THIS WARRANT AND ANY SECURITIES ACQUIRED UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAW OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. THIS WARRANT AND SUCH
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THIS WARRANT AND IN THE INVESTMENT
AGREEMENT, DATED AS OF APRIL 19, 1999, BETWEEN BRANDYWINE REALTY TRUST (THE
"COMPANY") AND FIVE ARROWS REALTY SECURITIES III L.L.C., A COPY OF WHICH WILL BE
MADE AVAILABLE BY THE COMPANY UPON REQUEST.
BRANDYWINE REALTY TRUST
COMMON SHARES PURCHASE WARRANT
No. W-1 April 19, 1999
Void after April 19, 2006 Warrant to Purchase 500,000
Common Shares
BRANDYWINE REALTY TRUST, a Maryland real estate investment
trust (the "Company"), for value received, hereby certifies that FIVE ARROWS
REALTY SECURITIES III L.L.C., or registered assigns (the "Holder"), is entitled
to purchase from the Company 500,000 duly authorized, validly issued, fully paid
and nonassessable shares of beneficial interest, par value $.01 per share, of
the Company (the "Common Shares"), at a purchase price, subject to Section 3.2
herein, of $24.00 per share, at any time or from time to time prior to 5:00
P.M., New York City time, on April 19, 2006 (the "Expiration Date"), all subject
to the terms, conditions and adjustments set forth below in this Warrant.
This Warrant is originally issued pursuant to the terms of a
certain Investment Agreement, dated as of the date hereof, between the Company
and Five Arrows Realty Securities III L.L.C. (the "Purchase Agreement").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned such terms in the Purchase Agreement.
1. Definitions. As used herein, unless the context otherwise
requires, the following terms shall have the meanings indicated:
"Additional Common Shares" shall mean all Common Shares issued
or sold (or, pursuant to Section 3.3, deemed to be issued) by the Company after
the date hereof, and prior to the twenty-fourth month anniversary of the date
this Warrant is originally issued, whether or not subsequently reacquired or
retired by the Company provided that the following shares shall not constitute
Additional Common Shares:
(a) (i) shares issued upon the exercise of this Warrant or
upon the conversion of the Series B Senior Cumulative Convertible
Preferred Shares and (ii) such number of additional shares as may
become issuable upon the exercise of this Warrant or upon conversion of
the Series B Senior Cumulative Convertible Preferred Shares by reason
of adjustments required pursuant to the anti-dilution provisions
applicable to this Warrant or the Series B Senior Cumulative
Convertible Preferred Shares as in effect on the date hereof, and
(b) (i) shares issued in the acquisition by the Company or a
subsidiary of one hundred percent (100%) of a public company by way of
merger, consolidation or exchange offer, (ii) shares issued pursuant to
a tender or exchange offer for one hundred percent (100%) of a public
company, (iii) shares issued upon the exercise, conversion or
redemption of options, warrants or units existing or outstanding on
January 11, 1999 or the issuance of shares pursuant to contractual
commitments in effect as of January 11, 1999, (iv) shares issued as
awards to trustees or employees of the Company or entities in which the
Company owns, directly or indirectly, at least a 50% economic interest
for recruitment purposes or pursuant to an equity incentive plan,
provided that the number of Common Shares, plus the number of Common
Shares issuable upon the exercise of the options or warrants under the
preceding clause (iii) issued in favor of such employees or trustees,
shall not exceed 5,000,000 Common Shares or (v) shares issued in the
acquisition of property or equity interests in property (e.g.,
partnership interests of a property-owning partnership) by the Company
or a subsidiary of the Company.
"Business Day" shall mean any day other than a Saturday or a
Sunday or a day on which commercial banking institutions in the City of New York
are authorized by law to be closed. Any reference to "days" (unless Business
Days are specified) shall mean calendar days.
"Commission" shall mean the Securities and Exchange Commission
or any successor agency having jurisdiction to enforce the Securities Act.
"Common Shares" shall have the meaning assigned to it in the
introduction to this Warrant, such term to include any shares of beneficial
interest into which such Common Shares shall have been changed or any shares of
beneficial interest resulting from any reclassification of such Common Shares.
"Company" shall have the meaning assigned to it in the
introduction to this Warrant, such term to include any trust, corporation or
other entity which shall succeed to or assume the obligations of the Company
hereunder in compliance with Section 4.
"Convertible Securities" shall mean any evidences of
indebtedness, shares of beneficial interest (other than Common Shares) or other
securities directly or indirectly convertible into, redeemable for or
exchangeable for Additional Common Shares.
"Current Market Price" shall mean, on any date specified
herein, the average of the daily closing prices for the five consecutive Trading
Days preceding such date specified herein.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time, and the rules and regulations thereunder, or any
successor statute.
"Expiration Date" shall have the meaning assigned to it in the
introduction to this Warrant.
"Fair Value" shall mean, on any date specified herein (i) in
the case of cash, the dollar amount thereof, (ii) in the case of a security, the
Current Market Price, and (iii) in all other cases, the fair value thereof (as
of a date which is within 20 days of the date as of which the determination is
to be made) determined in good faith jointly by the Company and the Holder;
provided, however, that if such parties are unable to reach agreement within a
reasonable period of time, the Fair Value shall be determined in good faith, by
an independent investment banking firm selected jointly by the Company and the
Holder or, if that selection cannot be made within ten days, by an independent
investment banking firm selected by the American Arbitration Association in
accordance with its rules, and provided further, that the Company and the Holder
shall each pay one-half of all of the fees and expenses of any third parties
incurred in connection with determining the Fair Value.
"Holder" shall have the meaning assigned to it in the
introduction to this Warrant.
