INVESTMENT AGREEMENT
between
BRANDYWINE REALTY TRUST
and
FIVE ARROWS REALTY SECURITIES III L.L.C.
----------------------
Dated as of April 19, 1999
----------------------
INVESTMENT AGREEMENT
INVESTMENT AGREEMENT dated as of April 19, 1999 between
Brandywine Realty Trust, a Maryland real estate investment trust (the
"Company"), and Five Arrows Realty Securities III L.L.C., a limited liability
company organized under the laws of the State of Delaware (the "Investor").
WHEREAS, the Company wishes to issue the Preferred Shares and
Warrant (each as defined herein) to the Investor, and the Investor wishes to
purchase, acquire and accept the Preferred Shares and Warrant from the Company
(the "Investment");
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE 1 DEFINED TERMS.
Section 1.1 Defined Terms. The following terms shall, unless
the context otherwise requires, have the meanings set forth in this Section 1.1.
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, liabilities, obligations, taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
disbursements.
"Affiliate" means, with respect to any Person, (a) any member
of the Immediate Family of such Person or a trust established for the benefit of
such member, (b) any beneficiary of a trust described in (a), (c) any Entity
which, directly or indirectly through one or more intermediaries, is deemed to
be the beneficial owner of 10% or more of the voting equity of such Person for
the purposes of Section 13(d) of the Exchange Act, (d) any officer of such
Person or any member of the Board of Directors or Board of Trustees of such
Person, or (e) any Entity which, directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with,
such Person, including such Person or Persons referred to in the preceding
clause (a) or (d); provided, however, that none of the Investor, Rothschild or
their respective Affiliates nor any of their respective officers, directors,
partners, members or Affiliates nor any Preferred Trustee (as such term is
defined in the Articles Supplementary) shall be considered an Affiliate of the
Company or its Subsidiaries for purposes of this Agreement.
"Agreement" means this Investment Agreement, as originally
executed and as hereafter from time to time supplemented, amended and restated.
"Agreement and Waiver" means the Agreement and Waiver, dated
as of the date of the initial Closing, between the Company and the Investor in
the form of Exhibit A attached hereto.
"Articles Supplementary" means the Articles Supplementary
classifying 4,375,000 preferred shares of beneficial interest of the Company,
par value $.01 per share, as 8.75% Series B Senior Cumulative Convertible
Preferred Shares of the Company in the form of Exhibit B attached hereto.
"Benefit Plan" means a defined benefit plan as defined in
Section 3(35) of ERISA that is subject to Title IV of ERISA (other than a
Multiemployer Plan) and in respect of which the Company or any ERISA Affiliate
is or within the immediately preceding six (6) years was an "employer" as
defined in Section 3(5) of ERISA.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday
or Friday which is not a day on which banking institutions in New York City are
authorized or obligated by law or executive order to close.
"Charter" means the Declaration of Trust of the Company as
currently in effect and as amended in the future in a manner that is not
inconsistent with the terms of the Operative Instruments.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor statute thereto.
"Common Shares" means the common shares of beneficial
interest, par value $.01 per share, of the Company.
"Confidential Information" means the identity of the Company
in the context of the Investment, the existence and contents of discussions
regarding the Investment and information concerning the assets, operations,
business, records, projections and prospects of the Company; provided, however,
that the term "Confidential Information" does not include information that (i)
is or becomes available to the public other than as a result of disclosure by
any of the Investor or Rothschild or any of their respective representatives,
(ii) was available to the Investor or Rothschild or was within the Investor's or
Rothschild's knowledge prior to its disclosure by the Company to the Investor or
Rothschild, or (iii) becomes available to the Investor or Rothschild from a
source other than the Company, provided that such source is not known by the
Investor or Rothschild to be bound by a confidentiality agreement with the
Company or its representative.
"Entity" means any general partnership, limited partnership,
corporation, joint venture, trust, business trust, real estate investment trust,
limited liability company, cooperative or association.
"Environmental Claim" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter or other communication from any
governmental agency, department, bureau, office or other authority, or any third
party alleging violations of Environmental Laws or Releases of Hazardous
Materials.
"Environmental Laws" means the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. ss.ss. 9601 et
seq., as amended; the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C.
ss.ss. 6901 et seq., as amended; the Clean Air Act ("CAA"), 42 U.S.C. ss.ss.
7401 et seq., as amended; the Clean Water Act ("CWA"), 33 U.S.C. ss.ss. 1251 et
seq., as amended; the Occupational Safety and Health Act ("OSHA"), 29 U.S.C.
ss.ss. 655 et seq. and any other federal, state, local or municipal laws,
statutes, regulations, rules or ordinances imposing liability or establishing
standards of conduct for protection of the environment.
"Environmental Liabilities" means any monetary obligations,
losses, liabilities (including strict liability), damages, punitive damages,
treble damages, costs and expenses (including all reasonable out-of-pocket fees,
disbursements and expenses of counsel, reasonable out-of-pocket expert and
consulting fees and reasonable out-of-pocket costs for environmental site
assessments, remedial investigation and feasibility studies), fines, penalties,
sanctions and interest incurred as a result of any Environmental Claim filed by
any governmental authority or any third party against the Company or its
Subsidiaries or any predecessors in interest which relate to any violations of
Environmental Laws, Response Actions, Releases or threatened Releases of
Hazardous Materials from or onto (i) any assets, properties or businesses
presently or formerly owned by the Company, its Subsidiaries or a predecessor in
interest, or (ii) any facility which received Hazardous Materials generated by
the Company, its Subsidiaries or a predecessor in interest.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, and regulations
thereunder, in each case as in effect from time to time. References to sections
of ERISA shall be construed also to refer to any successor sections.
"ERISA Affiliate" means any (i) corporation which is a member
of the same controlled group of corporations (within the meaning of Section
414(b) of the Code) as the Company, (ii) partnership or other trade or business
(whether or not incorporated) under common control (within the meaning of
Section 414(c) of the Code) with the Company, or (iii) member of the same
affiliated service group (within the meaning of Section 414(m) of the Code) as
the Company, any corporation described in clause (i) above or any partnership or
trade or business described in clause (ii) above.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means United States generally accepted accounting
principles, as in effect from time to time.
"Hazardous Materials" include (a) any element, compound, or
chemical that is defined, listed or otherwise classified as a contaminant,
pollutant, toxic pollutant, toxic or hazardous substances, extremely hazardous
substance or chemical, hazardous waste, medical waste, biohazardous or
infectious waste, special waste, or solid waste under Environmental Laws; (b)
petroleum, petroleum-based or petroleum-derived products; (c) electrical
equipment containing polychlorinated biphenyls at a level greater than 50 ppm;
(d) any substance exhibiting a hazardous waste characteristic including but not
limited to corrosivity, ignitibility, toxicity or reactivity) as well as any
radioactive or explosive materials; and (e) asbestos-containing materials.
"Immediate Family" means, with respect to any Person, such
Person's spouse, parents, parents-in-law, descendants, nephews, nieces,
brothers, sisters, brothers-in-law, sisters-in-law, stepchildren, sons-in-law
and daughters-in-law.
"Lien" means and includes any lien, security interest, pledge,
charge, option, right of first refusal, claim, mortgage, lease, easement or any
other encumbrance whatsoever.
"Material Adverse Effect," when used with reference to events,
acts, failures or omissions to act, or conduct of a specified Person, means that
such events, acts, failures or omissions to act, or conduct would have a
material adverse effect on (i) the condition (financial or otherwise), earnings,
business affairs or business prospects of such Person and its consolidated
subsidiaries, considered as one enterprise, or (ii) the ability of such Person
to perform its obligations under the Operative Instruments.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA and subject to Title IV of ERISA which is, or
within the immediately preceding six (6) years was, contributed to by the
Company or any ERISA Affiliate.
"Operating Agreement" means the Operating Agreement, dated as
of the initial Closing Date, between the Company and the Investor, in the form
of Exhibit C attached hereto.
"Operative Instruments" means this Agreement, the Warrant, the
Articles Supplementary, the Operating Agreement, and the Agreement and Waiver.
"PBGC" means the Pension Benefit Guaranty Corporation,
established by ERISA.
"Permit" means a permit, license, consent, order or approval
by any federal, state or local governmental agency.
"Person" means any individual or Entity.
"Plan" means an employee benefit plan defined in Section 3(3)
of ERISA in respect of which the Company or any ERISA Affiliate is, or within
the immediately preceding six (6) years was, an "employer" as defined in Section
3(5) of ERISA.
"Preferred Shares" means the preferred shares of beneficial
interest, par value $.01 per share, of the Company designated in the Articles
Supplementary as 8.75% Series B Senior Cumulative Convertible Preferred Shares.
"REIT" means a real estate investment trust described in
Section 856 of the Code.
"Release" means any spilling, leaking, pumping, emitting,
emptying, discharging, injecting, escaping, leaching, migrating, dumping, or
disposing of Hazardous Materials (including the abandonment or discarding of
barrels, containers or other closed receptacles containing Hazardous Materials)
into the environment in reportable quantities under applicable Environmental
Laws.
"Response Action" means all actions taken to (i) clean up,
remove, remediate, contain, treat, monitor, assess, evaluate or in any other way
address Hazardous Materials in the environment as required by Environmental
Laws; (ii) prevent or minimize a Release or threatened Release of Hazardous
Materials so they do not migrate or endanger or threaten to endanger to cause
substantial danger to public health or welfare or the environment as required by
42 U.S.C. ss. 9601; (iii) perform pre-remedial studies and investigations and
post-remedial operation and maintenance activities as required by 42 U.S.C. ss.
9601; or (iv) any other actions authorized by 42 U.S.C. ss. 9601.
"Reportable Event" means any of the events described in
Section 4043(b) of ERISA (other than events for which the notice requirements
have been waived).
"Representatives" means, with respect to any Person, the
directors, trustees, officers, employees, Affiliates, representatives
(including, but not limited to, financial advisors, attorneys and accountants),
agents or potential sources of financing of such person.
"Rothschild" means Rothschild Realty Inc., a Delaware
corporation.
"SDAT" means the State Department of Assessment and Taxation
of Maryland.
"SEC" means the Securities and Exchange Commission or any
successor regulatory authority.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" of any Person or Entity means an Entity in which
such Person or Entity has the power or right, whether by the direct or indirect
ownership of shares or other equity interests, by contract or otherwise, to
elect a majority of the directors of a corporation or the trustees of a real
estate investment trust, to select the managing partner of a partnership, or
otherwise to select, or have the power to remove and then select, a majority of
those persons exercising governing authority over such Entity. A limited
partnership shall be deemed to be a Subsidiary of a Person or Entity if such
Person or Entity or a Subsidiary of such Person or Entity serves as a general
partner thereof. A trust shall be deemed to be a Subsidiary of a Person or
Entity if such Person or Entity or a Subsidiary of such Person or Entity serves
as any trustee thereof or any Person having the right to select any such
trustee.
"Termination Event" means (i) a Reportable Event with respect
to any Benefit Plan (with respect to which the 30-day notice requirement has not
been waived); (ii) the withdrawal of the Company or any ERISA Affiliate from a
Benefit Plan during a plan year in which the Company or any ERISA Affiliate was
a "substantial employer" as defined in Section 4001(a)(2) of ERISA; (iii)
providing a written notice of intent to terminate a Benefit Plan to affected
parties of a distress termination described in Section 4041(c) of ERISA; or (iv)
the institution by the PBGC of proceedings to terminate a Benefit Plan.
"Warrant" means the warrant, in the form of Exhibit D attached
hereto, to purchase 500,000 Common Shares, as such number may be adjusted.
Section 1.2 Terms Defined Herein. In addition to the terms
defined in Section 1.1 above, the following terms shall, unless the context
otherwise requires, have the meanings set forth in the section set forth next to
such term:
Defined Term Section
- ------------ -------
Accredited Investor....................................................5.2
Balance Sheet..........................................................4.17
Breach.................................................................4.20
Closing................................................................2.1
Discount...............................................................2.1
Excess Shares..........................................................4.9
Indemnified Party......................................................10.4.3
Indemnifying Party.....................................................10.4.3
Liabilities............................................................4.17
1998 10-K..............................................................4.2
1999 Proxy Statement...................................................4.8
Preferred Shares.......................................................4.9
Purchase Price.........................................................2.1
Third Party Claim......................................................10.4.3
ARTICLE 2 SALE AND PURCHASE OF PREFERRED SHARES AND WARRANT.
Section 2.1 Sale of Preferred Shares. At the closings provided
for in Article 3 hereof (each, a "Closing"): (i) the Company shall issue and
sell an aggregate of up to 4,375,000 Preferred Shares to the Investor, as
hereinafter provided, and shall deliver to the Investor a share certificate or
certificates evidencing all of the Preferred Shares, registered in the
Investor's or its nominee's name; and (ii) the Investor shall purchase, acquire
and accept such Preferred Shares for $24.00 per share, less the Discount, as
defined below (the "Purchase Price"). The term "Discount" shall mean a discount
per share of 6.00% of $24.00, or a discount per share of $1.44.
Section 2.2 Payment for the Preferred Shares. At the Closings
and in accordance with the provisions set forth in Article 3, the Purchase Price
shall be paid by the Investor to the Company in United States dollars by wire
transfer of funds immediately available to such account(s) as the Company shall
designate in a written notice delivered to the Investor not less than five (5)
Business Days prior to the applicable Closing Date.
Section 2.3 Issuance of Warrant. At the first Closing provided
for in Article 3, (i) the Company shall issue the Warrant and shall deliver to
the Investor a certificate evidencing the Warrant, registered in the Investor's
or its nominee's name, and (ii) the Investor shall acquire and accept the
Warrant.
Section 2.4 Placement Fee. At each Closing, the Company shall
pay to Rothschild Realty Inc. a placement fee equal to $0.56 for each Preferred
Share issued at such Closing.
Section 2.5 Transfer Taxes. The Company shall pay all stock
transfer taxes, recording fees and other sales, transfer, use, purchase or
similar taxes resulting from the Investment.
ARTICLE 3 CLOSINGS.
Section 3.1 Closings. The Company shall be entitled to
designate up to four Closings, the first of which shall provide for the issuance
and sale of at least 1,041,667 Preferred Shares, and any subsequent Closing
shall provide for the issuance and sale of at least 208,334 Preferred Shares,
provided that all of the Closings together shall provide for the issuance and
sale of an aggregate of at least 2,291,667 Preferred Shares. Each Closing of the
sale and purchase of the Preferred Shares shall take place at the offices of
Schulte Roth & Zabel LLP, 900 Third Avenue, New York, New York 10022, at 10:00
a.m., New York City time.
Section 3.2 Closing Dates. Each Closing shall occur on such
date as the Company notifies the Investor on not less than ten (10) Business
Days' notice or at such other time as the Company and the Investor mutually
agree in writing (each, a "Closing Date"); provided, however, that if the sale
of at least 2,291,667 Preferred Shares as provided for herein shall not have
occurred before December 31, 1999, the Closing for such Preferred Shares as
shall not have previously been so sold shall occur on such date. If the Company
shall not have sold an aggregate of 4,375,000 Preferred Shares to the Investor
on or before December 31, 1999 (other than by reason of an event subject to
Section 3.3), the Company shall, on such date, pay to the Investor by wire
transfer in immediately available funds an amount equal to the product of (x)
$0.44 and (y) the difference between (A) 4,375,000 and (B) the number of
Preferred Shares which the Company has sold to the Investor pursuant to this
Agreement (which in no event shall be less than 2,291,667 shares).
Section 3.3 Cancellation of Subsequent Closings. In the event
that a Change of Control or a Put Event (each as defined in the Articles
Supplementary) occurs prior to the sale by the Company to the Investor of
4,375,000 Preferred Shares pursuant to this Agreement, and the Investor notifies
the Company that it elects to cancel the remaining Closings, any further
Closings shall be canceled and the Company shall immediately pay to the Investor
by wire transfer in immediately available funds an amount equal to the product
of (x) $.50 multiplied by (y) the difference between (A) 4,375,000 and (B) the
number of Preferred Shares which the Company has sold to the Investor pursuant
to this Agreement.
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to the Investor as
follows:
Section 4.1 Due Formation or Incorporation and Status of the
Company and Subsidiaries.
Section 4.1.1 Due Formation or Incorporation. The
Company and each of its Subsidiaries has been duly formed or organized and is
validly existing and in good standing under the laws of the state of their
respective formation or organization and are qualified or licensed, and in good
standing, as a foreign trust, corporation, general partnership, limited
partnership or limited liability company authorized to do business in each other
jurisdiction in which its ownership of properties or its conduct of business
requires such qualification or licensing, except where the failure to be so
qualified or licensed, or in good standing, as a foreign trust, corporation,
general partnership, limited partnership or limited liability company would not
have a Material Adverse Effect on the Company.
Section 4.1.2 REIT Status. As of the date hereof, the
Company qualifies as a REIT under the Code and has taken no action or omitted to
take any action, the effect of which reasonably could be expected to disqualify
the Company as a REIT under the Code. As of the date hereof, the Company is not
a "Pension-held REIT" as defined in Section 856(h)(3)(D) of the Code.
Section 4.2 Authority. The Company has the trust power and
authority to own, lease and operate its properties, directly or indirectly, and
to conduct its business as presently conducted and as contemplated by the Annual
Report on Form 10-K as filed by the Company under the Exchange Act for the year
ended December 31, 1998 (the "1998 10-K").
Section 4.3 Valid Agreement of the Company. The execution,
delivery and performance of this Agreement, the Warrant, the Operating Agreement
and the Agreement and Waiver have each been duly authorized by the Company. This
Agreement has been, and the Warrant, the Operating Agreement and Agreement and
Waiver, upon the Closing, will be, executed and delivered by the Company. This
Agreement represents, and the Warrant, the Operating Agreement and Agreement and
Waiver, upon the Closing will represent, the valid and binding obligations of
the Company, enforceable against the Company in accordance with their respective
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general principles of equity (whether
enforcement is sought by proceedings in equity or at law).
Section 4.4 No Default. The execution and delivery of the
Operative Instruments by the Company and the performance by the Company of its
obligations do not (or if not yet executed, upon the execution and delivery
thereof will not) (a) violate the Charter or By-Laws of the Company; (b) violate
or constitute a breach of or default under any mortgage, indenture, loan
agreement, promissory note or other agreement to which the Company or any of its
Subsidiaries is a party, or by which any of them is bound, or to which any
property of the Company or any of its Subsidiaries is subject; or (c) conflict
with or violate any law or any regulation, rule, order or decree of any
governmental body, court or administrative agency having jurisdiction over the
Company or any of its Subsidiaries or the properties of any of them; except, in
the case of clauses (b) and (c) above, for such breaches, defaults, conflicts or
violations which would not, individually or in the aggregate, have a Material
Adverse Effect on the Company or on the ability of the Company to consummate the
transactions contemplated hereby and thereby.
Section 4.5 No Required Consents. The execution and delivery
of the Operative Instruments by the Company and the performance by the Company
of its obligations to be performed at or prior to the related Closing do not
require any filing or registration with, or the receipt of any consent by, any
governmental or regulatory authority by the Company or its Subsidiaries other
than (a) any which have already been obtained or waived, (b) approval by the New
York Stock Exchange of a Supplemental Listing Application and (c) such consents
as may be required under the Securities Act, the regulations promulgated
thereunder or applicable state securities laws, which prior to the related
Closing will have been obtained or waived.
Section 4.6 Reservation of Shares. The Company has duly
reserved solely for purposes of issuance (i) upon conversion of the Preferred
Shares the Common Shares into which the Preferred Shares may be converted from
time to time, and (ii) upon exercise of the Warrant the Common Shares underlying
the Warrant.
Section 4.7 Validity of Preferred Shares. The Company has duly
authorized the issuance and delivery of 4,375,000 Preferred Shares pursuant to
this Agreement and, upon delivery thereof and receipt by the Company of the
Purchase Price therefor, the Preferred Shares will be duly authorized, validly
issued, fully paid and nonassessable. The Preferred Shares have the
distribution, conversion, voting and other terms set forth in the Articles
Supplementary and, to the extent not inconsistent therewith, as set forth in the
Charter and By-Laws of the Company.
Section 4.8 Disclosure. The Company has heretofore delivered
to the Investor the Proxy Statement relating to its 1999 Annual Meeting of
Shareholders (the "1999 Proxy Statement") and the 1998 10-K.
Section 4.8.1 No Misstatement or Omission. At the
time of filing, the 1999 Proxy Statement and the 1998 10-K complied in all
material respects with the requirements of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder. The 1999 Proxy Statement and the
1998 10-K do not, as of their respective dates, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made not misleading in light of the
circumstances under which they were made.
Section 4.8.2 Financial Statements. The financial
statements, including the notes thereto, and supporting schedules included in
the 1998 10-K have been prepared in conformity with GAAP applied on a consistent
basis (except as otherwise noted therein) and present fairly the financial
position of the Company and its Subsidiaries as of the dates indicated and the
results of their operations for the periods shown.
Section 4.8.3 Subsequent Events. Since the respective
dates as of which information is given in the 1998 10-K, except as otherwise
stated in any Current Report on Form 8-K filed by the Company, or in the press
releases, listed on Schedule 4.8.3 hereto and other than changes in general
economic conditions or industry conditions, there has not been any change in the
condition (financial or otherwise) or in the earnings, business affairs or
business prospects of the Company and its Subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, which
would have a Material Adverse Effect on the Company.
Section 4.9 Capitalization. The authorized shares of
beneficial interest of the Company consist of: (i) 100,000,000 Common Shares,
par value $.01 per share; and (ii) 10,000,000 preferred shares, par value $.01
per share, of which 4,375,000 shares have been duly classified as 8.75% Series B
Senior Cumulative Convertible Preferred Shares, par value $.01 per share (the
"Preferred Shares"). Schedule 4.9 sets forth the issued and outstanding shares
of beneficial interest of the Company as of the date hereof. Except as set forth
on Schedule 4.9 hereto, there are no other shares of beneficial interest of the
Company outstanding and no other outstanding options, warrants, convertible or
exchangeable securities, subscriptions, rights (including preemptive rights),
share appreciation rights, calls or commitments of any character whatsoever to
which the Company is a party or may be bound requiring the issuance or sale of
any shares of beneficial interest of the Company, and there are no contracts or
other agreements by which the Company is or may become bound to issue additional
shares of its beneficial interest or any options, warrants, convertible or
exchangeable securities, subscriptions, rights (including preemptive rights),
share appreciation rights, calls or commitments of any character whatsoever
relating to such shares.
Section 4.10 Litigation. Except as set forth on Schedule 4.10
or in the 1998 10-K, the Company has not received any notice of any outstanding
judgments, rulings, orders, writs, injunctions, awards or decrees of any court
or any foreign, federal, state, county or local government or any other
governmental, regulatory or administrative agency or authority or arbitral
tribunal against or involving the Company or any of its Subsidiaries which is
currently in effect. Except as set forth on Schedule 4.10, neither the Company
nor any of its Subsidiaries is a party to, or to the knowledge of the Company,
threatened with, any litigation or judicial, governmental, regulatory,
administrative or arbitration proceeding.
