EXHIBIT 99.3
INVESTMENT AGREEMENT
between
BRANDYWINE REALTY TRUST
and
FIVE ARROWS REALTY SECURITIES III L.L.C.
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Dated as of April 19, 1999
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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.
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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.
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"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. Sections
9601 et seq., as amended; the Resource Conservation and Recovery Act
("RCRA"), 42 U.S.C. Sections6901 et seq., as amended; the Clean Air Act
("CAA"), 42 U.S.C. Sections 7401 et seq., as amended; the Clean Water
Act ("CWA"), 33 U.S.C. Sections 1251 et seq., as amended; the
Occupational Safety and Health Act ("OSHA"), 29 U.S.C. Sections 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.
3 Investment Agreement
"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.
4 Investment Agreement
"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. Section 9601; (iii)
perform pre-remedial studies and investigations and post-remedial
operation and maintenance activities as required by 42 U.S.C. Section
9601; or (iv) any other actions authorized by 42 U.S.C. Section 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.
5 Investment Agreement
"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
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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
6 Investment Agreement
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.
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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
7 Investment Agreement
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 ▇▇▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, 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
8 Investment Agreement
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.
9 Investment Agreement
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.
10 Investment Agreement
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
11 Investment Agreement
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;
12 Investment Agreement
(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
13 Investment Agreement
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 ▇▇▇▇, 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, ▇▇▇▇▇▇ 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
14 Investment Agreement
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 ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Inc. and ▇▇▇▇ ▇▇▇▇▇ 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.
15 Investment Agreement
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.
16 Investment Agreement
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.
17 Investment Agreement
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
18 Investment Agreement
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.
19 Investment Agreement
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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP to the effect of the matters contained in
Exhibit F. In rendering such opinion, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP shall be
permitted to rely upon ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, 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.
20 Investment Agreement
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
21 Investment Agreement
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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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.
22 Investment Agreement
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 ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, 3000 Two ▇▇▇▇▇ Square, Eighteenth
and Arch Streets, Philadelphia, Pennsylvania 19103-2799, Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq., or such other address of which the Investor
shall have been given notice; and (b) if to the Investor, at Rothschild
Realty Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇. ▇▇▇▇ ▇▇▇▇▇▇, or such other address of which the Company
shall have been given notice, with copies to ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
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
23 Investment Agreement
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.
24 Investment Agreement
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
25 Investment Agreement
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
26 Investment Agreement
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;
27 Investment Agreement
(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.
28 Investment Agreement
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:
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive
Officer
FIVE ARROWS REALTY SECURITIES III L.L.C.
By:
--------------------------------------
Name: ▇. ▇▇▇▇ 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:
--------------------------------------
Name: ▇. ▇▇▇▇ ▇▇▇▇▇▇
Title:
29 Investment Agreement