"Operating Agreement" shall mean the Operating Agreement dated
as of April 19, 1999, between the Company and Five Arrows Realty Securities III
L.L.C.
"Options" shall mean any rights, options or warrants to
subscribe for, purchase or otherwise acquire either Additional Common Shares or
Convertible Securities.
"Other Securities" shall mean any shares of beneficial
interest (other than Common Shares) and other securities of the Company or any
other Person (corporate or otherwise) which the holders of the Warrants at any
time shall be entitled to receive, or shall have received, upon the exercise of
the Warrants, in lieu of or in addition to Common Shares, or which at any time
shall be issuable or shall have been issued in exchange for or in replacement of
Common Shares or Other Securities pursuant to Section 4 or otherwise.
"Person" shall mean any individual, firm, partnership,
corporation, trust, joint venture, association, joint stock company, limited
liability company, unincorporated organization or any other entity or
organization, including a government or agency or political subdivision thereof,
and shall include any successor (by merger or otherwise) of such entity.
"Purchase Agreement" shall have the meaning assigned to it in
the introduction to this Warrant.
"Purchase Price" shall mean initially $24.00 per share,
subject to adjustment and readjustment from time to time as provided in Section
3, and, as so adjusted or readjusted, shall remain in effect until a further
adjustment or readjustment thereof is required by Section 3.
"Restricted Securities" shall mean (i) any Warrants bearing
the applicable legend set forth in Section 10.1, (ii) any Common Shares (or
Other Securities) issued or issuable upon the exercise of Warrants which are
(or, upon issuance, will be) evidenced by a certificate or certificates bearing
the applicable legend set forth in such Section, and (iii) any Common Shares (or
Other Securities) issued subsequent to the exercise of any of the Warrants as a
distribution with respect to, or resulting from a subdivision of the outstanding
Common Shares (or other Securities) into a greater number of shares by
reclassification, share splits or otherwise, or in exchange for or in
replacement of the Common Shares (or Other Securities) issued upon such
exercise, which are evidenced by a certificate or certificates bearing the
applicable legend set forth in such Section.
"Rights" shall have the meaning assigned to it in Section 3.9.
"Securities Act" shall mean the Securities Act of 1933, as
amended from time to time, and the rules and regulations thereunder, or any
successor statute.
"Series B Senior Cumulative Convertible Preferred Shares"
shall mean the Company's 8.75% Series B Senior Cumulative Convertible Preferred
Shares, $.01 par value per share.
"Trading Day" shall mean a day on which the Common Shares are
traded on the New York Stock Exchange, or other national exchange or quotation
system used to determine the Current Market Price.
"Warrant" shall mean this Warrant.
2. Exercise of Warrant.
2.1. Manner of Exercise; Payment of the Purchase Price. (a)
This Warrant may be exercised by the Holder hereof, in whole or in part, at any
time or from time to time prior to the Expiration Date, by surrendering to the
Company at its principal office this Warrant, with the form of Election to
Purchase Shares attached hereto as Exhibit A (or a reasonable facsimile thereof)
duly executed by the Holder and accompanied by payment of the Purchase Price for
the number of Common Shares specified in such form.
(b) Payment of the Purchase Price may be made as follows (or
by any combination of the following): (i) in United States currency by cash or
delivery of a certified check or bank draft payable to the order of the Company
or by wire transfer to the Company, (ii) by cancellation of such number of the
Common Shares otherwise issuable to the Holder upon such exercise as shall be
specified in such Election to Purchase Shares, such that the excess of the
aggregate Current Market Price of such specified number of shares on the date of
exercise over the portion of the Purchase Price attributable to such shares
shall equal the Purchase Price attributable to the Common Shares to be issued
upon such exercise, in which case such amount shall be deemed to have been paid
to the Company and the number of shares issuable upon such exercise shall be
reduced by such specified number, or (iii) by surrender to the Company for
cancellation certificates representing Common Shares of the Company owned by the
Holder (properly endorsed for transfer in blank) having an aggregate Current
Market Price on the date of Warrant exercise equal to the Purchase Price.
2.2. When Exercise Effective. Each exercise of this Warrant
shall be deemed to have been effected immediately prior to the close of business
on the Business Day on which this Warrant shall have been surrendered to, and
the Purchase Price shall have been received by, the Company as provided in
Section 2.1, and at such time the Person or Persons in whose name or names any
certificate or certificates for Common Shares (or Other Securities) shall be
issuable upon such exercise as provided in Section 2.3 shall be deemed to have
become the holder or holders of record thereof for all purposes.
2.3. Delivery of Share Certificates, etc.; Charges, Taxes and
Expenses. (a) As soon as practicable after each exercise of this Warrant, in
whole or in part, and in any event within three Trading Days thereafter, the
Company shall cause to be issued in the name of and delivered to the Holder
hereof or, subject to Section 10, as the Holder may direct,
(i) a certificate or certificates for the number of Common
Shares (or Other Securities) to which the Holder shall be entitled upon
such exercise plus, in lieu of issuance of any fractional share to
which the Holder would otherwise be entitled, if any, a check for the
amount of cash equal to the same fraction multiplied by the Current
Market Price per share on the date of Warrant exercise, and
(ii) in case such exercise is for less than all of the Common
Shares purchasable under this Warrant, a new Warrant or Warrants of
like tenor, for the balance of the Common Shares purchasable hereunder.
(b) An issuance of certificates for Common Shares upon the
exercise of this Warrant shall be made without charge to the Holder
hereof for any issue or transfer tax or other incidental expense, in
respect of the issuance of such certificates, all of which such taxes
and expenses shall be paid by the Company; provided, however, that the
Company shall not be required to pay any tax that may be payable in
respect of any transfer involved in the issue or delivery of Common
Shares or other securities or property in a name other than that of the
Holder hereof, and no such issue or delivery shall be made unless and
until the person requesting such issue or delivery has paid to the
Company the amount of any such tax or established, to the reasonable
satisfaction of the Company, that such tax has been paid.
3. Adjustment of Common Shares Issuable Upon Exercise.
3.1. Adjustment of Number of Shares.
Upon each adjustment of the Purchase Price as a
result of the calculations made in this Section 3, this Warrant shall thereafter
evidence the right to receive, at the adjusted Purchase Price, that number of
Common Shares (calculated to the nearest one-tenth) obtained by dividing (i) the
product of the aggregate number of shares covered by this Warrant immediately
prior to such adjustment and the Purchase Price in effect immediately prior to
such adjustment of the Purchase Price by (ii) the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
3.2. Adjustment of Purchase Price.
3.2.1. Below Purchase Price. In case the Company, before (but
not after) the twenty-fourth-month anniversary of the date hereof, shall issue
or sell Additional Common Shares (including Additional Common Shares deemed to
be issued pursuant to Section 3.3 but excluding Additional Common Shares
purchasable upon the exercise of Rights referred to in Section 3.9) without
consideration or for a consideration per share (without taking into account
customary underwriters' or placement agents' discounts) less than the Purchase
Price in effect immediately prior to such issue or sale, then the Purchase Price
shall be reduced, concurrently with such issue or sale, to the amount of
consideration for such issuance or sale (or, if for no consideration, to zero).
3.2.2. Extraordinary Distributions. In case the Company at any
time or from time to time after the date hereof shall distribute to all holders
of Common Shares evidence of its indebtedness or assets other than (a) a
distribution payable in Common Shares or (b) a Regular Quarterly Dividend, or
(c) a distribution of Rights referred to in Section 3.9 hereof, then, in each
such case, subject to Section 3.7, the Purchase Price in effect immediately
prior to the close of business on the record date fixed for the determination of
holders of any class of securities entitled to receive such distribution shall
be reduced, effective as of the close of business on such record date, to a
price determined by multiplying such Purchase Price by a fraction
(x) the numerator of which shall be the Current Market Price
in effect on such record date or, if the Common Shares trade on an
ex-distribution basis, on the date prior to the commencement of
ex-distribution trading, less the Fair Value of such distribution
applicable to one Common Share, and
(y) the denominator of which shall be such Current Market
Price,
3.3. Treatment of Options and Convertible Securities. In case
the Company at any time or from time to time after the date hereof shall issue,
sell, grant or assume, or shall fix a record date for the determination of
holders of any class of securities of the Company entitled to receive, any
Options or Convertible Securities (whether or not the rights thereunder are
immediately exercisable), then, and in each such case, the maximum number of
Additional Common Shares (as set forth in the instrument relating thereto,
without regard to any provisions contained therein for a subsequent adjustment
of such number) issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Common Shares issued as
of the time of such issue, sale, grant or assumption or, in case such a record
date shall have been fixed, as of the close of business on such record date (or,
if the Common Shares trade on an ex-distribution basis, on the date prior to the
commencement of ex-distribution trading), provided that such Additional Common
Shares shall not be deemed to have been issued (i) unless the consideration per
share (determined pursuant to Section 3.5) of such shares would be less than the
Current Market Price (or, in the case of an adjustment pursuant to Section
3.2.1, less than the Purchase Price) in effect on the date of and immediately
prior to such issue, sale, grant or assumption or immediately prior to the close
of business on such record date (or, if the Common Shares trade on an
ex-distribution basis, on the date prior to the commencement of ex-distribution
trading), as the case may be, and (ii) such Additional Common Shares are not
purchasable pursuant to Rights referred to in Section 3.9, and provided,
further, that in any such case in which Additional Common Shares are deemed to
be issued,
(a) whether or not the Additional Common Shares underlying
such Options or Convertible Securities are deemed to be issued, no
further adjustment of the Purchase Price shall be made upon the
subsequent issue or sale of Convertible Securities or Common Shares
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities, except in the case of any such Options or
Convertible Securities which contain provisions requiring an
adjustment, subsequent to the date of the issue or sale thereof, of the
number of Additional Common Shares issuable upon the exercise of such
Options or the conversion or exchange of such Convertible Securities by
reason of (x) a change of control of the Company, (y) the acquisition
by any Person or group of Persons of any specified number or percentage
of the voting securities of the Company or (z) any similar event or
occurrence, each such case to be deemed hereunder to involve a separate
issuance of Additional Common Shares, Options or Convertible
Securities, as the case may be;
(b) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in the
consideration payable to the Company, or decrease in the number of
Additional Common Shares issuable, upon the exercise, conversion or
exchange thereof (by change of rate or otherwise), the Purchase Price
computed upon the original issue, sale, grant or assumption thereof (or
upon the occurrence of the record date, or date prior to the
commencement of ex-distribution trading, as the case may be, with
respect thereto), and any subsequent adjustments based thereon, shall,
upon any such increase or decrease becoming effective, be recomputed to
reflect such increase or decrease insofar as it affects such Options,
or the rights of conversion or exchange under such Convertible
Securities, which are outstanding at such time;
(c) upon the expiration (or purchase by the Company and
cancellation or retirement) of any such Options which shall not have
been exercised or the expiration of any rights of conversion or
exchange under any such Convertible Securities which (or purchase by
the Company and cancellation or retirement of any such Convertible
Securities the rights of conversion or exchange under which) shall not
have been exercised, the Purchase Price computed upon the original
issue, sale, grant or assumption thereof (or upon the occurrence of the
record date, or date prior to the commencement of ex-distribution
trading, as the case may be, with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration (or such
cancellation or retirement, as the case may be), be recomputed as if:
(i) in the case of Options for Common Shares or
Convertible Securities, the only Additional Common Shares
issued or sold were the Additional Common Shares, if any,
actually issued or sold upon the exercise of such Options or
the conversion or exchange of such Convertible Securities and
the consideration received therefor was the consideration
actually received by the Company for the issue, sale, grant or
assumption of all such Options, whether or not exercised, plus
the consideration actually received by the Company upon such
exercise, or for the issue or sale of all such Convertible
Securities which were actually converted or exchanged, plus
the additional consideration, if any, actually received by the
Company upon such conversion or exchange, and
(ii) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually
issued or sold upon the exercise of such Options were issued
at the time of the issue or sale, grant or assumption of such
Options, and the consideration received by the Company for the
Additional Common Shares deemed to have then been issued was
the consideration actually received by the Company for the
issue, sale, grant or assumption of all such Options, whether
or not exercised, plus the consideration deemed to have been
received by the Company (pursuant to Section 3.5) upon the
issue or sale of such Convertible Securities with respect to
which such Options were actually exercised;
(d) no readjustment pursuant to subdivision (b) or (c) above
shall have the effect of increasing the Purchase Price by an amount in
excess of the amount of the adjustment thereof originally made in
respect of the issue, sale, grant or assumption of such Options or
Convertible Securities; and
(e) in the case of any such Options which expire by their
terms not more than 30 days after the date of issue, sale, grant or
assumption thereof, no adjustment of the Purchase Price shall be made
until the expiration or exercise of all such Options, whereupon such
adjustment shall be made in the manner provided in subdivision (c)
above.
3.4. Treatment of Share Distributions, Share Splits, etc. In
case the Company at any time or from time to time after the date hereof shall
declare or pay any distribution on the Common Shares payable in Common Shares,
or shall effect a subdivision of the outstanding Common Shares into a greater
number of Common Shares (by reclassification or otherwise than by payment of a
distribution in Common Shares), then the Purchase Price in effect immediately
prior to such action shall be proportionately reduced and the number of Common
Shares issuable upon exercise of this Warrant shall be proportionately
increased.
3.5. Computation of Consideration. For the purposes of this
Section 3,
(a) the consideration for the issue or sale of any Additional
Common Shares shall, irrespective of the accounting treatment of such
consideration,
(i) insofar as it consists of cash, be computed at
the amount of cash payable to the Company, without deducting
any expenses paid or incurred by the Company or any
commissions or compensations paid or concessions or discounts
allowed to underwriters, dealers or others performing similar
services in connection with such issue or sale,
(ii) insofar as it consists of property (including
securities) other than cash, be computed at the Fair Value
thereof at the time of such issue or sale, and
(iii) in case Additional Common Shares are issued or
sold together with other shares of beneficial interest or
securities or other assets of the Company for a consideration
which covers both, be the portion of such consideration so
received, computed as provided in clauses (i) and (ii) above,
allocable to such Additional Common Shares, such allocation to
be determined in the same manner that the Fair Value of
property not consisting of cash or securities is to be
determined as provided in the definition of "Fair Value"
herein;
(b) Additional Common Shares deemed to have been issued
pursuant to Section 3.3, relating to Options and Convertible
Securities, shall be deemed to have been issued for a consideration per
share determined by dividing
(i) the total amount, if any, received and receivable
by the Company as consideration for the issue, sale, grant or
assumption of the Options or Convertible Securities in
question, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating
thereto, without regard to any provision contained therein for
a subsequent adjustment of such consideration to protect
against dilution) payable to the Company upon the exercise in
full of such Options or the conversion or exchange of such
Convertible Securities or, in the case of Options for
Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such
Convertible Securities, in each case computing such
consideration as provided in the foregoing subdivision (a),
by
(ii) the maximum number of Common Shares (as set
forth in the instruments relating thereto, without regard to
any provision contained therein for a subsequent adjustment of
such number to protect against dilution) issuable upon the
exercise of such Options or the conversion or exchange of such
Convertible Securities; and
(c) Additional Common Shares deemed to have been issued
pursuant to Section 3.4, relating to distributions, share splits, etc.,
shall be deemed to have been issued for no consideration.
3.6. Adjustments for Combinations, etc. In case the
outstanding Common Shares shall be combined or consolidated, by reclassification
or otherwise, into a lesser number of Common Shares, the Purchase Price in
effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased and the number of Common Shares issuable upon exercise
of this Warrant shall be proportionately decreased.
3.7. De Minimis Adjustments. No adjustment in the Conversion
Ratio shall be required unless such adjustment would require a cumulative
increase or decrease of at least 1% thereof; provided, however, that any
adjustments that by reason of this Section 3.7 are not required to be made shall
be carried forward and taken into account in any subsequent adjustment until
made. All calculations under this Section 3 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.
3.8. Abandoned Distribution. If the Company shall take a
record of the holders of its Common Shares for the purpose of entitling them to
receive a distribution (which results in an adjustment to the Purchase Price
under the terms of this Warrant) and shall, thereafter, and before such
distribution is paid or delivered to shareholders entitled thereto, abandon its
plan to pay or deliver such distribution, then any adjustment made to the
Purchase Price and number of Common Shares purchasable upon exercise of this
Warrant by reason of the taking of such record shall be reversed, and any
subsequent adjustments, based thereon, shall be recomputed.
3.9. Shareholder Rights Plan. Notwithstanding the foregoing,
in the event that the Company shall distribute "poison pill" rights pursuant to
a "poison pill" shareholder rights plan (the "Rights"), the Company shall, in
lieu of making any adjustment pursuant to Section 3.2.1 or Section 3.2.2 hereof,
make proper provision so that each Holder who exercises a Warrant after the
record date for such distribution and prior to the expiration or redemption of
the Rights shall be entitled to receive upon such exercise, in addition to the
Common Shares issuable upon such exercise, a number of Rights to be determined
as follows: (i) if such exercise occurs on or prior to the date for the
distribution to the holders of Rights of separate certificates evidencing such
Rights (the "Distribution Date"), the same number of Rights to which a holder of
a number of Common Shares equal to the number of Common Shares issuable upon
such exercise at the time of such exercise would be entitled in accordance with
the terms and provisions of and applicable to the Rights; and (ii) if such
exercise occurs after the Distribution Date, the same number of Rights to which
a holder of the number of shares into which the Warrant so exercised was
exercisable immediately prior to the Distribution Date would have been entitled
on the Distribution Date in accordance with the terms and provisions of and
applicable to the Rights.
4. Consolidation, Merger, etc.
4.1. Adjustments upon Certain Transactions. If the Company
shall be a party to any transaction (including, without limitation, a merger,
consolidation, statutory share exchange, self tender offer for all or
substantially all Common Shares, sale of all or substantially all of the
Company's assets or recapitalization of the Common Shares (each of the foregoing
being referred to herein as a "Transaction"), in each case as a result of which
Common Shares shall be converted into the right to receive shares, stock,
securities or other property (including cash or any combination thereof) (other
than a capital reorganization or reclassification resulting in the issue of
Additional Common Shares for which adjustment in the Purchase Price is provided
in Section 3.2.1 or 3.2.2), then, and in the case of each such Transaction,
proper provision shall be made so that, upon the basis and the terms and in the
manner provided in this Warrant, the Holder of this Warrant, upon the exercise
hereof at any time after the consummation of such Transaction, shall be entitled
to receive (at the aggregate Purchase Price in effect at the time of such
consummation for all Common Shares or Other Securities issuable upon such
exercise immediately prior to such consummation), in lieu of the Common Shares
or Other Securities issuable upon such exercise prior to such consummation, the
kind and amount of shares, stock, securities and other property (including cash
or any combination thereof) to which such Holder would actually have been
entitled as a shareholder upon the consummation of such Transaction if such
Holder had exercised this Warrant immediately prior thereto, assuming such
Holder (i) is not a person with which the Company consolidated or into which the
Company merged or which merged into the Company or to which such sale or
transfer was made, as the case may be (a "Constituent Person"), or an affiliate
of a Constituent Person and (ii) failed to exercise his or her appraisal rights
or rights of election, if any, as to the kind or amount of shares, stock,
securities and other property (including cash) receivable in such Transaction.
The Company shall not be a party to any Transaction unless the terms of such
Transaction are consistent with the provisions of this Section 4.1, and it shall
not consent or agree to the occurrence of any Transaction until the Company has
entered into an agreement with the successor or purchasing entity, as the case
may be, for the benefit of the Holder of this Warrant that will contain
provisions enabling such Holder to receive the securities, cash or other
property to which such Holder would actually have been entitled as a shareholder
upon such consummation if such Holder had exercised this Warrant immediately
prior thereto, subject to adjustments (subsequent to such consummation) as
nearly equivalent as possible to the adjustments provided for in Sections 3
through 5.
4.2. Assumption of Obligations. Notwithstanding anything
contained in this Warrant or in the Purchase Agreement to the contrary, the
Company shall not effect any Transaction unless, prior to the consummation
thereof, each Person (other than the Company) which may be required to deliver
any stock, securities, cash or property upon the exercise of this Warrant as
provided herein shall assume, by written instrument delivered to, and reasonably
satisfactory to, the Holder of this Warrant, (a) the obligations of the Company
under this Warrant (and if the Company shall survive the consummation of such
transaction, such assumption shall be in addition to, and shall not release the
Company from, any continuing obligations of the Company under this Warrant), (b)
the obligations of the Company under the Operating Agreement and (c) the
obligation to deliver to the Holder such shares of stock, securities, cash or
property as, in accordance with the foregoing provisions of this Section 4, the
Holder may be entitled to receive. Nothing in this Section 4 shall be deemed to
authorize the Company to enter into any transaction not otherwise permitted by
the Purchase Agreement.
5. [Intentionally omitted.]
6. No Dilution or Impairment. The Company shall not, by
amendment of its Declaration of Trust or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the Holder of
this Warrant against dilution or other impairment. Without limiting the
generality of the foregoing, the Company (a) shall not permit the par value of
any shares of beneficial interest receivable upon the exercise of this Warrant
to exceed the amount payable therefor upon such exercise, (b) shall at all times
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued Common Shares solely for the purpose of effecting
the exercise of this Warrant, the full number of Common Shares deliverable upon
the full exercise of this Warrant, (c) shall take all such action as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of beneficial interest, free from all taxes,
liens, security interests, encumbrances, preemptive rights and charges on the
exercise of this Warrant from time to time outstanding and, (d) shall not take
any action which results in any adjustment of the Purchase Price if the total
number of Common Shares (or Other Securities) issuable after the action upon the
full exercise of this Warrant would exceed the total number of Common Shares (or
Other Securities) then authorized by the Company's Declaration of Trust and
available for the purpose of issue upon such exercise.
7. NOTICE OF Adjustments. In each case of any adjustment or
readjustment in the Common Shares (or Other Securities) issuable upon the
exercise of this Warrant, the Company at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms of this Warrant and
prepare a notice of such adjustment or readjustment setting forth such
adjustment or readjustment and the effective date of such adjustment or
readjustment and shall mail such notice of such adjustment or readjustment to
each holder of a Warrant at such holder's address as it appears in the Warrant
Register (as defined below).
8. Notices of TRUST Action. If:
(a) the Company shall declare a distribution on the Common
Shares (other than the Regular Quarterly Dividend); or
(b) the Company shall authorize the granting to all holders of
Common Shares of rights or warrants to subscribe for or purchase any
shares of any class of beneficial interest; or
(c) there shall be any reclassification of the Common Shares
or any consolidation or merger to which the Company is a party and for
which approval of any shareholders of the Company is required, or a
statutory share exchange, or self tender offer by the Company for all
or substantially all of its outstanding Common Shares or the sale or
transfer of all or substantially all of the assets of the Company as an
entity; or
(d) there shall occur the involuntary or voluntary
liquidation, dissolution or winding up of the Company;
then the Company shall cause to be mailed to the holders of this Warrant, at the
address as it appears in the Warrant Register, as promptly as possible, but at
least 15 Business Days prior to the applicable date hereinafter specified, a
notice stating (A) the date on which a record is to be taken for the purpose of
such distribution or rights or warrants, or, if a record is not to be taken, the
date as of which the holders of Common Shares of record to be entitled to such
distribution or rights or warrants are to be determined or (B) the date on which
such reclassification, consolidation, merger, statutory share exchange, sale,
transfer, liquidation, dissolution or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Shares
shall be entitled to exchange their Common Shares for securities or other
property, if any, deliverable upon such reclassification, consolidation, merger,
statutory share exchange, sale, transfer, liquidation, dissolution or winding
up. Failure to give or receive such notice or any defect therein shall not
affect the legality or validity of the proceedings described in this Section 8.
9. Registration of Common Shares. If any Common Shares
required to be reserved for purposes of exercise of this Warrant require
registration with or approval of any governmental authority under any federal or
state law (other than the Securities Act) before such shares may be issued upon
exercise, the Company shall, at its expense and as expeditiously as possible,
use its reasonable best efforts to cause such shares to be duly registered or
approved, as the case may be. At any such time as Common Shares are listed on
any national securities exchange, the Company shall endeavor to list the Common
Shares required to be delivered upon exercise of this Warrant, prior to such
delivery, upon each such national securities exchange and maintain the listing
of such shares after their issuance; and the Company shall also endeavor to list
on any such national securities exchange and maintain such listing of, any Other
Securities that at any time are issuable upon exercise of this Warrant, if and
at the time that any securities of the same class shall be listed on any such
national securities exchange(s) by the Company. The covenants contained in this
Section 9 shall terminate upon the Expiration Date.
10. Restrictions on Transfer.
10.1. Restrictive Legends.
Except as otherwise permitted by this Section 10, each certificate for Common
Shares (or Other Securities) issued upon the exercise of any Warrant, and each
certificate issued upon the transfer of any such Common Shares (or Other
Securities), shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAW OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF
SUCH ACT AND SUCH LAWS. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE CONDITIONS
SPECIFIED IN THE COMMON SHARE PURCHASE WARRANT ISSUED BY BRANDYWINE
REALTY TRUST (THE "COMPANY") PURSUANT TO THE INVESTMENT AGREEMENT,
DATED APRIL 19, 1999, BETWEEN THE COMPANY AND FIVE ARROWS REALTY
SECURITIES III L.L.C. A COMPLETE AND CORRECT COPY OF THE FORM OF SUCH
WARRANT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE
COMPANY OR AT THE OFFICE OR AGENCY MAINTAINED BY THE COMPANY AS
PROVIDED IN SUCH WARRANT AND WILL BE FURNISHED TO THE HOLDER OF SUCH
SECURITIES UPON WRITTEN REQUEST AND WITHOUT CHARGE."
10.2. Transfer to Comply With the Securities Act. Restricted
Securities may not be sold, assigned, pledged, hypothecated, encumbered or in
any manner transferred or disposed of, in whole or in part, except in compliance
with (i) the provisions of the Securities Act and state securities or Blue Sky
laws, (ii) the terms and conditions of the Purchase Agreement and (iii) the
terms and conditions hereof.
10.3. Termination of Restrictions. The restrictions imposed by
this Section 10 on the transferability of Restricted Securities shall cease and
terminate as to any particular Restricted Securities (a) when a registration
statement with respect to the sale of such securities shall have been declared
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, (b) when such securities are
sold pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act, or (c) when, in the opinion of both counsel for the Holder and
counsel for the Company, such restrictions are no longer required or necessary
in order to protect the Company against a violation of the Securities Act upon
any sale or other disposition of such securities without registration
thereunder. Whenever such restrictions shall cease and terminate as to any
Restricted Securities, the Holder shall be entitled to receive from the Company,
without expense, new securities of like tenor not bearing the applicable legends
required by Section 10.1.
11. Reservation of SHARES, etc. The transfer agent for the
Common Shares, which may be the Company ("Transfer Agent"), and every subsequent
Transfer Agent for any shares of the Company's equity securities issuable upon
the exercise of any of the purchase rights represented by this Warrant, are
hereby irrevocably authorized and directed at all times until the Expiration
Date to reserve such number of authorized and unissued shares as shall be
requisite for such purpose. The Company shall keep copies of this Warrant on
file with the Transfer Agent for the Common Shares and with every subsequent
Transfer Agent for any of the Company's equity securities issuable upon the
exercise of the rights of purchase represented by this Warrant. The Company
shall supply such Transfer Agent with duly executed share certificates for such
purpose. All Warrant Certificates surrendered upon the exercise of the rights
thereby evidenced shall be canceled, and such canceled Warrants shall constitute
sufficient evidence of the number of shares of beneficial interest which have
been issued upon the exercise of such Warrants. Subsequent to the Expiration
Date, no shares of beneficial interest need be reserved in respect of any
unexercised Warrant.
12. Registration and Transfer of Warrants, etc.
12.1. Warrant Register; Ownership of Warrants. Each Warrant
issued by the Company shall be numbered and shall be registered in a warrant
register (the "Warrant Register") as it is issued and transferred, which Warrant
Register shall be maintained by the Company at its principal office or, at the
Company's election and expense, by a Warrant Agent or the Company's transfer
agent. The Company shall be entitled to treat the registered Holder of any
Warrant on the Warrant Register as the owner in fact thereof for all purposes
and shall not be bound to recognize any equitable or other claim to or interest
in such Warrant on the part of any other Person, and shall not be affected by
any notice to the contrary, except that, if and when any Warrant is properly
assigned in blank, the Company may (but shall not be obligated to) treat the
bearer thereof as the owner of such Warrant for all purposes. Subject to Section
10, a Warrant, if properly assigned, may be exercised by a new holder without a
new Warrant first having been issued.
12.2. Transfer of Warrants. Subject to compliance with Section
10, if applicable, this Warrant and all rights hereunder are transferable in
whole or in part, without charge to the Holder hereof, upon surrender of this
Warrant with a properly executed Form of Assignment attached hereto as Exhibit B
at the principal office of the Company. Upon any partial transfer, the Company
shall at its expense issue and deliver to the Holder a new Warrant of like
tenor, in the name of the Holder, which shall be exercisable for such number of
Common Shares with respect to which rights under this Warrant were not so
transferred. The Holder shall be responsible for payment of any transfer tax
payable in connection with any transfer, in whole or in part of this Warrant.
12.3. Replacement of Warrant. On receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and, in the case of any such loss, theft or
destruction of this Warrant, on delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender of such Warrant to the Company at its principal office
and cancellation thereof, the Company at its expense shall execute and deliver,
in lieu thereof, a new Warrant of like tenor.
12.4. Adjustments To Purchase Price and Number of Shares.
Notwithstanding any adjustment in the Purchase Price or in the number or kind of
Common Shares purchasable upon exercise of this Warrant, any Warrant theretofore
or thereafter issued may continue to express the same number and kind of Common
Shares as are stated in this Warrant, as initially issued.
12.5. Fractional Shares. Notwithstanding any adjustment
pursuant to Section 3 in the number of Common Shares covered by this Warrant or
any other provision of this Warrant, the Company shall not be required to issue
fractions of shares upon exercise of this Warrant or to distribute certificates
which evidence fractional shares. In lieu of fractional shares, the Company
shall make payment to the Holder, at the time of exercise of this Warrant as
herein provided, in an amount in cash equal to such fraction multiplied by the
Current Market Price of a Common Share on the date of Warrant exercise.
13. Remedies; Specific Performance. The Company stipulates
that there would be no adequate remedy at law to the Holder of this Warrant in
the event of any default or threatened default by the Company in the performance
of or compliance with any of the terms of this Warrant and accordingly, the
Company agrees that, in addition to any other remedy to which the Holder may be
entitled at law or in equity, the Holder shall be entitled to seek to compel
specific performance of the obligations of the Company under this Warrant,
without the posting of any bond, in accordance with the terms and conditions of
this Warrant in any court of the United States or any State thereof having
jurisdiction, and if any action should be brought in equity to enforce any of
the provisions of this Warrant, the Company shall not raise the defense that
there is an adequate remedy at law. Except as otherwise provided by law, a delay
or omission by the Holder hereto in exercising any right or remedy accruing upon
any such breach shall not impair the right or remedy or constitute a waiver of
or acquiescence in any such breach. No remedy shall be exclusive of any other
remedy. All available remedies shall be cumulative.
14. No Rights or Liabilities as Shareholder. Nothing contained
in this Warrant shall be construed as conferring upon the Holder hereof any
rights as a shareholder of the Company or as imposing any obligation on the
Holder to purchase any securities or as imposing any liabilities on the Holder
as a shareholder of the Company, whether such obligation or liabilities are
asserted by the Company or by creditors of the Company.
15. Notices. All notices and other communications (and
deliveries) provided for or permitted hereunder shall be made in writing by hand
delivery, telecopier, any courier guaranteeing overnight delivery or first class
registered or certified mail, return receipt requested, postage prepaid,
addressed (a) if to the Company, to the attention of its President at its
principal office located at 14 Campus Boulevard, Suite 100, Newtown Square,
Pennsylvania 19073 or such other address as may hereafter be designated in
writing by the Company to the Holder in accordance with the provisions of this
Section, or (b) if to the Holder, at its address as it appears in the Warrant
Register.
All such notices and communications (and deliveries) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; when receipt is acknowledged, if telecopied; on the next Business
Day, if timely delivered to a courier guaranteeing overnight delivery; and five
days after being deposited in the mail, if sent first class or certified mail,
return receipt requested, postage prepaid; provided, that the exercise of any
Warrant shall be effective in the manner provided in Section 2.
16. Amendments. This Warrant and any term hereof may not be
amended, modified, supplemented or terminated, and waivers or consents to
departures from the provisions hereof may not be given, except by written
instrument duly executed by the party against which enforcement of such
amendment, modification, supplement, termination or consent to departure is
sought.