Section 4.11 ERISA. (a) Each Plan is in substantial compliance
with the applicable provisions of ERISA and the Code, (b) no Termination Event
has occurred nor is reasonably expected to occur with respect to any Benefit
Plan, (c) the most recent annual report (Form 5500 Series) with respect to each
Plan, including Schedule B (Actuarial Information) thereto, copies of which have
been filed with the Internal Revenue Service, is complete and correct in all
material respects and fairly presents the funding status of such Benefit Plan,
and since the date of such report there has been no material adverse change in
such funding status, (d) no Benefit Plan had an accumulated (whether or not
waived) funding deficiency or permitted decreases which would create a
deficiency in its funding standard account within the meaning of Section 412 of
the Code at any time during the previous 60 months, and (e) no Lien imposed
under the Code or ERISA exists or is likely to arise on account of any Benefit
Plan within the meaning of Section 412 of the Code. Neither the Company nor any
of its ERISA Affiliates has incurred any withdrawal liability under ERISA with
respect to any Multiemployer Plan, and the Company is not aware of any facts
indicating that the Company or any of its ERISA Affiliates may in the future
incur any such withdrawal liability. Except as required by Section 4980B of the
Code or as set forth on Schedule 4.11, the Company does not maintain a welfare
plan (as defined in Section 3(1) of ERISA) which provides benefits or coverage
after a participant's termination of employment. Neither the Company nor any of
its ERISA Affiliates have incurred any liability under the Worker Adjustment and
Retraining Notification Act. All Plans in existence on the Closing Date are set
forth on Schedule 4.11 hereto.
Section 4.12 Environmental Matters. To the best knowledge of
the Company and its Subsidiaries (which for purposes of this Section 4.12 means
the actual knowledge of the President and Chief Executive Officer, each of the
Senior Vice Presidents and the Regional Vice Presidents and the General Counsel
of the Company, whose knowledge is based upon the Phase I and Phase II reports
obtained by the Company and provided to the Investor):
(a) The operations and properties of the Company and its
Subsidiaries are in material compliance with Environmental Laws;
(b) Except as set forth on Schedule 4.12, there has been no
Release (i) at any assets, properties or businesses currently owned or operated
by the Company, any of its Subsidiaries or any predecessor in interest; (ii)
from adjoining properties or businesses onto or under the Company's properties;
or (iii) from or onto any facilities which received Hazardous Materials
generated by the Company, any of its Subsidiaries or any predecessor in interest
that would result in any Environmental Liabilities;
(c) Except as set forth on Schedule 4.12, no Environmental
Claims have been asserted against the Company, any of its Subsidiaries or any
predecessor in interest nor does the Company or any of its Subsidiaries have
knowledge or notice of any threatened or pending Environmental Claims;
(d) No Environmental Claims have been asserted against any
facilities that may have received Hazardous Materials generated by the Company,
any of its Subsidiaries or any predecessor in interest;
(e) The Company has conducted Phase I Environmental Site
Assessments on all of the material assets, properties and businesses owned or
operated by the Company and its Subsidiaries and has delivered or made available
to the Investor true and complete copies of all material environmental reports,
studies, investigations or material correspondence with any governmental agency
in their possession regarding any Environmental Liabilities at the assets,
properties or businesses of the Company or any of its Subsidiaries; and
(f) To the extent that any of the assets, properties or
businesses owned or operated by the Company or any of its Subsidiaries are
located in "wetlands" regulated under Environmental Laws, the Company and its
Subsidiaries are in material compliance with Environmental Laws regulating those
"wetlands."
Section 4.13 Investment Company. The Company is not, and upon
the issuance and sale of the Preferred Shares and Warrant as herein contemplated
will not be, an "investment company" or an Entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act of 1940, as
amended.
Section 4.14 Taxes. The Company has filed all federal, state,
local or foreign tax returns that are required to be filed or has duly requested
extensions thereof and has paid all taxes required to be paid by it and any
related assessments, fines or penalties, except for any such tax, assessment,
fine or penalty that is being contested in good faith and by appropriate
proceedings or where the failure to make any such filing or payment would not be
reasonably expected to have a Material Adverse Effect on the Company; and
adequate charges, accruals and reserves have been provided for in the financial
statements of the Company in respect of all material federal, state, local and
foreign taxes for all periods as to which the tax liability of the Company has
not been finally determined or remains open to examination by applicable taxing
authorities. The Company is not currently under review by any federal or state
taxing authority.
Section 4.15 Insurance. The Company carries or is entitled to
the benefits of insurance in such amounts and covering such risks as is
reasonably sufficient under the circumstances and is consistent with comparable
businesses and all such insurance is in full force and effect.
Section 4.16 Affiliated Transactions. Except as set forth on
Schedule 4.16, the 1998 10-K or the 1999 Proxy Statement describe all
transactions with, or payments to, any Affiliate in excess of $60,000 in the
aggregate (other than reimbursement of expenses and compensation payable to
employees or officers or trustees' fees payable to the Company's trustees).
Except as set forth on Schedule 4.16, neither the Company, nor any officer or
trustee of the Company, nor any of its Subsidiaries, or any Affiliate of any of
the foregoing, or any member of the Immediate Family of any of the foregoing:
(i) owns, directly or indirectly, any interest in (excepting not more than five
(5) percent stock holdings held solely for investment purposes in securities of
any Person which are listed on any national securities exchange or regularly
traded in the over-the-counter market) or is an owner, sole proprietor,
shareholder, partner, director, officer, employee, consultant or agent of any
person which is a competitor, lessor, lessee, customer or supplier of the
Company or any of its Subsidiaries; (ii) owns, directly or indirectly, in whole
or in part, any property, patent, trademark, service mark, trade name,
copyright, franchise, invention, permit, license or secret or confidential
information which the Company or any of its Subsidiaries is using or the use of
which is necessary for the business of the Company or any of its Subsidiaries;
or (iii) has any cause of action or other suit, action or claim whatsoever
against, or owes any amount to, the Company or any of its Subsidiaries, in each
case (i) through (iii) except for those in the ordinary course of business. For
purposes of this Section 4.16, the term "Affiliate" shall not include any Person
that is a partner or member in any Subsidiary of the Company if such Person (but
for this sentence) would be an Affiliate of the Company solely by virtue of such
partner or member position.
Section 4.17 Liabilities. Except as set forth on Schedule 4.17
or as reflected in the consolidated balance sheet of the Company at December 31,
1998 (the "Balance Sheet") as included in the 1998 10-K for the year ended
December 31, 1998, the Company and its Subsidiaries do not have any material
direct or indirect indebtedness, liability, claim, loss, damage, deficiency,
obligation or responsibility, fixed or unfixed, choate or inchoate, liquidated
or unliquidated, secured or unsecured, subordinated or unsubordinated, matured
or unmatured, accrued, absolute, contingent or otherwise, including, without
limitation, liabilities on account of taxes, other governmental, regulatory or
administrative charges or lawsuits brought, whether or not of a kind required by
GAAP to be set forth on a financial statement (collectively, "Liabilities"),
that were not fully and adequately reflected or reserved against on the Balance
Sheet of the Company or incurred in the ordinary course of business since
December 31, 1998 (less Liabilities that have been discharged in the ordinary
course of business since the date of the Balance Sheet of the Company).
Section 4.18 Agreement and Waiver. The Board of Trustees of
the Company has authorized the Company to enter into and perform the Agreement
and Waiver.
Section 4.19 Integration. Neither the Company nor any Person
or Entity acting on behalf of the Company has offered, transferred, pledged,
sold or otherwise disposed of any Preferred Shares, any interest in the
Preferred Shares or any other similar security to, or solicited any offer to buy
or accept a transfer, pledge or other disposition of any Preferred Share, any
interest in any Preferred Share or any such other similar security from, or
otherwise approached or negotiated with respect to any Preferred Share, or any
other similar security with, any Person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, in each case that would constitute a distribution of the
Preferred Shares under the Securities Act and would disqualify the issuance and
sale of the Preferred Shares without a registration statement by the Company to
the Investor pursuant to Section 4(2) of the Securities Act. Assuming the
correctness of the representations and warranties of the Investor in Article 5,
the Investment is exempt from registration under applicable federal and state
securities laws.
Section 4.20 No Event of Default. No event has occurred and is
continuing and no condition exists which constitutes a breach, an event of
default, or otherwise gives any other party the rights to accelerate or require
payment of any obligation, or with the passage of time would constitute such an
event (a "Breach"), under any agreement or instrument to which the Company or
any of its Subsidiaries is a party that could reasonably be expected to have a
Material Adverse Effect on the Company. Neither the Company nor any of its
Subsidiaries has received any notice that an event has occurred and is
continuing or that a condition exists which constitutes a Breach under any
agreement or instrument to which the Company or any of its Subsidiaries is a
party that could reasonably be expected to have a Material Adverse Effect on the
Company.
Section 4.21 No Brokers. In connection with the Investment,
the Company has not retained or become obligated to any broker or finder except
Legg Mason Wood Walker Inc. and Legg Mason Real Estate Services.
Section 4.22 Full Disclosure. All documents and other papers
delivered to the Investor by or on behalf of the Company in connection with this
Agreement and the transactions contemplated hereby are true, complete, accurate
and authentic and, when taken together with the Company's representations and
warranties set forth in this Agreement, do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading.
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.
In order to induce the Company to enter into this Agreement
and to consummate the transactions contemplated hereby, the Investor hereby
represents and warrants to, and covenants with, the Company as follows:
Section 5.1 Organization. The Investor has been duly organized
and is validly existing and in good standing under the laws of the State of
Delaware, and has all requisite power and authority under such laws to carry on
its business as now conducted.
Section 5.2 Accredited Investor. The Investor is an
"Accredited Investor," as such term is defined in Rule 501(a) of Regulation D
promulgated under the Securities Act.
Section 5.3 Valid Agreements of the Investor. The Investor has
all right, limited liability company power and authority to enter into this
Agreement and the Operating Agreement and to consummate the transactions
contemplated hereby and thereby. All action on the part of the Investor, its
officers, managers and members necessary for the authorization, execution and
delivery of the Operative Instruments and the performance of all obligations of
the Investor hereunder have been taken or will be taken prior to the Closing.
Each of the Operative Instruments to which the Investor is a party has been duly
authorized, executed and delivered by the Investor, and constitutes a legal,
valid and binding obligation of the Investor, enforceable against the Investor
in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (whether enforcement is sought by proceedings in equity or
at law).
Section 5.4 No Default. The execution and delivery of this
Agreement and the Operating Agreement by the Investor and the performance by the
Investor of its obligations thereunder do not (or if not yet executed, upon the
execution and delivery thereof will not) (a) violate the organizational
documents of the Investor; (b) violate or constitute a breach of or default
under any mortgage, indenture, loan agreement, promissory note or other
agreement to which the Investor is a party, or by which the Investor is bound,
or to which any property of the Investor is subject; or (c) conflict with or
violate any law or any regulation, rule, order or decree of any governmental
body, court or administrative agency having jurisdiction over the Investor or
its properties except with respect to clauses (b) and (c) where such conflict,
breach, default or violation would not reasonably be expected to have a Material
Adverse Effect on the Investor.
Section 5.5 No Brokers. In connection with the Investment, the
Investor has not retained or become obligated to any broker or finder.
Section 5.6 Investment Company. The Investor is not, and upon
the purchase of the Preferred Shares and Warrant as herein contemplated, will
not be, an "investment company" or an Entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act of 1940, as
amended.
Section 5.7 Knowledge and Experience. The Investor has such
knowledge and experience in financial and business matters that the Investor is
capable of evaluating the merits and risks involved in connection with the
Investment.
Section 5.8 Registration. The Preferred Shares and Warrant to
be acquired by the Investor pursuant to this Agreement and the Common Shares to
be received upon conversion of the Preferred Shares and exercise of the Warrant
are being acquired by the Investor for its own account for purposes of
investment and not with a view to, or intention of, distribution thereof in
violation of the Securities Act, or any applicable state securities laws.
Section 5.9 Current Share Ownership. The Investor and its
Affiliates collectively are the beneficial owners on the date hereof of less
than five percent (5%) of the outstanding Common Shares.
ARTICLE 6 COVENANTS AND UNDERTAKINGS.
Section 6.1 Closings. The Company shall use its reasonable
best efforts to comply with all conditions precedent to the Closings, including,
without limiting the foregoing, the Company shall cause the Articles
Supplementary to have been adopted, to have been filed with the SDAT and to
become effective.
Section 6.2 Expenses of Rothschild Realty, Inc. Except as set
forth in Section 6.3, the Company agrees to reimburse Rothschild at each Closing
for its reasonable out-of-pocket expenses documented to the reasonable
satisfaction of the Company. All such amounts paid pursuant to this Section 6.2
shall be paid by wire transfer of funds immediately available in New York City
to such account(s) as Rothschild shall designate in a written notice delivered
to the Company not less than two Business Days prior to the initial Closing
Date; provided, however, that the Investor, on behalf of the Company, may
directly pay out of the Purchase Price payable hereunder such fees and expenses
to Rothschild; provided further that the aggregate of all such out-of-pocket
expenses for all Closings including, without limitation, the fees and expenses
of counsel to the Investor provided for in Section 6.3 hereof, shall not exceed
$100,000.
Section 6.3 Fees and Expenses of Counsel to the Investor.
Subject to the limitation set forth in Section 6.2, the Company agrees to pay to
counsel to the Investor, at each Closing, reasonable fees and expenses in
connection with services rendered and expenses incurred in connection with the
issuance and sale of Preferred Shares and the Warrant to the Investor. All such
amounts paid pursuant to this Section 6.3 shall be paid by wire transfer of
funds immediately available in New York City to such account(s) as counsel to
the Investor shall designate in a written notice delivered to the Company not
less than two Business Days prior to each Closing Date; provided, however, that
the Investor, on behalf of the Company, may directly pay out of the Purchase
Price hereunder such fees and expenses to counsel to the Investor.
Section 6.4 Use of Proceeds. The Company shall use the
proceeds from the sale of the Preferred Shares to the Investor at each Closing
to purchase an identical number of Series C Preferred Mirror Limited Partnership
Units of Brandywine Operating Partnership, LP (the "Operating Partnership"), as
set forth in the Eighth Amended and Restated Agreement of Limited Partnership of
the Operating Partnership in the Form of Exhibit E attached hereto.
Section 6.5 Transfer Restrictions. The certificates
representing the Preferred Shares and Warrant and the Common Shares received
upon conversion of the Preferred Shares and the exercise of the Warrant shall
bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION
THEREFROM.
The Investor may not sell, transfer or dispose of any of the
Preferred Shares, the Warrant or the Common Shares received upon conversion of
the Preferred Shares or exercise of the Warrant (except pursuant to an effective
registration statement under the Securities Act) without first delivering to the
Company an opinion of counsel (reasonably acceptable in form and substance to
the Company) that neither registration nor qualification under the Securities
Act and applicable state securities laws is required in connection with such
transfer and the written agreement of the transferee to be bound by the
provisions of this Section 6.5.
ARTICLE 7 CONDITIONS PRECEDENT TO THE OBLIGATION
OF THE INVESTOR TO CLOSE.
The obligation of the Investor to complete each Closing is
subject, at its option, to the fulfillment on or prior to the related Closing
Date (unless otherwise provided) of the following conditions, any one (1) or
more of which may be waived by it in its sole discretion:
Section 7.1 Representations and Covenants. The representations
and warranties of the Company contained in this Agreement shall be true,
complete and accurate in all material respects on and as of the related Closing
Date with the same force and effect as though made on and as of the related
Closing Date, except for changes contemplated or permitted by this Agreement and
except to the extent that any representation or warranty is made as of a
specified date, in which case, such representation and warranty shall be true
and correct in all material respects as of such date. The Company shall have
performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by the
Company on or prior to the related Closing Date. The Company shall have
delivered to the Investor a certificate, dated the related Closing Date and
signed by the President and Chief Financial Officer of the Company, to the
foregoing effect and stating that all conditions to the Investor's obligations
hereunder have been satisfied.
Section 7.2 Good Standing Certificates. The Company shall have
delivered to the Investor: (i) copies of its Charter, including all amendments
thereto, certified by the SDAT; (ii) a certificate from the SDAT to the effect
that the Company is in good standing and listing all charter documents of the
Company on file in such state; and (iii) a certificate from the Secretary of
State or other appropriate official in each State in which the Company is
qualified to do business to the effect that the Company is in good standing in
such State.
Section 7.3 Governmental Permits and Approvals. Any and all
Permits necessary for the consummation of the transactions contemplated hereby
shall have been obtained and a copy thereof shall have been delivered to the
Investor except for (a) notice requirements which may be fulfilled subsequent to
the Closing Date and (b) consents, permits, approvals, authorizations, filings
and declarations the failure to obtain or to undertake which will not adversely
affect the ability of the Company to perform its obligations under the Operative
Agreements or any agreement executed in accordance therewith or would not have a
Material Adverse Effect on the Company or its Subsidiaries.
Section 7.4 Legislation. No legislation shall have been
proposed, and approved by a legislative committee, or enacted, and no statute,
law, ordinance, code, rule or regulation shall have been adopted, revised or
interpreted, by any foreign, federal, state, county or local government or any
other governmental, regulatory or administrative agency or authority, which
would require, upon or as a condition to the acquisition of the Preferred Shares
or the Warrant by the Investor, the divestiture or cessation of the conduct of
any business presently conducted by the Company, on the one hand, or by the
Investor, on the other hand, or which, in the good faith judgment of the
Investor, may, individually or in the aggregate, have a Material Adverse Effect
on it or on the Company in the event that the transactions contemplated hereby
are consummated.
Section 7.5 Legal Proceedings. No suit, action, claim,
proceeding or investigation shall have been instituted or threatened by or
before any court or any foreign, federal, state, county or local government or
any other governmental, regulatory or administrative agency or authority seeking
to restrain, prohibit or invalidate the issuance or sale of the Preferred Shares
or the Warrant to the Investor hereunder or the consummation of the transactions
contemplated hereby or to seek damages in connection with such transactions.
Section 7.6 Third Party Consents. All consents, waivers,
licenses, variances, exemptions, franchises, permits, approvals and
authorizations from parties to any contracts and other agreements (including any
amendments and modifications thereto) with the Company which may be required in
connection with the performance by the Company of its obligations under this
Agreement or to assure such contracts and other agreements continue in full
force and effect after the consummation of the transactions contemplated hereby
(without any Breach by the Company or any of its Subsidiaries) shall have been
obtained.
Section 7.7 Share and Warrant Certificates. The Company shall
have tendered to the Investor the share certificate or certificates evidencing
the Preferred Shares, and the certificates for the Warrant, to be purchased on
such Closing Date in accordance with Section 3.1 hereof, registered in the
Investor's name.
Section 7.8 Approval of Counsel to the Investor. The Company
shall furnish to counsel for the Investor such certificates and documents as may
reasonably be requested by counsel to the Investor to enable such counsel to
pass on or evaluate the satisfaction of the conditions set forth in this
Article 7. All actions and proceedings hereunder and all documents and other
papers required to be delivered by the Company hereunder or in connection with
the consummation of the transactions contemplated hereby, and all other related
matters, shall have been reasonably approved by counsel to the Investor, as to
their form and substance.
Section 7.9 Articles Supplementary. The Articles Supplementary
shall have been accepted for record by the SDAT.
Section 7.10 Operating Agreement. The Company shall have
executed and delivered to the Investor the Operating Agreement.
Section 7.11 Opinion of Counsel. The Investor shall have
received a favorable opinion letter, dated as of the related Closing Date, from
Pepper Hamilton LLP to the effect of the matters contained in Exhibit F. In
rendering such opinion, Pepper Hamilton LLP shall be permitted to rely upon
Ballard Spahr Andrews & Ingersoll, LLP as to matters of Maryland law.
Section 7.12 Listing of Common Shares. The Common Shares
issuable upon conversion of the Preferred Shares and exercise of the Warrant
shall have been approved for listing on the New York Stock Exchange.
Section 7.13 Expenses of Rothschild Realty, Inc. Rothschild
shall have been reimbursed for the expenses to be paid by the Company as
described under Section 6.2.
Section 7.14 Fees and Expenses of Counsel to the Investor.
Provided that counsel to the Investor shall have provided to the Company a copy
of their invoice at least three (3) days prior to the related Closing, counsel
to the Investor shall have received the fees and disbursements to be paid by the
Company as described under Section 6.3.
Section 7.15 Agreement and Waiver. The Company shall have
executed and delivered to the Investor the Agreement and Waiver.
Section 7.16 Subsequent Events. Since the respective dates as
of which information is given in the 1998 10-K, there has not been any change in
the condition (financial or otherwise) or in the earnings, business affairs or
business prospects of the Company and its Subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, which has
had, or could reasonably be expected to have, a Material Adverse Effect on the
Company.
Section 7.17 Trustee and Officer Insurance. The Company shall
have in place director and officer insurance as provided under Section 2.4 of
the Operating Agreement.
Section 7.18 Use of Proceeds. The Company shall provide
evidence reasonably acceptable to the Investor that the transaction described in
Section 6.4 has occurred.
Section 7.19 Section 4(d) Trustee. None of the events
enumerated in Section 4(d) of the Articles Supplementary which provide for the
election of the Section 4(d) Trustee (as defined in the Articles Supplementary)
shall have occurred.
ARTICLE 8 CONDITIONS PRECEDENT TO THE OBLIGATION OF
THE COMPANY TO CLOSE.
The obligation of the Company to complete each Closing is subject, at
its option, to the fulfillment on or prior to the related Closing Date of the
following conditions, any one (1) or more of which may be waived it in its sole
discretion:
Section 8.1 Representations and Covenants. The representations
and warranties of the Investor contained in this Agreement shall be true,
complete and accurate in all material respects on and as of the related Closing
Date with the same force and effect as though made on and as of the related
Closing Date, except for changes contemplated or permitted by this Agreement and
except to the extent that any representation or warranty is made as of a
specified date, in which case, such representation and warranty shall be true,
complete and accurate in all material respects as of such date. The Investor
shall have performed and complied in all material respects with all covenants
and agreements required by this Agreement to be performed or complied with by it
on or prior to the related Closing Date. The Investor shall have delivered to
the Company a certificate, dated the related Closing Date and signed by an
officer of the Investor to the foregoing effect and stating that all conditions
to the Company's obligations hereunder have been satisfied.
Section 8.2 Governmental Permits and Approvals. Any and all
Permits necessary for the consummation of the transactions contemplated hereby
shall have been obtained.
Section 8.3 Legal Proceedings. No suit, action, claim,
proceeding or investigation shall have been instituted or threatened before any
court or any foreign, federal, state, county or local government or any other
governmental, regulatory or administrative agency or authority seeking to
restrain, prohibit or invalidate the sale of the Preferred Shares or the Warrant
to the Investor hereunder or the consummation of the transactions contemplated
hereby or to seek damages in connection with such transactions.
Section 8.4 Third Party Consents. All consents, waivers,
licenses, variances, exemptions, franchises, permits, approvals and
authorizations from parties to any contracts and other agreements (including any
amendments and modifications thereto) with the Investor which may be required in
connection with the performance by the Investor of its obligations under this
Agreement shall have been obtained.
Section 8.5 Purchase Price. The Investor shall have tendered
payment for the Preferred Shares in the amount and in the manner specified in
Section 3.1 hereof.
Section 8.6 Approval of Counsel to the Company. The Investor
shall furnish to counsel for the Company such certificates and documents as may
reasonably be requested by counsel to the Company to enable such counsel to pass
on or evaluate the satisfaction of the conditions set forth in this Article 8.
All actions and proceedings hereunder and all documents or other papers required
to be delivered by the Investor hereunder or in connection with the consummation
of the transactions contemplated hereby, and all other related matters, shall be
subject to the reasonable approval of Pepper Hamilton LLP, counsel to the
Company, as to their form and substance.
Section 8.7 Listing of Common Shares. The Common Shares
issuable upon conversion of the Preferred Shares and exercise of the Warrant
shall have been approved for listing on the New York Stock Exchange.
ARTICLE 9 ASSIGNMENT.
Section 9.1 Assignability by Investor. Subject to the terms of
the Agreement and Waiver, the Investor may, without the consent or approval of
the Company, but with written notice to the Company, assign its rights and
obligations under this Agreement to a Person to whom the Investor assigns its
interest in the Preferred Shares or the Warrant, pro rata based upon the
percentage of the Preferred Shares or the Warrant transferred, provided that
such assignee agrees in writing to be bound by the terms of this Agreement.
Section 9.2 Assignability by the Company. Without the prior
written consent of the Investor, in the sole and absolute discretion of the
Investor, the Company may not assign or delegate its rights or obligations
hereunder except in connection with a merger or consolidation of the Company or
a sale by the Company of all or substantially all of its assets or a similar
transaction, so long as the consummation of such merger, consolidation, sale or
similar transaction is in compliance with any applicable terms of the Operative
Instruments (including, without limitation, Section 7(a) of the Operating
Agreement and Section 4(m) of the Articles Supplementary).
Section 9.3 Binding Agreement. Subject to the provisions of
Sections 9.1 and 9.2, this Agreement shall be binding upon the heirs, successors
and assigns of the parties.
ARTICLE 10 MISCELLANEOUS.
Section 10.1 Applicable Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York as applied
between residents of such State entering into contracts to be performed wholly
within such State.
Section 10.2 Notices. All notices hereunder shall be in
writing and shall be given: (a) if to the Company, at 14 Campus Boulevard, Suite
100, Newtown Square, Pennsylvania 19073, Attention: President and Chief
Executive Officer and General Counsel, or such other address or addresses of
which the Investor shall have been given notice, with copies to Pepper Hamilton
LLP, 3000 Two Logan Square, Eighteenth and Arch Streets, Philadelphia,
Pennsylvania 19103-2799, Attention: Michael Friedman, Esq., or such other
address of which the Investor shall have been given notice; and (b) if to the
Investor, at Rothschild Realty Inc., 1251 Avenue of the Americas, New York, New
York 10020, Attention: D. Pike Aloian, or such other address of which the
Company shall have been given notice, with copies to Schulte Roth & Zabel LLP,
900 Third Avenue, New York, New York 10022, Attention: Marc Weingarten, Esq., or
such other address of which the Company shall have been given notice. Any notice
shall be deemed to have been given if personally delivered or sent by United
States mail or by commercial courier or delivery service or by telegram or telex
and shall be deemed received, unless earlier received, (i) if sent by certified
or registered mail, return receipt requested, three business days after deposit
in the mail, postage prepaid, (ii) if sent by United States Express Mail or by
commercial courier or delivery service, one Business Day after delivery to a
United States Post Office or delivery service, postage prepaid, (iii) if sent by
telegram, telex or facsimile transmission, when receipt is acknowledged by
answerback, and (iv) if delivered by hand, on the date of receipt.
Section 10.3 Entire Agreement; Amendments. This Agreement and
other agreements referred to herein set forth the entire understanding of the
parties hereto with respect to the subject matter hereof and thereof and
supersede any prior agreements or understandings with respect to the subject
matter hereof and thereof, and this Agreement shall not be amended except by an
instrument in writing executed by the Company and the Investor.
Section 10.4 Remedies for Breaches of This Agreement.
Section 10.4.1 Survival of Certain Provisions. All of
the representations and warranties of the Company contained in Article 4 above
and all of the covenants and undertakings of the Company contained in Article 6
above shall survive the Closings hereunder and continue in full force and effect
until the second anniversary of the final Closing, provided that the
representations and warranties contained in Sections 4.11, 4.12 and 4.14 shall
survive the Closings hereunder and continue in full force and effect until the
expiration of the applicable statutes of limitation.
Section 10.4.2 Indemnification Provisions. In the
event that either the Company or the Investor breaches any of its
representations, warranties, and covenants contained herein, provided that the
non-breaching party makes a written claim for indemnification against the
breaching party pursuant to Section 10.2, then the breaching party agrees to
indemnify the non-breaching party from and against the entirety of any Adverse
Consequences the non-breaching party may suffer through and after the date of
the claim for indemnification (including any Adverse Consequences the
non-breaching party, its members or shareholders may suffer after the end of any
applicable survival period, provided that notice of any claim is delivered prior
to the end of the survival period) resulting from, arising out of, relating to,
in the nature of, or caused by such breach; provided that the Company's
obligation to indemnify the Investor shall not exceed the sum of (i) the amount
of funds invested in the Company by the Investor at any time a claim for
indemnification is made and (ii) legal fees and collection costs associated with
any such claim. In addition to the indemnification rights provided for herein,
the non-breaching party shall also have the right to all such remedies to which
it is entitled as a matter of law or equity. No failure or delay by the
non-breaching party in exercising any right, power or privilege shall operate as
a waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise of any right, power or privilege.
Section 10.4.3 Matters Involving Third Parties.
(i) If any third party shall notify any party
entitled to be indemnified hereunder (the "Indemnified Party") with
respect to any matter (a "Third Party Claim") which may give rise to a
claim for indemnification against the Company or the Investor (the
"Indemnifying Party") under this Section 10.4, then the Indemnified
Party shall promptly notify each Indemnifying Party thereof in writing;
provided, however, that no delay on the part of the Indemnified Party
in notifying any Indemnifying Party shall relieve the Indemnifying
Party from any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to
assume the defense of the Third Party Claim with counsel of his or its
choice reasonably satisfactory to the Indemnified Party at any time
within 15 days after the Indemnified Party has given notice of the
Third Party Claim; provided, however, that the Indemnifying Party must
conduct the defense of the Third Party Claim actively and diligently
thereafter in order to preserve its rights in this regard; and provided
further that the Indemnified Party may retain separate co-counsel at
its sole cost and expense and participate in the defense of the Third
Party Claim.
(iii) So long as the Indemnifying Party has assumed
and is conducting the defense of the Third Party Claim in accordance
with Section 10.4.3(ii) above, the Indemnifying Party will not consent
to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably) unless the judgment
or proposed settlement involves only the payment of money damages by
one or more of the Indemnifying Parties and does not impose an
injunction or other equitable relief upon the Indemnified Party.
(iv) So long as the Indemnifying Party has assumed
and is conducting the defense of the Third Party Claim in accordance
with Section 10.4.3(ii) above, the Indemnified Party will not consent
to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably).
(v) In the event none of the Indemnifying Parties
assumes and conducts the defense of the Third Party Claim in accordance
with Section 10.4.3(ii) above, (A) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner he or
it reasonably may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any Indemnifying Party in
connection therewith) and (B) the Indemnifying Parties will remain
responsible for any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of,
or caused by the Third Party Claim to the fullest extent provided in
this Section 10.4.
Section 10.5 Confidentiality. The Investor shall not use any
Confidential Information for any purpose other than evaluating the Investment
and the Investor will not divulge, furnish or make available to any other person
or entity other than the Investor's legal counsel, accountants and designated
advisors, and a limited number of the Investor's officers and employees and the
officers and employees of any member of the Investor, solely to the extent
necessary in connection with the evaluation and consummation of the Investment;
such persons and entities shall be informed by the Investor of the confidential
nature of the Confidential Information and shall be directed to treat such
Confidential Information confidentially. Except as required by law, without the
prior written consent of the other party or until such time as a mutually
agreeable public announcement is made, no party hereto will disclose to any
Person other than its Affiliates, attorneys, accountants and other advisors
either the fact that discussion or negotiations are taking place concerning the
Investment or any of the terms, conditions or other facts with respect to the
Investment, including status or that the Confidential Information has been made
available to the Investor and its Representatives.
In the event that the Investor is requested or required (by
interrogatories, requests for information or documents, subpoena, civil
investigative demand or similar process) to disclose any of the Confidential
Information, the Investor will provide the Company with prompt notice of such
request or requirements, and the Investor shall cooperate with the Company in
seeking to legally avoid such disclosure. If, in the absence of a protective
order, the Investor is legally compelled, in the opinion of its counsel, to
disclose any of the information, the Company shall either seek and obtain
appropriate protective orders against such disclosure or shall hereby be deemed
to waive the Investor's compliance with the provisions of this Agreement to the
extent necessary to satisfy such request or requirement.
Section 10.6 Standstill. Subject to the provisions of the
sentence next following, the Investor agrees that for such period of time as it
and its Affiliates beneficially own at least fifty percent (50%) of the
outstanding Preferred Shares, none of the Investor, Rothschild, any of their
officers, members, partners, stockholders or subsidiaries and its Affiliates
shall (a) acquire, offer to acquire, or agree to acquire, directly or
indirectly, by purchase or otherwise, or sell short, any securities, direct or
indirect rights or options to acquire any securities, or securities or
instruments convertible into voting securities, of the Company, without the
consent of the Company (provided, however, that the foregoing shall not prohibit
the acquisition of securities of the Company as provided in Articles 2 and 3 of
this Agreement); (b) make, or in any way participate, directly or indirectly, in
any "solicitation" of "proxies" to vote (as such terms are used in the proxy
rules of the SEC) securities of the Company, or seek to advise or influence any
person or entity with respect to any voting of any securities of the Company;
(c) form, join or in any way participate in a "group" within the meaning of
Section 13(d)(3) of the Exchange Act, with respect to any voting securities of
the Company; (d) make any public announcement with respect to or make or submit
a proposal or offer (with or without conditions) for the securities or assets of
the Company or any extraordinary transaction involving the Company or any of its
Subsidiaries; (e) submit or effect any filing or application, or seek to obtain
any permit, consent or agreement, approval or other action, required by or from
any regulatory agency with respect to an acquisition of the Company or any of
its securities or assets; (f) otherwise act alone or in concert with others to
seek to control the management, board of trustees or policies of the Company; or
(g) propose any of the foregoing unless and until such proposal is specifically
invited by the Company. Based on the representations by Rothschild to the
Company that Affiliates of Rothschild (which representation Rothschild hereby
reaffirms) not under control of Rothschild and The Public Employees Retirement
System of Ohio ("OPERS") have no access to any of the internal information or
files of Rothschild and receive no information, recommendations or advice from
Rothschild, the Company agrees that the prohibitions of the preceding sentence
shall not apply to any Affiliates of Rothschild that are not under the control
of Rothschild and are engaged in the regular business of trading in publicly
traded securities or to OPERS, so long as such affiliates and OPERS have not
received, or been given access to, any of the Confidential Information and have
not received any instructions, recommendations or advice pertaining to an
investment in or control of the Company from any party having access to any of
the Confidential Information.
Section 10.7 Lock-Up. For a period of one year, commencing on
the date of this Agreement, the Investor shall not sell, transfer, convey,
assign, pledge or hypothecate any of the Preferred Shares or the Warrant or any
Common Shares obtained upon conversion of any Preferred Shares or exercise of
the Warrant; provided that this Section 10.7 shall not apply to any sale,
transfer, conveyance, assignment, pledge or hypothecation between the Investor
and any of its Affiliates or between or among Affiliates of the Investor;
provided, however, that all such Affiliates shall be similarly restricted for
such one-year period.
Section 10.8 Termination. This Agreement may be terminated at
any time prior to the date on which all of the Preferred Shares have been sold
hereunder:
(a) by the mutual written consent of the Investor and the
Company;
(b) by the Investor if the entire amount of Preferred Shares
to be sold by the Company to the Investor pursuant hereto has not been sold on
or prior to December 31, 1999; provided that the Investor is not in material
breach of any of its representations, warranties, covenants or agreements
contained in this Agreement. In the event of termination by the Investor
pursuant to this Section 10.8, written notice thereof shall forthwith be
delivered to the Company;
(c) by the Investor, if there is a material breach of any
material representation or warranty set forth in Article 4 hereof or any
covenant or agreement to be complied with or performed by the Company pursuant
to the terms of this Agreement, provided that the Investor may not terminate
this Agreement prior to the Closing unless the Company has not cured such breach
after 10 days' notice thereof; or
(d) by the Company, if there is a material breach of any
material representation or warranty set forth in Article 5 hereof or any
covenant or agreement to be complied with or performed by the Investor pursuant
to the terms of this Agreement, provided that the Company may not terminate this
Agreement prior to the Closing unless the Investor has not cured such breach
after 10 days' notice thereof.
Section 10.9 Counterparts. This Agreement may be executed in
more than one counterpart, each of which may be executed by fewer than all the
parties, with the same effect as if the parties executed one counterpart as of
the day and year first above written.
Section 10.10 Attorneys' Fees. In any action or proceeding
brought to enforce any provisions of this Agreement, or where any provision
hereof is validly asserted as a defense, the successful party shall be entitled
to recover reasonable attorneys' fees in addition to its reasonable costs and
expenses and any other available remedy.
Section 10.11 Non-Recourse. No recourse shall be had for any
of the obligations of the Company hereunder or for any claim based thereon or
otherwise in respect thereof, against any past, present or future trustee,
shareholder, officer or employee of the Company, whether by virtue of any
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise, all of such liability being expressly waived and released by the
Investor on behalf of itself and its Affiliates.
IN WITNESS WHEREOF, the parties hereto have hereunto set their
hands and seals as of the day and year first above written.
BRANDYWINE REALTY TRUST
By: /s/ Gerard H. Sweeney
--------------------------------------
Name: Gerard H. Sweeney
Title: President and Chief Executive Officer
FIVE ARROWS REALTY SECURITIES III L.L.C.
By: /s/ D. Pike Aloian
--------------------------------------
Name: D. Pike Aloian
Title: Manager
The undersigned hereby acknowledges the terms hereof and
hereby agrees to be bound by the following sections hereof: Sections 10.5 and
10.6.
ROTHSCHILD REALTY INC.
By: /s/ D. Pike Aloian
--------------------------------------
Name: D. Pike Aloian
Title: