary
contained herein, the creation or issuance of any series of Preferred Units
that is subject to mandatory redemption at a scheduled date or dates or that
has the benefit of a sinking fund or that is subject to redemption at the
option of the Partnership or the holder but that otherwise ranks on a parity
with or junior to the Series B Preferred Units with respect to payment of
distributions and the distribution of assets upon voluntary or involuntary
liquidation, dissolution or winding up of the Partnership shall not require
the affirmative vote or consent of all or any of the holders of the Series B
Preferred Units.
(vii) The foregoing voting provisions shall not apply
if, at or prior to the time when the act with respect to which such vote would
otherwise be required shall be effected, all outstanding Series B Preferred
Units shall have been converted, redeemed or called for redemption upon proper
notice and sufficient funds or Class A Units, as applicable, shall have been
deposited in trust to effect such redemption.
G. Conversion.
(i) Each whole (but not fractional) Series B Preferred
Unit shall be convertible at any time, at the option of the holder thereof,
into such number of Class A Units as is equal to the quotient that results
from dividing (i) the sum of (X) the Stated Value plus (Y) accrued and unpaid
distributions on such Class B Preferred Unit (other than such accrued and
unpaid distributions that the General Partner elects to pay in cash at the
time of conversion) by (ii) a conversion price (the "Conversion Price") of
$28.00 per Series B Preferred Unit; provided, however, that if the average
Current Market Price of the Common Shares during the 60-Trading Day period
ending on December 31, 2003 is $23.00 or lower then the Conversion Price shall
automatically be reduced from $28.00 to $26.50, subject to adjustment as
described in subsection G(v) below; provided, further, that the right to
convert Series B Preferred Units called for redemption pursuant to subsection
E above shall terminate at the close of business on the Redemption Date,
unless the Partnership shall default in making payment of the redemption
price.
(ii) To exercise the conversion right, the holder of
each Series B Preferred Unit to be converted shall surrender the certificate
evidencing such Series B Preferred Unit, duly endorsed or assigned to the
Partnership or in blank, at the principal office of the Partnership
accompanied by written notice to the Partnership that the holder thereof
elects to convert such Series B Preferred Unit. Unless the Class A Units
issuable on conversion are to be issued in the same name
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as the name in which such Series B Preferred Unit is registered, in which case
the Partnership shall bear the related taxes, each Series B Preferred Unit
surrendered for conversion shall be accompanied by instruments of transfer, in
form satisfactory to the General Partner, duly executed by the holder or such
holder's duly authorized attorney and an amount sufficient to pay any transfer
or similar tax (or evidence reasonably satisfactory to the General Partner
demonstrating that such taxes have been paid).
(iii) Each conversion shall be deemed to have been
effected immediately prior to the close of business on the date on which the
certificates for Series B Preferred Units shall have been surrendered and such
notice (and if applicable, payment of an amount equal to the distribution
payable on such shares) received by the Partnership as aforesaid, and the
person or persons in whose name or names any certificate or certificates for
Class A Units shall be issuable upon such conversion shall be deemed to have
become the holder or holders of record of the Class A Units evidenced thereby
at such time on such date, and such conversion shall be at the Conversion
Price in effect at such time and on such date unless the unit transfer books
of the Partnership shall be closed on that date, in which event such person or
persons shall be deemed to have become such holder or holders of record at the
close of business on the next succeeding day on which such unit transfer books
are open, but such conversion shall be at the Conversion Price in effect on
the date on which such shares have been surrendered and such notice received
by the Partnership.
(iv) Holders of Series B Preferred Units at the close
of business on a Distribution Record Date shall be entitled to receive the
distribution payable on such Series B Preferred Units on the corresponding
Distribution Payment Date notwithstanding the conversion of such Series B
Preferred Units following such Distribution Record Date and prior to such
Distribution Payment Date. However, certificates evidencing Series B Preferred
Units surrendered for conversion during the period between the close of
business on any Distribution Record Date and ending with the opening of
business on the corresponding Distribution Payment Date (except shares
converted after the issuance of a notice of redemption with respect to a
Redemption Date during such period or coinciding with such Distribution
Payment Date) shall be accompanied by payment of an amount equal to the
distribution payable on such Series B Preferred Units on such Distribution
Payment Date. A holder of Series B Preferred Units on a Distribution Record
Date who (or whose transferee) tenders any such Series B Preferred Units for
conversion into Class A Units on such Distribution Payment Date shall receive
the distribution payable by the Partnership on such Series B Preferred Units
on such date, and the converting holder need not include payment of the amount
of such distribution upon surrender of certificates representing such Series B
Preferred Units for conversion. Except as provided above, the Partnership
shall make no payment or allowance for unpaid distributions, whether or not in
arrears, on converted Series B Preferred Units or for distribution on the
Class A Units that are issued upon such conversion.
As promptly as practicable after the surrender of
certificates for Series B Preferred Units as aforesaid, the Partnership shall
issue and shall deliver at such office to such holder, or on
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such holder's written order, a certificate or certificates for the number of
full Class A Units issuable upon the conversion of such Series B Preferred
Units in accordance with the provisions of this Subsection G.
(v) Reclassification of Class A Units; Conversion
Price Adjustment.
(a) In the event of any adjustment to the number
of outstanding Class A Units pursuant to Section 15.4 of the Partnership
Agreement, the Conversion Price in effect at the opening of business on the
day following the day on which such adjustment becomes effective shall be
adjusted so that the holder of any Series B Preferred Units thereafter
surrendered for conversion shall be entitled to receive the number of Class A
Units that such holder would have been entitled to receive after the effective
date of such adjustment had such Series B Preferred Units been converted
immediately prior to the effective date of such adjustment.
(b) If the Trust shall issue after the Issue Date
rights, options or warrants to all holders of Common Shares entitling them
(for a period expiring within 45 days after the record date mentioned below)
to subscribe for or purchase Common Shares at a price per share less than the
Fair Market Value per Common Share on the record date fixed for the
determination of shareholders entitled to receive such rights, options or
warrants (any of the foregoing being hereinafter in this subsection (b) called
the "Securities"), then the Conversion Price shall be adjusted so that it
shall equal the price determined by multiplying (I) the Conversion Price in
effect immediately prior to the close of business on the record date fixed for
the determination of shareholders entitled to receive such distribution by
(II) a fraction, the numerator of which shall be the sum of (A) the number of
Common Shares outstanding on the close of business on the record date fixed
for the determination of shareholders entitled to receive such distribution
and (B) the number of shares that the aggregate proceeds to the Trust from the
exercise of such rights, options or warrants for Common Shares would purchase
at such Fair Market Value, and the denominator of which shall be the sum of
(A) the number of Common Shares outstanding on the close of business on the
record date fixed for the determination of shareholders entitled to receive
such distribution and (B) the number of additional Common Shares offered for
subscription or purchase pursuant to such rights, options or warrants. Such
adjustment shall become effective immediately upon the opening of business on
the business day next following the record date fixed for the determination of
shareholders entitled to receive such distribution (subject to paragraph (j)
below). In determining whether any rights, options or warrants entitle the
holders of Common Shares to subscribe for or purchase Common Shares at less
than such Fair Market Value, there shall be taken into account any
consideration received by the Trust upon issuance and upon exercise of such
rights, options or warrants, the value of such consideration, if other than
cash, to be determined by the General Partner, whose determination shall be
conclusive. For the purposes of this subsection (b), if in connection with the
distribution of a Security to the holders of the Common Shares an adjustment
is made to
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the Conversion Price pursuant to subsection G(v)(a) above, no additional
adjustment to the Conversion Price need be made pursuant to this subsection
(b).
(c) No adjustment in the Conversion Price shall be
required unless such adjustment would require a cumulative increase or
decrease of at least 1% in such price; provided, however, that any adjustments
that by reason of this subsection (c) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment until
made; and provided, further, that any adjustment shall be required and made in
accordance with the provisions of this subsection G(v) (other than this
subsection (c)) not later than such time as may be required in order to
preserve the tax-free nature of a distribution to the holders of Common
Shares. Notwithstanding any other provisions of this subsection G(v), the
Partnership shall not be required to make any adjustment of the Conversion
Price as a result of the issuance of any Common Shares by the Trust pursuant
to any plan providing for the reinvestment of distributions or interest
payable on securities of the Trust and the investment of additional optional
amounts in Common Shares under such plan. All calculations under this
subsection G(v) shall be made to the nearest cent with ($.005 being rounded
upward) or to the nearest one-tenth of a share (with .05 of a share being
rounded upward), as the case may be. Anything in this subsection G to the
contrary notwithstanding, the Partnership shall be entitled, to the extent
permitted by law, to make such reductions in the Conversion Price, in addition
to those required by this subsection G, as the General Partner in its
discretion shall determine to be advisable in order that any share
distributions, subdivision of shares, reclassification or combination of
shares, distribution of rights, options or warrants to purchase shares or
securities, or a distribution of other assets (other than cash distributions)
hereafter made by the Trust to its shareholders shall not be taxable.
(d) If the Partnership shall be a party to any
transaction (including, without limitation, a merger or consolidation, sale of
all or substantially all of the Partnership's assets or (each of the foregoing
being referred to herein as a "Transaction"), in each case as a result of
which Class A Units shall be converted into the right to receive shares,
stock, securities or other property (including cash or any combination
thereof), each Series B Preferred Unit which is not converted into the right
to receive shares, stock, securities or other property in connection with such
Transaction shall thereafter be convertible into the kind and amount of
shares, stock, securities and other property (including cash or any
combination thereof) receivable upon the consummation of such Transaction by a
holder of that number of Class A Units into which one Series B Preferred Unit
was convertible immediately prior to such Transaction. The Partnership shall
not be a party to any Transaction unless the terms of such Transaction are
consistent with the provisions of this subsection G(v), and it shall not
consent or agree to the occurrence of any Transaction until the Partnership
has entered into an agreement with the successor or purchasing entity, as the
case may be, for the benefit of the holders of the Series B Preferred Units
that will contain provisions enabling the holders of the Series B Preferred
Units that remain outstanding after such Transaction to convert into the
consideration received by holders of Class A Units at the
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Conversion Price in effect immediately prior to such Transaction. The
provisions of this subsection G(v) shall similarly apply to successive
Transactions.
H. Transfer Restrictions. The Series B Preferred Units
are subject to the restrictions on transferability set forth in Article XI of
the Partnership Agreement. In addition, except to Affiliates or upon the
written consent of the General Partner (such consent not to be unreasonably
withheld), none of the Series B Preferred Units, the Class A Units issuable
upon conversion or redemption of the Series B Preferred Units (the "Underlying
Class A Units"), nor the Common Shares issuable upon redemption of the
Underlying Class A Units may be sold, assigned, exchanged, pledged or
otherwise transferred prior to January 2, 2004. This subsection H shall not
restrict a sale of the direct or indirect equity interests of the holders of
the Series B Preferred Units. Any Series B Preferred Units, Underlying Class A
Units and Common Shares issued upon redemption of Underlying Class A Units
shall bear a restrictive legend evidencing the transfer restrictions set forth
in this subsection H.
I. Allocations. Allocations of the Partnership's items of
income, gain, loss and deduction shall be allocated among holders of Series B
Preferred Units in accordance with Article VII of the Partnership Agreement.
J. Definitions.
"Common Shares" shall mean the common shares of beneficial
interest, par value $.01 per share, of the Trust.
"Current Market Price" of publicly traded Common Shares or
any other class of shares of beneficial interest or other security of the
Trust or any other issuer for any day shall mean the last reported sales
price, regular way, on such day, or, if no sale takes place on such day, the
average of the reported closing bid and asked prices on such day, regular way,
in either case as reported on the New York Stock Exchange ("NYSE") or, if such
security is not listed or admitted for trading on the NYSE, on the principal
national securities exchange on which such security is listed or admitted for
trading or, if not listed or admitted for trading on any national securities
exchange, on the NASDAQ National Market or, if such security is not quoted on
such NASDAQ National Market, the average of the closing bid and asked prices
on such day in the over-the-counter market as reported by NASDAQ or, if bid
and asked prices for such security on such day shall not have been reported
through NASDAQ, the average of the bid and asked prices on such day as
furnished by any NYSE member firm regularly making a market in such security
selected for such purpose by Partnership, acting through the General Partner.
"Distribution Payment Date" shall mean, with respect to each
Distribution Period, the fifteenth day of January, April, July and October in
each year, commencing, on ______________, 1998; provided, however, that if any
Distribution Payment Date falls on any day other than a
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business day, the distribution payment due on such Distribution Payment Date
shall be paid on the business day immediately following such Distribution
Payment Date.
"Distribution Periods" shall mean quarterly distribution
periods commencing on January 1, April 1, July 1 and October 1 of each year
and ending on and including the day preceding the first day of the next
succeeding Distribution Period (other than the initial Distribution Period,
which shall commence on the Issue Date and end on and include _____________,
1998).
"Issue Date" shall mean the date on which Series B Preferred
Units are first issued by the Partnership.
"Trading Day" shall mean any day on which the securities in
question are traded on the NYSE or, if such securities are not listed or
admitted for trading on the NYSE, on the principal national securities
exchange on which such securities are listed or admitted or, if not listed or
admitted for trading on any national securities exchange, on the NASDAQ
National Market or, if such securities are not quoted on such NASDAQ National
Market, in the applicable securities market in which the securities are
traded.
The "Trust" means Brandywine Realty Trust, a Maryland real
estate investment trust.
2. The Partnership Agreement is hereby amended to reflect
the admission as a Limited Partners on the date hereof of the Persons set
forth on Schedule A attached hereto (the "Admitted Partners") and the
ownership by such Persons of the number of Series B Preferred Units listed
opposite each Person's name on Schedule A. Attached as Schedule B is a list of
the Partners of the Partnership prior to the admission of the Admitted
Partners, together with the number and class of Partnership Interests owned by
such partners.
3. The "Redemption Right" granted to holders of Class A
Units in Article XV of the Partnership Agreement shall not be exercisable by
the holders of the Class A Units issuable upon redemption or conversion of
Series B Preferred Units until the first anniversary of the date hereof,
except that if a Change of Control (as defined below) of the General Partner
occurs, the foregoing restriction on exercise of the Redemption Right shall
automatically terminate with respect to all of such Class A Units.
As used herein, the term "Change of Control" shall mean:
(i) the acquisition in one or more transactions by any
"Person" (as the term person is used for purposes of Sections 13(d) or 14(d)
of the Exchange Act) of "Beneficial ownership" (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of twenty-five percent (25%) or more
of the combined voting power of the General Partner's then outstanding voting
securities (the "Voting Securities"), provided that for purposes of this
clause (i) Voting
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Securities acquired directly from the General Partner by any Person shall be
excluded from the determination of such Person's Beneficial ownership of
Voting Securities (but such Voting Securities shall be included in the
calculation of the total number of Voting Securities then outstanding); or
(ii) approval by shareholders of the General Partner
of:
(A) a merger, reorganization or consolidation involving
the General Partner if the shareholders of the General Partner immediately
before such merger, reorganization or consolidation do not or will not own
directly or indirectly immediately following such merger, reorganization or
consolidation, more than fifty percent (50%) of the combined voting power of
the outstanding voting securities of the General Partner resulting from or
surviving such merger, reorganization or consolidation in substantially the
same proportion as their ownership of the Voting Securities outstanding
immediately before such merger, reorganization or consolidation; or
(B) a complete liquidation or dissolution of the General
Partner; or
(C) an agreement for the sale or other disposition of all
or substantially all of the assets of the General Partner; or
(iii) acceptance by shareholders of the General
Partner of shares in a share exchange if the shareholders of the General
Partner immediately before such share exchange do not or will not own directly
or indirectly immediately following such share exchange more than fifty
percent (50%) of the combined voting power of the outstanding voting
securities of the entity resulting from or surviving such share exchange in
substantially the same proportion as their ownership of the Voting Securities
outstanding immediately before such share exchange.
4. By execution of this Amendment to the Partnership
Agreement by the General Partner, the Admitted Partners agree to be bound by
each and every term of the Partnership Agreement as amended from time to time
in accordance with the terms of the Partnership Agreement. The General Partner
confirms that the provisions in Section 18.1(a) of the Partnership Agreement
shall apply to the Admitted Partners notwithstanding Section 18.7 of the
Partnership Agreement.
5. On the date of this Amendment, each of the Admitted
Partners shall execute and deliver to Brandywine Realty Trust an Irrevocable
Proxy coupled with an Interest in the form set forth on Exhibit 1 hereto
attached.
6. Except as expressly set forth in this Amendment to the
Partnership Agreement, the Partnership Agreement is hereby ratified and
confirmed in each and every respect.
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IN WITNESS WHEREOF, this Amendment to the Partnership
Agreement has been executed and delivered as of the date first above written.
GENERAL PARTNER:
BRANDYWINE REALTY TRUST
By: ________________________________________________
Name: Gerard H. Sweeny
Its: President and Chief Executive Officer
ADMITTED PARTNER:
____________________________________________________
By:_________________________________________________
Name:
Title:
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SCHEDULE "A"
ADMITTED NUMBER OF SERIES B
PARTNERS PREFERRED UNITS
-------- ------------------
SCHEDULE "B"
BRANDYWINE OPERATING PARTNERSHIP, L.P.
OUTSTANDING PARTNERSHIP INTERESTS
AS OF _______ , 1998
NUMBER OF
PARTNERSHIP
INTERESTS
LIMITED PARTNERS (ALL CLASS A UNITS)
- ---------------- -------------------
NUMBER OF
PARTNERSHIP
LIMITED PARTNER INTERESTS
- --------------- -----------
Brandywine Realty Trust [ ] Series A
Preferred Mirror Units
NUMBER OF
PARTNERSHIP
GENERAL PARTNER INTERESTS
- --------------- -----------
Brandywine Realty Trust [ ] GP Units
IRREVOCABLE PROXY COUPLED WITH AN INTEREST
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
irrevocably constitutes and appoints the General Partner, any Liquidating
Trustee, and authorized officers and attorneys-in-fact of each, and each of
those acting singly, in each case with full power of substitution, as its true
and lawful agent and attorney-in-fact, with full power and authority in its
name, place and stead to: execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (i) all certificates, documents and
other instruments (including, without limitation, this Agreement and the
Certificate and all amendments or restatements thereof) that the General
Partner or the Liquidating Trustee deems appropriate or necessary to form,
qualify or continue the existence or qualification of the Partnership as a
limited partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware and in all other jurisdictions in
which the Partnership may conduct business or own property; (ii) all
instruments that the General Partner deems appropriate or necessary to reflect
any amendment, change, modification or restatement of this Agreement in
accordance with the terms of this Agreement; (iii) all conveyances and other
instruments or documents that the General Partner deems appropriate or
necessary to reflect the dissolution and liquidation of the Partnership
pursuant to the terms of this Agreement, including, without limitation, a
certificate of cancellation; and (iv) all instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant to the
provisions of this Agreement, or the Capital Contribution of any Partner. The
foregoing power of attorney is irrevocable and a power coupled with an
interest, in recognition of the fact that each of the Partners will be relying
upon the power of the General Partner to act as contemplated by this Agreement
in any filing or other action by it on behalf of the Partnership, and it shall
survive the death, incapacity or incompetency of a Limited Partner to the
effect and extent permitted by law and the Transfer of all or any portion of
such Limited Partner's Partnership Units and shall extend to such Limited
Partner's heirs, distributees, successors, assigns and personal
representatives.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Proxy on this ____ day of __________, 1998.
_____________________________________
By: ________________________________
Name:
Title: