OPERATING AGREEMENT
OPERATING 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"), for
the benefit of the Investor.
This Agreement is executed pursuant to the Investment
Agreement, dated as of April 19, 1999, between the Company and the Investor (the
"Investment Agreement"). In order to induce the Investor to enter into the
Investment Agreement, the Company has agreed to provide the registration rights
set forth in this Agreement.
The parties hereby agree as follows:"`
1. DEFINITIONS
The following terms shall have the meanings set forth below:
"Affiliate" means, with respect to any Person, (a) any member
of the Immediate Family of such Person or a trust established primarily
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 the Person for the purposes of Section
13(d) of the Exchange Act, (d) any officer of the Person or any member
of the Board of Trustees of the Company, 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 Realty Inc. or
their respective Affiliates, nor any of their respective officers,
directors, partners or members nor a Preferred Trustee (as such term is
defined in the Articles Supplementary) shall be considered an Affiliate
of the Company or any of its Subsidiaries for the purposes of this
Agreement.
"Articles Supplementary" means the Articles Supplementary
classifying 4,375,000 preferred shares of beneficial interest as 8.75%
Series B Senior Cumulative Convertible Preferred Shares of the Company.
"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.
"Commission" means the Securities and Exchange Commission.
"Common Share" means the common shares of beneficial interest,
par value $.01 per share, of the Company.
"Demand Requesting Holders" means any Holder or Holders
holding an aggregate of not less than 30% of the Registrable Securities
then outstanding. For purposes of calculating such percentage,
Preferred Shares constituting Registrable Securities shall be deemed to
equal the number of Common Shares into which such Preferred Shares are
convertible.
"Entity" means any general partnership, limited partnership,
corporation, joint venture, trust, business trust, real estate
investment trust, limited liability company, cooperative or
association.
"equity security" includes common stock, preferred stock,
shares of beneficial interest, units of limited partner interests and
any other security that is treated as an equity security either under
the Exchange Act or under generally accepted accounting principles by
the issuer thereof or any other security convertible into, redeemable
for or exchangeable for any equity security and any other instrument,
such as an equity swap, the value of which is based, at least in part,
on the value of such equity security.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fully Diluted Basis" means the computation of a percentage
giving effect to: (I) all issued and outstanding Common Shares, (II)
all Common Shares issuable upon the conversion or redemption of or
exchange for any convertible debt or equity securities, and (III) all
shares issuable upon the exercise or redemption of any warrants,
options or any other rights of any nature whatsoever (whether or not
vested) including but not limited to any employee, consultant or
trustee share option plan.
"Governmental Body" means any foreign, federal, state,
municipal or other government, or any department, commission,
investigative body, board, bureau, agency, public authority or
instrumentality thereof or any court, mediator, arbitrator or other
tribunal.
"Holder" means any person that owns Registrable Securities or
Piggyback Registrable Securities, as applicable, constituting more than
3% of the outstanding shares of such class of Registrable Securities or
Piggyback Registrable Securities, as applicable.
"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.
"Majority Holders" means (a) the Investor, so long as (i) the
Investor holds at least 25% of the outstanding Registrable Securities
and (ii) no underwritten Demand Registration or Piggyback Registration
has been consummated by the Company pursuant to Section 3 or Section 4
of this Agreement, or (b) otherwise, the holder or holders at the
relevant time (excluding the Company or any of its Subsidiaries) of
more than 50% of the Registrable Securities then outstanding. For
purposes of calculating such percentage, Preferred Shares constituting
Registrable Securities shall be deemed to equal the number of Common
Shares into which such Preferred Shares are convertible.
"Person" means any individual or Entity.
"Piggyback Registrable Securities" means Registrable
Securities of the same class and series as the securities the Company
proposes to register under the Securities Act in a transaction giving
rise to Piggyback Registration rights under Section 4 hereof.
"Preferred Shares" means the 8.75% Series B Senior Cumulative
Convertible Preferred Shares of Beneficial Interest issued by the
Company to the Investor, pursuant to the Investment Agreement.
"Prospectus" means the Prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with
respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference in such
Prospectus.
"Registrable Securities" means (i) all Preferred Shares and
all Common Shares that (x) have been issued, or are issuable on
conversion, in respect of the Preferred Shares pursuant to the
provisions of Section 7 of the Articles Supplementary of the Company,
dated April 19, 1999, (y) have been issued or are issuable upon
exercise, in respect of the Warrant issued pursuant to the Investment
Agreement or (z) otherwise are held, or would be held upon conversion
or exercise of other securities, by the Investor, its Affiliates or
their respective members and partners (provided that if such securities
have been purchased in the open market, they shall be Registrable
Securities only if they are "restricted securities" or the holder
thereof is an "affiliate" of the Trust, as such terms are defined in
the federal securities laws), (ii) any other securities that are
received by the Holders pursuant to Section 7 of the Articles
Supplementary or Section 3 of the Warrant, and (iii) any other
securities into which or for which any of the securities described in
clauses (i) and (ii) above may be or have been converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger, sale of
assets or otherwise, until such time as (a) they have been effectively
registered under the Securities Act for resale and sold thereunder, (b)
they are distributed to the public pursuant to Rule 144 (or any similar
provisions then in force) under the Securities Act, (c) they shall have
been otherwise transferred, new certificates therefor not bearing a
legend restricting further transfer shall have been issued by the
Company (or any successor) and subsequent disposition thereof shall not
require registration under the Securities Act, or (d) they shall have
ceased to be outstanding. The Company shall have the right to exclude
shares eligible to be sold pursuant to Rule 144(k) from its
registration obligations hereunder.
"Registration Statement" means any registration statement of
the Company which covers any of the Registrable Securities pursuant to
the provisions of this Agreement, including the Prospectus, amendments
and supplements to such Registration Statement, including
post-effective amendments, all exhibits and all material incorporated
by reference in such Registration Statement.
"Securities Act" means the Securities Act of 1933, as amended,
or any successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Shareholder Approval" means the affirmative vote of holders
of a majority of the Voting Shares of the Company represented in person
or by proxy at a duly held meeting of such shareholders at which a
quorum was present or the written consent of holders of a majority of
all outstanding Voting Shares of the Company; provided, however, that
if the outstanding Voting Shares having varying votes per share, the
foregoing reference in this sentence to holders of a majority of shares
shall be deemed to mean holders of shares entitled to cast a majority
of votes.
"Subsidiary" of any Person or Entity means an Entity in which
such Person or Entity has the ability, 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 or the designees thereof serves as a majority of the trustees
thereof or of any Person having the right to select a majority of such
trustees.
"Underwriters Maximum Number" means for any underwritten
registration, that number of shares of securities to which such
registration should, in the written opinion of the managing underwriter
or underwriters of such registration in light of market factors, be
limited. The Underwriters Maximum Number may be zero.
"underwritten registration" or "underwritten offering" means a
registration in which securities of the Company are sold to an
underwriter for reoffering to the public.
"Voting Shares" means equity securities of the Company
entitled to vote generally in the election of trustees of the Company.
2. COVENANTS AND UNDERTAKINGS
2.1 Reservation of Shares. The Company will maintain as
reserved those Common Shares reserved in accordance with Section 4.6 of the
Investment Agreement and shall take all such action as may be required from time
to time in order that it may validly and legally issue fully paid and
nonassessable Common Shares in accordance herewith and therewith.
2.2 Affiliate Transactions. So long as the Investor or an
Affiliate of the Investor, or one of their respective current members or
partners (and their Affiliates), is the holder of either (A) all of the
outstanding Preferred Shares or (B) an amount of the Company's Voting Shares,
together with Preferred Shares and/or the Warrant, which if converted into or
exercised for Common Shares, would exceed 10% of the outstanding Common Shares
on a Fully Diluted Basis, the Company will not, and will not permit any of their
respective Subsidiaries to, directly or indirectly, consummate any transaction
or series of transactions (including, without limitation, the sale, purchase,
exchange or lease of any assets or properties or the rendering of any services)
with any Affiliate (other than among the Company or its Subsidiaries) (an
"Affiliate Transaction") unless (i) such transaction or series of related
transactions is on terms that are no less favorable to the Company or its
Subsidiaries, as the case may be, than would be available in a comparable
transaction in arm's-length dealings with an unrelated third party, as
reasonably determined by the Company's Board of Trustees and (ii) with respect
to any one transaction or series of related transactions involving aggregate
payments in excess of $500,000, the Company delivers a certificate, certified by
an officer of the Company, to the Investor certifying that such transaction or
series of related transaction complies with clause (i) above and such
transaction or series of related transactions has received the approval of a
majority of the disinterested members of the Board of Trustees of the Company;
provided, however, that this Section 2.2 shall not apply to the compensation of
executives of the Company or to any transaction (a) arising out of any agreement
existing on the date hereof or any transaction in which all holders of any class
or series of outstanding equity securities of the Company have the right to
participate on a pro rata basis, (b) between a joint venture (in which the
Company or one of its Subsidiaries is a partner or member) and an Affiliate of
the joint venture that is not otherwise an Affiliate of the Company, (c) that
has received Shareholder Approval or (d) under any equity incentive plan that
has received Shareholder Approval.
2.3 Inspection Rights. So long as the Investor or an Affiliate
of the Investor, or one of their respective current members or partners (and
their Affiliates), is the holder of either (A) all of the Preferred Shares
outstanding or (B) an amount of the Company's Voting Shares, together with
Preferred Shares and/or the Warrant, which if converted into or exercised for
Common Shares, would exceed 10% of the Common Shares on a Fully Diluted Basis,
the Company shall permit, and cause its Subsidiaries to permit, the Investor or
any agents or representatives thereof to examine and inspect the books and
records of the Company and its Subsidiaries and take copies and extracts
therefrom on reasonable prior notice and at reasonable times and during normal
business hours; provided, however, that the Investor continues to be subject to
Section 10.5 of the Investment Agreement.
2.4 Insurance for Trustees. So long as the Investor or an
Affiliate of the Investor, or one of their respective current members or
partners (and their Affiliates), is represented on the Board of Trustees of the
Company or is entitled to obtain such representation or is the holder of either
(A) all of the Preferred Shares outstanding or (B) an amount of the Company's
Voting Shares, together with Preferred Shares and/or the Warrant, which if
converted into or exercised for Common Shares would exceed 10% of the Common
Shares on a Fully Diluted Basis, the Company shall obtain and maintain trustees'
and officers' reimbursement and liability insurance in form reasonably
acceptable to the Investor and with such carrier as shall be reasonably
acceptable to the Investor in the name of the Company for the benefit of each
trustee, including each Preferred Trustee (as such term is defined in the
Articles Supplementary), in an amount not less than $5,000,000 (it being agreed
that the policy currently in place is in acceptable form and with an acceptable
carrier); provided, however, that (i) such trustees supply the information
required by the Company's insurance carrier and meet the qualifications
established by such carrier, if any, which shall not be more burdensome than
those of the Company's current policy, and (ii) if such insurance is a
claim-based or equivalent policy, each such Preferred Trustee shall be entitled
to such insurance for an additional six years.
2.5 Accrued and Unpaid Distributions. Notwithstanding anything
in the Articles Supplementary to the contrary, on the date of conversion of any
Preferred Shares pursuant to Section 7 of the Articles Supplementary by the
Investor, Rothschild Realty Inc., an Affiliate of either of them or one of their
respective members or partners, the Company shall pay such holder of such
Preferred Shares all accrued and unpaid distributions in respect of such
Preferred Shares in cash as provided for in Section 2 of the Articles
Supplementary.
2.6 Fees and Expenses. In the event that the Company shall
request that the Investor consent to any action by the Company that is otherwise
prohibited by, or amend any of, the Operative Instruments, the Company shall pay
all reasonable legal fees and expenses reasonably incurred by the Investor in
connection with the Investor's review of such request.
3. DEMAND REGISTRATION
3.1 Right to Demand Registration
(a) Subject to Section 3.6, at any time following the
date hereof, Demand Requesting Holders may make written requests to the Company
for registration with the Commission (a "Demand Registration") under and in
accordance with the provisions of the Securities Act of all or part of their
Registrable Securities; provided, however, that the Company (i) shall be
required to effect no more than two such Demand Registrations pursuant to this
Section 3 (other than the Shelf Registration as defined in Section 3.2), (ii)
shall not be required to cause a Demand Registration to be filed with the
Commission prior to the day that is 270 days after the date hereof, and (iii)
shall not be required to effect a Demand Registration if less than $10 million
in market value of Registrable Securities would be registered or if the
Registrable Securities could be sold pursuant to the Shelf Registration if then
in effect.
(b) A Demand Registration shall be in the form of a
firmly underwritten offering managed by an underwriter or underwriters selected
pursuant to Section 3.5.
(c) Within ten days after receipt of any request by
the Demand Requesting Holders under Section 3.1(a) or the Majority Holders under
Section 3.2, the Company will give written notice (the "Other Holders Notice")
of such registration request to all other Holders, if any, and, subject to
Section 3.4, shall include in such registration all Registrable Securities with
respect to which the Company has received written requests for inclusion therein
from the Holders thereof within 15 days after such notice by the Company. The
Company shall have no obligation to include in such registration Registrable
Securities with respect to which the Company has not received written requests
within such 15-day period.
(d) The failure to file a Registration Statement
within 60 days of a written request delivered under Section 3.1 shall
constitute, in the absence of an injunction or a Blackout Period having been
imposed, a breach thereof entitling the Holders to remedies hereunder.
3.2 Shelf Registration. Subject to Section 3.6, at any time
following the date hereof, the Majority Holders may make a written request to
the Company that a "shelf" registration statement with respect to all of the
Registrable Shares, on an appropriate Form, pursuant to Rule 415 under the
Securities Act or any similar rule that may be adopted by the Commission (the
"Shelf Registration"), be filed with the Commission, provided that the Company
shall not be required to cause such Shelf Registration to be filed with the
Commission prior to the date that is 270 days after the date hereof, provided
that the Company may, upon prior notice to Holders of Registrable Securities
elect to file a Shelf Registration before such date or request. The Company
shall use reasonable best efforts to keep the Shelf Registration continuously
effective until the earlier of (i) the second anniversary (plus the term of any
Blackout Period, as defined in Section 3.5) of the date the Shelf Registration
is declared effective and (ii) the date on which all shares registered on the
Shelf Registration statement have been sold. The Shelf Registration shall
provide for distributions under all lawful means and shall not qualify as either
of the Demand Registrations to which the Holders are entitled. Any Holder shall
be required to comply with the rules of the New York Stock Exchange or any other
stock exchange on which the Common Shares are then listed.
3.3 Effective Registration and Expenses. A registration will
qualify as a Demand Registration or a Shelf Registration when it has become
effective; provided, however, that (i) if the Demand Requesting Holders with
regard to a Demand Registration, or the Majority Holders with regard to a Shelf
Registration, withdraw their Registrable Securities after the filing with the
Commission of the initial Registration Statement related thereto and prior to
the effective date thereof, the registration will count as a Demand Registration
or a Shelf Registration unless such Demand Requesting Holders or Majority
Holders, as the case may be, agree severally to pay all of the Registration
Expenses of the Company and all other out of pocket expenses of the Company
contemplated by Section 7 hereof, incurred through the date that notice of such
withdrawal is given and (ii) an effective Demand Registration will not count as
a Demand Registration if the Demand Requesting Holders have not been permitted
to register and sell all of the Registrable Securities requested to be included
in such registration by such Demand Requesting Holders.
3.4 Priority on Underwritten Demand Registrations. Subject to
the rights granted pursuant to the agreements set forth on Schedule 11.2, if the
managing underwriter or underwriters of any underwritten Demand Registration
advise the Company and the Holders in writing of an Underwriters Maximum Number,
the Company will be obligated and required to include in such registration (i)
first, the Registrable Securities requested to be included in such Demand
Registration by the Holders, pro rata in proportion to the number of Registrable
Securities requested to be included in such registration by each of them until
all such Registrable Securities have been so included, (ii) second, the
securities requested to be included in such Demand Registration by the Company
and other Persons having contractual rights thereto, in accordance with the
priorities that exist among them, and (iii) third, any other securities of the
Company to be registered on behalf of any other Person, including the Company.
Neither the Company nor any of its securityholders (other than Holders of
Registrable Securities) shall be entitled to include any securities in any
underwritten Demand Registration unless the Company or such securityholders (as
the case may be) shall have irrevocably agreed in writing to sell such
securities on the same terms and conditions as shall apply to the Registrable
Securities to be included in such underwritten Demand Registration.
3.5 Selection of Underwriters. The managing underwriter and
any additional investment bankers and managers for use in connection with any
underwritten Demand Registration will be selected by the Company with the
consent of the holders of a majority of the Registrable Securities to be
registered on behalf of the Demand Requesting Holders, with such consent not to
be unreasonably withheld.
3.6 Limitations Regarding Registration at the Request of
Holders
(a) The Company shall not be required to effect a
Demand Registration or a Shelf Registration under Section 3 and the Holders of
Registrable Securities will discontinue the disposition of their securities
covered by a Shelf Registration during any Blackout Period (as defined below)
(i) if the Board of Trustees of the Company determines in good faith that
effecting such a registration or continuing such disposition at such time would
have a material adverse effect upon a proposed sale of all (or substantially
all) of the assets of the Company or a merger, reorganization, recapitalization
or similar current transaction materially affecting the capital structure or
equity ownership of the Company, (ii) if the Company is in possession of
material information which the Board of Trustees of the Company determines in
good faith is not in the best interests of the Company to disclose in a
registration statement at such time, (iii) if the Company has delivered a notice
pursuant to Section 4.1 that it is undertaking an underwritten offering in which
the Holders will be entitled to exercise their Piggyback Registration rights, or
(iv) if the Company is otherwise prohibited pursuant to the rules and
regulations of the Commission from effecting such filing; provided, however,
that the Company may (x) only delay a Demand Registration pursuant to this
Section 3.6 by delivery of a Blackout Notice (as defined below) within thirty
(30) days of delivery of the notice requesting a Demand Registration and only
for a period not exceeding three (3) months from the date of delivery of the
Blackout Notice (or until such earlier time as such transaction is consummated
or no longer proposed or the material information has been made public); and (y)
require, by delivery of a Blackout Notice, that the Holders of Registrable
Securities discontinue from time to time, the disposition of their securities
covered by a Shelf Registration for an aggregate period not to exceed six (6)
months (each period as described in (x) and (y) above, a "Blackout Period") in
any 36-month period.
(b) The Company shall promptly notify the Holders in
writing (a "Blackout Notice") of any decision not to effect a Demand
Registration or a Shelf Registration or to discontinue sales of Registrable
Securities pursuant to this Section 3.6, which notice shall set forth the reason
for such decision (but not disclosing any nonpublic material information unless
expressly requested by Holders, who shall be obligated to maintain the
confidentiality of such information) and shall include an undertaking by the
Company promptly to notify the Holders as soon as a Demand Registration or a
Shelf Registration may be effected or sales may resume.
(c) The Company shall not be required to effect a
Demand Registration or Shelf Registration under this Section 3 during any period
in which the Company is restricted from filing a registration statement or from
making any public sale or distribution of its equity securities pursuant to any
agreement on Schedule 11.2.
4. PIGGYBACK REGISTRATION
4.1 Right to Include Registrable Securities. Subject to
Section 4.3, if the Company or any other issuer of Registrable Securities at any
time or from time to time proposes to register shares of its equity securities
or Registrable Securities under the Securities Act (other than in a registration
on Form S-4 or S-8 or any successor form to such forms or in connection with an
exchange offer or an offering of securities solely to the existing stockholders
or employees of the Company), whether or not for sale for its own account, the
Company shall deliver prompt written notice to all Holders of Registrable
Securities of its intention to undertake such registration and of such Holders'
rights to participate in such registration to the extent of their holdings of
Piggyback Registrable Securities under this Section 4 as hereinafter provided.
The Company shall use its reasonable best efforts to effect the registration
under the Securities Act of all Piggyback Registrable Securities with respect to
which the Company receives a request for registration from the Holders thereof
by written notice to the Company within 15 Business Days after the date of the
Company's notice to such Holders of its intended registration (which notice by
Holders shall specify the amount of such Piggyback Registrable Securities to be
registered, which amount for each Holder must equal or exceed the lesser of (i)
half of all Piggyback Registrable Securities that such Holder either owns or has
the right to acquire or (ii) 10,000 shares), to the extent necessary to permit
their disposition in accordance with the Company's intended methods thereof of
all such Piggyback Registrable Securities by including such Piggyback
Registrable Securities in the registration statement pursuant to which the
Company proposes to register the securities (a "Piggyback Registration");
provided, however, that if such registration involves an underwritten offering,
all Holders requesting inclusion in the registration shall be required to sell
such Piggyback Registrable Securities to the underwriters selected by the
Company at the same price and on the same terms of underwriting applicable to
the Company and any other Persons selling securities. Holders desiring to
participate in a Piggyback Registration shall be bound by the Company's intended
method of disposition of shares thereunder. The Holders requesting inclusion in
a registration pursuant to this Section 4 may, at any time prior to the
effective date of the registration statement relating to such registration,
revoke such request by delivering written notice to the Company revoking such
requested inclusion. All requests for Piggyback Registration under this Section
4 shall be without prejudice to the rights of the Holders to request, and shall
not be counted as, a Demand Registration or Shelf Registration under Section 3
above.
4.2 Priority in Piggyback Registration. If any of the
Piggyback Registrable Securities registered pursuant to any Piggyback
Registration are to be sold in one or more firm commitment underwritten
offerings, and the managing underwriters provide a written opinion addressed to
the Company and the Holders of such Piggyback Registrable Securities advising of
an Underwriters Maximum Number, or, in the case of a Piggyback Registration not
being underwritten, the Company shall reasonably determine (and notify the
Holders of Piggyback Registrable Securities of such determination), after
consultation with an investment banker of nationally recognized standing, that
the number of shares of securities proposed to be sold in such offering exceeds
the number of shares which can be sold in such offering within a price range
acceptable to the Company, the Company shall include in such registration only
such number of shares (including Piggyback Registrable Securities, if any) which
in the opinion of such underwriter or underwriters or the Company, as the case
may be, can be sold within such price range, selected in the following order of
priority: (i) first, all of the shares that the Company proposes to register
(but solely to the extent that the proceeds thereof shall not be used to
purchase Common Shares or other securities of the Company), and the shares
requested by any other Person having demand registration rights and having made
demand for the subject registration, and (ii) second, subject only to priority
"piggyback" rights, if any, granted pursuant to the agreements set forth on
Schedule 11.2, the Piggyback Registrable Securities requested to be included in
such registration by Holders that have requested their Piggyback Registrable
Securities to be included therein, pro rata in proportion to the number of
Piggyback Registrable Securities requested to be included in such registration
by each of them.
4.3 Limitations Regarding Piggyback Registrations. If the
Company, at any time after giving written notice under Section 4.1 of its
intention to register Common Stock and prior to the effectiveness of the
registration statement filed in connection with such registration, determines
for any reason either not to effect such registration or to delay such
registration, the Company may, at its election, by the delivery of written
notice to each Holder, (i) in the case of a determination not to effect
registration, relieve itself of its obligation to register the Piggyback
Registrable Securities in connection with such registration, or (ii) in the case
of a determination to delay the registration, delay the registration of such
Piggyback Registrable Securities for the same period as the delay in the
registration of such other Common Shares. In addition, Holders of Piggyback
Registrable Securities shall not have the right to include such securities in
any registration statement filed pursuant to a registration rights agreement in
effect on the date hereof and set forth on Schedule 11.2 if, under any such
agreement, the beneficiary thereof would not be required to allow a Holder of
Piggyback Registrable Securities to participate in the registration statement
filed on behalf of such beneficiary.
4.4 Agreement of Holders. As a condition precedent to
permitting any Holder to participate in a Piggyback Registration, the Company
shall have the right to require such Holder to execute an agreement in form and
substance satisfactory to the Company to the effect that such Holder agrees to
be bound by, and to comply with, all of the obligations of a Holder under this
Agreement.
5. HOLDBACK AGREEMENTS
5.1 Restrictions on Public Sale by Holder of Registrable
Securities
(a) Each Holder of Registrable Securities agrees, if
requested by the managing underwriter or underwriters in an underwritten
offering of any Registrable Securities (or of Company securities from which
Registrable Securities are not included in compliance with this Agreement), not
to effect any public sale or distribution or any other sale pursuant to the
exemption from the registration requirements of the Securities Act available for
private placements, of its remaining equity securities of the Company, including
a sale pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act (except as part of such underwritten registration), during the
14-day period prior to, and during the 90-day period (or such shorter period as
may be agreed to by the parties hereto) beginning on, the effective date of such
Registration Statement, to the extent timely notified in writing by the Company
or the managing underwriter or underwriters, unless the underwriters managing
the registered offering and the Company otherwise agree.
(b) Each Holder of Registrable Securities agrees by
acquisition of such Registrable Securities not to effect any public sale or
distribution or any other sale pursuant to the exemption from the registration
requirements of the Securities Act available for private placements, of its
remaining equity securities of the Company, including a sale pursuant to Rule
144 (or any similar provision then in force) under the Securities Act (except as
part of such underwritten registration), during the period that a holder of
securities registrable under any of the agreements set forth on Schedule 11.2 is
prohibited from making any such sale or distribution as a result of an
underwritten public offering pursuant to such agreement.
5.2 Restriction on Public Sale by the Company and Others. The
Company agrees (i) not to effect any public sale or distribution of any of its
equity securities during the 14-day period prior to, and during the 90-day
period beginning on, the effective date of a Demand Registration Statement filed
pursuant to Section 3 or such longer periods, but in no event more than 180
days, as may be required in the reasonable judgment of the managing underwriter
or underwriters (except as part of such underwritten registration or pursuant to
registrations on Forms S-4 or S-8 or any successor form to such forms or in
connection with an exchange offer or an offering of securities solely to the
existing stockholders or employees of the Company), and (ii) that it will cause
each holder of equity securities of the Company purchased from the Company at
any time after the date of this Agreement (other than in a registered public
offering) who as a result of such purchase, owns more than 5% of the Common
Shares on a Fully Diluted Basis, to agree not to effect any public sale or
distribution or, in the case of officers or Trustees of the Company, any other
sale pursuant to the exemption from the registration requirements of the
Securities Act available for private placements, of any such securities during
such period, including a sale pursuant to Rule 144 under the Securities Act
(except as part of such underwritten registration, if permitted).
6. REGISTRATION PROCEDURES
Upon the Company incurring registration obligations under
Section 3 or Section 4 and subject thereto (including, without limitation, the
Company's unfettered right to terminate or withdraw a registration under Section
4 for any or no reason), the Company will use its reasonable best efforts to
effect such registrations to permit the sale of such Registrable Securities in
accordance with the intended method or methods of distribution thereof, and
pursuant thereto the Company will, at its expense, as expeditiously as
reasonably possible:
(a) prepare and file with the Commission a
Registration Statement relating to such registration on any appropriate form
under the Securities Act, which form shall be available for the sale of the
Registrable Securities by the Holders thereof in accordance with the intended
method or methods of distribution thereof, and use its reasonable best efforts
to cause such Registration Statement to become effective; provided, however,
that before filing a Registration Statement or Prospectus or any amendments or
supplements thereto, the Company will furnish to the Holders of the Registrable
Securities covered by such Registration Statement, their counsel and the
underwriters, if any, copies of all such documents proposed to be filed
sufficiently in advance of filing to provide them with a reasonable opportunity
to review such documents and comment thereon; provided that nothing in this
Agreement shall require the Company to provide Holders and their counsel with
documents incorporated by reference in advance of the filing of such documents
with the Commission;
(b) prepare and file with the Commission such
amendments and post-effective amendments to a Registration Statement as may be
necessary to keep such Registration Statement effective for a period of not less
than 180 days (or such shorter period which shall terminate when all Registrable
Securities covered by such Registration Statement have been sold or withdrawn,
but not prior to the expiration of the 90-day period referred to in Section 4(3)
of the Securities Act and Rule 174 thereunder, if applicable); cause the related
Prospectus to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Securities Act; and
comply with the provisions of the Securities Act applicable to it with respect
to the disposition of all securities covered by such Registration Statement
during the applicable period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration Statement or
supplement to such Prospectus;
(c) notify each Holder of Registrable Securities
included in the Registration Statement, their counsel and the managing
underwriters, if any, at any time when a prospectus relating thereto is required
to be delivered under the Securities Act, promptly, and (if requested by any
such Person) confirm such notice in writing, (1) when a Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective, (2) of any request by the Commission for amendments
or supplements to a Registration Statement or related Prospectus or for
additional information, (3) of the issuance by the Commission of any stop order
suspending the effectiveness of a Registration Statement or the initiation of
any proceedings for that purpose, (4) if at any time the representations and
warranties of the Company contained in agreements contemplated by Section 6(n)
cease to be true and correct, (5) of the receipt by the Company of any
notification with respect to the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (6) of the happening of any
event as a result of which the Prospectus included in the Registration Statement
(as then in effect) contains any 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 (in the case of the Prospectus or any preliminary Prospectus,
in light of the circumstances under which they were made) not misleading
(provided that in the case of a shelf registration, the Company shall be
required to notify Holders only when the Company has received notice from a
Holder that the Holder intends to sell Registrable Securities under the
Registration Statement) and (7) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate or
that there exist circumstances not yet disclosed to the public which make
further sales under such Registration Statement inadvisable pending such
disclosure and post-effective amendment (provided that in the case of a shelf
registration, the Company shall be required to notify Holders only when the
Company has received notice from a Holder that the Holder intends to sell
Registrable Securities under the Registration Statement);
(d) at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, upon the occurrence of any
event contemplated by Section 6(c)(2)-(7), prepare a supplement or
post-effective amendment to the Registration Statement or related Prospectus or
any document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the Registrable
Securities being sold thereunder, such Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading;
(e) use reasonable best efforts to obtain the
withdrawal of any order suspending the effectiveness of the Registration
Statement, or the lifting of any suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction required pursuant to Section
6(i), as soon as reasonably possible;
(f) if requested by a managing underwriter or any
Holder of Registrable Securities, immediately incorporate in a prospectus
supplement or post-effective amendment such information concerning such Holder
of Registrable Securities, the managing underwriter or underwriters or the
intended method of distribution as the managing underwriter or underwriters or
the Holder of Registrable Securities reasonably requests to be included therein
and as is appropriate in the reasonable judgment of the Company, including,
without limitation, information with respect to the number of shares of the
Registrable Securities being sold to such underwriter or underwriters, the
purchase price being paid therefor by such underwriter or underwriters and with
respect to any other terms of the underwritten (or best efforts underwritten)
offering of the Registrable Securities to be sold in such offering; make all
required filings of such Prospectus supplement or post-effective amendment as
soon as notified of the matters to be incorporated in such Prospectus supplement
or post-effective amendment; and supplement or make amendments to any
Registration Statement if requested by a managing underwriter of such
Registrable Securities;
(g) furnish to each Holder of Registrable Securities
included in such Registration Statement and each managing underwriter, if any,
without charge, one manually-signed copy of the Registration Statement and any
post-effective amendments thereto, including financial statements and schedules,
and, upon request, copies of all documents incorporated therein by reference and
all exhibits (including those incorporated by reference);
(h) deliver to each Holder of Registrable Securities
included in such Registration Statement, their counsel and the underwriters, if
any, without charge, as many copies of the Prospectus or Prospectuses (including
each preliminary Prospectus) and any amendment or supplement thereto as such
Persons may reasonably request; the Company consents to the use of such
Prospectus or any amendment or supplement thereto by each Holder of Registrable
Securities included in the Registration Statement and the underwriters, if any,
in connection with the offering and sale of the Registrable Securities covered
by such Prospectus or any amendment or supplement thereto;
(i) prior to any public offering of Registrable
Securities use its reasonable best efforts to register or qualify, or cooperate
with the Holders of Registrable Securities included in the Registration
Statement, the underwriters, if any, and their respective counsel in connection
with the registration or qualification of, such Registrable Securities for offer
and sale under the securities or blue sky laws of such jurisdictions as any
Holder or underwriter reasonably requests in writing; use its reasonable best
efforts to keep each such registration or qualification effective, including
through new filings or amendments or renewals, during the period such
Registration Statement is required to be kept effective and do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the applicable
Registration Statement; provided, however, that the Company will not be required
to qualify to do business or take any action that would subject it to taxation
or general service of process in any jurisdiction where it is not then so
qualified or subject;
(j) cooperate with the Holders of Registrable
Securities included in the Registration Statement and the managing underwriter
or underwriters, if any, to facilitate (x) the timely preparation and delivery
of certificates (not bearing any restrictive legends) representing Registrable
Securities to be sold under the Registration Statement or (y) the timely
transfer of beneficial ownership of such Registrable Securities in machine
book-entry fashion under the auspices of The Depository Trust Company or other
similar organization; and cause such Registrable Securities to be in such
denominations and registered in such names as the managing underwriter or
underwriters, if any, or such Holders may request at least two business days
prior to any sale of Registrable Securities;
(k) use its reasonable best efforts to cause the
Registrable Securities covered by the Registration Statement to be registered
with or approved by such Governmental Bodies consistent with the provisions of
Section 6(i) as may be necessary to enable the seller or sellers thereof or the
managing underwriter or underwriters, if any, to consummate the disposition of
such Registrable Securities;
(l) cause all Registrable Securities included in such
Registration Statement to be (1) listed, by the date of first sale of
Registrable Securities pursuant to such Registration Statement, on each
securities exchange on which shares of the same class and series have previously
been, or are concurrently to be, listed, if any, or (2) if the Registrable
Securities to be included in such Registration Statement are to be distributed
in an underwritten offering, quoted on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") or the National Market System of
NASDAQ if the Common Shares are then quoted thereon and such Registrable
Securities qualify for inclusion thereon;
(m) provide a transfer agent and registrar for the
Registrable Securities not later than the effective date of such Registration
Statement;
(n) enter into such agreements and take all such
other reasonable actions in connection therewith in order to expedite or
facilitate the disposition of such Registrable Securities and in such
connection, in the case of an underwritten offering, enter into an underwriting
agreement in form, scope and substance as is customary in underwritten offerings
and use its reasonable best efforts to comply with and satisfy the covenants and
conditions of such underwriting agreement, including, without limitation,
providing opinions of counsel to the Company, indemnifications, and "comfort"
letters from the Company's independent certified public accountants;
(o) make available for inspection by a representative
of the Holders of Registrable Securities included in the Registration Statement,
any underwriter participating in any disposition pursuant to such Registration
Statement and any lawyer, accountant or other advisors retained by such selling
Holders or underwriter, all pertinent financial and other records, pertinent
trust documents and properties of the Company as they may reasonably request,
and cause the Company's officers, trustees and employees to supply all pertinent
information reasonably requested by any such representative, underwriter,
lawyer, accountant or other advisors in connection with such Registration
Statement; provided, however, that any records, information or documents that
are furnished by the Company and that are nonpublic shall be used only in
connection with such registration and shall be kept confidential by such Persons
except to the extent disclosure of such records, information or documents is
required by law; and
(p) otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the Commission and make
generally available to its security holders earnings statements satisfying the
provisions of Section 11(a) of the Securities Act, no later than 90 days after
the end of any 12-month period commencing at the end of any fiscal quarter in
which Registrable Securities are sold to underwriters in a firmly underwritten
offering.
Each Holder of Registrable Securities as to which any
registration is being effected shall furnish promptly to the Company such
information regarding the distribution of such securities as the Company may
from time to time reasonably request in writing.
Each Holder of Registrable Securities (i) shall sell its
securities covered by any Registration Statement in accordance with the plan of
distribution provided for therein and (ii) upon receipt of any notice from the
Company of the happening of any event of the kind described in Section
6(c)(2)-(7), shall forthwith discontinue disposition of Registrable Securities
covered by such Registration Statement or Prospectus until such Holder's receipt
of the copies of the supplemented or amended Prospectus contemplated by Section
6(d), or until it is advised in writing by the Company that the use of the
applicable Prospectus may be resumed, and has received copies of any additional
or supplemental filings which are incorporated by reference in such Prospectus,
and, if so directed by the Company, such Holder will, or will request the
managing underwriter or underwriters, if any, to, deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such securities current at the
time of receipt of such notice. In the event the Company shall give any such
notice, the time period mentioned in Section 6(b) during which a Registration
Statement is required to be kept effective shall be extended by the number of
days during the time period from and including the date of the giving of such
notice pursuant to Section 6(c) to and including the earlier of (x) the date
when each seller of Registrable Securities covered by such Registration
Statement shall have received the copies of the supplemented or amended
Prospectus contemplated by Section 6(d), or (y) the date when each such seller
is notified by the Company that it may resume use of the Prospectus as then in
effect. The Company shall be obligated to use its reasonable best efforts to
cause such Registration Statement and Prospectus to conform to all legal
requirements and to notify the Holders that the use of the applicable Prospectus
may be resumed. Nothing in this paragraph shall create an exception to the
permitted duration of any Blackout Period imposed pursuant to and subject to
Section 3.6 of this Agreement.
7. REGISTRATION EXPENSES
All expenses incident to the Company's performance of or
compliance with this Agreement, including, without limitation, all registration
and filing fees, fees and expense of compliance with state securities or blue
sky laws, including reasonable fees and disbursements of counsel for the
underwriters in connection with blue sky qualifications of the Registrable
Securities under the laws of such jurisdictions as the managing underwriter or
underwriters may reasonably designate, printing expenses, messenger, telephone
and delivery expenses, and fees and disbursements of counsel for the Company and
of all independent certified public accountants of the Company (including the
expenses of any special audit and "cold comfort" letters required by or incident
to such performance), and of underwriters, any liability insurance and fees and
expenses of other Persons retained by the Company (all such expenses being
herein called "Registration Expenses") will be borne by the Company whether or
not the Registration Statement becomes effective. The Company will also pay its
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expense
of any annual audit, the fees and expenses incurred in connection with the
listing of the securities to be registered on any securities exchange on which
similar securities issued by the Company are then listed and the fees and
expenses of any Person, including special experts, retained by the Company. None
of the following expenses shall be paid by the Company: transfer taxes,
discounts, commissions or fees of underwriters, selling brokers, dealer managers
or similar securities industry professionals relating to the distribution of the
Registrable Securities and the legal fees and disbursements of counsel to the
Holders.
8. INDEMNIFICATION
8.1 Indemnification by the Company. The Company agrees to
indemnify, defend and hold harmless, to the full extent permitted by law, each
Holder of Registrable Securities registered pursuant to any registration
hereunder and each of its Affiliates or partners, each of their respective
members, officers, directors, employees, agents, representatives, successors and
assigns and each Person who controls such Holder, Affiliate or partner (within
the meaning of the Securities Act) against any and all actions, causes of
action, suits, losses, liabilities, obligations, damages, deficiencies, demands,
claims, judgments, taxes, assessments, settlement costs, court costs and other
costs and expenses, including, without limitation, interest, penalties, fines,
costs of investigation, discovery, case preparation, defense or appeal, expert
witness fees and expenses and reasonable attorneys' and paralegal fees and
disbursements (collectively, "Losses") incurred by any such Person in any
capacity and caused by any untrue statement of a material fact contained in any
Registration Statement, Prospectus or preliminary Prospectus or any omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein (in the case of a Prospectus or any preliminary
Prospectus, in the light of the circumstances under which they were made) not
misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such Holder or its
representative expressly for use therein; provided, however, that such
indemnification with respect to any preliminary prospectus shall not be
applicable if a copy of the Prospectus was not sent or given by or on behalf of
such Holder on the initial sale, if such is required by law, at or prior to the
written confirmation of the sale and if the Prospectus (as amended or
supplemented) would have cured the defect giving rise to such Losses.
8.2 Indemnification by Holders. In connection with any
registration hereunder, each Holder participating in such registration will
promptly furnish to the Company in writing such information and affidavits with
respect to such Holder as the Company reasonably requests for use in connection
with any Registration Statement or Prospectus and agrees to indemnify, defend,
and hold harmless, to the full extent permitted by law, the Company, its
trustees, officers, agents and representatives and each Person who controls the
Company (within the meaning of the Securities Act) against any Losses incurred
by any such Person in any capacity and caused by any untrue statement of a
material fact or any omission of a material fact required to be stated in any
Registration Statement or Prospectus or preliminary Prospectus or necessary to
make the statements therein (in the case of a Prospectus, in the light of the
circumstances under which they were made) not misleading, to the extent, but
only to the extent, that such untrue statement or omission is contained in any
information or affidavit with respect to such Holder so furnished in writing by
such Holder or its representatives to the Company specifically for inclusion in
such Registration Statement or Prospectus; provided, however, that such
indemnification with respect to any preliminary prospectus shall not be
applicable if a copy of the Prospectus was not sent or given by or on behalf of
the Company on the initial sale, if such is required by law, at or prior to the
written confirmation of the sale and if the Prospectus (as amended or
supplemented) would have cured the defect giving rise to such Losses. In no
event shall the liability of any selling Holder hereunder be greater in amount
than the net dollar amount of the proceeds received by such Holder upon the sale
of the Registrable Securities giving rise to such indemnification obligation.
The Company shall be entitled to receive indemnities from underwriters to the
same extent as provided above with respect to information so furnished in
writing by such persons or their representatives to the Company specifically for
inclusion in any Prospectus or Registration Statement.
8.3 Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder will (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party. Notwithstanding the
foregoing, any Person entitled to indemnification hereunder shall have the right
to employ separate counsel and to participate in the defense of such claim, but
the reasonable fees and expenses of such counsel shall be at the expense of such
Person unless (a) the indemnifying party has agreed in writing to pay such fees
or expenses, (b) the indemnifying party shall have failed to assume the defense
of such claim and employ counsel reasonably satisfactory to such Person or (c) a
conflict of interest may exist between such Person and the indemnifying party
(it being understood that (x) in the case of each of (a), (b) and (c) above, the
reasonable fees and expenses of such separate counsel to such Person shall be
paid by the indemnifying party and (y) in the case of (c) above, if the Person
notifies the indemnifying party in writing that such Person elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such claim on behalf of
such Person). If such defense is not assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any settlement made
without its consent (but such consent will not be unreasonably withheld or
delayed). No indemnifying party will be required to consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to the indemnified party of
a release from all liability in respect to such claim or litigation. An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the reasonable fees and expenses of more
than one counsel for all parties indemnified by such indemnifying party with
respect to such claim, unless in the reasonable judgment of any indemnified
party a conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels. The Company may not enter into any settlement of
any claim relating to the offer and sale of Registrable Securities that does not
provide for the complete and unconditional release of such Person.
8.4 Contribution. If the indemnification provided for in this
Section 8 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expense
referred to therein, then the indemnifying party in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action; provided, however, that in no event shall the liability of any
selling Holder hereunder be greater in amount than the difference between the
dollar amount of the proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such contribution obligation and all
amounts previously contributed by such Holder with respect to such losses,
claims, damages, liabilities and expenses. The amount paid or payable by a party
as a result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 8.4 were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in the immediately paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
9. RULE 144
The Company agrees that it will file the reports required to
be filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the Commission thereunder, to the extent required from
time to time to enable such Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the Commission. Upon the request of any Holder of Registrable Securities, the
Company will deliver to such Holder a written statement as to whether it has
complied with such information and requirements.
10. EFFECTIVENESS
This Agreement shall be effective upon the execution and
delivery of a counterpart by each of the parties hereto.
11. MISCELLANEOUS
11.1 No Adequate Remedy at Law. In the event of a breach by
the Company of its obligations under this Agreement, each Holder, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
11.2 No Inconsistent Agreement
(a) Except for the registration rights contained in
the agreements set forth on Schedule 11.2 hereto, the Company has not previously
entered into any agreement that remains in effect with respect to its equity
securities granting any registration rights to any Person. The provisions of the
agreements set forth on Schedule 11.2 hereto are not in conflict with the
provisions hereof and do not inhibit the Company's ability to perform this
Agreement. There are no priority "piggyback" rights as referred to in Section
4.2 hereof, except in the agreements indicated by asterisk on Schedule 11.2.
(b) The Company will not on or after the date of this
Agreement enter into any agreement with respect to its securities (i) which
grants registration rights to anyone on a preferred or pari passu position to
the Holders as to "cut-back" priorities in piggyback registrations or (ii) which
conflicts with the provisions hereof.
11.3 Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
Majority Holders. Notwithstanding the foregoing, a waiver or consent to depart
from the provisions hereof with respect to a matter which relates exclusively to
the rights of Holders of Registrable Securities whose securities are being sold
pursuant to a Registration Statement and which does not directly or indirectly
affect the rights of other Holders may be given by Holders owning a majority of
the shares of the Registrable Securities being sold by such Holders, provided
that the provisions of this sentence may not be amended, modified, or
supplemented except in accordance with the provisions of the immediately
preceding sentence.
11.4 Notices. Any notice or other communication required or
permitted hereunder shall be deemed to be delivered if in writing (or in the
form of a telecopy) addressed as provided below and if either (a) actually
delivered or telecopied to said address, (b) in the case of overnight delivery
of a notice, the next business day after properly posted with postage prepaid,
or (c) in the case of a letter, three business days shall have elapsed after the
same shall have been deposited in the United States mails, postage prepaid and
registered or certified:
If to the Company, then to Brandywine Realty Trust, 00 Xxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxxx Xxxxxx, Xxxxxxxxxxxx 00000, 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 concurrent copies to Xxxxxx Xxxxxxxx LLP, 0000 Xxx Xxxxx
Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, Attention: Xxxxxxx Xxxxxxxx,
Esq., or such other address of which the Investor shall have been given
notice.
If to any Holder of Registrable Securities, to it at its
address set forth on the books and records of the Company.
11.5 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 and each Holder of Registrable Securities.
11.6 Counterparts. This Agreement and any amendments, waivers,
consents or supplements may be executed in two or more counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same instrument. This Agreement shall become effective upon the
execution of a counterpart by each of the parties hereto.
11.7 Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
11.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State.
11.9 Consent to Jurisdiction; Waiver of Jury Trial
(a) Any action, suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby may be
instituted in any federal court of the Southern District of New York or any
state court located in New York County, State of New York, and each party agrees
not to assert, by way of motion, as a defense or otherwise, in any such action,
suit or proceeding, any claim that it is not subject personally to the
jurisdiction of such court, that the action, suit or proceeding is brought in an
inconvenient forum, that the venue of the action, suit or proceeding is improper
or that this Agreement or the subject matter hereof may not be enforced in or by
such court. The parties irrevocably submit to the exclusive jurisdiction of such
court in any such action, suit or proceeding. Any and all service of process and
any other notice in any such action, suit or proceeding shall be effective
against any party if given personally or by registered or certified mail, return
receipt requested, or by any other means of mail that requires a signed receipt,
postage prepaid, mailed to such party as herein provided. Nothing herein
contained shall be deemed to affect the right of any party to serve process in
any manner permitted by law or to commence legal proceedings or otherwise
proceed against any other party in any other jurisdiction to enforce judgments
obtained in any action, suit or proceeding brought pursuant to this Section
11.9.
(b) Each of the parties hereby irrevocably waives
trial by jury in any action, suit, proceeding or counterclaim, whether at law or
equity, brought by either of them in connection with this Agreement or the
transactions contemplated hereby.
11.10 Severability. The invalidity, illegality or
unenforceability in any jurisdiction of any provision in or obligation under
this Agreement shall not affect or impair the validity, legality and
enforceability of the remaining provisions or obligations under this Agreement
or of such provision or obligation in any other jurisdiction.
11.11 Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein, other than the provisions of
any other documents specifically referred to herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein, with respect to the registration rights granted by the Company with
respect to the Registrable Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
11.12 Non-Public Information. The Investor acknowledges that
its ability to disclose material non-public information or to trade any of the
Company's securities based on any material non-public information furnished to
it by the Company may be limited by the securities laws.
11.13 Attorneys' Fees. In any action or proceeding brought to
enforce any provision 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.
11.14 Construction. The Company and the Investor acknowledge
that each of them has had the benefit of legal counsel of its own choice and has
been afforded an opportunity to review this Agreement with its legal counsel and
that this Agreement shall be construed as if jointly drafted by the Company and
the Investor.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
BRANDYWINE REALTY TRUST
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
FIVE ARROWS REALTY SECURITIES III L.L.C.
By: /s/ X. Xxxx Aloian
----------------------------------------------
Name: X. Xxxx Xxxxxx
Title: Manager
