Exhibit 10.11
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of December 11, 1997, is
entered into by and among BRANDYWINE REALTY TRUST, a Maryland real estate
investment trust (the "Trust"), BRANDYWINE OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership (the "Partnership"), LAUREL OAK ROAD, L.L.C. (the
"LLC"), and M. SEAN SCARBOROUGH and R. RANDLE SCARBOROUGH, the sole members of
the LLC (together, the "Members").
RECITALS
WHEREAS, the LLC holds ownership interests in certain properties (the
"Properties") which it may contribute to the Partnership in exchange for units
of limited partnership interests ("Units") in the Partnership in accordance with
the terms of that certain Agreement, dated as of the date hereof, by and among
the parties hereto (the "Contribution Agreement");
WHEREAS, pursuant to the Partnership Agreement (as defined below), the
Units will be redeemable for cash or common shares of beneficial interest, par
value $.01 per share, of the Trust (the "Common Shares") upon the terms and
subject to the conditions contained therein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Definitions. In addition to the definitions set forth above, the
following terms, as used herein, have the following meanings:
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under common control with such
Person. For the purposes of this definition, "control", when used with respect
to any Person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement" means this Registration Rights Agreement, as it may
be amended, supplemented or restated from time to time.
"Business Day" means any day except a Saturday, Sunday or other
day on which commercial banks in New York, New York are authorized by law to
close.
"Commission" means the United States Securities and Exchange
Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Partnership Agreement" means the Amended and Restated Agreement
of Limited Partnership of the Partnership dated as of November 18, 1997, as the
same may be amended, modified or restated from time to time.
"Person" means an individual or a corporation, partnership,
limited liability company, association, trust, or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Registrable Securities" means any Common Shares issued or
issuable upon any redemption of Units issued pursuant to the Contribution
Agreement; provided that such Common Shares shall cease to constitute
Registrable Securities once: (i) a registration statement covering such Common
Shares has been declared effective by the Commission and such Common Shares have
been sold or transferred pursuant to such effective registration statement, (ii)
such Common Shares may be sold pursuant to Rule 144(k) under the Securities Act
or (iii) such Common Shares have been otherwise transferred in a transaction
that would constitute a sale thereof under the Securities Act, the Trust has
delivered a new certificate or other evidence of ownership for such Common
Shares not bearing the Securities Act restricted stock legend and such Common
Shares may be resold without subsequent registration under the Securities Act.
"Registration Expenses" means all expenses incident to the
Trust's performance of or compliance with Article 2, including, without
limitation, all registration and filing fees, all listing fees, all fees and
expenses of complying with securities or blue sky laws, and printing expenses,
the fees and disbursements of counsel for the Trust and of the Trust's
independent public accountants, but excluding fees and disbursements of counsel
or other advisors for the LLC or the Members and excluding any brokerage
discounts or commissions payable in connection with a sale of Registrable
Securities.
"Rule 144" means Rule 144 under the Securities Act, as amended
from time to time (or any successor statute).
"Securities Act" means the Securities Act of 1933, as amended.
2. Registration Rights.
2.1 Registration on Demand.
2.1.1 Demand. At any time following the issuance of the
Units to the LLC and subject to Sections 2.1.3 and 2.1.6, upon the written
request (the "Demand") of the LLC that the Trust effect the registration under
the Securities Act of the reoffer and resale of all, and not less than all, of
the Registrable Securities, the Trust shall prepare and file, within 75 days
after the Demand is received, and shall thereafter use its reasonable efforts to
cause to become effective, a "shelf" registration statement under the Securities
Act covering the reoffer and resale of the Registrable Securities by the LLC in
an offering to be made on a continuous basis pursuant to Rule 415 under the
Securities Act.
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2.1.2 Registration of Other Securities. Whenever the
Trust shall effect a registration pursuant to this Section 2.1, holders of
securities of the Trust who have "piggyback" registration rights may include all
or a portion of such securities in such registration, offering or sale.
2.1.3 Registration Statement Form S-3. Registrations
under this Section 2.1 shall only be required to be made on Form S-3, or any
successor form. In the event the Trust is not eligible to use Form S-3 to
register the Registrable Securities at the time it receives a Demand, the Trust
shall notify the LLC (a "Demand Rejection") within five days of its receipt of
the Demand. Thereafter, the LLC shall have the option, exercisable by written
notice delivered to the Trust within five days of its receipt of a Demand
Rejection, to allow the Trust to delay the filing of the applicable registration
statement until that date on which the Trust is again eligible to file a Form
S-3. In the event the LLC does not exercise such option, such Demand shall be
deemed to be withdrawn. The Trust hereby represents and warranties to the LLC
that, as of the date hereof, the Trust is eligble to register the Registrable
Securties on Form S-3.
2.1.4 Expenses. The Trust shall pay the Registration
Expenses in connection with the Demand registration effected pursuant to this
Section 2.1. If a registration requested pursuant to this Section 2.1 is
withdrawn or otherwise not effected, other than at the request of LLC, the Trust
shall pay the Registration Expenses in connection therewith. If the
registration pursuant to a Demand is withdrawn at the request of the LLC and if
the LLC elects not to have such registration count as its Demand registration
under this Section 2.1, the LLC shall pay all the Registration Expenses of such
registration, other than the fees and expenses of counsel to the Trust or of any
other holder of Trust securities participating in the registration (a
"Participating Holder").
2.1.5 Effective Registration Statement. A registration
requested pursuant to this Section 2.1 shall not be deemed to have been effected
(i) unless a registration statement with respect thereto has been declared
effective by the Commission or (ii) if after it has become effective, such
registration is interfered with by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court for any
reason and has not thereafter become effective.
2.1.6 Limitations on Registration on Demand.
(i) In no event shall the Trust be required to effect
more than one registration pursuant to this Section 2.1.
(ii) Notwithstanding anything herein, if the Trust
reasonably believes that the filing of a registration statement with the
Commission would adversely affect the contemplated activities of the Trust, then
the Trust may postpone the filing of the applicable registration statement for a
period not in excess of 30 days or, in the event the filing is being postponed
in connection with a proposed underwritten public offering of the Trust's
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securities, for such longer period (not to exceed an additional 30 days) as may
be reasonably requested by the managing underwriter for such proposed offering.
(iii) Notwithstanding anything herein, if the
filing of a registration statement pursuant to a Demand would require the Trust
to include in a filing with the Commission financial statements of probable or
completed acquisitions in order that such registration statement be in
compliance with rules and regulations of the Commission, then the Trust may
delay the filing of such registration statement until it has included the
requisite financial statements (including any necessary pro forma financial
information) in a filing with the Commission.
2.2 Registration Procedures.
2.2.1 In connection with the registration of any
Registrable Securities under the Securities Act as provided in Section 2.1, the
Trust shall as promptly as practicable:
(i) prepare and file with the Commission the requisite
registration statement to effect such registration and thereafter use
commercially reasonable efforts to cause such registration statement to become
and remain effective;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective and to comply with provisions of the Securities Act with
respect to the disposition of all Registrable Securities covered by such
registration statement until all of such Registrable Securities have been sold
thereunder;
(iii) furnish to the LLC such number of conformed
copies of such registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of the
prospectus contained in such registration statement (including each preliminary
prospectus and any summary prospectus) and any other prospectus filed under Rule
424 under the Securities Act, in conformity with the requirements of the
Securities Act, and such number of copies of such other documents as the LLC may
reasonably request;
(iv) use commercially reasonable efforts (x) to
register or qualify all Registrable Securities under such other securities or
Blue Sky laws of such States of the United States of America where an exemption
is not available and as the LLC shall reasonably request, (y) to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and (z) to take any other action which may
reasonably be necessary or advisable to enable the LLC to consummate the
disposition in such jurisdictions of the Registrable Securities to be sold by
the LLC, except that the Trust shall not for any such purpose be required to
qualify generally to do business as a foreign trust in any jurisdiction wherein
it would not, but
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for the requirements of this paragraph (iv), be obligated to be so qualified or
to consent to general service of process in any such jurisdiction;
(v) notify the LLC upon discovery that, or upon the
happening of any event as a result of which, the prospectus included in the
registration statement filed pursuant to a Demand, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, in the light of the circumstances under which they were made, and at
the request of the LLC, use its best efforts to promptly prepare and furnish to
the LLC such number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made;
(vi) use commercially reasonable efforts to list all
Registrable Securities covered by such registration statement on any national
securities exchange or over-the-counter market, if any, on which Registrable
Securities covered by such registration statement are then listed.
The LLC agrees that upon receipt of any notice from the Trust of the
happening of an event of the kind described in Section 2.2.1(v), the LLC shall
forthwith discontinue its disposition of Registrable Securities pursuant to the
registration statement relating to such Registrable Securities until the LLC's
receipt of the copies of the supplemented or amended prospectus contemplated by
Section 2.2.1(v).
2.3. Holdback Agreements; Information Blackout.
2.3.1 Holdback Agreements. In connection with an
underwritten public offering of securities of the Trust, the LLC agrees that, if
required by the underwriter or underwriters, it will not effect any public sale
or distribution, including any sale pursuant to Rule 144 under the Securities
Act, of any Registrable Securities, during the period commencing 10 days prior
to the expected commencement of the offering and ending 30 days after the
closing of such offering.
2.3.2 Information Blackout. At any time when a
registration statement effected pursuant to this Section 2 relating to
Registrable Securities is effective, upon written notice from the Trust to the
LLC that the Trust has determined in good faith that sale of Registrable
Securities pursuant to the registration statement would require disclosure by
the Trust of non-public material information not otherwise required, in the
judgment of the Trust, to be disclosed under applicable law, the LLC shall
suspend sales of Registrable Securities pursuant to such registration statement
until the earlier of (a) 30 days after the Trust makes such good faith
determination and (b) such time as the Trust notifies the LLC that such material
information has
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been disclosed to the public or has ceased to be material or that sales pursuant
to such registration statement may otherwise be resumed.
2.4 Preparation. In connection with the preparation and filing
of any registration statement under the Securities Act in which the LLC is a
selling shareholder, the Trust shall give the LLC not less than 15 days prior
written notice of the preparation of such registration statement and give the
LLC and its counsel and accountants the opportunity to review and comment on, at
the LLC's expense, the applicable portions, relating to the LLC (including the
Selling Shareholder and Plan of Distribution sections), of the registration
statement, each prospectus included therein or filed with the Commission, and
each amendment thereof or supplement thereto (provided that the LLC shall
furnish the Trust with comments on any such amendment or supplement as promptly
as the Trust shall reasonably require).
2.5 Indemnification.
2.5.1 Indemnification by the Trust. In the event of any
registration of any securities of the Trust under the Securities Act in which
the LLC is or may be a selling shareholder, the Trust shall, and hereby does,
indemnify and hold harmless, the LLC, its members, officers, employees, agents
and affiliates and each Person who controls the LLC within the meaning of the
Securities Act, insofar as losses, claims, damages, or liabilities (or actions
or proceedings, whether commenced or threatened, in respect thereof) arise out
of or are based upon (a) any untrue statement or alleged untrue statement of any
fact contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus, final
prospectus, or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a fact
required to be stated therein or necessary to make the statements therein in
light of the circumstances in which they were made not misleading, or (b) any
violation by the Trust, its trustees, officers, employees or agents of this
Agreement or any law applicable to and in connection with such registration, and
the Trust shall reimburse the LLC and each such member, officer, agent or
affiliate and controlling Person of the LLC for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, liability, action or proceeding described in clauses (a) or
(b); provided, however, that the Trust shall not be liable in any such case to
the extent that any such loss, claim, damage, liability (or action or proceeding
in respect thereof) or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with information furnished to the Trust by the LLC. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
the LLC or any such director, officer, agent or affiliate or controlling Person
and shall survive the transfer of such securities by the LLC.
2.5.2 Indemnification by the LLC If any Registrable
Securities are included in any registration statement, the LLC shall indemnify
and hold harmless (in the same manner and to the same extent as set forth in
Section 2.5.1 above) the Trust and each trustee,
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officer and employee of the Trust and each Person who controls the Trust within
the meaning of the Securities Act, with respect to any statement or alleged
statement in or omission or alleged omission from such registration statement,
any preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, if such statement or alleged
statement or omission or alleged omission was made in reliance upon and in
conformity with information furnished to the Trust by the LLC.
2.5.3 Notice of Claims, Etc. Promptly after receipt by
an indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding paragraphs of this Section 2.5,
such indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party, immediately give written notice to the latter of
the commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of this
Section 2.5, except to the extent that the indemnifying party is materially
prejudiced by such failure. In case any such action is brought against an
indemnified party, unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may exist
in respect of such claim, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that the indemnifying
parties may agree, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party shall not
be liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable out of pocket costs related to the indemnified party's cooperation
with the indemnifying party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties arises in respect of such claim after the assumption of the defense
thereof. No indemnifying party shall be liable for any settlement of any action
or proceeding effected without its written consent, which consent shall not be
unreasonably withheld, delayed or conditioned. Consent of the indemnified party
shall be required for the entry of any judgment or to enter into a settlement
only when such judgment or settlement does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect such claim or litigation.
2.5.4 Contribution. If the indemnification provided for
in this Section 2.5 shall for any reason be held by a court to be unavailable to
an indemnified party under Section 2.5.1 or 2.5.2 hereof in respect of any loss,
claim, damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under Sections 2.5.1 or 2.5.2 hereof, the indemnified
party and the indemnifying party under Sections 2.5.1 or 2.5.2 hereof shall
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating the
same), (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Trust on one hand and the LLC on the other or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect the relative fault of the Trust
on one hand and the LLC on the other that resulted in such loss, claim, damage
or liability, or action in respect
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thereof, as well as any other relevant equitable considerations. No Person
guilty of fraudulent misrepresentation (within the meaning of the Securities
Act) shall be entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation. In addition, no Person shall be obligated to
contribute hereunder any amounts in payment for any settlement of any action or
claim, effected without such Person's written consent, which consent shall not
be unreasonably withheld.
3. Modification; Waivers. This Agreement may be modified or amended
only with the written consent of each party hereto. No party shall be released
from its obligations hereunder without the written consent of the other party.
The observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively) by the party
entitled to enforce such term, but any such waiver shall be effective only if in
a writing signed by the party against which such waiver is to be asserted.
Except as otherwise specifically provided herein, no delay on the part of any
party hereto in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of any party hereto of any
right, power or privilege hereunder operate as a waiver of any other right,
power or privilege hereunder nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any right, power or privilege hereunder.
4. Entire Agreement. This Agreement represents the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and supersedes all other prior and contemporaneous
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof. In the event the LLC elects to sell the
Property to the Partnership for cash instead of contributing the Property to the
Partnership, pursuant to Section 3 of the Contribution Agreement, this Agreement
shall automatically terminate and no party hereto shall have any further rights
or obligations hereunder.
5. Severability. If any provision of this Agreement, or the
application of such provision to any party or circumstance, shall be held
invalid, the remainder of this Agreement or the application of such provision to
other parties or circumstances, to the extent permitted by law, shall not be
affected thereby; provided, that the parties shall negotiate in good faith with
respect to an equitable modification of the provision or application thereof
held to be invalid.
6. Notices. All notices, requests and other communications required
or permitted to be given under this Agreement shall be in writing and shall be
delivered (i) in person, (ii) by certified mail, return receipt requested, (iii)
by recognized overnight delivery service providing positive tracking of items
(for example, Federal Express), or (iv) by confirmed telecopier, in each case
addressed as follows:
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If to the Trust or the Partnership, addressed to:
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c/o Brandywine Realty Trust
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
Attention: Gerard H. Sweeney, President and Chief Executive
Officer
Fax: (610) 325-5622
with a copy in each instance to:
--------------------------------
Brad A. Molotsky, General Counsel
Brandywine Operating Partnership, L.P.
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
Fax: (610) 325-5622
If to Laurel Oak or a Member, addressed to:
------------------------------------------
Scarborough Properties
20 E. Clementon Road, Suite 201
Gibbsboro, NJ 08026
Attention: R. Randle Scarborough
Fax: (609) 435-4554
with a copy in each instance to:
-------------------------------
Kelly Young, Esquire
20 East Clementon Road, Suite 202
Gibbsboro, NJ 08026
Fax: (609) 346-3233
or to such other address or addresses and to the attention of such other person
or persons as any of the parties may notify the other in accordance with the
provisions of this Agreement. All such notices, requests and other
communications shall be deemed to have been sufficiently given for all purposes
hereof only if given pursuant to the foregoing requirements as to both manner
and address, and only upon receipt (or refusal to accept delivery) by the party
to whom such notice is sent. Notices by the parties may be given on their
behalf by their respective attorneys.
7. Successors and Assigns. This Agreement shall inure to the
benefit of and shall be binding upon the Trust and the LLC and their respective
successors and permitted
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assigns. The parties hereto anticipate that the LLC will transfer all of the
Units to the Members in a transaction exempt from the registration requirements
of the Securities Act. Following such a transfer, all references herein to
"LLC" shall be deemed to refer to the Members, and following such a transfer,
all decisions and notices hereunder shall be made by the holders of not less
than a majority of the Registrable Securities outstanding and all other holders
of Registrable Securities shall be bound by any such decision.
8. Counterparts. This Agreement may be executed in counterparts,
each of which for all purposes shall be deemed to be an original and all of
which together shall constitute the same agreement.
9. Headings. The Section headings in this Agreement are for
convenience of reference only, and shall not be deemed to alter or affect the
meaning or interpretation of any provisions hereof.
10. Construction. This Agreement shall be governed, construed and
enforced in accordance with the laws of the Commonwealth of Pennsylvania without
regard to its principles of conflict of laws.
11. Recapitalizations, etc. In the event that any shares of
beneficiary interest or other securities are issued in respect of, in exchange
for, or in substitution of, any Registrable Securities by reason of any
reorganization, recapitalization, reclassification, merger, consolidation,
spin-off, partial or complete liquidation, share dividend, split-up, sale of
assets, distribution to shareholders or combination of the shares of Registrable
Securities or any other similar change in the Trust's capital structure,
appropriate adjustments shall be made in this Agreement so as to fairly and
equitably preserve, as far as practicable, the original rights and obligations
of the parties hereto under this Agreement.
12. Term. This Agreement shall continue in full force and effect
until the earlier of (i) six (6) years after the date hereof and (ii) the first
date on which the LLC and its permitted assigns may sell all of the Registrable
Securities held by them in a ninety (90) day period pursuant to Rule 144 under
the Securities Act.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the date first above written and delivered by their respective duly
authorized officers.
LAUREL OAK ROAD, LLC
By: /s/ M. Sean Scarborough
--------------------------------
M. Sean Scarborough, authorized
member
By: /s/ R. Randle Scarborough
--------------------------------
R. Randle Scarborough, authorized
member
/s/ M. Sean Scarborough
------------------------------------
M. Sean Scarborough
/s/ R. Randle Scarborough
------------------------------------
R. Randle Scarborough
BRANDYWINE OPERATING PARTNERSHIP, L.P.
By: BRANDYWINE REALTY TRUST, its sole
general partner
By: /s/ Gerard H. Sweeney
--------------------------------
Name: Gerard H. Sweeney
Title: President & CEO
BRANDYWINE REALTY TRUST
By: /s/ Gerard H. Sweeney
--------------------------------
Name: Gerard H. Sweeney
Title: President & CEO
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