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EXHIBIT 10.2
BRANDYWINE REALTY TRUST
SECURITIES PURCHASE AGREEMENT
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TABLE OF CONTENTS
SECTION 1. SALE AND PURCHASE OF SHARES; CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
1.1 Authorization of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
1.2 Sale and Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
1.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
2.1 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
2.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
2.3 No Conflict with Law or Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
2.4 Beneficial Interest of Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
2.5 Reservation of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
2.6 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
2.7 Private Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
2.8 Declaration of Trust and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
2.9 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
2.10 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
2.11 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
2.12 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
2.13 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
2.14 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
2.15 Tenant Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
2.16 Dividends and Other Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
2.17 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
2.18 Agreements Affecting the Company's Securities . . . . . . . . . . . . . . . . . . . . . . . . . -10-
2.19 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
2.20 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
2.21 Contracts and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
2.22 Absence of Certain Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
2.23 Contracts with Insiders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
2.24 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
2.25 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
2.26 Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
2.27 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
2.28 Certain Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
2.29 Labor Agreements and Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
2.30 Entire Business; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
2.31 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
2.32 Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
2.33 Standstill Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
2.34 Matters Relating to Partnership Agreement and Warrants. . . . . . . . . . . . . . . . . . . . . -16-
2.35 Investment Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
2.36 Commodity Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
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SECTION 3. PURCHASER'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
3.1 Pre-Existing Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
3.2 Beneficial Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
3.3 Principal Place of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
3.4 Purchase Without View to Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
3.5 Restrictions on Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
3.6 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
3.7 Additional Representations of the Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
3.8 Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
3.9 Due Authorization, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
SECTION 4. CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . -18-
4.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
4.2 Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
4.3 Opinion of Counsel to the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
4.4 Proceedings; Certified Copies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
4.5 No Proceeding or Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
4.6 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
4.7 ASE Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
4.8 Blue Sky Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
4.9 Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
4.10 Contribution Closing; Transaction Documents . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
4.11 Maryland Anti-Takeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
4.12 Environmental Representation Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
4.13 Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
SECTION 5. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . -20-
5.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
5.2 Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
5.3 No Proceeding or Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
5.4 ASE Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
5.5 Contribution Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
5.6 Additional Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
5.7 Proceedings; Certified Copies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
5.8 No SEC Integration Challenge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
SECTION 6. COVENANTS OF THE COMPANY AND THE PURCHASER PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . -21-
6.1 Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
6.2 Operation of Business in Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
6.3 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
6.4 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
6.5 Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
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SECTION 7. COVENANTS OF THE COMPANY AND THE PURCHASER AFTER CLOSING . . . . . . . . . . . . . . . . . . . . -23-
7.1 Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
7.2 Delivery of Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
7.3 Reservation of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
7.4 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
7.5 Waivers, Consents, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
7.6 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
7.7 Shareholders' Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
7.8 Purchaser's Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
7.9 REIT Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
SECTION 8. COMPLIANCE WITH 1933 ACT; RESTRICTIONS ON TRANSFERABILITY OF SHARES, PROPERTY
SHARES WARRANT AND CONVERSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
8.1 Compliance with 1933 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
8.2 Restrictive Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
8.3 Restrictions on Transferability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
8.4 Termination of Restrictions on Transferability . . . . . . . . . . . . . . . . . . . . . . . . . -26-
SECTION 9. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . -26-
SECTION 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
10.1 Owner of Shares, Property Shares, Warrant and Conversion Shares . . . . . . . . . . . . . . . . -26-
10.2 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
10.3 Broker or Finder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
10.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
10.5 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
10.6 Full Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
10.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
10.8 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
10.9 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
10.10 Settlement of Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
10.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
10.12 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
10.13 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
10.14 Non-Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
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SCHEDULE OF EXHIBITS
Exhibit A -- Form of Amendment No. 1 to Registration Statement
Exhibit B -- Amendments or Waivers of Warrant Holders
Exhibit C -- Form of Opinion of Counsel to the Company
Exhibit D -- Form of Opinion of Special Maryland Counsel to the Company
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SECURITIES PURCHASE AGREEMENT (this "Agreement") made as of
the 6th day of November, 1996 between BRANDYWINE REALTY TRUST, a Maryland real
estate investment trust (the "Company"), and RAI REAL ESTATE ADVISERS, INC.
("RAI") as the voting trustee of a voting trust dated as of November 6, 1996
executed by the Commonwealth of Pennsylvania State Employes' Retirement System
("SERS") as shareholder and by RAI as voting trustee (the "Purchaser").
BACKGROUND
The Company desires to issue and sell to the Purchaser, and the
Purchaser desires to purchase Common Shares (as defined in Section 1.1), or, if
so provided in Section 1.2, Series A Preferred Shares (as defined in Section
1.1), for an aggregate purchase price of $10,500,000 (the "Purchase Price") on
the terms and conditions set forth herein.
Intending to be legally bound hereby, the parties hereto agree as
follows:
SECTION 1. SALE AND PURCHASE OF SHARES; CLOSING
1.1 AUTHORIZATION OF SECURITIES. The Board of
Trustees of the Company has authorized the issuance of a number of its
authorized but unissued common shares of beneficial interest (the "Common
Shares") as provided in Section 1.2. The term "Shares" as used herein means the
number of Common Shares issuable to the Purchaser hereunder or, if shares of the
Company's Series A Convertible Preferred Shares (the "Series A Preferred
Shares") are to be issued as provided in Section 1.2, the number of Series A
Preferred Shares issuable to Purchaser hereunder. The term "Securities" as used
herein means the Shares, the Conversion Shares, the Series A Preferred Shares
(the "Property Shares") issuable pursuant to the Contribution Agreement of even
date herewith among, inter alia, the Company and the Purchaser (the
"Contribution Agreement"), and the Warrant to Purchase Common Shares (the
"Warrant") issuable pursuant to the Contribution Agreement. The term "Conversion
Shares" as used herein means the Common Shares issuable upon conversion of the
Series A Preferred Shares and Property Shares and upon exercise or exchange of
the Warrant.
1.2 SALE AND PURCHASE. Subject to the terms and
conditions herein set forth, on the Closing Date (as defined in Section 1.3),
the Company shall sell, issue and deliver Shares to the Purchaser as follows:
If the Secondary Offering occurs on or prior to December 27, 1996, the Company
shall issue to the Purchaser a number of Common Shares equal to the Purchase
Price divided by a number equal to the price to the public in the Secondary
Offering. If the Secondary Offering is not consummated on or before December
27, 1996, the Company shall issue to the Purchaser Preferred Shares convertible
into a number of Common Shares equal to the Purchase Price divided by $5.50.
The term "Secondary Offering" as used herein means an underwritten primary
public offering of Common Shares pursuant to a Registration Statement on Form
S-11 declared effective by the
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SEC (as defined in Section 2.10) which results in gross proceeds to the Company
(prior to reduction for the underwriters' discount) of at least $50,000,000.
All share amounts and prices shall be appropriately adjusted for any share
splits, reverse share splits, share dividends or similar transactions.
1.3 CLOSING.
(a) The closing of the issuance and sale of the
Shares to the Purchaser hereunder shall take place on the earlier of (i) as
promptly as practicable after the closing of the Secondary Offering, or (ii)
December 30, 1996, subject to the satisfaction or, if permissible, waiver of
the conditions set forth in Sections 4 and 5, at 10:00 A.M. at the offices of
Wolf, Block, ▇▇▇▇▇▇ and ▇▇▇▇▇-▇▇▇▇▇, Packard Building, 15th and ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, unless another date, time or place is agreed
to in writing by the parties hereto. As used herein "Closing" shall mean the
closing of the issuance and sale of the Shares to the Purchaser hereunder and
the "Closing Date" shall mean the date on which such Closing takes place.
(b) Subject to the terms and conditions herein
set forth, at the Closing, the Company shall deliver to the Purchaser
certificates for the Shares duly executed by the Company and registered in the
Purchaser's name or the name of its nominee and, in exchange for the delivery
of the Shares, the Purchaser shall deliver to the Company the Purchase Price by
wire transfer of immediately available funds to an account designated by the
Company at least two business days prior to the Closing Date.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Other than as set forth on the disclosure letter previously
provided to the Purchaser by the Company (the "Disclosure Letter") or as
described in the Registration Statement (as defined in Section 2.31) or in the
SEC Reports (as defined in Section 2.10), the Company represents and warrants
to the Purchaser as follows:
2.1 ORGANIZATION AND GOOD STANDING. The Company is a real
estate investment trust duly formed and existing under and by virtue of the
laws of the State of Maryland and is in good standing with the State Department
of Assessments and Taxation of Maryland and has all requisite power and trust
authority, and all necessary licenses and permits, to own and lease its
properties and assets and to conduct its business as now conducted. Each
Subsidiary (as defined in Section 2.9) is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has all requisite power and authority, and all necessary
licenses and permits, to own and lease its properties and assets and to conduct
its business as now conducted. The Company and its Subsidiaries are each
qualified to do business and are in good standing in all states where the
conduct of their respective businesses or their ownership or leasing of
property requires such qualification.
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2.2 AUTHORIZATION. The Company has all requisite power
and trust authority to execute and deliver this Agreement and each Transaction
Document (as defined in Section 4.10) required to be executed and delivered by
it prior to or at the Closing and to carry out the transactions contemplated
hereby and thereby. The execution, delivery and performance by the Company of
this Agreement and each Transaction Document to which it is a party have been
duly authorized by all requisite corporate action. This Agreement has been duly
executed and delivered by the Company and constitutes (and, when executed and
delivered as contemplated herein each such Transaction Document will
constitute) the valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency, moratorium, reorganization and other
similar laws relating to or affecting the enforcement of creditors' rights
generally, and except that the availability of specific performance, injunctive
relief or other equitable remedies is subject to the discretion of the court
before which any such proceeding may be brought.
2.3 NO CONFLICT WITH LAW OR DOCUMENTS. The execution,
delivery and performance by the Company of this Agreement and each Transaction
Document to which it is a party will not violate any provision of law, any rule
or regulation of any governmental authority, or any judgment, decree or order
of any court binding on the Company, and will not conflict with or result in
any breach of any of the terms, conditions or provisions of, or constitute a
default under, or result in the creation of any lien, security interest, charge
or encumbrance upon any of the properties, assets or outstanding shares of the
Company under its the Declaration of Trust of the Company as amended to the
date of this Agreement (the "Declaration of Trust") or the Bylaws of the
Company as amended to the date of this Agreement (the "Bylaws"), or any
indenture, mortgage, lease, agreement or other instrument to which the Company
is a party or by which it or any of its properties is bound.
2.4 BENEFICIAL INTEREST OF COMPANY. The authorized
beneficial interest of the Company consists of: (a) 75,000,000 Common Shares,
2,733,554 shares of which are presently issued and outstanding, and (b)
5,000,000 undesignated preferred shares, par value $.01 per share, none of
which is presently issued and outstanding. All issued and outstanding Common
Shares have been duly and validly issued and are fully paid and nonassessable.
There are no outstanding subscriptions, warrants, options or other rights or
commitments of any character to subscribe for or purchase from the Company, or
obligating the Company to issue, any shares of beneficial interest of the
Company or any securities convertible into or exchangeable for such shares, and
there are no Common Shares reserved for issuance. The number of Common Shares
issuable upon the exercise, conversion or exchange of any outstanding
securities of the Company is not subject to adjustment by reason of the
issuance and sale of the Securities. There are no (i) preemptive, first refusal
or similar rights to purchase or otherwise acquire securities of the Company or
any Subsidiary pursuant to any provision of law, the Declaration of Trust, the
Bylaws, the Partnership Agreement (as defined in Section 2.21), other agreement
or otherwise; or (ii) rights to adjust the number, type or pricing of
securities issuable upon conversion, exercise or exchange of other securities
or rights issued by the Company.
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2.5 RESERVATION OF SHARES. The requisite number of duly
authorized and unissued Common Shares of the Company have been duly authorized
and reserved for issuance upon conversion of the Preferred Shares and Property
Shares and exercise of the Warrant and no further trust action is required for
the valid issuance of Common Shares upon conversion of the Preferred Shares and
Property Shares and exercise of the Warrant. The Conversion Shares will, at the
time of the Closing and thereafter, not be subject to preemptive or similar
rights of any person or entity, and when issued against payment therefor in
accordance with the terms of the Preferred Shares, Property Shares and Warrant,
as applicable, will be duly and validly issued, fully paid and nonassessable.
2.6 CONSENTS AND APPROVALS. No permit, consent, approval
or authorization of, or declaration to or filing with, any federal, state,
local or foreign governmental or regulatory authority or other person or
entity, not made or obtained, is required in connection with the execution or
delivery of this Agreement or any Transaction Document by the Company, the
offer, issuance, sale or delivery of the Securities, or the carrying out by the
Company of the other transactions contemplated hereby, other than (a) the
filing with, and approval of, the American Stock Exchange, Inc. ("ASE") with
respect to the listing of the Shares (to the extent they are Common Shares) and
the Conversion Shares, (b) any filings required under federal and applicable
state securities laws and (c) the filing of Articles Supplementary in the form
of Exhibit D-1 to the Contribution Agreement with the State Department of
Assessments and Taxation of Maryland. The issuance and sale by the Company of
the Securities as contemplated hereby or by the Contribution Agreement will not
require compliance with the notification or other requirements of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder. Prior to the closing under the
Contribution Agreement (the "Contribution Closing"), the Board of Trustees of
the Company shall have taken all action necessary so that the transactions
contemplated by the Contribution Agreement and this Agreement including,
without limitation, the issuance of the Securities, shall be irrevocably exempt
from the operation of Section 3-601 et seq. (the "business combination"
statute) and Section 3-701 et seq. (the "control share acquisition" statute) of
the Maryland General Corporation Law (collectively, the "Maryland Anti-Takeover
Statutes") and from any provisions of the Declaration of Trust and Bylaws that
may have the effect of limiting the acquisition of securities of the Company,
including without limitation Sections 6.6 and 11.5 of the Declaration of Trust.
2.7 PRIVATE OFFERING. Assuming the accuracy of the
Purchaser's representations and warranties contained in Section 3, the offer,
issuance and delivery to the Purchaser pursuant to the terms of this Agreement
and the Contribution Agreement of the Shares, Property Shares and Warrant and,
assuming compliance by the Purchaser with the terms of the Series A Preferred
Shares, the Warrant and applicable law, the Conversion Shares, are exempt from
registration under the Securities Act of 1933, as amended (the "1933 Act").
Based on the representations of the Purchaser contained in Section 3, it is not
necessary, under the circumstances contemplated by this Agreement and the
Contribution Agreement, to register issuance of the Securities under the 1933
Act or the Pennsylvania Securities Act of 1972.
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2.8 DECLARATION OF TRUST AND BYLAWS. The Company has
filed as exhibits to the SEC Reports the Declaration of Trust and Bylaws, true
and correct copies of which have been delivered to the Purchaser.
2.9 SUBSIDIARIES. The SEC Reports or the Disclosure
Letter disclose the name of each entity in which the Company owns any equity
interest, other than such entities that neither own any assets nor have ever
conducted any business (collectively, the "Subsidiaries," which term includes
without limitation Brandywine Operating Partnership, L.P., a Delaware limited
partnership). The SEC Reports or the Disclosure Letter accurately describe (a)
each Subsidiary's jurisdiction of organization and the percentage of its equity
interests owned by the Company and (b) the name of each of the Company's
corporate or joint venture affiliates (other than Subsidiaries) and the nature
of the affiliation. Except as described in the SEC Reports or the Disclosure
Letter, the Company has good and marketable title to all of the equity
interests it purports to own of each Subsidiary, free and clear in each case of
any mortgage, lien, security interest, charge or other encumbrance, and all
such interests have been duly issued and are fully paid and nonassessable.
There are no outstanding warrants, options or other rights or commitments of
any character to subscribe for or purchase from the Company or a Subsidiary, or
obligating such Subsidiary to issue, any additional equity interests or any
securities convertible into or exchangeable for such equity interests.
2.10 SEC REPORTS. Since January 1, 1995, the Company and
its Subsidiaries have timely filed all forms, reports, schedules, statements
and other documents required to be filed with the Securities and Exchange
Commission (the "SEC") pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or the 1933 Act, including without limitation,
(a) all Annual Reports on Form 10-K, (b) all Quarterly Reports on Form 10-Q,
(c) all reports on Form 8-K, (d) all proxy statements relating to meetings of
stockholders (whether annual or special) and (e) all information incorporated
by reference into any of the foregoing. As used herein the term "SEC Reports"
means any of the foregoing, as amended to the date of this Agreement, filed on
or after January 1, 1995. The SEC Reports were prepared in all material
respects in accordance with and complied in all material respects with the
requirements of applicable law, including the Exchange Act and the 1933 Act and
the applicable rules and regulations of the SEC thereunder, and the SEC Reports
did not at the time they were filed and 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 therein, in the light of the
circumstances under which they were made, not misleading. Except for the
Registration Statement and the Registration Statement on Form S-8 filed on
October 16, 1996, the Company has not filed any registration statements with
the SEC at any time within the last three years. The Company has delivered to
the Purchaser prior to the date hereof true and correct copies of all SEC
Reports and any other reports and documents filed with the SEC since January 1,
1995.
2.11 LITIGATION. The SEC Reports, the Registration
Statement and/or the Disclosure Letter list all material pending or, to the
Company's knowledge, threatened
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litigation involving the Company and its Subsidiaries. Except as so disclosed,
there is no pending or, to the knowledge of the Company, threatened suit,
action or litigation, or administrative, arbitration or other proceeding or
governmental inquiry or investigation questioning the validity of this
Agreement or the transactions contemplated hereby, or affecting in any material
adverse respect the Company or any Subsidiary or the business, properties,
assets, operations, prospects or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole, nor is there, to the knowledge
of the Company, any basis for any such suit, action, litigation, proceeding,
inquiry or investigation.
2.12 COMPLIANCE WITH LAWS. The Company and each Subsidiary
is in compliance in all material respects with all laws, ordinances, rules and
regulations of governmental authorities (including, without limitation, the
Americans with Disabilities Act of 1990) and requirements of insurance bodies
applicable to ownership, leasing, use and operation of its or their properties
and has obtained and fully paid for all material licenses, permits,
certificates, entitlements, grants of right and any other items and documents
required by applicable law to be obtained by the Company or its Subsidiaries
for the completion, ownership, leasing, use and occupancy of its or their
properties, except where the failure to so comply or obtain would not have a
material adverse effect on the Company and its Subsidiaries taken as a whole.
Such licenses, permits, certificates, entitlements, grants of right and other
items and documents are in full force and effect. Neither the Company nor any
of its Subsidiaries have taken any action that would (or failed to take any
action, the omission of which would) result in the revocation or suspension of
such licenses, permits, certificates, entitlements, grants of right and other
items and documents, and neither the Company nor any of its Subsidiaries have
received any notice of any material violation from any federal, state or
municipal entity or notice of an intent by any such governmental entity to
revoke any material certificate of occupancy or other certificate, license,
permit, entitlement or grant of right issued by it in connection with the
ownership, use and occupancy of any of its or their properties, that in each
case has not been cured or otherwise resolved to the satisfaction of such
governmental entity.
2.13 FINANCIAL STATEMENTS.
(a) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the SEC
Reports and the Registration Statement (i) have been prepared in all material
respects in accordance with the published rules and regulations of the SEC and
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved (except in the case of the unaudited financial
statements, as permitted by Form 10-Q of the SEC), (ii) comply as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto and (iii) fairly present
in all material respects the consolidated financial position of the Company and
its Subsidiaries as of the respective dates thereof and the consolidated
results of operations and cash flows for the periods indicated (subject, in the
case of unaudited consolidated financial statements for interim periods, to
year-end adjustments consisting only of normal recurring accruals), except that
any pro forma
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financial statements contained in such consolidated financial statements are
not necessarily indicative of the consolidated financial position of the
Company and its Subsidiaries as of the respective dates thereof and the
consolidated results of operations and cash flows for the periods indicated.
Since December 31, 1995, the Company has not made any material change in the
accounting practices or policies applied in the preparation of its financial
statements.
(b) Since June 30, 1996 (the "Balance Sheet
Date") there has been no material adverse change in the business, properties,
assets, operations or condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole.
(c) The consolidated balance sheet of the Company
and its Subsidiaries at the Balance Sheet Date (the "Balance Sheet") reflects
all liabilities and obligations of the Company and of each Subsidiary, whether
accrued, contingent or otherwise as of the date thereof, that are of a nature
required to be set forth as a liability on a consolidated balance sheet under
GAAP. Neither the Company nor any of its Subsidiaries have any liabilities or
obligations of any nature (whether or not of the nature required to be
reflected on the balance sheet prepared in accordance with GAAP) that are not
reflected on the Balance Sheet, except for current liabilities (within the
meaning of GAAP) which (i) have been incurred in the ordinary course of
business consistent in nature and amount with past practice, and (ii) are
neither material to the Company and its Subsidiaries taken as a whole nor
inconsistent with any of the representations and warranties contained herein.
The Balance Sheet reflects reserves or other appropriate provisions at least
equal to reasonably anticipated liabilities, losses and expenses of the Company
and its Subsidiaries as of the date thereof which are required to be disclosed
by GAAP.
(d) At the respective times of the issuance and
sale of the Shares, Property Shares and Warrant to the Purchaser, neither the
Company nor any of its Subsidiaries will have any liabilities or obligations,
whether absolute, accrued, contingent, or otherwise, other than (i) current
liabilities reflected on the Balance Sheet not paid since the Balance Sheet
Date, (ii) current liabilities incurred in the ordinary course of business or
in connection with the transactions contemplated hereby or by the Contribution
Agreement or the Disclosure Letter and (iii) the other indebtedness and
liabilities of the Company or of its Subsidiaries described in the Disclosure
Letter, the Registration Statement or SEC Reports.
2.14 REAL PROPERTY.
(a) The SEC Reports or the Registration Statement
describe all real properties owned by the Company and each Subsidiary. To the
Company's knowledge, the Company and each Subsidiary has good, valid and
marketable title to all such real and personal properties and assets reflected
therein as being owned by the Company or such Subsidiary, except for properties
and assets sold or otherwise disposed of in the ordinary course of business
since the Balance Sheet Date or that are not material to its business taken as
a whole, subject to no liens, mortgages, security interests, pledges,
encumbrances, or
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charges of any kind except: (i) liens for taxes or assessments or other
government charges or levies not yet due and payable, (ii) liens imposed by
law, such as mechanic's, materialmen's, warehousemen's and carrier's liens, and
other similar liens, securing obligations incurred in the ordinary course of
business which are not past due for more than 30 days, (iii) liens under
workmen's compensation, unemployment insurance, social security or similar
legislation securing obligations which are not past due and (iv) the liens
securing other indebtedness not past due of the Company or its Subsidiaries
described in the SEC Reports, the Registration Statement or the Disclosure
Letter (the "Permitted Liens").
(b) No eminent domain, condemnation,
incorporation, annexation or moratorium or similar proceeding has been commenced
or, to the best of the Company's knowledge, threatened by an authority having
the power of eminent domain to condemn any part of the properties owned by the
Company and its Subsidiaries. To the best of the Company's knowledge, there are
no pending or threatened governmental rules, regulations, plans, studies or
efforts, or court orders or decisions, which do or could adversely affect the
use or value of such properties for their present use.
(c) The improvements at all properties owned by
the Company and its Subsidiaries are in good condition and repair, ordinary
wear and tear excepted, and have not suffered any casualty or other material
damage which has not been repaired in all material respects. To the best of the
Company's knowledge, there is no material latent or patent structural,
mechanical or other significant defect, soil condition or deficiency in the
improvements included in such properties.
(d) Each of the properties owned by the Company
and its Subsidiaries has been fully assessed and is not subject to abatement.
To the best of the Company's knowledge, there are no proposed reassessments of
any of such properties by any taxing authority and there are no threatened or
pending special assessments or other actions or proceedings (other than
county-wide reassessments and/or the usual increases in millage rates that may
be under consideration by the taxing authorities in the jurisdictions where
such properties are located) that could give rise to an increase in real
property taxes or assessments against any of such properties.
(e) There are no "Significant Agreements"
relating to the properties owned by the Company and its Subsidiaries, or their
operations, other than as set forth in the Disclosure Letter, the Registration
Statement or the SEC Reports. For purposes hereof, "Significant Agreement"
means and includes any of the following by which any of such properties may
otherwise be subject or bound, in each such case as amended and currently in
effect, inclusive of any waivers relating thereto:
(i) all agreements, instruments and documents
(excluding tenant leases referred to in Section 2.15 and easements included in
the Permitted Liens) evidencing, securing or pertaining to contractual
obligations that (A) are not cancelable upon 60 days
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notice or less and (B) have payments or receipts, as applicable, in excess of
$15,000 per year or $25,000 over its life; and
(ii) all mortgages and ground leases.
2.15 TENANT LEASES.
(a) The Disclosure Letter lists each of the leases
currently in effect with respect to the properties owned by the Company and its
Subsidiaries as the same have been amended or modified to date (the "Leases").
The Leases are in full force and effect and, except as set forth in the
Disclosure Letter, a. no material uncured Event of Default (as defined in any
such Lease), has occurred and is continuing under any such Lease, no tenant has
asserted a defense to, offset or claim against its rent or the performance of
its obligations under its Lease and no tenant has asserted a default on the
part of the landlord which would give it the right to terminate its Lease and
b. there are no rights of first refusal on, or options to purchase, any of such
leased properties in favor of any tenant, and no proposed modifications to any
Lease that would reduce (A) the space leased to any tenant, (B) the amount of
any tenant's rent or (C) the term of any Lease.
(b) Except for (i) security deposits or (ii) the
first full month's rent, whether or not the term of a Lease has commenced, no
prepayments of rent more than thirty (30) days in advance have been made under
the Leases. No rent or security deposits under the Leases have been assigned or
encumbered, except as security for the mortgages noted in the Disclosure Letter
or the SEC Reports, and there are no agreements or understandings, written or
oral, with any of the tenants other than as set forth in the Leases. All
brokerage commissions and other compensation and fees payable by reason of the
Leases have been paid in full.
2.16 DIVIDENDS AND OTHER DISTRIBUTIONS. Since the Balance
Sheet Date, except for the Company's regular quarterly cash dividend (not in
excess of $.07 per share per quarter between the Balance Sheet Date and the
Closing Date) neither the Company nor any Subsidiary has declared, set aside,
or made any payment of a dividend or made any other distribution in respect of
the Company's beneficial interest, repurchased or redeemed any of the Company's
beneficial interest, or made any other payments to any holder of 5% or more of
the Company's outstanding Common Stock other than salary paid to such
stockholder for bona fide services to the Company or a Subsidiary as an officer
or employee or reimbursement of reasonable expenses incurred in the ordinary
course of business.
2.17 TAX MATTERS. Beginning with the first taxable year of
the Company, its taxable year ended December 31, 1986, the Company properly
elected to be taxed as a real estate investment trust within the meaning of
Sections 856-860 of the Internal Revenue Code of 1986, as amended (the "Code"),
and has satisfied, and continues to satisfy, all of the requirements set forth
in those provisions and the regulations thereunder to be taxed as a real estate
investment trust within the meaning of those provisions. Without limiting the
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generality of the foregoing, the Company, for each taxable year of the Company
beginning with the first taxable year for which it made an election to be
classified as a real estate investment trust: (i) has timely made all of the
distributions required under Section 857(a)(1) of the Code; (ii) has timely
demanded the statements from its shareholders required under Section 1.857-8(d)
of the Treasury Regulations promulgated under the Code and maintained the
records required under Treasury Regulations Section 1.857-8(e); (iii) has not
sought to apply the provisions of Section 856(c)(7) of the Code in any taxable
year of the Company; and (iv) has not revoked its election to be taxed as a
real estate investment trust for federal income tax purposes nor has it
received any notice that its classification as a real estate investment trust
has been challenged by any taxing authority. The Company and each Subsidiary
has filed all U.S. Federal, state, local, foreign and other tax returns which
were required to be filed on or before the date hereof and has paid all taxes
which have become due and payable. All such reports and returns were materially
accurate and complete when filed and reflect all taxes required to be paid by
the Company and its Subsidiaries for the periods reported therein. The
provision for taxes made in the Balance Sheet at the Balance Sheet Date was
sufficient for the payment of all accrued and unpaid taxes of the Company and
its Subsidiaries with respect to the periods then ended. No additional material
assessments, deficiencies or penalties in respect of taxes have been made or
claimed against the Company or any Subsidiary which remain unpaid. No tax
returns or reports of the Company or any Subsidiary are or ever have been under
audit.
2.18 AGREEMENTS AFFECTING THE COMPANY'S SECURITIES. There
are no agreements, written or oral, between the Company and any holder of its
securities or, to the knowledge of the Company, among any holders of its
securities, relating to the acquisition, disposition or voting of the securities
of the Company. Except for the provisions of the Registration Rights Agreement
attached as Exhibit W to the Contribution Agreement (the "Registration Rights
Agreement"), there are no agreements, either written or oral, which obligate the
Company to effect the registration of any of its securities under the 1933 Act.
2.19 INSURANCE. The Disclosure Letter lists all insurance
policies carried by the Company or any Subsidiary relating to its or their real
property and assets. All such policies are in full force and effect and all
premiums thereunder have been paid to the extent due, and no notice of
cancellation has been received with respect thereto and, to the best knowledge
of Company, no cancellation is threatened.
2.20 EMPLOYEE BENEFIT PLANS. Schedule 2.20 to the
Disclosure Letter lists all deferred compensation, pension, profit sharing,
stock option, stock purchase, savings, group insurance and retirement plans,
and all vacation pay, severance pay, incentive compensation, consulting, bonus
and other material employee benefit or fringe benefit plans or arrangements
maintained by the Company and its Subsidiaries with respect to which
contributions are made by the Company (including health, life insurance and
other benefit plans or arrangements maintained for the retirees which are
specifically identified as such on Schedule 2.20). Such plans, including but
not limited to all plans or programs that constitute "employee benefit plans"
as defined in Section 3(3) of the Employee Retirement Income
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Security Act of 1974, as amended ("ERISA"), are sometimes collectively referred
to in this section as "Benefit Plans." Neither the Company nor any ERISA
Affiliate (as hereinafter defined) maintains, contributes or sponsors, and have
not maintained, contributed to or sponsored any "employee benefit plan" (as
defined in section 3(3) of ERISA) that is subject to Title IV of ERISA or
Section 412 of the Internal Revenue Code of 1986, as amended ("Code") or any
"Multiemployer Plan" (as defined in Section 4001(a)(3) of ERISA). ERISA
Affiliate means all persons which are treated as being under common control or
as a single employer with the Company or any of its Subsidiaries under Section
414(b), (c), (m) or (o) of the Code. Each Benefit Plan is and has been
maintained in compliance in all material respects with applicable law,
including but not limited to ERISA, the Code and with any applicable collective
bargaining agreements or other contractual obligations. Each Benefit Plan that
provides medical benefits has been operated in compliance with all applicable
requirements of Sections 601 through 608 of ERISA and either (i) Section
162(i)(2) and (k) of the Code and regulations thereunder (prior to 1989) or
(ii) Section 4980B of the Code and regulations thereunder (after 1988),
relating to the continuation of coverage under certain circumstances in which
coverage would otherwise cease. Company is not required to make any payment to
any current or former employee of the Company in the form of wages or other
consideration pursuant to any employment agreement or Benefit Plan that will
constitute in the aggregate an "excess parachute payment" (within the meaning
of Section 280G(b) of the Code as a consequence in whole or in part of the
transactions contemplated by this Agreement.
There have been no written statements or communications made or
materials provided to any employee or former employee of the Company or its
Subsidiaries by any person which provide for or could reasonably be construed
as a contract or promise by the Company or any subsidiary to provide for any
pension, welfare, or other insurance-type benefits to any such employee or
former employee, whether before or after retirement, other than benefits
specifically identified on Schedule 2.20 or under the form of employment
contracts. All of the Benefit Plans which are pension benefit plans are the
subject of favorable determination or opinion letters from the IRS such that
the employers maintaining such Benefit Plans, are entitled to rely on the
compliance of such Benefit Plans as to the form of the Plan with the applicable
requirements of Sections 401(a) and 501(a) of the Code; and no determination
letter with respect to any Benefit Plan has been revoked nor, to the best
knowledge of the Company, has revocation been threatened, nor has any Benefit
Plan been amended since the date of its most recent determination letter or
application therefore in any request which would adversely affect its
qualification or materially increase its cost. Neither the Company nor any
ERISA Affiliate maintains or sponsors any nonqualified deferred compensation
plan or arrangements. There are no pending or, to the best knowledge of the
Company, threatened claims, actions or lawsuits, other than routine claims for
benefits in the ordinary course, asserted or instituted against (i) any Benefit
Plan or its assets, (ii) any ERISA Affiliate with respect to any Benefit Plan,
or (iii) any fiduciary with respect to any Benefit Plan for which the Company,
or its Subsidiaries may be directly or indirectly liable, through
indemnification obligations or otherwise. Neither the Company, nor any of its
Subsidiaries
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has engaged, directly or indirectly, in a non-exempt prohibited transaction (as
defined in Section 4975 of the Code or Section 406 of ERISA) in connection with
any Benefit Plan.
As of the date of this Agreement, none of the assets of the Company or
its Subsidiaries are required to be treated as "plan assets," within the
meaning of Title I of ERISA ("Plan Assets").
2.21 CONTRACTS AND AGREEMENTS.
(a) The Company has filed as exhibits to its SEC
Reports and the Registration Statement all of the contracts and agreements
required to be so filed by the 1933 Act, the Exchange Act and the rules and
regulations of the SEC. True and correct copies of all such agreements have
been provided to the Purchaser prior to the date hereof. Neither the Company
nor any Subsidiary is a party to any contract or agreement which is material to
the business, properties, assets, prospects, operations or condition (financial
or otherwise) of the Company and its Subsidiaries taken as a whole which have
not been filed as an exhibit to, or otherwise described in, the Registration
Statement or the SEC Reports.
(b) Neither the Company nor any Subsidiary is (i)
in default under any agreement, contract or instrument to which it is a party
or by which it is bound, which default is reasonably likely to have a material
adverse effect on the business, properties, assets, prospects, operations or
condition (financial or otherwise) of the Company and its Subsidiaries taken as
a whole, (ii) in violation of the Declaration of Trust, Bylaws or the Agreement
of Limited Partnership of Brandywine Operating Partnership, L.P. (the
"Partnership Agreement") dated August 22, 1996, as amended, by the amendment
attached as Exhibit X to the Contribution Agreement (or other organizational
documents), or (iii) in default with respect to any order, writ, injunction or
decree of any court or governmental agency binding on it, and no event has
occurred which with notice or lapse of time, or both, would create any default
or violation described in clauses (i) through (iii).
2.22 ABSENCE OF CERTAIN DEVELOPMENTS. Since the Balance
Sheet Date, neither the Company nor any Subsidiary has (a) mortgaged, pledged
or subjected to lien, charge or any other encumbrance any of its assets,
tangible or intangible, except Permitted Liens, (b) sold, assigned or
transferred any of its tangible assets or canceled any debts or obligations
except in the ordinary course of business, (c) suffered any extraordinary
losses, or waived any rights of substantial value (whether or not in the
ordinary course of business), (d) made any changes in officer compensation, (e)
entered into any material transaction other than in the ordinary course of
business, (f) made any change in any of its material contracts, the Declaration
of Trust, Bylaws or Partnership Agreement (or other organizational documents),
or in any arrangements or agreements of any nature relating to its officers and
directors, (g) sold any equity interests or (h) established any record dates
for dividends or other distributions on other than customary quarterly record
dates in accordance with past practice.
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2.23 CONTRACTS WITH INSIDERS. Excluding any agreements or
transactions that would not be required to be disclosed pursuant to Items 402
or 404 of Regulation S-K, no officer or trustee of the Company, or, to the
Company's knowledge, holder of more than 5% of the Company's outstanding Common
Shares, is a party to any contract, agreement, or arrangement providing for the
Company's or a Subsidiary's employment of, furnishing of services to the
Company or a Subsidiary by, the rental of real or personal property by the
Company or a Subsidiary from, or otherwise requiring payments by the Company or
a Subsidiary to, any such person or entity, or, to the Company's knowledge, any
member of such person's family, or any corporation, partnership or other entity
in which such person or entity, or, to the Company's knowledge, any member of
such person's family, has an interest or of which such person, or, to the
Company's knowledge, any member of such person's family, is an officer,
director, trustee, or beneficiary.
2.24 USE OF PROCEEDS. The Company shall use the Purchase
Price solely to pay fees and expenses relating to the transactions contemplated
by the Transaction Documents and to repay mortgage indebtedness to one or more
entities that are not affiliated with the Company or with any entity that owns
or has the right to obtain more than five percent of the outstanding Common
Shares as of the date of this Agreement in substantially the amounts and to the
lenders identified in the Disclosure Letter.
2.25 ENVIRONMENTAL MATTERS. Neither the Company nor its
Subsidiaries have (a) caused any substance or waste that is listed or defined
as hazardous or toxic under applicable environmental laws or petroleum products
(collectively "Hazardous Materials") to be improperly maintained or disposed of
on, under or at any of its or their properties, or any part thereof, in a
manner which violates, or could give rise to liability under, applicable
environmental laws, or (b) failed to remediate, alter, mitigate or ▇▇▇▇▇ any
condition required to be remediated, altered, mitigated or abated under such
environmental laws, to the extent the Company and its Subsidiaries have been
notified of the existence of a condition required to be remediated, altered,
mitigated or abated. Except as set forth in the environmental site assessments
provided by the Company to the Purchaser, (i) to the Company's knowledge, each
of its properties, and the properties of its Subsidiaries, is in compliance,
and has heretofore complied, with all environmental laws in all material
respects, (ii) to the Company's knowledge, there has been no discharge of
Hazardous Materials by any tenant of any property of the Company or its
subsidiaries in quantities requiring response, remediation or removal, and
(iii) the Company has not received any written notice from any governmental
unit or other person or entity that it or its Subsidiaries, or any of its or
their properties or operations conducted thereon, are not or have not been in
compliance with all environmental laws.
2.26 CERTAIN AGREEMENTS. The SEC Reports, the Registration
Statement or the Disclosure Letter list all employment and severance agreements
that the Company and each Subsidiary has entered into with its officers and
employees. The issuance and sale of the Shares to the Purchaser hereunder, the
issuance of the Property Shares and Warrant pursuant to the Contribution
Agreement, the issuance of the Conversion Shares and the
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completion of the other transactions provided for herein or in the other
Transaction Documents will not give any employee the right to terminate his or
her employment and receive severance or other payments from the Company or any
Subsidiary, or result in the acceleration of vesting of any outstanding option
issued by the Company.
2.27 BOOKS AND RECORDS. The books and records of the
Company and its Subsidiaries accurately and fairly reflect their respective
income, expenses, assets and liabilities, and the Company and its Subsidiaries
maintain internal accounting controls which provide reasonable assurance that:
(a) transactions are executed in accordance with management's authorization;
(b) transactions are recorded as necessary to permit preparation of reliable
financial statements and to maintain accountability for earnings and assets;
(c) access to assets is permitted only in accordance with management's
authorization; (d) the recorded accountability of all assets is compared with
existing assets at reasonable intervals; and (e) all intercompany transactions,
charges and expenses among or between the Company, any Subsidiary, or any other
affiliate of the Company are accurately reflected in all financial statements.
2.28 CERTAIN PAYMENTS. Neither the Company nor any of its
Subsidiaries, nor, to the Company's knowledge, any trustee, officer, agent or
employee of any such entity, or any other person or entity associated with or
acting for or on behalf of the Company or any of its Subsidiaries has directly
or indirectly (a) made any unlawful contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any person or entity, private
or public, regardless of form, whether in money, property or services, (i) to
obtain favorable treatment in securing business, (ii) to pay for favorable
treatment for business secured, or (iii) to obtain special concessions or
special concessions already obtained, for or in respect of the Company or any
of its Subsidiaries, or (b) established or maintained any fund or asset that
has not been recorded in the books and records of the Company and its
Subsidiaries, or (c) taken any other action in violation of any provision of
the Foreign Corrupt Practices Act of 1977, as amended.
2.29 LABOR AGREEMENTS AND ACTIONS. Neither the Company nor
any Subsidiary is bound by or subject to, any written or oral, express or
implied, contract, commitment or arrangement with any labor union, and no labor
union has requested or, to the knowledge of the Company, has sought to
represent any of the employees, representatives or agents of the Company or any
Subsidiary. There is no strike or other labor dispute involving the Company or
any Subsidiary pending, or to the knowledge of the Company threatened, nor is
the Company aware of any labor organization activity involving any of the
employees of the Company or any Subsidiary. The Company is not aware that any
officer or key employee, or that any group of key employees, intends to
terminate his, her or their employment with the Company or any Subsidiary, nor
does the Company or any Subsidiary have a present intention to terminate the
employment of any of the foregoing. The employment of each employee of the
Company or any Subsidiary is terminable at the will of the applicable employer
without further liability of such employer to such employee
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except for the payment of such employee's normal salary accrued but not paid
through the date of such termination.
2.30 ENTIRE BUSINESS; ETC. All of the assets (including
the Company's and its Subsidiaries' interests under franchises, licenses,
leases and permits) necessary for the conduct of the business of the Company
and its Subsidiaries as presently conducted are held exclusively by the Company
or a Subsidiary.
2.31 REGISTRATION STATEMENT. The Registration Statement on
Form S-11 (SEC File No. 333-13969) initially filed by the Company with the SEC
on October 11, 1996 (the "Registration Statement"), as it shall be amended from
time to time, will comply at all times in all material respects with the
provisions of the 1933 Act and the rules and regulations thereunder, as
applicable, except that no representation is made by the Company with respect
to information supplied in writing by the Purchaser specifically for inclusion
in the Registration Statement ("Purchaser Information") and, at the date
hereof, at the date of the Contribution Closing, at the Closing Date, at the
date that the Registration Statement is declared effective by the SEC and at
each date that sales of Common Shares are made pursuant to the Registration
Statement, except for Purchaser Information, the Registration Statement, as it
shall be amended from time to time, will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Unless the otherwise
specifically provided, references to the Registration Statement are to the
Registration Statement as originally filed, as modified by the form of
Amendment No. 1 thereto attached hereto as Exhibit A.
2.32 INFORMATION. Neither this Agreement nor any document
delivered to the Purchaser pursuant hereto, including the SEC Reports (except
to the extent modified by the Disclosure Letter) and the Registration
Statement, contains an untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading. There is no
fact, development or threatened development known to the Company which could
reasonably be expected to materially adversely effect the business, assets,
properties, operations, prospects or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole which has not been set forth in
this Agreement, the Disclosure Letter, the SEC Reports or the Registration
Statement.
2.33 STANDSTILL AGREEMENTS. The Agreement, dated March 20,
1996, by and among the Company, the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Trust (the "RMO Trust")
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and the Agreement dated August 22, 1996, by and among
the Company, Safeguard Scientifics, Inc. and Safeguard Scientifics (Delaware),
Inc., copies of which have been delivered to the Purchaser, have been executed
and delivered by all the parties thereto and are in full force and effect as of
the date hereof.
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2.34 MATTERS RELATING TO PARTNERSHIP AGREEMENT AND
WARRANTS. The Company has caused the Partnership Agreement to be amended in the
form of Exhibit X to the Contribution Agreement and the terms of all outstanding
options and warrants (the "Outstanding Warrants") to be amended or waived in the
form of Exhibit B hereto, to the effect that:
(a) All rights of first refusal relating to the
securities of the Company have been eliminated.
(b) No adjustments in the number of shares to be
received upon redemption or exchange of the Units (as defined in the
Partnership Agreement) or upon exercise or exchange of the Outstanding Warrants
shall be made as a result of any issuance of securities by the Company other
than as a result of the transactions described in Section 15.4(a) of the
Partnership Agreement.
2.35 INVESTMENT COMPANY. Each of the Company and its
Subsidiaries is not, and upon the issuance and sale of the Common Shares as
herein contemplated and the application of the net proceeds therefrom, will not
be, an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
2.36 COMMODITY EXCHANGE ACT. The Common Shares, upon
issuance, will be excluded or exempted under, or beyond the purview of, the
Commodity Exchange Act, as amended (the "Commodity Exchange Act"), and the
rules and regulations of the Commodity Futures Trading Commission under the
Commodity Exchange Act.
SECTION 3. PURCHASER'S REPRESENTATIONS AND WARRANTIES
The Purchaser understands that the Shares, Property Shares,
Warrant and Conversion Shares will not be registered under the 1933 Act, on the
grounds that the sales provided for in this Agreement and the Contribution
Agreement are exempt pursuant to Section 4(2) of the 1933 Act and/or Regulation
D promulgated under Section 4(2) of the 1933 Act, and that the reliance of the
Company on such exemptions is predicated in part on the Purchaser's
representations, warranties, covenants and acknowledgments set forth in this
Section 3.
3.1 PRE-EXISTING ENTITY. The Purchaser represents and
warrants to the Company that SERS is the sole owner of the economic interest in
the Securities to be issued to the Purchaser pursuant to the Transaction
Documents and that SERS was not organized for the specific purpose of purchasing
the Securities to be purchased by it hereunder and pursuant to the Contribution
Agreement.
3.2 BENEFICIAL OWNERSHIP. The Purchaser represents and
warrants to the Company that, as of the date hereof and prior to the purchase
of the Shares, Property Shares and Warrant, (a) it is not the "beneficial
owner" of any securities of the Company, as such
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term is defined in Rule 13d-3 promulgated under the Exchange Act, except for
ten Common Shares acquired immediately prior to the execution of this Agreement
and the Contribution Agreement, and (b) it is not a member of a group which has
acquired beneficial ownership of securities of the Company for purposes of
Sections 13(d) and 13(g) of the Exchange Act.
3.3 PRINCIPAL PLACE OF BUSINESS. The Purchaser represents
and warrants to the Company that the address of its principal place of business
or residence is as set forth in Section 10.5 herein.
3.4 PURCHASE WITHOUT VIEW TO DISTRIBUTION. The Purchaser
represents and warrants to the Company that the Shares, Property Shares and
Warrant to be purchased by it are being, and any Conversion Shares acquired by
it will be, acquired by the Purchaser for its own account for investment
purposes, not as a nominee or agent, and not with a view to resale or
distribution within the meaning of the 1933 Act, and the rules and regulations
thereunder, and the Purchaser will not distribute the Shares, Property Shares,
Warrant or Conversion Shares in violation of the 1933 Act or in a way that will
cause the Company to lose its exemption from the registration requirements
under the 1933 Act with respect to the offer and sale of any of the Securities.
3.5 RESTRICTIONS ON TRANSFER. The Purchaser (a)
acknowledges that the Securities are not registered under the 1933 Act or under
any state securities laws and that the Securities to be acquired by it must be
held indefinitely by it unless they are subsequently registered under the 1933
Act and under any applicable state securities laws or an exemption from
registration is available, (b) is aware that any routine sales pursuant to Rule
144 promulgated under the 1933 Act of the Securities may be made only in
limited amounts and in accordance with the terms and conditions of that Rule
and that in such cases where the Rule is not applicable, compliance with some
other registration exemption will be required, (c) is aware that Rule 144 is
not presently available for use by the Purchaser for resale of the Securities
and (d) is aware that, except as provided in the Registration Rights Agreement,
the Company is not obligated to register under the 1933 Act any sale, transfer
or other disposition of the Securities.
3.6 ACCESS TO INFORMATION. The Purchaser confirms that
the Company has made available to it the opportunity to ask questions of and
receive answers from the Company's officers and trustees concerning the terms
and conditions of this transaction and the business and financial condition of
the Company and its Subsidiaries, and to acquire, and the Purchaser has
received to its satisfaction, such additional information, in addition to that
set forth herein, about the business and financial condition of the Company and
its Subsidiaries and the terms and conditions of this transaction as it has
requested.
3.7 ADDITIONAL REPRESENTATIONS OF THE PURCHASER. The
Purchaser, on behalf of itself and SERS, represents that (a) it is an
"accredited investor" as such term is defined in Rule 501 promulgated under the
1933 Act, and an "institutional investor" within the meaning of Section 203(c)
of the Pennsylvania Securities Act of 1972 and the regulations
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promulgated thereunder, (b) its financial situation is such that it can afford
to bear the economic risk of holding the Securities for an indefinite period of
time and suffer complete loss of its investment in the Securities (c) its
knowledge and experience in financial and business matters are such that it is
capable of evaluating the merits and risks of its purchase of the Securities as
contemplated by this Agreement and (d) the purchase of the Shares, Property
Shares and Warrant by it has been duly and properly authorized and this
Agreement has been duly executed by it or on its behalf.
3.8 LEGENDS. The Purchaser understands that the
certificates evidencing the Securities shall bear the legend set forth in
Section 8.2 herein.
3.9 DUE AUTHORIZATION, ETC. The Purchaser represents that
it has all requisite power and authority to execute and deliver this Agreement
and each Transaction Document required to be excuted and delivered by it prior
to or at the Closing and to carry out the transactions contemplated hereby and
thereby. The execution, delivery and performance by the Purchaser of this
Agreement and each Transaction Document to which is a party have been duly
authorized. This Agreement has been duly executed and delivered by the
Purchaser and constitutes (and, when executed and delivered as contemplated
herein, each Transaction Document will constitute) the valid and binding
obligation of the Purchaser, enforceable against it in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency,
moratorium, reorganization and other similar laws relating to or affecting the
enforcement of creditors' rights generally, except that the availability of
specific performance, injunctive relief or other equitable relief or other
equitable remedies is subject to the discretion of the court before which any
such proceeding may be brought. The execution, delivery and performance by the
Purchaser of this Agreement and each Transaction Document to which it is a
party will not violate any provision of law, or any rule or regulation of any
governmental authority, or any judgment, decree or order of any court binding
on the Purchaser, and will not conflict with or result in any breach of any of
the terms, conditions or provisions of, or constitute a default under, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the assets of the Purchaser, any Agreement or other instrument to
which it is a party or by which it or any of its assets is bound. SERS is the
sole owner of the economic interest in the Purchaser. No individual has an
actuarial interest of more than 9.8% in SERS.
SECTION 4. CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATIONS
The Purchaser's obligation to purchase and make payment for
the Shares subscribed for hereunder by it on the Closing Date is subject, at
its option, to the satisfaction of each of the following conditions:
4.1 REPRESENTATIONS AND WARRANTIES. On the Closing Date,
the representations and warranties contained in Section 2 shall be true and
correct in all material
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respects with the same effect as though made on and as of the Closing Date, and
the Company shall have so certified to the Purchaser in writing.
4.2 PERFORMANCE. All the covenants, agreements and
conditions contained in this Agreement to be performed or complied with by the
Company on or prior to the Closing Date shall have been performed or complied
with in all material respects, and the Company shall have so certified to the
Purchaser in writing.
4.3 OPINION OF COUNSEL TO THE COMPANY. On the Closing
Date, the Purchaser shall have received an opinion from counsel for the Company
and special Maryland Counsel to the Company, each dated the Closing Date,
addressed to the Purchaser in the forms of Exhibits C and D hereto,
respectively.
4.4 PROCEEDINGS; CERTIFIED COPIES. All proceedings to be
taken in connection with the transactions contemplated by this Agreement to be
consummated on or prior to the Closing Date, and all documents incident
thereto, shall be satisfactory in form and substance to the Purchaser. The
Purchaser shall have received such certified copies or other copies of such
documents as it may reasonably request.
4.5 NO PROCEEDING OR LITIGATION. No suit, action, or
other proceeding seeking to restrain, prevent or change the transactions
contemplated hereby or otherwise questioning the validity or legality of such
transactions shall have been instituted and be pending.
4.6 NO MATERIAL ADVERSE CHANGE. There shall have been no
material adverse change since the Balance Sheet Date in the business,
properties, assets, operations, or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole.
4.7 ASE LISTING. On or prior to the Closing Date, the
Shares (to the extent that they are Common Shares) and the Conversion Shares
shall have been approved for listing on the ASE.
4.8 BLUE SKY COMPLIANCE. The Company shall have complied
with all applicable requirements of federal and state securities or "blue sky"
laws with respect to the issuance of the Shares sold at the Closing.
4.9 REGISTRATION RIGHTS. The Registration Rights
Agreement shall have been executed and delivered by all the parties thereto and
shall be in full force and effect.
4.10 CONTRIBUTION CLOSING; TRANSACTION DOCUMENTS. The
Contribution Closing shall have occurred. This Agreement, the Warrant,
Registration Rights Agreement, Standstill Agreement (as defined in Section
5.4), Contribution Agreement, and each document or agreement required to be
delivered at the closing hereunder and at the Contribution Closing shall be
referred to herein collectively as the "Transaction Documents."
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4.11 MARYLAND ANTI-TAKEOVER STATUTES, ETC. The Company and
its counsel shall have confirmed to the Purchaser's satisfaction that (a) this
Agreement, the other Transaction Documents and the transactions contemplated
hereby and thereby are exempt from the operation of the Maryland Anti-Takeover
Statutes and Section 11.5 of the Declaration of Trust; and (b) the Purchaser is
not subject to the restrictions set forth in Section 6.6 of the Declaration of
Trust, including without limitation from the Ownership Limit and the
Permissible Ownership Threshold.
4.12 ENVIRONMENTAL REPRESENTATION LETTER. The Company
shall have delivered to Purchaser a representation letter dated the Closing
Date concerning environmental matters in form and substance similar to that
which is contained in the underwriting agreement for the Secondary Offering.
4.13 TAX OPINION. On the Closing Date the Company shall
have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP an opinion with respect to certain tax
matters in form and substance reasonably satisfactory to Purchaser.
SECTION 5. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS
The Company's obligation to sell the Shares subscribed for by
the Purchaser on the Closing Date is subject, at the Company's option, to the
satisfaction of each of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES. On the Closing Date,
the representations and warranties contained in Section 3 shall be true and
correct in all material respects with the same effect as though made on and as
of the Closing Date and the Purchaser shall have so certified to the Company in
writing.
5.2 PERFORMANCE. All the covenants, agreements and
conditions contained in this Agreement to be performed or complied with by the
Purchaser on or prior to the Closing Date shall have been performed or complied
with in all material respects, and the Purchaser shall have so certified to the
Company in writing.
5.3 NO PROCEEDING OR LITIGATION. No suit, action, or
other proceeding seeking to restrain, prevent or change the transactions
contemplated hereby or otherwise questioning the validity or legality of such
transactions shall have been instituted and be pending.
5.4 ASE LISTING. On or prior to the Closing Date, the
Shares (to the extent that they are Common Shares) and the Conversion Shares
shall have been approved for listing on the ASE.
5.5 CONTRIBUTION CLOSING. The Contribution Closing shall
have occurred.
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5.6 ADDITIONAL DOCUMENTS. The Purchaser shall have
delivered such other documents necessary to effect the transactions
contemplated hereby as the Company may reasonably request.
5.7 PROCEEDINGS; CERTIFIED COPIES. All proceedings to be
taken in connection with the transactions contemplated by this Agreement to be
consummated on or prior to the Closing Date, and all documents incident
thereto, shall be satisfactory in form and substance to the Company. The
Company shall have received such certified copies or other copies of such
documents as it may reasonably request.
5.8 NO SEC INTEGRATION CHALLENGE. The SEC shall not have
commented that the issuance of Shares pursuant to this Agreement should or may
be required to be integrated with the sale of Common Shares pursuant to the
Registration Statement, which comment, if made, has not been resolved to the
reasonable satisfaction of the Company after the Company has used its best
efforts to accomplish such resolution.
SECTION 6. COVENANTS OF THE COMPANY AND THE PURCHASER PRIOR TO CLOSING
6.1 PAYMENT OF EXPENSES.
(a) If the Closing occurs hereunder, each party
shall bear its own expenses, except that the Company shall pay all reasonable
legal fees and expenses incurred by the Purchaser in connection with this
Agreement and the transactions contemplated hereby.
(b) If the Closing hereunder does not occur, each
party shall bear its own expenses.
6.2 OPERATION OF BUSINESS IN ORDINARY COURSE. Prior to
the Closing, the Company and each Subsidiary will operate its business and the
business of each of its Subsidiaries only in the usual and normal course, and
will not, except as contemplated by the Registration Statement, as amended
through the date of this Agreement, including Amendment No. 1, without the
consent of the Purchaser, engage in any of the transactions described in
paragraphs (a), (b), (d), (e), (f), (except for the amendment in the form of
Exhibit C hereto), (g) or (h) of Section 2.22 hereof.
6.3 ACCESS TO INFORMATION.
(a) Between the date hereof and the Closing Date, the
Company will give the Purchaser and its authorized representatives reasonable
access to all officers, employees, agents, properties, offices and other
facilities and to all books and records of the Company and its Subsidiaries,
and will permit the Purchaser to make such inspections as the Purchaser may
reasonably request and will cause the Company's officers and those of its
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Subsidiaries to furnish the Purchaser promptly (i) a copy of each report,
schedule, registration statement and other document filed by it pursuant to the
requirements of federal securities laws and (ii) all other financial and
operating data and other information with respect to the business and
properties of the Company and any of its Subsidiaries as the Purchaser may from
time to time reasonably request.
(b) The Purchaser will hold and will cause its
authorized representatives, consultants and advisors to hold in confidence,
unless compelled to disclose by judicial or administrative process or, in the
written opinion of its legal counsel, by other requirements of law, all
documents and information concerning the Company and its Subsidiaries furnished
to the Purchaser in connection with the transactions contemplated by this
Agreement (except to the extent that such information can be shown to have been
(i) previously known by the Purchaser from sources other than the Company, its
trustees, officers, representatives or affiliates, (ii) in the public domain
through no fault of the Purchaser or (iii) later lawfully acquired by the
Purchaser on a non-confidential basis from other sources who are not known by
the Purchaser to be bound by a confidentiality agreement or otherwise
prohibited from transmitting the information to the Purchaser by a contractual,
legal or fiduciary obligation) and will not release or disclose such
information to any other person or entity, except its auditors, attorneys,
financial advisors and other consultants, agents and representatives in
connection with this Agreement who need to know such information. If the
transactions contemplated by this Agreement are not consummated, such
confidence shall be maintained and, if requested by or on behalf of the
Company, the Purchaser will, and will use all reasonable efforts to cause its
auditors, attorneys, financial advisors and other consultants, agents and
representatives to, return to the Company or destroy all copies of written
information furnished by the Company to the Purchaser or its agents,
representatives or advisors. It is understood that the Purchaser shall be
deemed to have satisfied its obligation to hold such information confidential
if it exercises the same care as it takes to preserve confidentiality for its
own similar information.
(c) No inquiry or investigation pursuant to Section
3.6 or this Section 6.3 shall affect any representation or warranty in this
Agreement or any other Transaction Document made by the Company or its
Subsidiaries or any condition to the Purchaser's obligations set forth herein
or in any other Transaction Document.
6.4 NOTIFICATION OF CERTAIN MATTERS. The Company shall
give prompt notice to the Purchaser, and the Purchaser shall give prompt notice
to the Company, of (a) the occurrence or nonoccurrence of any event the
occurrence or nonoccurrence of which would be likely to cause (i) any
representation or warranty contained in this Agreement to be untrue or
inaccurate or (ii) any covenant, condition or agreement contained in this
Agreement not to be complied with or satisfied and (b) any failure of the
Company or the Purchaser, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 6.4 shall not cure such breach or noncompliance or limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
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6.5 CONDITIONS PRECEDENT. The Company and the Purchaser
shall use their reasonable best efforts to cause the conditions specified in
Sections 4 and 5 to be satisfied by the Closing Date.
SECTION 7. COVENANTS OF THE COMPANY AND THE PURCHASER AFTER CLOSING
7.1 RULE 144.
(a) The Company covenants that (i) the Company will
use its best efforts to comply with the current public information requirements
of Rule 144(c)(1) under the 1933 Act; and (ii) at all such times as Rule 144 is
available for use by the holders of the Securities, the Company will furnish
each such holder upon request with all information within the possession of the
Company required for the preparation and filing of Form 144.
(b) At all times during which the Company is neither
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, nor exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange
Act, it will provide as promptly as practicable (in any event not later than 15
days after initial request) in written form, upon the written request of the
Purchaser or any prospective buyer of the Shares or Conversion Shares from the
Purchaser, all information required by Rule 144A(d)(4)(i) of the General
Regulations promulgated by the Commission under the Securities Act ("Rule 144A
Information"). The Company's obligations under this Section 7.1 shall at all
times be contingent upon such seller's obtaining from a prospective buyer an
agreement to take all reasonable precautions to safeguard any non-public Rule
144A Information from disclosure to anyone other than a person or entity who
will assist such buyer in evaluating the purchase of the Conversion Shares.
7.2 DELIVERY OF FINANCIAL STATEMENTS. From and after the
Contribution Closing, the Company shall deliver to the Purchaser, until such
time as the Purchaser no longer owns any Securities, a copy of each and every
report on Form 10-K, Form 8-K, Form 10-Q and all other reports and proxy
statements filed by the Company or any Subsidiary with the SEC within 15 days
of such filing.
7.3 RESERVATION OF SHARES. From and after the Closing,
the Company shall at all times reserve and keep available, free from
pre-emptive rights, out of its authorized but unissued shares of beneficial
interest, a sufficient number of of Common Shares for issuance upon the
exercise of the Warrant and conversion of the Shares (if applicable) and
Property Shares.
7.4 COMPLIANCE WITH LAWS. The Company will, and will
cause each Subsidiary to, comply in all material respects with all laws and
regulations applicable to the conduct of its business, including without
limitation ERISA, environmental laws, and
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employee safety laws. The Company shall use its best efforts to insure that
none of the assets of the Company or its Subsidiaries are required to be
treated as Plan Assets (as defined in Section 2.20) by any "benefit plan
investor" (as defined in Title I of ERISA). The Company shall take such actions
as are necessary, on an ongoing basis, to determine whether assets of the
Company or its Subsidiaries are required to be treated by a Benefit Plan
Investor as including Plan Assets and shall promptly notify the Purchaser in
writing if, at any time, it has reason to believe that any Benefit Plan
Investor is likely to be required to treat the assets of the Company or its
Subsidiaries as Plan Assets.
7.5 WAIVERS, CONSENTS, ETC. Compliance with any of the
covenants in this Section 7 may be waived, either generally or in the
particular instance, and any consent required thereunder may be given, by the
Purchaser in writing.
7.6 PRESS RELEASES. The Purchaser shall have the right
reasonably to approve any press release with respect to the transactions
contemplated by this Agreement and the Contribution Agreement. In addition, at
no time may the Company use or otherwise refer to the name of the Purchaser or
any of its affiliates in any press release, publication or other report without
the prior consent of the Purchaser not to be unreasonably withheld or delayed.
7.7 SHAREHOLDERS' MEETING. The Company shall duly call
and hold an annual meeting of its shareholders as soon as practicable after the
end of its curent fiscal year, but in no event later than June 30, 1997, for
the purpose of voting upon the approval of the Stockholder Approval Matter;
and, if approval of the Stockholder Approval Matter is not obtained at such
meeting, the Company shall duly call and hold another meeting of its
shareholders by June 30, 1998 for such purpose. In this regard, the Company
will (i) subject to the fiduciary duties of the Board of Trustees, include in
the proxy statement (the "Proxy Statement") relating to the annual meeting
(and, if necessary, such other meeting) the unanimous recommendation of the
Board that shareholders of the Company vote in favor of the Stockholder
Approval Matter, and (ii) use its best efforts (A) to obtain and furnish the
information required to be included by it in the Proxy Statement in compliance
with the Exchange Act and, after consultation with the Purchaser, respond
promptly to any comments made by the SEC with respect to the Proxy Statement
and cause the Proxy Statement to be mailed to its shareholders in a timely
fashion and (B) to obtain the necessary approvals by its shareholders of the
Stockholder Approval Matter subject to its Board's fiduciary duties. The term
"Stockholder Approval Matter" as used herein means any and all matters that
must be approved by shareholders in order to permit the unlimited conversion
and exchange of all the Conversion Shares by the Purchaser in compliance with
all ASE rules, regulations and requirements.
7.8 PURCHASER'S COVENANT. To the extent permitted by
applicable law Purchaser hereby (i) waives any right of rescission it might
have arising out of the integration of the offer and sale of the Securities
made hereby or in the Contribution
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Agreement with the public offering under the Registration Statement and (ii)
covenants that it will not make any rescission claim on that basis.
7.9 REIT STATUS. The Company will continue to elect to be
taxed as a real estate investment trust within the meaning of Sections 856-860
of the Code, and will continue to satisfy all of the requirements set forth in
those provisions and the regulations thereunder to be taxed as a real estate
investment trust within the meaning of those provisions and the regulations
thereunder.
SECTION 8. COMPLIANCE WITH 1933 ACT; RESTRICTIONS ON TRANSFERABILITY
OF SHARES, PROPERTY SHARES WARRANT AND CONVERSION SHARES
8.1 COMPLIANCE WITH 1933 ACT. The Shares, Property
Shares, Warrant, Property Shares and Conversion Shares shall not be
transferable, except upon the conditions specified in this Section 8, which
conditions are intended to insure compliance with the provisions of the 1933
Act and applicable state securities laws in respect of any such transfer.
8.2 RESTRICTIVE LEGEND. The Warrant, and each certificate
evidencing the Shares and Conversion Shares and any Common Shares or other
securities issued in respect of such Shares and Conversion Shares upon any
share split, share dividend, recapitalization, merger, consolidation, similar
event, shall (unless otherwise permitted by the provisions of Section 8.4) be
stamped or otherwise imprinted with the following legend:
"[THIS WARRANT HAS] OR [THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE] NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAW AND THE TRANSFERABILITY [T]HEREOF IS SUBJECT TO THE
PROVISIONS OF A SECURITIES PURCHASE AGREEMENT BETWEEN BRANDYWINE REALTY TRUST
AND THE ORIGINAL HOLDER OF THE SECURITIES EVIDENCED HEREBY."
8.3 RESTRICTIONS ON TRANSFERABILITY. The Company shall
not be required to register the transfer of the Shares, Property Shares or
Warrant or any Conversion Shares on the books of the Company unless the Company
shall have been provided with an opinion of counsel reasonably satisfactory to
it prior to such transfer to the effect that registration under the 1933 Act or
any applicable state securities law is not required in connection with the
transaction resulting in such transfer; provided, however, that no such opinion
of counsel shall be necessary in order to effectuate a transfer in accordance
with the provisions of Rule 144(k) or Rule 144A promulgated under the 1933 Act.
Each Warrant or certificate for Shares, Property Shares or Conversion Shares
issued upon any transfer as above provided shall bear the restrictive legend
set forth in Section 8.2 above, except that such restrictive legend shall not
be required if the opinion of counsel reasonably satisfactory to the Company
referred to above is to the further effect that such legend is not required in
order to establish
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compliance with the provisions of the 1933 Act and any applicable state
securities law, or if the transfer is made in accordance with the provisions of
Rule 144(k) under the 1933 Act. Nothing herein shall restrict a transfer of any
or all of the Securities to a Permitted Transferee (as defined in Section
10.2).
8.4 TERMINATION OF RESTRICTIONS ON TRANSFERABILITY. The
conditions precedent imposed by this Section 8 upon the transferability of the
Shares, Property Shares, Warrant and Conversion Shares shall cease and
terminate as to any of the Shares, Property Shares, Warrant or Conversion
Shares when (i) such securities shall have been registered under the 1933 Act
and sold or otherwise disposed of in accordance with the intended method of
disposition by the seller or sellers thereof set forth in the registration
statement covering such securities, (ii) at such time as an opinion of counsel
satisfactory to the Company shall have been rendered as required pursuant to
the second sentence of Section 8.3 to the effect that the restrictive legend on
such securities is no longer required, or (iii) when such securities are
transferable in accordance with the provisions of Rule 144(k) promulgated under
the 1933 Act. Whenever the conditions imposed by this Section 8 shall terminate
as hereinabove provided with respect to any of the Shares, Property Shares,
Warrant or Conversion Shares, the holder of any such securities bearing the
legend set forth in this Section 8 as to which such conditions shall have
terminated shall be entitled to receive from the Company, without expense
(except for the payment of any applicable transfer tax) and as expeditiously as
possible, a new Warrant or new shares certificates not bearing such legend.
SECTION 9. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS
All covenants, agreements, representations and warranties made
herein and in the certificates delivered pursuant hereto shall survive the
execution and delivery of this Agreement and the issuance and sale of the
Shares hereunder in accordance with Section 10.9.
SECTION 10. MISCELLANEOUS
10.1 OWNER OF SHARES, PROPERTY SHARES, WARRANT AND
CONVERSION SHARES. The Company may deem and treat the person or entity in whose
name the Shares, Property Shares, Warrant and Conversion Shares, as the case
may be, are registered as the absolute owner thereof for all purposes
whatsoever, and the Company shall not be affected by any notice to the
contrary.
10.2 SUCCESSORS. This Agreement shall be binding upon and
except as provided herein, shall inure to the benefit of the respective
successors and permitted assigns of each of the parties hereto. The rights and
obligations of either party hereunder shall not be assignable without the prior
written consent of the other party, except that, subject to
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compliance with applicable state and federal securities laws, the Purchaser
shall be entitled to assign its rights and obligations in whole or in part to
one or more entities in which the majority of the economic interests are held
by SERS ("Permitted Transferees") to the extent that any of the Securities are
transferred to any such entity and any such entity agrees to be bound by the
restrictions set forth in this Agreement.
10.3 BROKER OR FINDER. Each party to this Agreement
represents and warrants that, to the best of its knowledge, no broker or finder
has acted for such party in connection with this Agreement or the transactions
contemplated by this Agreement and that no broker or finder is entitled to any
broker's or finder's fee or other commission in respect thereof based in any
way on agreements, arrangements or understandings made by such party. The
Company shall indemnify the Purchaser against, and hold it harmless from, any
liability, cost or expense (including reasonable attorneys' fees and expenses)
resulting from any agreement, arrangement, or understanding made by the
Company, and the Purchaser shall indemnify the Company against, and hold the
Company harmless from, any liability, cost or expense (including reasonable
attorneys' fees and expenses) resulting from any agreement, arrangement, or
understanding made by the Purchaser with any third party, for brokerage or
finder's fees or other commissions in connection with this Agreement or any of
the transactions contemplated hereby.
10.4 GOVERNING LAW. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the Commonwealth of
Pennsylvania.
10.5 NOTICE. Any notice or other communication required or
permitted hereunder shall be deemed given when delivered personally, or upon
receipt by the party entitled to receive the notice when sent by registered or
certified mail, postage prepaid, addressed as follows or to such other address
or addresses as may hereafter be furnished in writing by notice similarly given
by one party to the other:
To the Company: Brandywine Realty Trust
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
With a copy to: Pepper, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
3000 Two ▇▇▇▇▇ Square
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
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To the Purchaser: RAI Real Estate Advisers, Inc.
▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
With a copy to: Wolf, Block, ▇▇▇▇▇▇ and ▇▇▇▇▇-▇▇▇▇▇
Packard Building, 15th and Chestnut Streets
Philadelphia, Pennsylvania 19102
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Notice to any holder of Shares, Property Shares, Warrant, or Conversion Shares
other than the Purchaser shall be given in a like manner to such holder at the
address reflected in the Company's records.
10.6 FULL AGREEMENT. This Agreement,
together with all Exhibits attached hereto or delivered herewith, the other
Transaction Documents and any other documents delivered herewith, sets forth
the entire understanding of the parties with respect to the transactions
contemplated hereby.
10.7 HEADINGS. The headings of the
sections of this Agreement are inserted for convenience of reference only and
shall not be considered a part hereof.
10.8 AMENDMENT. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
10.9 SURVIVAL OF REPRESENTATIONS AND
WARRANTIES. All representations and warranties made by the parties in this
Agreement shall survive the execution of this Agreement for a period of two
years after the Closing Date.
10.10 SETTLEMENT OF DISPUTES. The parties
will attempt in good faith to resolve any and all controversies of every kind
and nature between the parties to this Agreement and the other Transaction
Documents arising out of or in connection with the existence, construction,
validity, interpretation or meaning, performance, non- performance,
enforcement, operation, breach, continuance or termination of this Agreement or
the other Transaction Documents (each, a "Dispute") promptly by negotiations
between senior executives of the parties who have authority to settle the
Dispute (and who do not have direct responsibility for administration of this
Agreement or the other Transaction Documents). The disputing party shall give
the other party written notice of the Dispute. Within 20 days after receipt of
said notice, the receiving party shall submit to the other a written response.
The notice and response shall include (a) a statement of each party's position
and a summary of the evidence and arguments supporting its position, and (b)
the name and title of the executive who will represent that party. The
executives shall meet at a
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mutually acceptable time and place within 30 days of the date of the disputing
party's notice and thereafter as often as they reasonably deem necessary to
exchange relevant information and to attempt to resolve the Dispute. If the
matter has not been resolved within 60 days of the disputing party's notice, or
if the party receiving said notice will not meet within 30 days, either party
may initiate mediation of the controversy or claim in accordance with the
Center for Public Resources Model Procedure for Mediation of Business Disputes.
If the Dispute has not been resolved pursuant to the aforesaid mediation
procedure within 60 days of the initiation of such procedure, or if either
party will not participate in a mediation, the Dispute shall be submitted to
arbitration in accordance with the rules of the American Arbitration
Association. The parties further agree that all matters shall be governed by
the laws of the Commonwealth of Pennsylvania. The parties further agree that
any arbitration conducted pursuant to this Section 10.10 shall be held in
Philadelphia, Pennsylvania before a panel of three arbitrators, one selected by
the Purchaser and one selected by the Company and the third selected by the
arbitrators selected by the parties. All deadlines specified in this Section
10.10 may be extended by mutual agreement. The prevailing party in any Dispute
shall be entitled to reimbursement for its costs, including without limitation
attorneys' fees and expenses.
10.11 COUNTERPARTS. This Agreement may be
executed in two or more counterparts each of which shall be deemed an original,
and all of which shall be considered one and the same agreement and shall
become effective when two or more counterparts have been signed by each of the
parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
10.12 TERMINATION. This Agreement may be terminated prior to the Closing:
(a) by mutual written consent of the
Purchaser and the Company;
(b) by either the Purchaser or the
Company if the Closing shall not have been consummated before January 31, 1997
(unless the failure to so close by such date shall be due to the action or
failure to act of the party seeking to terminate this Agreement);
(c) by either the Purchaser or the
Company if any court of competent jurisdiction or other governmental entity
shall have issued a final permanent order, decree or ruling or taken any other
final action restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other action
is or shall have become nonappealable;
(d) by the Purchaser if (i) there shall
have been a material breach on the part of the Company or any of its
Subsidiaries of any representation or warranty of the Company or its
Subsidiaries set forth herein, (ii) there shall have been any
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failure of the Company or any of its Subsidiaries to perform or comply with its
covenants or agreements hereunder and, in either case, the aggregate effect of
all such breaches or failures, as the case may be, would be material to the
Company and the Subsidiaries taken as a whole, or (iii) any person (as that
term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) acquires
beneficial ownership of at least 20% of the outstanding Common Shares; or
(e) by the Company if (i) there shall
have been a material breach of any representation or warranty on the part of
the Purchaser or (ii) there shall have been a failure of the Purchaser to
perform or comply with its covenants or agreements hereunder which failure has
not been cured within ten days after written notice thereof from the Company to
the Purchaser and, in either case, the aggregate effect of all such breaches
and failures, as the case may be, would be material.
10.13 EFFECT OF TERMINATION. In the event
of the termination and abandonment of this Agreement pursuant to Section 10.12,
this Agreement shall forthwith become void and have no effect, without any
liability on the part of any party hereto or its affiliates, trustees,
directors, officers or stockholders; provided, however, that nothing contained
in this Section 10.13 shall relieve any party from liability for any breach of
this Agreement; provided further that Sections 6.1(b), 6.3(b), 7 (if the
Contribution Closing occurs), 8 and 10 shall survive any such termination.
10.14 NON-RECOURSE. No recourse shall be
had for any obligation of the Company hereunder, or for any claim based thereon
or otherwise in respect thereof, against any past, present or future trustee,
stockholder, officer or employee of the Company, whether by virtue of any
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such other liability being expressly waived and released by each
other party hereto. No recourse shall be had for any obligation of the
Purchaser hereunder, or for any claim based thereon or in respect thereof,
against RAI Real Estate Advisers, Inc., SERS, or any past, present or future
trustee, stockholder, officer or employee of either or against any other person
or entity, except as provided in the following sentence, whether by virtue of
any statute or rule of law, or by the enforcement of any assessment or penalty
or otherwise, all such other liability being expressly waived and released by
each other party hereto. Recourse for any obligation or liability of the
Purchaser hereunder shall be limited to the Collateral (as defined in the
Pledge Agreement attached as Exhibit V to the Contribution Agreement) on the
terms set forth in such Pledge Agreement.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, each of the parties
hereto has fully executed this Agreement as of the date first set forth above.
BRANDYWINE REALTY TRUST
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
RAI REAL ESTATE ADVISERS, INC.,
as voting trustee of a voting trust
dated November 6, 1996
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
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