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PLEDGE AGREEMENT
PLEDGE AGREEMENT (the "Agreement") made as of this 14th day of
November, 1996 by and among RAI Real Estate Advisers, Inc. ("RAI"), as the
voting trustee of a voting trust dated as of November 6, 1996 between the
Commonwealth of Pennsylvania State Employes' Retirement System as shareholder
and RAI as voting trustee ("Pledgor"), Brandywine Realty Trust, a Maryland real
estate investment trust ("Pledgee") and Commonwealth Land Title Insurance
Company ("Escrow Agent").
WITNESSETH:
WHEREAS, as of the date hereof, pursuant to a Contribution Agreement
dated November 6, 1996 by and among, inter alia, the Pledgor and Pledgee (the
"Contribution Agreement"), the Pledgee has issued to the Pledgor shares of the
Pledgee's Series A Convertible Preferred Shares (the "Preferred Shares"), par
value $.01 per share;
WHEREAS, pursuant to Sections 3.3 and 10.10 of the Contribution
Agreement, any and all liability of Sellers (as defined in the Contribution
Agreement) and the Pledgor under the Contribution Agreement, after the closing
under the Contribution Agreement, is limited to and enforceable only against
the Collateral (as defined below) on the terms set forth in this Agreement; and
WHEREAS, pursuant to Section 10.14 of the Securities Purchase
Agreement dated as of November 6, 1996 by and between the Pledgor and the
Pledgee (the "Securities Purchase Agreement"), recourse for any liability or
obligation of Pledgor thereunder is limited to the Collateral on the terms set
forth in this Agreement.
NOW, THEREFORE, intending to be legally bound hereby, the parties
hereto agrees as follows:
1. Defined Terms. For purposes of this Agreement, the following
terms shall have the meanings specified below and shall be equally applicable
to both singular and plural forms.
"Collateral" means, subject to Section 12 below, the Pledged
Shares and, in the event the Pledged Shares are sold, transferred, assigned,
exchanged or otherwise disposed of pursuant to Section 8 below, all proceeds
from the sale, transfer, assignment, exchange or other disposition of the
Pledged Shares or other replacement collateral which is reasonably satisfactory
to Pledgee.
"Event of Default" means either (i) a court of competent
jurisdiction having entered a final judgment or (ii) a final resolution being
reached by mediation or
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arbitration pursuant to the dispute resolution provision in the Securities
Purchase Agreement, against Pledgor in favor of Pledgee for an obligation or
liability arising under the Contribution Agreement or the Securities Purchase
Agreement.
"Pledged Shares" means the 90,909 Preferred Shares being
delivered to the Escrow Agent pursuant to Section 4 below and the shares of the
Pledgee's common shares of beneficial interest, par value $.01 per share,
issued upon any conversion of such Preferred Shares.
"Uniform Commercial Code" means the Uniform Commercial Code
from time to time in effect in the Commonwealth of Pennsylvania and the Uniform
Commercial Code of any other state which shall be applicable to the pledge of
shares hereunder.
2. Pledge; Grant of Security Interest. The Pledgor hereby grants
and confirms to Pledgee a first pledge and security interest in the Collateral,
as collateral security for any and all liability of Sellers or Pledgor to
Pledgee arising out of the Contribution Agreement or the Securities Purchase
Agreement.
3. Appointment of Escrow Agent. Pledgor and Pledgee hereby
appoint Escrow Agent as the escrow agent under this Agreement and Escrow Agent
accepts such appointment in accordance with the provisions of this Agreement.
4. Share Transfer Powers. Pledgor hereby delivers to Escrow
Agent, and Escrow Agent acknowledges receipt of, all certificates representing
the Pledged Shares, with undated share transfer powers covering such
certificates, duly executed in blank by the Pledgor. Such certificates, share
transfer powers and any other Collateral subsequently delivered to Escrow Agent
pursuant to this Agreement shall be held in escrow by Escrow Agent pursuant to
the terms hereof.
5. Representations and Warranties. Pledgor represents and
warrants that; (a) Pledgor has the power and authority and the legal right to
grant the lien on the Collateral pursuant to this Agreement; (b) Pledgor is the
record owner of, and has good and marketable title to, the Pledged Shares, free
of any and all liens or options in favor of any other person, except the lien
granted by this Agreement; (c) the lien granted and confirmed pursuant to this
Agreement constitutes a valid, perfected priority lien on the Collateral,
enforceable as such against all creditors of the Pledgor and any persons
purporting to purchase any Collateral from the Pledgor; and (d) this Agreement
constitutes the valid and binding obligations of Pledgor, enforceable against
Pledgor in accordance with its terms, and the execution, delivery and
performance of this Agreement does not violate any agreement or understanding
to which Pledgor is a party or by which Pledgor is bound, or any applicable
law, rule or regulation.
6. Covenants. Pledgor covenants and agrees with Pledgee that
from and after the date of this Agreement and until the second anniversary of
the date of the Securities Purchase Agreement (or, if on such second
anniversary, a claim has been made by Pledgee
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pursuant to Section 16 (f) below, which, if resolved in Pledgee's favor, would
result in an Event of Default, until such later date that such claim has been
resolved) (the "Termination Date"):
(a) If Pledgor shall, as a result of its ownership of the
Pledged Shares, become entitled to receive or shall receive any share
certificate as a result of a share dividend, share split or similar
distribution on, or as a conversion of or in exchange for any of the Pledged
Shares then constituting all or a portion of the Collateral, Pledgor shall
immediately deliver the same to Escrow Agent in the exact form received, duly
endorsed by the Pledgor to Pledgee, if required, together with an undated share
transfer power covering such certificate duly executed in blank by the Pledgor
to be held as part of the Collateral.
(b) Without the prior written consent of Pledgee, the
Pledgor will not create, incur or permit to exist any lien or option in favor
of, or any claim of any person with respect to, the Collateral, or any interest
therein, except for the lien provided for by this Agreement. The Pledgor will
defend the right, title and interest of Pledgee in and to the Collateral
against the claim and demands of all persons whom so ever.
(c) At any time and from time to time upon the written
request of, and at the expense of, Pledgee, the Pledgor will promptly and duly
execute and delivery such further documents and take such further actions as
Pledgee may reasonably request for the purposes of obtaining or preserving the
full benefits of this Agreement and of the rights and powers herein granted.
If any amount payable under or in connection with any of the Collateral shall
be or become evidenced by any promissory note, other instrument or chattel
paper, such note, instrument or chattel paper shall be immediately delivered to
Pledgee, duly endorsed in a manner satisfactory to Pledgee, to be held as
Collateral pursuant to this Agreement.
(d) Pledgor agrees to pay, and to save Pledgee and Escrow
Agent harmless from, any and all liability with respect to or resulting from
any delay in paying, any and all stamp, exercise, sales or other taxes which
may be payable or determined to be payable with respect to any of the
Collateral or in connection with any of the transactions contemplated by this
Agreement.
7. Cash Dividends; Other Distributions; Voting Rights. Unless an
Event of Default shall have occurred and Pledgee shall have given notice to
Pledgor of Pledgee's intent to exercise one or more of its rights pursuant to
Sections 9 and 10 below, Pledgor shall be permitted to receive all cash
dividends and other distributions, if any, paid in respect of the Pledged
Shares (except as provided in Section 6(a) above) and to exercise all voting
and other rights with respect to the Pledged Shares.
8. Sale of Pledged Shares. Unless an Event of Default shall have
occurred and Pledgee shall have given notice to Pledgor of Pledgee's intent to
exercise one or more of its rights pursuant to Sections 9 and 10 below, Pledgor
shall have the right to sell, transfer, assign, exchange or otherwise dispose
of, or grant an option with respect to, any or all of the Pledged Shares
provided Pledgee receives a security interest in the proceeds of the Pledged
Shares or
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such other collateral as is satisfactory to Pledgee in its reasonable
discretion. Pledgor, Pledgee and Escrow Agent shall cooperate with each other
in order to accomplish any such transaction.
9. Rights of Pledgee. If an Event of Default shall occur: (i)
Pledgee shall have the right to receive any and all cash dividends paid in
respect of the Pledged Shares, and (ii) at Pledgee's option, all the Collateral
shall be transferred into the name of Pledgee or its nominee, and Pledgee or
its nominee may, at its option, thereafter exercise (A) all voting and other
rights pertaining to the Collateral and (B) any and all rights of conversion,
exchange, subscription and any other rights, privileges or options pertaining
to the Collateral as if it were the absolute owner thereof, all without
liability except to account for property actually received by it, but Pledgee
shall have no duty to the Pledgor to exercise any such right, privilege or
option and shall not be responsible for any failure to do so or delay in so
doing.
10. Remedies. If an Event of Default shall have occurred which is
then continuing, the Pledgee shall thereafter have all of the rights and
remedies set forth in this Agreement and in the Contribution Agreement and of a
Pledgee after default under the Uniform Commercial Code or other applicable law
with respect to the Collateral and shall have the right, at any time or times
thereafter to sell, resell, assign and deliver all or any part of the
Collateral in one or more parcels at public or private sale. The Pledgee shall
give Pledgee at least ten (10) days' prior written notice of the time and place
of any public sale of any Collateral or of the time after which any private
sale or any other intended disposition thereof is to be made. Any such notice
shall be deemed to meet all requirements hereof and of any applicable law
(including the Uniform Commercial Code) that reasonable notification be given
of the time and place of such sale or other disposition. All such sales shall
be at such commercially reasonable price or prices as the Pledgee shall deem
best and either for cash or on credit or for future delivery (without the
Pledgee assuming any responsibility for credit risk). At any such sale or
sales the Pledgee may purchase any or all of the Collateral to be sold thereat
upon such terms as the Pledgee may deem best. The Pledgor shall not remain
liable for any deficiency if the proceeds of any sale or other disposition of
Collateral are insufficient to pay the judgment causing the Event of Default
and the reasonable fees and disbursements of any attorneys employed by Pledgee
to collect such judgment.
11. Private Sales. The Pledgor recognizes that Pledgee may be
unable to effect a public sale of any or all the Pledged Shares, by reason of
certain prohibitions contained in the Securities Act of 1933 (the "Securities
Act") and applicable state securities laws or otherwise, and may be compelled
to resort to one or more private sales thereof to a restricted group of
purchasers which will be obliged to agree, among other things, to acquire such
securities for their own account for investment and not with a view to the
distribution or resale thereof. The Pledgor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner. Pledgee shall be under no obligation to delay a sale of any
of the Pledged Shares for the period of time necessary to permit the Pledged
Shares to be registered for public sale under the Securities Act, or under
applicable state securities laws.
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12. Return of Collateral. On the Termination Date (as defined in
Section 6 above), the Escrow Agent shall return to Pledgor any remaining
Collateral and this Agreement shall terminate.
13. Further Assurances. Pledgor agrees to cooperate with Pledgee
and to execute and deliver, or cause to be executed and delivered, all such
other instruments and to take all such actions as Pledgee may reasonably
request from time to time which shall be appropriate or necessary in Pledgee's
judgment in order to carry out the provisions and purposes of this Agreement.
14. Escrow Agent
(a) Designation. Escrow Agent is designated by Pledgee
to hold the Collateral and holds the Collateral on behalf of Pledgee for
purposes of Articles 8 and 9 of the Uniform Commercial Code.
(b) Limitation on Duties and Liability. Escrow Agent's
sole duty with respect to the custody, safekeeping and physical preservation of
the Collateral in its possession, under Section 9207 of the Uniform Commercial
Code or otherwise, shall be to take reasonable steps to carry out the terms of
this Agreement and to assure safekeeping of the Collateral while in Escrow
Agent's possession. In no event, however, shall Escrow Agent have any duty to
preserve rights in the Collateral against other parties and Escrow Agent shall
not be liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so. Escrow Agent shall not be liable for
any actions undertaken in good faith or in reliance upon documents which it
believes to be genuine.
(c) Indemnification. Pledgor and Pledgee each agrees to
indemnify and hold Escrow Agent harmless against any loss or liability
(including reasonable attorneys' fees) incurred by Escrow Agent as a result of
any dispute regarding the Collateral or in any way arising from the performance
of its obligations under this Agreement, except for any loss or liability
resulting from Escrow Agent's negligence or willful misconduct.
(d) Resignation; Successor. Escrow Agent may resign from
its obligations hereunder by written notice to Pledgor and Pledgee, such
resignation to become effective upon the appointment of a successor escrow
holder and the delivery to such successor escrow holder of the Collateral.
Within 10 days following notice of Escrow Agent's intent to resign, the Pledgor
and Pledgee shall jointly designate in writing a successor escrow holder. In
the absence of such a designation by Pledgor and Pledgee, Escrow Agent may
designate a successor escrow holder. The resigning Escrow Agent shall have no
responsibility for the performance of failure of performance of any successor
escrow holder hereunder, whether designated by Pledgor and Pledgee or by the
resigning Escrow Agent. When the resignation of a resigning Escrow Agent shall
become affective hereunder, such Escrow Agent shall be
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absolutely released and relieved from any and all liability arising thereafter
under this Agreement.
15. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
16. Miscellaneous.
(a) Indulgences, Etc. Neither the failure nor any delay
on the part of any party hereto to exercise any right, remedy, power or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, power or privilege preclude
any other or further exercise of the same or of any other right, remedy, power
or privilege, nor shall any waiver of any right, remedy, power or privilege
with respect to any occurrence be construed as a waiver of such right, remedy,
power or privilege with respect to any other occurrence. No waiver shall be
effective unless it is in writing and signed by the party asserted to have
granted such waiver.
(b) Controlling Law. This Agreement and all questions
relating to its validity, interpretation, performance and enforcement
(including, without limitation, provisions concerning limitations of actions),
shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania, notwithstanding any conflict-of-laws doctrines of
such state or other jurisdiction to the contrary, and without the aid of any
canon, custom or rule of law requiring construction against the draftsman.
(c) Notices. All notices required or permitted hereunder
shall be deemed given when delivered (personally or by recognized courier
service such as Federal Express), or upon receipt by the party entitled to
receive the notice two days after 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:
(i) If to Pledgor:
RAI Real Estate Advisers, Inc.
000 Xxxxxx-Xxxxxxx Xxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: President
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With a copy to:
Wolf, Block, Xxxxxx and Xxxxx-Xxxxx
Twelfth Floor Packard Building
S.E. Xxxxxx 00xx xxx Xxxxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxx, Esquire
(ii) If to Pledgee:
Brandywine Realty Trust
00 Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx Xxxxxx, XX 00000
Attention: President
With a copy to:
Xxxxxx Xxxxxxxx & Xxxxxxx
3000 Two Xxxxx Square
00xx xxx Xxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esquire
(iii) If to Escrow Agent:
Commonwealth Land Title Insurance Company
Two Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx
(d) Binding Nature of Agreement; No Assignment. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that neither Pledgor nor
Pledgee may assign or transfer any of their obligations under this Agreement
without the consent of the other.
(e) Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original as against any party whose signature appears thereon, and all of which
shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of all of the parties reflected hereon as
the signatories.
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(f) Settlement of Disputes. Any and all controversies of
every kind and nature between the parties hereto shall be resolved in
accordance with the provisions set forth in Section 10.10 of the Securities
Purchase Agreement.
(g) Fees and Expenses of Escrow Agent. Pledgee shall pay
all fees and expenses of the Escrow Agent hereunder.
(h) Provisions Separable. The provisions of this
Agreement are independent of and separable from each other, and no provision
shall be affected or rendered invalid or unenforceable by virtue of the fact
that for any reason any other or others of them may be invalid or unenforceable
in whole or in part.
(I) Entire Agreement. This Agreement contains the entire
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course or performance and/or usage of the trade inconsistent with any of the
terms hereof. This Agreement may not be modified or amended other than by
agreement in writing.
(j) Section Headings. The section headings in this
Agreement are for convenience only; they form no part of this Agreement and
shall not affect its interpretation.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed and delivered as of the date first above written.
BRANDYWINE REALTY TRUST
By: /s/ Xxxx X. Xxxxxxx, Xx.
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Xxxx X. Xxxxxxx, Xx., Vice President
RAI REAL ESTATE ADVISERS, INC., as voting
trustee of a voting trust dated November 6, 1996.
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, President
COMMONWEALTH LAND TITLE
INSURANCE COMPANY
By: /s/ Xxxx Xxxxxxxx
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Xxxx Xxxxxxxx
Title Officer
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