17. Descriptive Headings, Etc. The headings in this Warrant
are for convenience of reference only and shall not limit or otherwise affect
the meaning of terms contained herein. Unless the context of this Warrant
otherwise requires: (1) words of any gender shall be deemed to include each
other gender; (2) words using the singular or plural number shall also include
the plural or singular number, respectively; (3) the words "hereof", "herein"
and "hereunder" and words of similar import when used in this Warrant shall
refer to this Warrant as a whole and not to any particular provision of this
Warrant, and Section and paragraph references are to the Sections and paragraphs
of this Warrant unless otherwise specified; (4) the word "including" and words
of similar import when used in this Warrant shall mean "including, without
limitation," unless otherwise specified; (5) "or" is not exclusive; and (6)
provisions apply to successive events and transactions.
18. GOVERNING LAW. This Warrant shall be governed by, and
construed in accordance with, the laws of the State of New York (without giving
effect to the conflict of laws principles thereof).
19. Judicial Proceedings; waiver of jury. Any legal action,
suit or proceeding brought against the Company with respect to this Warrant may
be brought in any federal court of the Southern District of New York or any
state court located in New York County, State of New York, and by execution and
delivery of this Warrant, the Company hereby irrevocably and unconditionally
waives any claim (by way of motion, as a defense or otherwise) of improper
venue, that it is not subject personally to the jurisdiction of such court, that
such courts are an inconvenient forum or that this Warrant or the subject matter
may not be enforced in or by such court. The Company hereby irrevocably and
unconditionally consents to the service of process of any of the aforementioned
courts in any such action, suit or proceeding by the mailing of copies thereof
by registered or certified mail, postage prepaid, at its address set forth or
provided for in Section 15, such service to become effective 10 days after such
mailing. Nothing herein contained shall be deemed to affect the right of any
party to serve process in any manner permitted by law or commence legal
proceedings or otherwise proceed against any other party in any other
jurisdiction to enforce judgments obtained in any action, suit or proceeding
brought pursuant to this Section. The Company irrevocably submits to the
exclusive jurisdiction of the aforementioned courts in such action, suit or
proceeding. THE COMPANY HEREBY IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION,
SUIT OR PROCEEDING, WHETHER AT LAW OR EQUITY, BROUGHT BY IT OR THE HOLDER IN
CONNECTION WITH THIS WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
20. OPERATING Agreement. The Common Shares (and Other
Securities) issuable upon exercise of this Warrant (or upon conversion of any
Common Shares issued upon such exercise) shall constitute Registrable Securities
(as such term is defined in the Operating Agreement). Each holder of this
Warrant shall be entitled to all of the benefits afforded to a holder of any
such Registrable Securities under the Operating Agreement and such holder, by
its acceptance of this Warrant, agrees to be bound by and to comply with the
terms and conditions of the Operating Agreement applicable to such holder as a
holder of such Registrable Securities.
21. NON-RECOURSE. No recourse shall be had for any obligation
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 such other
liability being expressly waived and released by each other party hereto.
BRANDYWINE REALTY TRUST
By: /s/ Gerard H. Sweeney
--------------------------------------------
Title: President and Chief Executive Officer
EXHIBIT A to
Common Shares Purchase Warrant
[FORM OF]
ELECTION TO PURCHASE SHARES
The undersigned hereby irrevocably elects to exercise the
Warrant to purchase ____ Common Shares, par value $0.01 per share ("Common
Shares"), of BRANDYWINE REALTY TRUST and hereby [makes payment of $________
therefor] [or] [makes payment therefor by reduction pursuant to Section
2.1(b)(ii) of the Warrant of the number of Common Shares otherwise issuable to
the Holder upon Warrant exercise by ___ shares] [or] [makes payment therefor by
delivery of the following Common Shares Certificates of the Company (properly
endorsed for transfer in blank) for cancellation by the Company pursuant to
Section 2.1(b)(iii) of the Warrant, certificates of which are attached hereto
for cancellation [list certificates by number and amount]]. The undersigned
hereby requests that certificates for such shares be issued and delivered as
follows:
ISSUE TO:
(NAME)
(ADDRESS, INCLUDING ZIP CODE)
(SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)
DELIVER TO:
(NAME)
(ADDRESS, INCLUDING ZIP CODE)
If the number of Common Shares purchased (and/or reduced)
hereby is less than the number of Common Shares covered by the Warrant, the
undersigned requests that a new Warrant representing the number of Common Shares
not so purchased (or reduced) be issued and delivered as follows:
ISSUE TO:
FIVE ARROWS REALTY SECURITIES III L.L.C.
(ADDRESS, INCLUDING ZIP CODE)
DELIVER TO:
FIVE ARROWS REALTY SECURITIES III L.L.C.
(ADDRESS, INCLUDING ZIP CODE)
Dated: _____________, ______ FIVE ARROWS REALTY SECURITIES II, L.L.C.
By
Name:
Title:
EXHIBIT B to
Common Shares Purchase Warrant
[FORM OF] ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers unto the Assignee named below all of the rights of the undersigned to
purchase Common Shares, par value $0.01 per share ("Common Shares") of
BRANDYWINE REALTY TRUST represented by the Warrant, with respect to the number
of Common Shares set forth below:
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
and does hereby irrevocably constitute and appoint ________ Attorney to make
such transfer on the books of BRANDYWINE REALTY TRUST maintained for that
purpose, with full power of substitution in the premises.
Dated: _______________, ______ FIVE ARROWS REALTY SECURITIES III L.L.C.
By
Name:
Title: