<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. _)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BRANDYWINE REALTY TRUST
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Shares of Beneficial Interest Preferred Shares of Beneficial
Interest
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the pervious filing by registration statement
number, or the Form or Schedule and the date of its filing.
<PAGE> 2
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
Schedule 14A
(3) Filing Party:
Brandywine Realty Trust
(4) Date Filed:
March 24, 1997
<PAGE> 3
BRANDYWINE REALTY TRUST
16 CAMPUS BOULEVARD
NEWTOWN SQUARE, PA 19073
(610) 325-5600
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 12, 1997
To our Shareholders:
Notice is hereby given that the Annual Meeting of the Shareholders of
Brandywine Realty Trust, a Maryland real estate investment trust (the
"Company"), will be held at The Union League of Philadelphia, 140 South Broad
Street, Philadelphia, Pennsylvania on Monday, May 12, 1997, at 10:00 a.m., local
time (the "Meeting"), to consider and take action on the following matters:
1. The election of seven Trustees to the Board of Trustees.
2. The conversion of the Company's outstanding Series A Convertible
Preferred Shares of Beneficial Interest ("Series A Preferred Shares") into up to
1,424,736 Common Shares of Beneficial Interest ("Common Shares").
3. An amendment to the Declaration of Trust of the Company to permit
the Board of Trustees to alter the number of authorized shares of beneficial
interest of the Company.
4. Adoption of the 1997 Long-Term Incentive Plan.
5. The transaction of such other business as may properly come
before the Meeting or any postponement or adjournment thereof.
The Board of Trustees of the Company has fixed the close of business on
April 2, 1997 as the record date for determination of the Shareholders of the
Company entitled to notice of, and to vote at, the Meeting and any postponement
or adjournment thereof.
By order of the Board of Trustees,
Mark S. Kripke, Secretary
April 7, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE MARK, DATE AND
SIGN YOUR PROXY, AND MAIL IT IN THE STAMPED ENVELOPE ENCLOSED FOR YOUR
CONVENIENCE. IN ORDER TO AVOID THE ADDITIONAL EXPENSE TO THE COMPANY OF
FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN MAILING YOUR PROXY PROMPTLY.
RETURNING THE PROXY DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON ON ALL
MATTERS BROUGHT BEFORE THE MEETING, BUT WILL HELP ASSURE A QUORUM IF YOU DO NOT
ATTEND.
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<PAGE> 4
BRANDYWINE REALTY TRUST
16 CAMPUS BOULEVARD
NEWTOWN SQUARE, PA 19073
(610) 325-5600
PROXY STATEMENT FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 12, 1997
INTRODUCTION:
The enclosed proxy is solicited by and on behalf of the Board of Trustees
(the "Board of Trustees" or the "Board") of Brandywine Realty Trust (the
"Company") for use at the Annual Meeting of Shareholders to be held on Monday,
May 12, 1997 at 10:00 a.m., local time, and at any postponement or adjournment
thereof (the "Meeting"). This Proxy Statement and the enclosed form of proxy are
first being mailed to shareholders of the Company on or about April 7, 1997.
At the Meeting, the shareholders will be asked to consider and take action
on the following matters (collectively, the "Proposals"):
1. The election of seven Trustees to the Board of Trustees.
2. The conversion of the Company's outstanding Series A Convertible
Preferred Shares of Beneficial Interest ("Series A Preferred Shares") into up to
1,424,736 Common Shares of Beneficial Interest ("Common Shares").
3. An amendment to the Declaration of Trust (the "Declaration of
Trust") of the Company to permit the Board of Trustees to amend the Declaration
of Trust from time to time, without a shareholder vote, to increase or decrease
the aggregate number of shares of beneficial interest of the Company or the
number of shares of beneficial interest of any class the Company is authorized
to issue.
4. Adoption of the 1997 Long-Term Incentive Plan.
5. The transaction of such other business as may properly come
before the Meeting or any adjournments thereof.
THE BOARD OF TRUSTEES HAS UNANIMOUSLY APPROVED EACH OF THE PROPOSALS
DESCRIBED HEREIN AND RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR EACH OF THE
PROPOSALS AT THE MEETING.
The Board of Trustees knows of no business that will be presented for
consideration at the Meeting other than the matters described in this Proxy
Statement. If any other matter should be presented at the Meeting for action,
the persons named in the accompanying proxy card will vote the proxy in
accordance with their best judgment on such matter.
A shareholder may revoke his or her proxy at any time by executing and
returning another proxy of a later date, by written notice to the Company
(attention: Gerard H. Sweeney) at its address above, or by attending the Meeting
and voting in person. Attendance at the Meeting will not by itself constitute
revocation of a proxy.
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<PAGE> 5
In the event that there are not sufficient votes to approve any one or
more of the Proposals, it is expected that the Meeting will be postponed or
adjourned in order to permit further solicitation of proxies by the Company.
The delivery of this Proxy Statement shall not, under any circumstances,
create any implication that the information contained herein is correct after
the date hereof, April 7, 1997.
RECORD DATE, QUORUM AND VOTE REQUIRED:
The record date for the determination of shareholders entitled to notice
of and to vote at the Meeting is the close of business on April 2, 1997. The
presence, in person or by proxy, of Common Shares and Preferred Shares
representing a majority of all votes entitled to be cast at the Meeting, will
constitute a quorum for the transaction of business at the Meeting. All valid
proxies returned will be included in the determination of whether a quorum is
present at the Meeting. As of the Record Date, [ ] Common Shares were issued and
outstanding and 427,421 Series A Preferred Shares were issued and outstanding.
Each Common Share is entitled to one vote on each matter to be voted on at the
Meeting, and (except as indicated below) each Series A Preferred Share is
entitled to 3.3333 votes on each matter to be voted on at the Meeting. The
Common Shares and Series A Preferred Shares (referred to collectively herein as
"Shares") will vote on all such matters as a single class. Series A Preferred
Shares will not be entitled to vote on Proposal 2 (Conversion of Series A
Preferred Shares into Common Shares). Shareholders have no cumulative voting
rights.
Election of Trustees (Proposal No. 1) requires the favorable vote of a
plurality of all votes cast at the Meeting. The approval of the conversion of
Series A Preferred Shares into Common Shares (Proposal No. 2) requires the
affirmative vote of the holders of a majority of the votes cast on the Proposal
by the holders of Common Shares. The approval of the amendment to the
Declaration of Trust (Proposal No. 3) requires the affirmative vote of the
holders of a majority of the Shares outstanding and entitled to vote. Adoption
of the 1997 Long-Term Incentive Plan (Proposal 4) requires the affirmative vote
of the holders of a majority of the votes cast on the Proposal in person or by
proxy.
Regarding the election of Trustees (Proposal No. 1), Shares represented by
Proxies marked "For" such Proposal will be counted in favor of all nominees,
except to the extent the Proxy withholds authority to vote for, or indicates a
vote against, a specified nominee. Shares represented by Proxies marked
"Against," "Abstain" or withholding authority to vote will not be counted in
favor of any nominee. However, because Trustees are elected by a plurality vote,
abstentions will not affect the election of the candidates receiving the most
votes. IN THE ABSENCE OF SPECIFIC DIRECTION, SHARES REPRESENTED BY A PROXY WILL
BE VOTED "FOR" THE ELECTION OF ALL NOMINEES.
Regarding the vote on conversion of Series A Preferred Shares into Common
Shares (Proposal No. 2), Common Shares represented by Proxies marked "For" such
Proposal will be counted in favor of such Proposal. Common Shares represented by
Proxies marked "Abstain" and "broker non-votes" in respect of such Proposal will
not be counted as votes cast on the Proposal and will have no effect on the
result of the vote. IN THE ABSENCE OF SPECIFIC DIRECTION, COMMON SHARES
REPRESENTED BY A PROXY WILL BE VOTED "FOR" SUCH PROPOSAL.
Regarding the amendment to the Declaration (Proposal No. 3), Shares
represented by Proxies marked "For" such Proposal will be counted in favor of
such Proposal. Shares represented by Proxies marked "Abstain" and "broker
non-votes" in respect of such Proposal will not be counted in favor of such
Proposal and will have the effect of a vote "Against" such Proposal. IN THE
ABSENCE OF SPECIFIC DIRECTION, SHARES REPRESENTED BY A PROXY WILL BE VOTED "FOR"
SUCH PROPOSAL.
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<PAGE> 6
Regarding adoption of the 1997 Long-Term Incentive Plan (Proposal 4),
Shares represented by Proxies marked "For" such Proposal will be counted in
favor of such Proposal. Shares represented by Proxies marked "Abstain" and
"broker non-votes" in respect of such Proposal will not be counted as votes cast
on the Proposal and will have no effect on the result of the vote. IN THE
ABSENCE OF SPECIFIC DIRECTION, SHARES REPRESENTED BY A PROXY WILL BE VOTED "FOR"
SUCH PROPOSAL.
Holders of an aggregate of 618,372 Common Shares as of the Record Date
(i.e., Safeguard Scientifics, Inc. ("SSI"), Anthony A. Nichols, Sr., The Nichols
Company ("TNC") and two entities controlled by Richard M. Osborne) have agreed
with the holder of the Series A Preferred Shares to vote such Common Shares in
favor of Proposal 2.
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<PAGE> 7
PROPOSAL NO. 1 - ELECTION OF TRUSTEES
The Board of Trustees has nominated the following individuals for election
as Trustees at the Meeting: Anthony A. Nichols, Sr., Joseph L. Carboni, Richard
M. Osborne, Gerard H. Sweeney, Warren V. Musser, Walter D'Alessio and Charles P.
Pizzi. Mr. Carboni was first elected a Trustee on May 14, 1991. Messrs. Osborne
and Sweeney were first elected as Trustees on February 9, 1996. Messrs. Nichols,
Musser, D'Alessio and Pizzi were first elected as Trustees on August 22, 1996.
The Trustees have no reason to believe that any of the foregoing nominees will
be unable or unwilling to be a candidate for election at the time of the
Meeting. If any nominee is unable or unwilling to serve, the persons named in
the proxy will use their best judgment in selecting and voting for a substitute
candidate.
Each individual elected as a Trustee at the Meeting will serve until the
next annual meeting of shareholders and until his successor is duly elected and
qualified.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE ELECTION OF EACH OF THE NOMINEES AS TRUSTEES.
TRUSTEES OF THE COMPANY
The following table sets forth certain information with respect to the
Trustees of the Company, each of whom has been elected to serve for a one-year
term expiring at the 1997 annual meeting of shareholders and until his successor
is duly elected and qualified:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C>
Anthony A. Nichols, Sr 57 Chairman of the Board and Trustee
Gerard H. Sweeney .... 40 President, Chief Executive Officer and Trustee
Joseph L. Carboni .... 60 Trustee
Richard M. Osborne ... 51 Trustee
Warren V. Musser ..... 70 Trustee
Walter D'Alessio ..... 63 Trustee
Charles P. Pizzi ..... 46 Trustee
</TABLE>
The following are biographical summaries of the Trustees of the Company:
ANTHONY A. NICHOLS, SR., Chairman of the Board and Trustee. Mr. Nichols
was elected a Trustee on August 22, 1996. Mr. Nichols founded TNC through a
corporate joint venture with SSI, and has been its President and Chief Executive
Officer since 1982. From 1968 to 1982, Mr. Nichols was Senior Vice President of
Colonial Mortgage Service Company (now GMAC Mortgage Corporation), a subsidiary
of CoreStates Bank, N.A. Mr. Nichols has been a member of the National
Association of Real Estate Investment Trusts ("NAREIT"), a member of the Board
of Governors of the Mortgage Banking Association and Chairman of the Income Loan
Committee of the regional Mortgage Bankers Association. Mr. Nichols also serves
on the Board of Directors of CenterCore Inc. and is a member of the National
Association of Industrial and Office Parks, the Philadelphia Board of Realtors
and the Urban Land Institute.
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<PAGE> 8
GERARD H. SWEENEY, President, Chief Executive Officer and Trustee. Mr.
Sweeney was elected a Trustee on February 9, 1996. Mr. Sweeney has served as
President and Chief Executive Officer of the Company since August 8, 1994 and as
President since November 9, 1989. Prior to August 8, 1994, Mr. Sweeney served as
Vice President of LCOR, Incorporated ("LCOR"), a real estate development firm.
Mr. Sweeney was employed by The Linpro Company (a predecessor of LCOR) from 1983
to 1994 and served in several capacities, including Financial Vice President and
General Partner. Mr. Sweeney is a member of NAREIT, the Urban Land Institute,
the American Institute of Certified Public Accountants and the Pennsylvania
Institute of Certified Public Accountants.
JOSEPH L. CARBONI, Trustee. Mr. Carboni was elected a Trustee on May 14,
1991 and served as Chairman of the Board from October 11, 1994 until August 22,
1996. Mr. Carboni has served as President of JLC Associates, Inc., a commercial
and real estate consulting firm since 1990. Prior to 1990, Mr. Carboni was a
Senior Vice President of BNE Realty Credit Corporation.
RICHARD M. OSBORNE, Trustee. Mr. Osborne was elected a Trustee on February
9, 1996. Mr. Osborne is President and Chief Executive Officer of OSAIR, Inc., a
property developer and manufacturer of industrial gases for pipeline delivery.
Mr. Osborne is a director of Great Lakes Bank, Mentor, Ohio.
WARREN V. MUSSER, Trustee. Mr. Musser was elected a Trustee on August
1996. He has served as Chairman and Chief Executive Officer of SSI since 1953.
Mr. Musser also serves as the Chairman of the Board of Directors of Cambridge
Technology Partners, Inc., and is a director of Coherent Communications Systems
Corporation and CompuCom Systems, Inc. Mr. Musser also serves on a variety of
civic, educational, and charitable Boards of Directors, including the Franklin
Institute and the Board of Overseers of the Wharton School of the University of
Pennsylvania. He also serves as Vice President/Development, Cradle of Liberty
Council, Boy Scouts of America and as Vice Chairman of the Technology Council of
the Philadelphia metropolitan area.
WALTER D'ALESSIO, Trustee. Mr. D'Alessio was elected a Trustee on August
22, 1996. He has served as President and Chief Executive Officer of Legg Mason
Real Estate Services, Inc., a mortgage banking firm headquartered in
Philadelphia, Pennsylvania, since 1982. Previously, Mr. D'Alessio served as
Executive Vice President of the Philadelphia Industrial Development Corporation
and Executive Director of the Philadelphia Redevelopment Authority. He also
serves on the Board of Directors of the Philadelphia Electric Company,
Pennsylvania Blue Shield and Independence Blue Cross, the Philadelphia Private
Industry Council and the Greater Philadelphia Chamber of Commerce.
CHARLES P. PIZZI, Trustee. Mr. Pizzi was elected a Trustee on August 22,
1996. Mr. Pizzi has served as President of the Greater Philadelphia Chamber of
Commerce since 1989. Mr. Pizzi also serves on a variety of civic, educational
and charitable Boards of Directors, including the American Chamber of Commerce
Executives, Boy Scouts of America (Philadelphia Council), Drexel University,
Greater Philadelphia Chamber of Commerce, Independence Blue Cross, Pennsylvania
Academy of the Fine Arts, Philadelphia Convention & Visitors Bureau, Temple
University School of Business Management, United Way of Southeastern
Pennsylvania, University of Pennsylvania Graduate School of Education Board of
Overseers and the Urban League of Philadelphia.
Messrs. Nichols, Musser and D'Alessio were initially elected to the Board
of Trustees as nominees of SSI and TNC in connection with the Company's
acquisition of properties from SSI and TNC in August 1996, and Mr. Pizzi was
initially elected to the Board of Trustees as the joint nominee of SSI, TNC and
the Company in connection with such transaction.
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<PAGE> 9
COMMITTEES OF THE BOARD OF TRUSTEES
Audit Committee. The audit committee of the Board of Trustees (the "Audit
Committee") currently consists of Messrs. Carboni, D'Alessio and Pizzi. The
Audit Committee makes recommendations concerning the engagement of independent
public accountants, reviews with the independent public accountants the plans
and results of the audit engagement, approves professional services provided by
the independent public accountants, reviews the independence of the independent
public accountants, considers the range of audit and non-audit fees and reviews
the adequacy of the Company's internal accounting controls.
Compensation Committee. The compensation committee of the Board of
Trustees (the "Compensation Committee"), established in August 1996, currently
consists of Messrs. Carboni, D'Alessio and Pizzi. The Compensation Committee
determines compensation for the Company's executive officers and, pursuant to
the employment agreements between the Company and its executive officers, will
establish an incentive compensation program for the Company's employees.
Executive Committee. The executive committee of the Board of Trustees (the
"Executive Committee"), established in August 1996, currently consists of
Messrs. Nichols, the Chairman of the Executive Committee, Mr. Musser, Mr.
Osborne and Mr. Sweeney. The Executive Committee has been delegated all powers
of the Board of Trustees except the power to: (i) declare dividends on Shares;
(ii) elect trustees; (iii) recommend to shareholders any action that requires
shareholder approval; (iv) amend the Bylaws of the Company; (v) approve any
merger or share exchange which does not require shareholder approval; (vi)
authorize the Company to issue Shares (or securities convertible into Shares) in
any single financing or series of related financings in excess of $10 million;
or (vii) authorize the Company to make any single acquisition of real estate in
excess of $20 million.
MEETINGS OF TRUSTEES
The Trustees held five meetings in 1996. Each of Messrs. DiLullo and
Jerome (former Trustees) attended two of three meetings held in1996 during his
term in office. Mr. Musser, who was elected a Trustee on August 22, 1996,
attended one of two meetings held in 1996 during this term in office. One
meeting of the Audit Committee was held in 1996 to discuss the 1996 audit with
Arthur Andersen LLP, the Company's independent public accountants.
COMPENSATION OF TRUSTEES
During 1996, the Company paid its Trustees who are not officers of the
Company fees for their services as Trustees. Each such Trustee received annual
compensation of $5,000 and a fee of $500 plus expenses for attendance in person
at each meeting of the Board of Trustees or a committee thereof and $500 for
participation in each telephonic meeting of the Board of Trustees or a committee
thereof. The compensation of non-employee Trustees for 1997 will consist of an
annual fee in the amount of $10,000, of which one-half will be payable in cash
and one-half will be payable in Common Shares. In addition, each Trustee will be
entitled to a fee of $1,000, payable in cash, for each meeting of the Board
attended by him and a fee of $500, payable in cash, for each meeting of a
committee of the Board attended by him.
COMPANY OFFICERS
The following are biographical summaries of the officers of the Company
who are not Trustees of the Company:
BRIAN F. BELCHER, Executive Vice President -- Marketing and Development.
Mr. Belcher became an executive of the Company on August 22, 1996. Mr. Belcher
joined TNC in 1982 as Vice President of Marketing and, from 1986 until August
22, 1996, served as its Executive Vice President. From 1978 to 1982, Mr. Belcher
was a marketing
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<PAGE> 10
specialist for Evans-Pitcairn Corporation, a real estate development firm. Prior
to that time, Mr. Belcher was a real estate broker with Cushman & Wakefield, a
national real estate firm, in the Philadelphia metropolitan area. Mr. Belcher
previously served as President of the Delaware Valley Chapter of the National
Association of Industrial and Office Parks, and is currently a member of the
Philadelphia Board of Realtors.
JOHN M. ADDERLY, JR., Senior Vice President -- Operations. Mr. Adderly has
served as an officer of the Company since January 1995. Mr. Adderly was employed
by the Rodin Group, a Philadelphia-based real estate development, management and
brokerage firm from 1982 until 1995, where he served as Vice President and Chief
Financial Officer from 1986 until 1995, and as Corporate Controller from 1982
until 1986.
ANTHONY A. NICHOLS, JR., Vice President -- Operations. Mr. Nichols became
an officer of the Company on August 22, 1996. Previously Mr. Nichols was
employed at TNC which he joined in 1989 as a marketing representative. In 1992
Mr. Nichols became an Assistant Vice President -- Property Management of TNC and
in 1995 he became Vice President -- Marketing. Mr. Nichols is the son of Anthony
A. Nichols, Sr., the Company's Chairman of the Board.
H. JEFFREY DEVUONO, Vice President -- Operations. Mr. DeVuono became an
officer of the Company on January 15, 1997. Prior to that time he was employed
in several capacities by LCOR, Incorporated, a real estate development firm.
MARK S. KRIPKE, Chief Financial Officer and Secretary. Mr. Kripke became
Chief Financial Officer and Secretary of the Company on April 7, 1997.
Previously Mr. Kripke was Chief Financial Officer for Stoltz Management, a
privately-held firm.
John P. Gallagher, who was Executive Vice President -- Finance of the
Company at December 31, 1996, resigned his position as an officer of the Company
effective April 1, 1997. Francine M. Haulenbeek, who was Vice President,
Secretary and Treasurer of the Company at December 31, 1996, resigned her
position as an officer of the Company effective January 31, 1997.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers, Trustees and beneficial owners of more than 10% of the
Shares to file reports of ownership and changes in ownership with the Securities
and Exchange Commission and the American Stock Exchange. Officers, Trustees and
beneficial owners of more than 10% of the Shares are required by regulation to
furnish the Company with copies of all Section 16(a) reports they file.
Based solely on review of the copies of such reports furnished to the
Company, and written representations that no other reports were required, the
Company believes that during the fiscal year ended December 31, 1996, all
Section 16(a) filing requirements applicable to its officers, Trustees and
beneficial owners of more than 10% of the Shares were complied with.
CASH AND NON-CASH COMPENSATION PAID TO EXECUTIVE OFFICERS
The following table sets forth certain information concerning the
compensation paid: (i) to the Company's President and Chief Executive Officer
for the years ended December 31, 1996, 1995 and 1994 and (ii) to the three other
executive officers of the Company for the year ended December 31, 1996. No
information is presented in the following table for such other executive
officers for the years ended December 31, 1995 or 1994, because none of them
became employees of the Company until August 22, 1996.
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<PAGE> 11
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS/SARS(#)
- --------------------------- ---- ------ ----- ---------------
<S> <C> <C> <C> <C>
Anthony A. Nichols, Sr., ........... 1996 $ 49,000(1) $30,000 40,000(5)
Chairman of the Board .............. 1995 -- -- --
1994 -- -- --
Gerard H. Sweeney, President and ... 1996 $134,000(2) $30,000 100,000(5)
Chief Executive Officer ............ 1995 $130,000 --
1994 $55,000 46,666(6)
Brian F. Belcher, Executive Vice1996 $ 43,000(3) $20,000 40,000(5)
President - Marketing and .......... 1995 -- -- --
Development ........................ 1994 -- -- --
John P. Gallagher, Executive Vice .. 1996 $ 36,000(4) $15,000 40,000(5)
President - Finance ................ 1995 -- -- --
1994 -- -- --
</TABLE>
(1) Mr. Nichols did not become an employee of the Company until August 22,
1996. See "Employment Agreements" below.
(2) Prior to August 8, 1994, the date on which Mr. Sweeney became employed by
the Company, Mr. Sweeney's salary and bonus were paid to him by LCOR,
pursuant to his employment agreement with that firm. In February 1994, the
Company paid LCOR $110,000, and LCOR in turn used $60,000 of this amount
to pay Mr. Sweeney a bonus in recognition of his contribution to the
Company's January 1994 debt restructuring and its sale of the Lincoln
Centre property in February 1994. Mr. Sweeney entered into a new
employment agreement with the Company on August 22, 1996 that replaced his
then existing employment agreement with the Company.
(3) Mr. Belcher did not become an employee of the Company until August 22,
1996. See "Employment Agreements" below.
(4) Mr. Gallagher did not become an employee of the Company until August 22,
1996. See "Employment Agreements" below.
(5) The options awarded in 1996 are evidenced by certificates denominated as
"warrants" and were vested and exercisable on the date of grant.
(6) Amount reflects fully vested options to purchase 33,333 and 13,333 Common
Shares at exercise prices of $14.31 and $6.21 per share, respectively.
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EMPLOYMENT AGREEMENTS
On August 22, 1996, each of Messrs. Nichols, Sweeney, Belcher and
Gallagher entered into a two-year employment agreement with a subsidiary of the
Company. With the consent of the Company's executives, these employment
agreements were subsequently assigned to the Company. These employment
agreements established annual base salaries for each of Messrs. Nichols,
Sweeney, Belcher and Gallagher at $141,500, $141,500, $125,500 and $104,500,
respectively, which compensation may be increased by the Board of Trustees in
its discretion. Effective January 1, 1997, the annual base salaries of each of
Messrs. Nichols and Sweeney were increased to $200,000 and the annual base
salary of Mr. Belcher was increased to $150,000. Mr. Gallagher resigned from the
Company effective April 1, 1997.
In the event the Company were to terminate the employment of any of
Messrs. Nichols, Sweeney or Belcher without cause, or were to elect not to
renew the applicable employment agreement on the second anniversary of the
date it was entered into, the Company would be obligated to provide the
executive with severance for the greater of the remaining term under his
employment agreement or 12 months at a rate equal to his then effective
salary. In addition, in the event the executive were to terminate his
employment with the Company following a change in control, the Company would
be obligated to provide the executive with the severance payments described
in the preceding sentence. The term "change in control," as defined in the
employment agreements, means the acquisition by any person (other
than the Company and its affiliates) of a majority of the outstanding Common
Shares or voting securities of the Company.
At the time each of the foregoing individuals entered into their
employment agreements, each received from the Company non-transferable warrants
exercisable for a six-year period at a price of $19.50 per share. The number of
Common Shares for which such warrants held by Messrs. Nichols, Sweeney, Belcher
and Gallagher are exercisable are 40,000, 100,000, 40,000 and 40,000,
respectively.
Section 162(m) of the Internal Revenue Code of 1986 (the "Code") provides
that a publicly-held corporation may not deduct compensation paid to any one of
certain specified officers in excess of $1 million per year unless such
compensation qualifies as "performance-based" compensation within the meaning of
that Section . Neither the options nor the warrants granted by the Company
qualify as performance-based compensation under Section 162(m) of the Code.
Therefore, if the aggregate taxable income recognized in any year by certain of
the executive officers of the Company, including any income recognized upon the
exercise of options or warrants and any bonuses, exceeds $1 million, the excess
will not be deductible by the Company unless it qualified as performance-based
compensation.
STOCK OPTIONS GRANTED TO EXECUTIVE OFFICERS DURING LAST FISCAL YEAR
The following table sets forth certain information regarding options for
the purchase of Common Shares that were awarded during fiscal 1996 to the
Company's: (a) President and Chief Executive Officer and (b) each of the three
other executive officers of the Company.
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<PAGE> 13
OPTIONS/SAR GRANTS IN FISCAL YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(2)
NUMBER OF % OF TOTAL )
SECURITIES OPTIONS/
UNDERLYING SARS EXERCISE
OPTIONS/ GRANTED TO OR BASE
SAR GRANTED EMPLOYEES IN PRICE EXPIRATION
NAME (#)(1) FISCAL YEAR ($/SH) DATE 5%($) 10% ($)
---- -------- ----------- ------ ---- ----- -------
<S> <C> <C> <C> <C> <C> <C>
Anthony A. Nichols, Sr.,
Chairman of the Board...... 40,000 16.4% $ 19.50 8/22/2002 $185,000 $ 496,000
Gerard H. Sweeney,
President and Chief
Executive Officer ......... 100,000 41.1% $ 19.50 8/22/2002 $462,000 $1,239,000
Brian F. Belcher, Executive
Vice President - Marketing
and Development ........... 40,000 16.4% $ 19.50 8/22/2002 $185,000 $ 496,000
John P. Gallagher,
Executive Vice President -
Finance ................... 40,000 16.4% $ 19.50 8/22/2002 $185,000 $ 496,000
</TABLE>
- -------------------------------
(1) Options vested on date of grant. The options are evidenced by certificates
denominated as "warrants."
(2) The potential realizable value portion of the foregoing table illustrates
value that might be realized upon the exercise of the options immediately
prior to the expiration of their term, assuming the specified compounded
rates of appreciation on Common Shares over the term of the options.
STOCK OPTIONS HELD BY EXECUTIVE OFFICERS AT DECEMBER 31, 1996
The following table sets forth certain information regarding options for
the purchase of Common Shares that were exercised and/or held by: (a) the
Company's President and Chief Executive Officer and (b) each of the three other
executive officers of the Company at December 31, 1996.
-10-
<PAGE> 14
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR ENDED
DECEMBER 31, 1996 AND 1996 FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS/SAR
AT FY-END VALUE OF UNEXERCISED IN-
(#) THE-MONEY OPTIONS AT
SHARES ACQUIRED VALUE EXERCISABLE/ FY-END($) EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE(1) UNEXERCISABLE(1)
- ---- -------------- ----------- ---------------- ----------------
<S> <C> <C> <C> <C>
Anthony A. Nichols, Sr
Chairman of the Board ., . N/A N/A 40,000 0
Gerard H. Sweeney,
President and Chief
Executive Officer ........ N/A N/A 146,666 $350,000
Brian F. Belcher,
Executive Vice President -
Marketing and ............ N/A
Development .............. N/A 40,000 0
John P. Gallagher, ....... N/A N/A 40,000 0
Executive Vice President -
Finance
</TABLE>
- ---------------
(1) All options are exercisable.
401(K) PLAN
TNC established a Section 401(k) and Profit Sharing Plan (the "401(k)
Plan") to cover its eligible employees and other designated affiliates. It is
anticipated that the Company will also adopt the 401(k) Plan for the benefit of
all of its eligible employees.
The 401(k) Plan will permit eligible employees of the adopting employers
(the "Participating Companies") to defer up to a designated percentage of their
annual compensation, subject to certain limitations imposed by the Code. The
employees' elective deferrals are immediately vested and non-forfeitable upon
contribution to the 401(k) Plan. Each Participating Company reserves the right
to make matching contributions or discretionary profit sharing contributions in
the future.
The 401(k) Plan is designed to qualify under section 401 of the Code so
that contributions by employees or by the Participating Companies to the 401(k)
Plan, and income earned on plan contributions, are not taxable to employees
until withdrawn from the 401(k) Plan, and so that contributions by the
Participating Companies, if any, will be deductible by them when made.
-11-
<PAGE> 15
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to the completion of the SSI/TNC Transaction on August 22, 1996, the
Board of Trustees had not established a separate compensation committee. No
executive officer of the Company serves on the Compensation Committee that was
established by the Board of Trustees in August 1996.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 10, 1997
(except as indicated in note 3) regarding the beneficial ownership of Common
Shares (and Common Shares for which units of limited partnership interest
("Units") of Brandywine Operating Partnership, L.P. and Preferred Shares may be
exchanged) by each Trustee, by each executive officer, by all Trustees and
executive officers as a group, and by each person known to the Company to be the
beneficial owner of 5% or more of the outstanding Common Shares assuming the
issuance of Units which the Company is contractually committed to issue by
September 1999. Except as indicated below, to the Company's knowledge, all of
such Common Shares are owned directly, and the indicated person has sole voting
and investment power.
<TABLE>
<CAPTION>
Name and Business Number of Percentage of
Address of Beneficial Owner(1) Common Common Shares(2)
- ------------------------------ Shares ----------------
------
<S> <C> <C>
Morgan Stanley Group Inc. (3) ........................................ 1,130,800 12.27%
RAI Real Estate Advisers, Inc.(4) ..................................... 951,019 9.98
Safeguard Scientifics Inc.(5) ......................................... 738,753 7.61
Anthony A. Nichols, Sr.(6) ............................................ 285,503 3.05
Joseph L. Carboni(7) .................................................. 1,166 *
Richard M. Osborne(8) ................................................. 440,478 4.74
Gerard H. Sweeney(9) .................................................. 146,934 1.57
Warren V. Musser(10) .................................................. 0 *
Walter D'Alessio(11) .................................................. 300 *
Charles P. Pizzi(12) .................................................. 0 *
John P. Gallagher(13) ................................................. 251,955 2.69
Brian F. Belcher(14) .................................................. 259,200 2.77
All Trustees and Executive Officers as a Group (9) persons ............ 961,626 9.93
</TABLE>
- ------------------------
*Less than one percent.
(1) Unless indicated otherwise, the business address of each person listed is 16
Campus Boulevard, Newtown Square, Pennsylvania 19073.
-12-
<PAGE> 16
(2) Assumes that all Units and Preferred Shares eligible for conversion held by
each named person or entity are converted into Common Shares. The total number
of Common Shares outstanding used in calculating the percentage of Common Shares
assumes that none of the Units or Preferred Shares eligible for conversion held
by other named persons or entities are converted into Common Shares.
(3) Based on a Schedule 13G dated January 14, 1997, and filed for the
year ended December 31, 1996. Morgan Stanley Group Inc. maintains its
principal office at 1585 Broadway, New York, New York 10036.
(4) The business address of RAI Real Estate Advisers, Inc. ("RAI") is 259
Radnor-Chester Road, Radnor, Pennsylvania 19087. Includes (a) 817,686 Common
Shares and (b) 133,333 Common Shares issuable upon exercise of warrants. Does
not include 1,424,736 Common Shares issuable upon conversion of Preferred
Shares after Conversion Approval (as defined in Proposal 2) or 65,000 Common
Shares held for the benefit of the Pennsylvania State Employees' Retirement
System ("SERS") by third parties that possess the voting and investment power in
respect of such Common Shares. RAI serves as the voting trustee under a
voting trust established for the benefit of SERS. RAI disclaims beneficial
ownership of such shares in which it has no pecuniary interest.
(5) The business address of SSI is 800 The Safeguard Building, 435 Devon Park
Drive, Wayne, Pennsylvania 19087. Includes (a) 241,560 Common Shares, (b)
241,560 Common Shares issuable upon exercise of warrants and (c) 255,633 Units
convertible into Common Shares. Safeguard Securities (Delaware), Inc.
("Safeguard Delaware"), a wholly-owned subsidiary of SSI, is the owner of the
foregoing securities other than 590 Units which are owned by C/N Leedom II,
Inc., another wholly-owned subsidiary of SSI. The Units referenced in clause (c)
of the preceding sentence include 3,246 Units issuable to a wholly-owned
subsidiary of SSI on or before September 1, 1999.
(6) Includes (a) 16,773 Common Shares, (b) 56,773 Common Shares issuable upon
exercise of warrants, (c) 110,281 Common Shares held by Newtown I, L.L.C. and
(d) 101, 674 Common Shares issuable upon conversion of Units beneficially owned
by TNC or issuable to TNC on or before September 1, 1999. Mr. Nichols shares
investment and voting power over the Common Shares beneficially owned by Newtown
I, L.L.C. and TNC. The foregoing includes 16,773 Common Shares and warrants to
purchase an additional 16,773 Common Shares which Mr. Nichols owns jointly with
his wife.
(7) The business address of Mr. Carboni is Two Greentree Centre, Marlton, New
Jersey 08053.
(8) The business address of Mr. Osborne is 7001 Center Street, Mentor, Ohio
44060. Includes (a) 179,600 Common Shares owned by The Richard M. Osborne Trust
(the "RMO Trust"), of which Mr. Osborne is the sole trustee, and (b) 180,439
Common Shares and warrants exercisable for 80,439 Common Shares held by Turkey
Vulture Fund XIII, Ltd. (the "RMO Fund"). Mr. Osborne has advised the Company
that he possesses sole authority over the voting and disposition of Common
Shares owned by the RMO Fund.
-13-
<PAGE> 17
(9) Includes (a) 267 Common Shares and (b) 146,666 Common Shares issuable upon
the exercise of options and warrants.
(10) The business address of Mr. Musser is 800 The Safeguard Building, 435 Devon
Park Drive, Wayne, Pennsylvania 19087.
(11) The business address of Mr. D'Alessio is 1735 Market Street, Philadelphia,
Pennsylvania 19103.
(12) The business address of Mr. Pizzi is 1234 Market Street, Philadelphia,
Pennsylvania 19107.
(13) Includes (a) 40,000 Common Shares issuable upon the exercise of warrants,
(b) 110,281 Common Shares held by Newtown I, L.L.C. and (c) 101,674 Common
Shares issuable upon conversion of Units beneficially owned by TNC or issuable
to TNC on or before September 1, 1999. Mr. Gallagher shares investment and
voting power over Common Shares beneficially owned by Newtown I, L.L.C. and TNC.
(14) Includes (a) 40,000 Common Shares issuable upon the exercise of warrants,
(b) 7,245 Common Shares issuable upon conversion of Units, (c) 110,281 Common
Shares held by Newtown I, L.C.C. and (d) 101,674 Units beneficially owned by TNC
or issuable to TNC on or before September 1, 1999. Mr. Belcher shares investment
and voting power over Common Shares beneficially owned by Newtown I, L.L.C. and
TNC.
CERTAIN TRANSACTIONS
Partnership Agreement; Redemption Rights. In connection with the SSI/TNC
Transaction, the Company entered into an Agreement of Limited Partnership (the
"Partnership Agreement") with SSI, TNC and 11 other persons (collectively, the
"Limited Partners"). The number of Units issued by the Operating Partnership to
the Limited Partners at the closing of the SSI/TNC Transaction (495,837) plus
the number of additional Units that the Operating Partnership will be required
to issue to the Limited Partners by September 1, 1999 (44,322) to acquire the
Residual Interests were and will be issued in exchange for direct and indirect
interests of the Limited Partners in the 19 SSI/TNC Properties contributed to
the Operating Partnership. The Partnership Agreement provides, among other
things, for the Limited Partners to have the right to cause the Company to
redeem their Units for cash, at a per Unit price based on the average closing
price of the Common Shares for the five consecutive trading days prior to such
determination (or, at the option of the Company, Common Shares on a one Common
Share per Unit basis, subject to customary antidilution adjustments). Pursuant
to the terms of the Partnership Agreement, in connection with the payment of an
approximately $500,000 prepayment penalty associated with the payoff of the debt
encumbering certain of the Properties, approximately 30,303 Units held by
Limited Partners were canceled by the Operating Partnership.
Repayment of Certain Advances to SSI. In connection with the SSI/TNC
Transaction, SSI agreed to loan the Operating Partnership an aggregate of
$400,000 on account of transaction expenses and agreed to advance the Operating
Partnership up to $700,000 to provide it with working capital for the operation
of certain of the Properties. SSI also agreed to advance funds to the Operating
Partnership to enable it to make certain preferred distributions to the Company.
These advances bore interest at the prime rate. In addition, in June 1996, SSI
provided a second mortgage loan in the amount of $460,000 to a subsidiary of the
Operating Partnership to fund the cost of tenant improvements at one of the
Properties. This loan also bore interest at the prime rate. The principal
balance of the SSI loans, including accrued interest thereon, was repaid in full
on December 2, 1996 following consummation by the Company of the public offering
(the "Offering") of its Common Shares.
-14-
<PAGE> 18
Indemnification of Certain Limited Partners. Pursuant to the Partnership
Agreement, the Company was obligated either to contribute sufficient proceeds
from the Offering to the Operating Partnership to enable it to repay or
refinance the mortgage debt encumbering the SSI/TNC Properties, or in lieu
thereof, either obtain general releases from the holders of such mortgages
indebtedness releasing the Limited Partners from all liability with respect
thereto or make other arrangements satisfactory to such Limited Partners to
indemnify them against such liability. As of December 31, 1996, approximately
$13.8 million of such mortgage debt remained outstanding, of which $8.7 million
constitutes recourse debt. Accordingly, the Company has agreed to indemnify the
Limited Partners who are liable on such recourse debt against liability thereon.
Partnership Agreement; General Indemnity. In the Partnership Agreement,
SSI and TNC made customary representations and warranties, on a several basis,
in favor of the Company. The Company also made customary representations and
warranties in favor of SSI and TNC. In the event the Company were to suffer a
loss as a result of the inaccuracy of any of the representations and warranties
made in its favor, the recourse of the Company against SSI and TNC is limited to
the Units issued to them in the SSI/TNC Transaction (less the Units that were
forfeited in connection with the repayment of debt upon closing of the Offering
and any Units that the Company may elect to release from the pledge).
Termination of Standstill Agreements. Each of SSI and Richard M. Osborne,
a Trustee of the Company, was a party to an agreement with the Company which, by
its terms, terminated upon completion of the Offering. In its respective
agreement, each of SSI and Mr. Osborne had agreed generally to vote its or his
Common Shares in accordance with the recommendation of a majority of the Board
of Trustees on any matter submitted to a vote of shareholders and to refrain
from disposing of its or his Common Shares other than in transactions under Rule
144, in certain private transactions and in certain extraordinary transactions
such as a third party tender offer or merger.
Option Properties. At the closing of the SSI/TNC Transaction, the
Operating Partnership acquired an option from an affiliate of TNC entitling it
to acquire, in the Operating Partnership's discretion, the four Option
Properties at any time during the two-year period ending August 22, 1998
(subject to two extensions of one year each). The parties have agreed that the
purchase price payable by the Operating Partnership upon exercise of its option
will consist of $10.00 in excess of the mortgage debt encumbering the Option
Properties at the time of exercise (which as of December 31, 1996 aggregated
$21.1 million, including accrued interest). Exercise of the option is subject to
a right of first refusal in favor of, and the consent of, the holder of the
mortgage encumbering the Option Properties. There can be no assurance that the
Company will exercise its option or that the holder of such mortgage will
consent to the exercise of the option.
Lease with SSI Affiliate. Approximately 21,580 net rentable square feet is
leased by the Company to an affiliate of SSI at an average rental rate of $9.66
per square foot under a lease that expires in April 1999. The Company believes
that this is the prevailing market rate for comparable space.
Environmental Indemnity. SSI has agreed to indemnify the Operating
Partnership against the cost of remediation that may be required to be
undertaken on account of certain environmental conditions at one of the SSI/TNC
Properties acquired in the SSI/TNC transaction subject to an aggregate maximum
of approximately $2.0 million. The term of the SSI indemnity agreement expires
on August 22, 2001.
Employment Agreements; Award of Warrants. At the closing of the SSI/TNC
Transaction, each of Messrs. Nichols, Sweeney, Belcher and Gallagher entered
into a two-year employment agreement with the Management Company. These
employment agreements were, with the consent of such executives, subsequently
assigned to and assumed by the Company. In order to induce each such executive
to enter into such employment agreements, Messrs. Nichols, Sweeney, Belcher and
Gallagher were awarded warrants to purchase 40,000, 100,000, 40,000 and 40,000
Common Shares, respectively, at an exercise price of $19.50 per share. See Item
11. "Executive Compensation."
-15-
<PAGE> 19
Prior Involvement of Legg Mason. One of the underwriters of the Offering,
Legg Mason Wood Walker, Incorporated ("Legg Mason"), served as financial advisor
to the Company in connection with the SSI/TNC Transaction. In connection with
the SSI/TNC Transaction, Legg Mason delivered to the Board of Trustees its
opinion to the effect that, as of July 12, 1996, the SSI/TNC Transaction was
fair to the Company's shareholders from a financial point of view. The Company
paid Legg Mason a $100,000 fee for its advisory services and reimbursed it
$10,000 for expenses. Legg Mason is the parent of Legg Mason Real Estate
Services, Inc., a mortgage banking firm of which Walter D'Alessio, a member of
the Company's Board of Trustees and Compensation Committee, is President.
Investment by RMO Fund. On June 21, 1996 (the "Investment Date"), Turkey
Vulture Fund XIII, Ltd. (the "RMO Fund"), a company controlled by Richard M.
Osborne, a Trustee of the Company, invested approximately $1.3 million in the
Company by: (i) making an unsecured loan (the "Osborne Loan") to the Company in
the amount of approximately $992,000 and (ii) by acquiring 19,983 Paired Units
(defined below) at a per unit price of $16.89. Under certain circumstances
following the issuance by the Company of additional Common Shares, the Company
was obligated to issue additional Paired Units, valued at $16.89 each, as a
mandatory prepayment of the Osborne Loan. The Osborne Loan was repaid pursuant
to its terms in 1996 through the issuance by the Company of an aggregate of
60,456 Paired Units. The term "Paired Units" means a unit comprised of one
Common Share and a six-year warrant exercisable for one Common Share at an
exercise price of $19.50 per share.
SHARE PERFORMANCE GRAPH
The Securities and Exchange Commission requires the Company to
present a chart comparing the cumulative total shareholder return on the Common
Shares with the cumulative total shareholder return of (i) a broad equity index
and (ii) a published industry or peer group index. The following chart compares
the cumulative total shareholder return for the Common Shares with the
cumulative shareholder return of companies on (i) the S&P Composite Index as
provided by the National Association of Real Estate Investment Trusts and (ii)
the NAREIT ALL-REIT Total Return Index as provided by the National Association
of Real Estate Investment Trusts for the period beginning December 31, 1991 and
ending December 31, 1996.
-16-
<PAGE> 20
COMPARISON OF CUMULATIVE SHAREHOLDERS' RETURN The Company, S&P
500 Index and NAREIT All-REIT Index
<TABLE>
<CAPTION>
Dec. 91 Dec. 92 Dec. 93 Dec. 94 Dec. 95 Dec. 96
<S> <C> <C> <C> <C> <C> <C>
The Company ......... $ 100.00 $ 75.00 $ 375.00 $1,017.34 $1,068.76 $2,009.14
S&P 500 Index ....... $ 100.00 $ 107.67 $ 118.43 $ 119.97 $ 164.88 $ 202.74
NAREIT All-REIT Index $ 100.00 $ 112.18 $ 132.98 $ 134.05 $ 158.60 $ 215.30
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
As part of the SSI/TNC Transaction, on August 22, 1996, the Company
entered into two-year employment agreements with each of its then four executive
officers. These agreements established base salaries at $141,500, $141,500,
$125,000 and $104,500, respectively, for each of Messrs. Nichols, Sweeney,
Belcher and Gallagher. In conjunction with these employment agreements, six-year
warrants exercisable for 40,000 Common Shares were awarded to each of Messrs.
Nichols, Belcher and Gallagher and six-year warrants exercisable for 100,000
Common Shares were awarded to Mr. Sweeney. The per share exercise price of these
warrants is $19.50. The employment agreements contemplated that the Company
would establish an incentive compensation program consistent with those provided
in the real estate investment trust industry.
At a meeting held on December 16, 1996, the Compensation Committee, in
recognition of the growth in the Company's property portfolio during 1996 (from
four properties at January 1, 1996 to 37 properties at December 31, 1996) and
its consummation of an underwritten public offering of 4,600,000 Common Shares
in December 1996, approved the establishment of a $120,000 bonus pool for the
five senior executives of the Company. The Committee determined that each of
Messrs. Nichols and Sweeney would receive $30,000 of such bonus pool.
The Compensation Committee's compensation policies with respect to the
Company's executive officers are based on the principles that compensation
should, to a significant extent, be reflective of the financial performance of
the Company, and that a significant portion of executive officers' compensation
should provide long-term incentives. The Compensation Committee seeks to set
executive compensation at levels that are sufficiently competitive so that the
Company may attract, retain and motivate high quality executives to contribute
to the Company's financial success. In furtherance of these efforts, on January
29, 1997, the Committee increased the base salaries of each of Messrs. Nichols
and Sweeney to $200,000, effective January 1, 1997, and determined that each
would be entitled to receive a minimum bonus for 1997 of $50,000, with the exact
amount, and the form of the pay-out, to be determined in light of the Company's
1997 performance, industry standards and the objective of providing long-term
incentives. In establishing compensation for executive officers, the Committee
considers industry data generally, the recommendations of a third-party
consultant, the Company's financial performance and industry position and the
recommendations of the Chairman of the Board and the President and Chief
Executive Officer. The Committee exercises judgment and discretion in the
information it analyzes and considers.
Charles P. Pizzi (Chairman)
Joseph L. Carboni
Walter D'Alessio
-17-
<PAGE> 21
PROPOSAL NO. 2 - PROPOSAL TO APPROVE CONVERSION OF SERIES A PREFERRED SHARES
In connection with its acquisition of a portfolio of nine properties in
November 1996, the Company issued to a voting trust (the "SERS Voting Trust")
established for the benefit of the Commonwealth of Pennsylvania State Employees'
Retirement System ("SERS") 481,818 Series A Preferred Shares. RAI Real Estate
Advisers, Inc. serves as the voting trustee of the SERS Voting Trust. See
"Proposal No. 1--Election of Trustees--Security Ownership of Certain Beneficial
Owners and Management." Each Series A Preferred Share is currently convertible
into approximately 3.3333 Common Shares. However, under rules of the American
Stock Exchange, prior to a favorable vote by the shareholders approving the
unlimited convertibility of the Series A Preferred Shares into Common Shares,
the number of Common Shares that may be issued in respect of the conversion of
Series A Preferred Shares is limited to 181,323 in the aggregate. Prior to the
Record Date, 54,397 Series A Preferred Shares were converted into 181,323 Common
Shares. A vote in favor of this Proposal will permit the unlimited
convertibility of the Series A Preferred Shares into an additional 1,424,736
Common Shares. A vote against this Proposal will result in an increase in the
dividend rate payable on the Series A Preferred Shares from an amount equal to
the rate payable on the number of Common Shares into which such Series A
Preferred Shares may be converted to 120% of the dividend rate payable in
respect of the Common Shares. In addition, if approval of the conversion of
Series A Preferred Shares into Common Shares as described in this Proposal (a
"Conversion Approval") has not occurred by July 1, 1998, each holder of Series A
Preferred Shares will have the right, at its option, to require the Company to
redeem all or a portion of its Series A Preferred Shares, as described below.
Prior to a Conversion Approval no further conversions of Series A Preferred
Shares into Common Shares may occur.
The Board is recommending that shareholders vote in favor of this Proposal
in order to avoid both (i) the occurrence of an increase in the dividend rate on
the Series A Preferred Shares and (ii) the giving of a redemption right to the
holder of the Series A Preferred Shares.
In the event that this Proposal is approved and the Series A Preferred
Shares are converted into Common Shares, the holder will be permitted to resell
all or a portion of such Common Shares under a currently effective registration
statement, subject to a contractual restriction on the resale of such Common
Shares until May 24, 1997. No prediction can be made as to the effect that
future market sales of such Common Shares will have on the market price of the
Common Shares prevailing from time to time. Sales of substantial amounts of such
Common Shares in the public market (or the perception that such sales could
occur) might adversely affect prevailing market prices for the Common Shares.
The terms of the Series A Preferred Shares are summarized below.
Dividends
In the event that the Company pays a dividend or makes any distribution
with respect to the Common Shares, regardless of the form of such distribution,
the holders of the Series A Preferred Shares are entitled to participate with
the holders of the Common Shares in all such dividends and distributions, such
that the holders of the Series A Preferred Shares shall receive, with respect to
each such Series A Preferred Share held, an amount equal to the product of: (i)
the dividend or distribution payable with respect to each such Common Share
multiplied by (ii) the number of Common Shares into which such Series A
Preferred Share is convertible as of the record date for such dividend or
distribution or the payment date with respect to such dividend or distribution
if there is no record date. In the event that a Conversion Approval has not
occurred by July 1, 1997, then the holders of the Series A Preferred Shares
shall be entitled to receive, with respect to each such Series A Preferred Share
held, an amount equal to the product of: (i) 120% of the dividend or
distribution payable with respect to each such Common Share multiplied by (ii)
the number of Common Shares into which such Series A Preferred Share is
convertible as of the record date for such dividend or distribution or the
payment date with respect to such dividend or distribution if there is no record
date.
-18-
<PAGE> 22
Liquidation Preference; Merger or Consolidation
In the event of any liquidation, dissolution or winding up of the Company
(a "Liquidation"), regardless of whether such event is voluntary or otherwise,
each Series A Preferred Share will entitle the holder to receive, before any
distributions are made on Common Shares, an amount equal to the greater of: (i)
the amount as would have been payable with respect to the Common Shares into
which such Series A Preferred Share would have been convertible immediately
prior to the Liquidation if a Conversion Approval had previously occurred and
(ii) the product of $16.50 multiplied by the number of Common Shares into which
such Series A Preferred Shares would have been convertible immediately prior to
the Liquidation if a Conversion Approval had previously occurred plus all
declared but unpaid dividends. In determining whether a distribution (other than
upon voluntary or involuntary liquidation), by dividend, redemption or other
acquisition of shares or otherwise, is permitted under applicable law, amounts
that would be needed if the Company were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of holders of
Series A Preferred Shares will not be added to the Company's total liabilities.
Upon a merger, consolidation or similar transaction involving the Company,
holders of Series A Preferred Shares will be entitled to receive such payments
as would have been made with respect to the Common Shares into which such Series
A Preferred Shares would have been convertible immediately prior to such event
if a Conversion Approval had previously occurred.
Redemption
In the event that a Conversion Approval has not occurred by July 1, 1998,
each holder of Series A Preferred Shares will have the right, at its option, to
require the Company to redeem from time to time all or a portion of the Series A
Preferred Shares held by it at a price per share equal to the Redemption Price.
The term "Redemption Price" means, in respect of a Series A Preferred Share, the
greater of: (i) the product of (a) $16.50 plus an amount (the "Return Amount")
equal to 8.0% of $16.50 per annum from the date of issuance of such Series A
Preferred Share to the redemption date thereof less an amount (not to exceed the
Return Amount) equal to distributions actually received by the holder on account
of such Series A Preferred Share and (b) the Conversion Number (as defined
below) and (ii) the product of the market price of a Common Share and the
Conversion Number. The term "Conversion Number" means the number of Common
Shares into which a Series A Preferred Share is, or Series A Preferred Shares
are, convertible. The Conversion Number, in respect of each Series A Preferred
Share, currently is approximately 3.3333 and, in respect of all currently
outstanding Series A Preferred Shares, is 1,424,736.
Voting Rights
Except as otherwise provided by law and as indicated below, the holders of
Series A Preferred Shares shall be entitled to vote on all matters as to which
the holders of Common Shares shall be entitled to vote, together with the
holders of Common Shares as a single class, and shall be entitled to cast a
number of votes equal to the Conversion Number. Holders of Series A Preferred
Shares will not be entitled to vote their Series A Preferred Shares on the
unlimited convertibility of Series A Preferred Shares into Common Shares.
Conversion Rights
Subject to the conditions set forth below, each holder of Series A
Preferred Shares has the right, at any time, at such holder's option, to
convert, without the payment of any additional consideration, each Series A
Preferred Share held by such holder into that number of non-assessable Common
Shares equal to the Conversion Number. Until Conversion Approval has occurred,
the number of Common Shares that may be issued in respect of the conversion of
Series A Preferred Shares is limited to 181,323 in the aggregate. After
Conversion Approval, there are no limitations on the convertibility of the
Series A Preferred Shares into Common Shares. After Conversion Approval, the
Company
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intends to cause the Series A Preferred Shares to be converted in full into
Common Shares pursuant to authority contained in the Declaration of Trust.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL TO
PERMIT UNLIMITED CONVERSION OF THE SERIES A PREFERRED SHARES.
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PROPOSAL NO. 3 - PROPOSAL TO AMEND THE DECLARATION OF TRUST
OF THE COMPANY TO PERMIT THE BOARD OF TRUSTEES TO ALTER THE
NUMBER OF AUTHORIZED SHARES OF BENEFICIAL INTEREST OF THE COMPANY
In 1995, the General Assembly of Maryland approved an amendment to Title 8
of the Corporations and Associations Article of the Annotated Code of Maryland
("Title 8"), the statute under which the Company is formed, permitting the board
of trustees of a Maryland real estate investment trust formed as a trust
("REIT"), such as the Company, to include in its declaration of trust a
provision permitting the board of trustees to amend the declaration of trust to
increase or decrease the aggregate number of shares or the number of shares of
any class of beneficial interest that the trust has authority to issue. This law
became effective on October 1, 1995.
Under Maryland law as in effect prior to October 1, 1995, a Maryland REIT
such as the Company was required to obtain the approval of its shareholders each
time it proposed to amend its declaration of trust to increase or decrease its
number of authorized shares of beneficial interest. This process is expensive
and time-consuming. Adopting the proposed amendment to the Declaration of Trust,
as authorized by Maryland law, will enable the Board of Trustees alone to amend
the Declaration of Trust of the Company to increase or decrease the number of
authorized shares. Adding the provision authorized by Maryland law to the
Declaration of Trust requires the approval of the shareholders of the Company.
Accordingly, the Board of Trustees has unanimously adopted a resolution
declaring that it is advisable and in the best interests of the Company to add
to Article 6, Section 6.1 of the Declaration of Trust the following sentence:
"The Board of Trustees, without any action by the Shareholders of the Company,
may amend the Declaration of Trust from time to time to increase or decrease the
aggregate number of shares of beneficial interest or the number of shares of
beneficial interest of any class that the Company is authorized to issue." The
resolution of the Board of Trustees also declared that it is advisable and in
the best interests of the Company to add to Article 9, Section 9.1(a) the
following sentence: "Notwithstanding the foregoing, no vote or other action of
Shareholders shall be required in order for the Board of Trustees to amend this
Declaration of Trust pursuant to Section 6.1." The effect of this amendment will
be to permit the Board of Trustees, without shareholder action, to increase or
decrease (a) the total number of authorized shares of beneficial interest of the
Company and/or (b) the number of authorized shares of beneficial interest of any
one or more classes. Maryland law permits a REIT to have shares of beneficial
interest that are assigned to a particular class as well as shares that are not
assigned to a particular class but are available to be classified by the board
of trustees at a later time. Thus, the total number of authorized shares of
beneficial interest may exceed the total number of authorized shares of all
classes.
At present, the Company is authorized to issue 30,000,000 shares, of which
25,000,000 shares are common shares of beneficial interest and 5,000,000 shares
are preferred shares of beneficial interest.
The Board of Trustees believes that it is in the best interests of the
Company and its shareholders to permit the Board of Trustees, without the
necessity of shareholder approval, to increase or decrease either the aggregate
number of shares of beneficial interest or the number of shares of any class of
beneficial interest that the Company has authority to issue in order to provide
the Company with maximum flexibility to meet a variety of business needs as they
may arise and to enhance the Company's flexibility in connection with possible
future opportunities. These business needs and opportunities may include share
dividends, share splits, retirement of indebtedness, employee benefit programs,
business combinations, acquisitions of property and raising cash for general
purposes. Responding to such needs or opportunities often requires quick action
and the process of obtaining shareholder approval to amend the Declaration of
Trust is both time-consuming and expensive.
If the proposed amendment is adopted, authorized shares of beneficial
interest of the Company as established from time to time by the Board of
Trustees in excess of those issued from time to time will be available for
issuance at
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such times and for such purposes as the Board of Trustees may deem advisable
without further action by the Company's shareholders, unless such action is
otherwise required by applicable law or the rules of the exchange on which
shares of beneficial interest are listed.
As discussed above, the advantages to the Company's shareholders of the
proposed amendment include the flexibility it would give the Company in raising
capital and acquiring property and the avoidance of delay and expense. However,
even if the proposed amendment is adopted, shareholder approval would continue
to be required under the rules of the American Stock Exchange for certain
transactions such as a transaction to acquire the stock or assets of another
company where the present or potential issuance of Common Shares, or securities
convertible into Common Shares, could result in an increase in outstanding
Common Shares of 20% or more.
The Board of Trustees does not intend to increase the aggregate number of
authorized shares or the number of shares of any class of beneficial interest or
to issue any shares of beneficial interest except on terms or for reasons that
the Board deems to be in the best interest of the Company. Because the holders
of Common Shares of the Company do not have preemptive rights, the issuance of
additional Common Shares (other than on a pro rata basis to all current
shareholders) would reduce current shareholders' proportionate interest.
However, in any such event, shareholders wishing to maintain their interests may
be able to do so through normal market purchases. Any future issuance of Common
Shares will be subject to the rights of holders of outstanding preferred shares,
if any, which the Company may issue in the future. While the issuance of shares
by certain entities in certain instances may have the effect of delaying,
deferring or preventing a hostile takeover, the Board of Trustees does not
believe that the authority to increase or decrease the authorized shares of
beneficial interest is likely to have a significant anti-takeover effect because
of existing provisions in the Company's Declaration of Trust restricting the
concentration of ownership of the outstanding shares of the Company in order to
maintain the Company's qualification as a REIT under the Internal Revenue Code.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL TO
AMEND ARTICLE 6, SECTION 6.1 AND ARTICLE 9, SECTION 9.1(a) OF THE COMPANY'S
DECLARATION OF TRUST TO PERMIT THE BOARD OF TRUSTEES TO AMEND THE DECLARATION OF
TRUST TO INCREASE OR DECREASE THE AGGREGATE NUMBER OF SHARES OR THE NUMBER OF
SHARES OF ANY CLASS OF BENEFICIAL INTEREST THAT THE COMPANY IS AUTHORIZED TO
ISSUE. If this proposal is approved by the shareholders, it will become
effective upon the filing of Articles of Amendment with the State
Department of Assessments and Taxation of Maryland, which will occur as soon as
soon as reasonably practicable after approval.
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PROPOSAL NO. 4 - ADOPTION OF 1997 LONG-TERM INCENTIVE PLAN
The Board of Trustees of the Company believes that grants of Shares,
Share-related and performance-based awards is an effective method of attracting
and retaining valuable employees and Trustees and also serves to strengthen the
identity of interest between them and the Company. In order to enhance the
ability of the Company to recruit and retain talented employees and Trustees, on
March 17, 1997, the Board adopted the 1997 Long-Term Incentive Plan (the
"Incentive Plan"), subject to shareholder approval. A copy of the Incentive Plan
is included herein as Appendix A, and the description of the principal features
of the Incentive Plan is qualified in its entirety by reference thereto.
The Incentive Plan is intended to provide the Company flexibility to adapt
the compensation of key employees and provide compensation to Trustees in a
changing business environment. The Incentive Plan permits the granting of any or
all of the following types of awards ("Awards"): (i) Options, including
Non-Qualified and Incentive Stock Options; (ii) Share Appreciation Rights; (iii)
Restricted Shares; (iv) Long-Term Performance Awards; (v) Performance Shares;
and (vi) Performance Units.
Trustees, officers and other employees of the Company or its subsidiaries
are eligible to receive Awards under the Incentive Plan. Trustees who are not
employees of the Company or a subsidiary are eligible to be granted Awards under
the Incentive Plan other than Incentive Stock Options. As of March 10, 1997, the
Company and its subsidiaries employed approximately 43 full-time employees.
The Incentive Plan will be administered by the Board or by a committee of
the Board (the "Committee"). The Committee will select those persons eligible to
receive Awards from time to time and will determine the type, terms and
conditions of Awards. The Committee will have the authority to interpret the
provisions of the Incentive Plan.
The Board may generally amend, alter or discontinue the Incentive Plan at
any time, but no amendment, alteration or discontinuation will be made which
would impair the rights of a participant with respect to an Award which has been
made under the Incentive Plan without such participant's consent.
The maximum number of Shares of the Company that may be made the subject
of Awards under the Incentive Plan is 750,000. In the event of any merger,
reorganization, consolidation, recapitalization, share dividend or other change
in the Company's structure affecting the Shares, the Committee will adjust
accordingly the number, type and issuer of Shares reserved for issuance under
the Incentive Plan, the number and option price of Shares subject to outstanding
Options granted under the Incentive Plan and the number and price of Shares
subject to other Awards made under the Incentive Plan. In addition, the Shares
related to the unexercised or undistributed portion of any terminated, expired
or forfeited Award will also be made available for distribution in connection
with future Awards. No individual may receive, over the term of the Incentive
Plan, more than an aggregate of 250,000 Shares under the Incentive Plan.
Options
The Incentive Plan permits the Committee to grant to any participant
Non-Qualified Stock Options and, to participants who are also employees,
Incentive Stock Options (collectively, "Options"). The per Share exercise price
of an Option will be determined by the Committee; provided, however, that the
exercise price per Share purchasable under an Incentive Stock Option will not be
less than 100% of the fair market value of the Shares at the time of grant (and
not less than 110% in the case of an Incentive Stock Option granted to a
participant who, at the time the Option is granted, owns more than 10% of the
voting power of all classes of Shares of the Company (a "10% Owner")). The
provisions of Option Awards need not be the same with respect to each
participant.
Subject to the limitations of the Incentive Plan, each Option will be
exercisable at such time or times and in the installments determined by the
Committee. No Option will be exercisable more than ten years after the date it
is
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granted. An Incentive Stock Option granted to a 10% Owner will not have a term
of more than five years. Incentive Stock Options are subject to additional
restrictions imposed by the Code. Options are not transferable by the
participant other than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order, and all Options will be
exercisable, during the participant's lifetime, only by the participant. In the
discretion of the Committee, the purchase price for Shares acquired pursuant to
the exercise of an Option may be paid in cash or Shares. In the event of a
Change of Control (defined below), the Committee may, in its discretion, cause
all outstanding Options to immediately become vested. In addition, the Committee
may require that all or part of the Shares to be issued pursuant to exercise of
an Option take the form of Restricted Shares. The Committee may also agree to
cooperate in a "cashless exercise" of an Option, which will be effected by the
participant delivering to a securities broker instructions to sell a sufficient
number of Shares to cover the costs and expenses associated therewith.
If the participant has held the Shares acquired upon exercise of an
Incentive Stock Option for at least two years after the date of grant and for at
least one year after the date of exercise, upon disposition of the Shares by the
participant, the difference, if any, between the sales price of the Shares and
the exercise price of the Option will be treated as long-term capital gain or
loss. If the participant does not satisfy these holding period requirements, a
"disqualifying disposition" occurs and the participant will recognize ordinary
income in the year of the disposition of the Shares in an amount equal to the
excess of the fair market value of the Shares at the time the Option was
exercised over the exercise price of the Option. The balance of gain realized,
if any, will be long-term or short-term capital gain, depending upon whether or
not the Shares were sold more than one year after the Option was exercised. If
the participant sells the Shares prior to the satisfaction of the holding period
requirements but at a price below the fair market value of the Shares at the
time the Option was exercised, the amount of ordinary income will be limited to
the amount realized on the sale in excess of the exercise price of the Option.
The Company and its subsidiaries will generally be allowed a deduction to the
extent the participant recognizes ordinary income.
In general, a participant to whom a Non-Qualified Stock Option is granted
will recognize no income when the Option is granted. Upon exercise of a
Non-Qualified Stock Option, the participant will recognize ordinary income equal
to the excess of the fair market value of the Shares on the date of exercise
over the exercise price of the Option unless the Shares received are Restricted
Shares, in which case, unless the exercising participant elects to recognize
such income, the income recognition is deferred until the restrictions lapse or
the Restricted Shares becomes transferable. The Company will generally be
entitled to a compensation deduction in the same amount and at the same time as
the participant recognizes ordinary income and will comply with applicable
withholding requirements with respect to such compensation.
There are no tax consequences to a participant or to the Company if an
Option lapses before it is exercised or forfeited.
Share Appreciation Rights
The Incentive Plan permits the grant of Share Appreciation Rights either
alone or in connection with the grant of Options. A Share Appreciation Right or
the applicable portion thereof granted in connection with a given Option will
generally terminate and no longer be exercisable upon the termination or
exercise of the related Option. A Share Appreciation Right permits the
participant to receive, upon exercise of the Share Appreciation Right, an amount
in cash and/or Shares equal in value to the excess of the fair market value of
one Share over the exercise price per Share specified in the Share Appreciation
Right or related Option, multiplied by the number of Shares in respect of which
the Share Appreciation Right will have been exercised. The Committee will
determine the recipients of Share Appreciation Rights, the number of Shares in
respect of which Share Appreciation Rights are awarded and the time or times
within which Share Appreciation Rights may be awarded. The provisions of Share
Appreciation Rights need not be the same with respect to each participant. The
Committee will have the right to determine the form of payment upon exercise of
a Share Appreciation Right.
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Upon exercise of a Share Appreciation Right, the participant will
recognize ordinary income in an amount equal to the cash or the fair market
value of the Shares received on the exercise date. The Company will generally be
entitled to a compensation deduction in the same amount and at the same time
that the participant holding a Share Appreciation Right recognizes ordinary
income, and will comply with applicable withholding requirements with respect to
such compensation.
Restricted Shares
Restricted Shares may be issued either alone or in addition to other
Awards granted under the Incentive Plan. The Committee will determine the
recipients of Restricted Shares, the number of Restricted Shares to be awarded,
the price (if any) to be paid by such recipient, the time or times within which
such Awards may be subject to forfeiture, and all other conditions of the Award.
The provisions of Restricted Share Awards need not be the same with respect to
each participant. The Company will issue a certificate to each recipient
representing the Restricted Shares, which will bear a legend marking such shares
as Restricted Shares. Although such certificate(s) may be held in custody by the
Company until the restrictions thereon have elapsed, such recipient will have,
with respect to the Restricted Shares, all rights of a shareholder of the
Company, including the right to vote the Shares, and the right to receive any
cash dividends or distributions. The Committee, at the time an Award is made,
may permit or require the payment of cash dividends or distributions to be
deferred and reinvested in additional Restricted Shares. During the restriction
period set by the Committee, the participant will not be permitted to transfer
or encumber Restricted Shares; provided that the Committee may provide for the
lapse of such restrictions in installments and may accelerate or waive such
restrictions in whole or in part. Upon the expiration of the restriction period
without a prior forfeiture of the Restricted Shares, the certificates for such
Restricted Shares will be delivered to the participant receiving the Award. In
the event of a Change of Control, the Committee may, in its discretion, cause
all forfeiture limitations on Restricted Shares to lapse and a share certificate
or certificates representing such unrestricted Shares to be issued to the
participant.
Unless the participant elects to recognize income at the time of an Award
of Restricted Shares, a participant will not recognize taxable income until the
Shares are no longer subject to a substantial risk of forfeiture or become
transferable. In either event, the participant's recognized income will equal
the excess of the fair market value of such Shares at grant if an election is
made, or at the time the restrictions lapse or are removed, over any amount paid
for such Shares (the "Bargain Element"). The Company will generally be entitled
to a deduction in the same amount and in the same year as the recipient of
Restricted Shares has income. The Company will comply with all applicable
withholding requirements with respect to such income.
The aforementioned election allows the participant to recognize the
Bargain Element as income in the year of the Award by making an election with
the Internal Revenue Service within 30 days after the Award is made. Dividends
or distributions received by a participant on Restricted Shares during the
restriction period are taxable to the participant as ordinary compensation
income and will be deductible by the Company unless the aforementioned election
is made, rendering dividends or distributions taxable as dividends and
nondeductible.
Long-Term Performance Awards
The Incentive Plan permits the Committee to grant to any participant
Long-Term Performance Awards. The Committee will determine in advance the
nature, length and starting date of the performance period for each Long-Term
Performance Award and will determine the performance objectives to be used in
valuing Long-Term Performance Awards and the extent to which such Long-Term
Performance Awards have been earned. Performance objectives may vary from
participant to participant and between groups of participants. In the event of
special or unusual events or circumstances affecting the application of one or
more performance objectives to a Long-Term Performance Award, the Committee may
revise the performance objectives and/or underlying factors and criteria
applicable to the Long-Term Performance Awards affected. Performance Awards may
be denominated in dollars or in Shares, and to the extent that
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the relevant measure of performance is met, payments may be made in the form of
cash or Shares, including Restricted Shares, either in a lump sum payment or in
annual installments commencing as soon as practicable after the end of the
relevant performance period. Unless otherwise provided in the applicable Award
agreement, if a participant terminates service with the Company during a
performance period because of death, disability or retirement, the participant
will be entitled to a payment with respect to each outstanding Long-Term
Performance Award at the end of the applicable performance period based upon the
participant's performance for the portion of such performance period ending on
the date of termination and pro-rated for the portion of the performance period
during which the participant was employed by the Company or served on the Board,
as determined by the Committee. In the event of a Change of Control, the
Committee may, in its discretion, cause all conditions applicable to a Long-Term
Performance Award to terminate immediately and a Share certificate or cash, as
the case may be, to be issued or paid to the participant.
A participant receiving a Long-Term Performance Award will recognize
taxable income when an Award is paid at which time the participant will realize
income in an amount equal to the amount of cash received or the fair market
value of Shares received in payment. The Company will generally be entitled to a
corresponding deduction at such time, and will comply with applicable
withholding requirements with respect thereto. If Restricted Shares are used in
payment of a Long-Term Performance Award, the participant's federal income tax
consequences will be as described above under "Restricted Shares."
Performance Shares
The Committee will determine the persons to whom Performance Shares will
be granted and the times and the number of such Performance Shares that will be
granted. Performance Shares are awards of the right to receive Shares at the end
of a specified period upon the attainment of performance goals specified by the
Committee at the time of grant. The provisions of the Performance Shares need
not be the same with respect to each participant. Performance Shares generally
will be forfeited if the participant terminates service with the Company during
the performance period for any reason other than death, disability or
retirement. In the event of death, disability or retirement, the participant or
the participant's estate, as the case may be, will be entitled to receive, at
the expiration of the performance period, a percentage of Performance Shares
that is equal to the percentage of the performance period that had elapsed as of
the date of death or date on which such disability or retirement commenced,
provided that the Committee determines that the applicable performance goals
have been met. In the event of a Change of Control, the Committee may, in its
discretion, cause all conditions applicable to the Performance Shares to
terminate immediately and the full number of Shares subject to the Performance
Shares Award to be issued to the participant.
At the end of a performance period, the participant will recognize
ordinary income in an amount equal to the fair market value of the Shares
received. The Company will generally be entitled to a compensation deduction in
the same amount and at the same time as the participant of a Performance Share
Award recognizes ordinary income, and will comply with applicable withholding
requirements with respect thereto.
Performance Units
The Committee will determine the persons to whom Performance Units will be
granted and the times and the number of such Performance Units that will be
granted. Performance Units are awards of the right to receive a fixed dollar
amount, payable in cash, at the end of a specified period upon the attainment of
performance goals specified by the Committee at the time of the grant. The
provisions of Performance Unit Awards need not be the same with respect to each
participant. Performance Units generally will be forfeited if the participant
terminates employment with the Company during the performance period for any
reason other than death, disability or retirement. In the event of death,
disability or retirement, the participant or his or her estate will be entitled
to receive, at the expiration of the performance period, cash for a percentage
of his or her Performance Units equal to the percentage of the performance
period that elapsed at the time of death or commencement of disability or
retirement, provided that the Committee determines that
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the applicable performance goals have been met. In the event of a Change of
Control, the Committee may, in its discretion, cause all conditions applicable
to Performance Units to terminate and a cash payment for the full amount of the
Performance Unit to be made to the participant.
At the end of a performance period, the participant will recognize
ordinary income in an amount equal to the cash received on such date. The
Company will generally be entitled to a compensation deduction in the same
amount and at the same time as the participant of a Performance Unit Award
recognizes ordinary income, and will comply with applicable withholding
requirements with respect thereto.
For purposes of the Incentive Plan, the term "Change of Control" means:
(i) the acquisition in one or more transactions by any person (including any
group acting in concert) of beneficial ownership of 25% or more of the combined
voting power of the Company's then outstanding voting securities (the "Voting
Securities"), excluding Voting Securities acquired directly from the Company
(but such Voting Securities shall be included in the calculation of the total
number of Voting Securities then outstanding); or (ii) approval by shareholders
of the Company of (A) a merger, reorganization or consolidation involving the
Company if the shareholders of the Company immediately before such merger,
reorganization or consolidation do not or will not own directly or indirectly
immediately following such merger, reorganization or consolidation more than
fifty percent (50%) of the combined voting power of the outstanding voting
securities of the entity resulting from or surviving such merger, reorganization
or consolidation in substantially the same proportion as their ownership of the
Voting Securities outstanding immediately before such merger, reorganization or
consolidation or (B) a liquidation or dissolution of the Company or (C) an
agreement for the sale or other disposition of all or substantially all of the
assets of the Company; or (iii) acceptance by shareholders of the Company
securities in a share exchange if the shareholders of the Company immediately
before such share exchange do not or will not own directly or indirectly
immediately following such share exchange more than fifty percent (50%) of the
combined voting power of the outstanding voting securities of the entity
resulting from or surviving such share exchange in substantially the same
proportion as their ownership of the Voting Securities outstanding immediately
before such share exchange.
The Board believes that granting the Committee the authority to cause the
acceleration of the exercisability of outstanding Options and Share Appreciation
Rights, the lapse of restrictions applicable to Restricted Shares and the
elimination of conditions applicable to Long Term Performance Awards,
Performance Shares and Performance Units upon the occurrence of an event
constituting a Change in Control will help to preserve the benefits of the
Awards granted under the Incentive Plan in the event of a Change in Control.
Such provisions may increase the cost to a third party of acquiring control of
the Company (whether pursuant to a friendly or hostile transaction) by reason of
the immediate expense it would be obligated to incur upon a Change of Control.
The Incentive Plan is intended to constitute an "unfunded" plan for
incentive and deferred compensation. The Incentive Plan states that with respect
to any payments not yet made to a participant by the Company, nothing contained
in the Incentive Plan gives any participant any rights that are greater than
those of a general creditor of the Company.
The foregoing discussion, as it relates to certain federal income tax
consequences of the Incentive Plan, does not purport to address all of the tax
consequences that may be applicable to any particular participant or to the
Company. In addition, such discussion does not address foreign, state or local
taxes, nor does it address federal taxes other than federal income tax. Such
discussion is based upon applicable statutes, regulations, case law,
administrative interpretations and judicial decisions in effect as of the date
of this Proxy Statement.
On March 10, 1997, the closing sale price of a Share, as reported on the
American Stock Exchange, was $20- 7/8.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS A VOTE FOR THE ADOPTION OF
THE 1997 LONG-TERM INCENTIVE PLAN.
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OTHER INFORMATION
APPRAISAL RIGHTS
In the event that any of the Proposals covered by this Proxy Statement are
approved by shareholders, dissenting shareholders will not have appraisal or
similar rights under the Maryland statutes applicable to the Company.
INDEPENDENT PUBLIC ACCOUNTANTS
The Trustees have appointed Arthur Andersen LLP to serve as the Company's
independent public accountants for 1997 and to audit the Company's financial
statements for 1997. A representative of Arthur Andersen LLP will be present at
the Meeting, will be available to respond to appropriate questions, and will
have an opportunity to make a statement.
OTHER BUSINESS
The Company knows of no business which will be presented at the Meeting
other than as set forth in this Proxy Statement. However, if other matters
should properly come before the Meeting, it is the intention of the persons
named in the enclosed proxy to vote in accordance with their best judgment on
such matters.
EXPENSES OF SOLICITATION
The solicitation of proxies on behalf of the Trustees and all
expenses in connection therewith will be paid by the Company. Request will be
made of brokerage houses and other custodians, nominees and fiduciaries to
forward the solicitation material, at the expense of the Company, to the
beneficial owners of Shares held of record by such persons. In addition to being
solicited through the mails, proxies may also be solicited personally or by
telephone by Trustees and officers of the Company.
SHAREHOLDER PROPOSALS
Proposals by shareholders intended to be presented at the next
annual meeting of shareholders of the Company must be received by the Company at
its offices at 16 Campus Boulevard, Newtown Square, Pennsylvania 19073 on or
before December 8, 1997 to be included in the Company's proxy statement and
form of proxy for the 1998 annual meeting.
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APPENDIX A
BRANDYWINE REALTY TRUST
1997 LONG-TERM INCENTIVE PLAN
SECTION 1. PURPOSE; DEFINITIONS. The purpose of the Brandywine
Realty Trust 1997 Long-Term Incentive Plan (the "Plan") is to offer to certain
employees and trustees of Brandywine Realty Trust (the "Company"), organized as
a Maryland real estate investment trust, and its subsidiaries, equity interests
in the Company, options to acquire equity interests in the Company, and other
performance-based incentive awards, thereby attracting, retaining and motivating
such persons, and strengthening the mutuality of interests between such persons
and the Company's shareholders.
For purposes of the Plan, the following initially capitalized words
and phrases shall be defined as set forth below, unless the context clearly
requires a different meaning:
a. "Affiliate" means, with respect to a person or entity, a
person that directly or indirectly controls, or is controlled by, or is under
common control with such person or entity.
b. "Board" means the Board of Trustees of the Company, as
constituted from time to time.
c. "Cause" occurs when the Participant, as determined by the
Board:
(i) has engaged in any type of disloyalty to the Company,
including without limitation, fraud, embezzlement,
theft, or dishonesty in the course of his employment or
engagement, or has otherwise breached any fiduciary duty
owed to the Company;
(ii) has been convicted of a felony;
(iii) has disclosed trade secrets or confidential information
of the Company; or
(iv) has breached any agreement with or duty to the Company
in respect of confidentiality, non-disclosure,
non-competition or otherwise.
d. "Change of Control" means:
(i) the acquisition in one or more transactions by any
"Person" (as the term person is used for purposes of
Sections 13(d) or 14(d) of the Exchange Act of
"Beneficial ownership" (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of twenty-five
percent (25%) or more of the combined voting power of
the Company's then outstanding voting securities (the
"Voting Securities"), provided that for purposes of this
clause (i) the Voting Securities acquired directly from
the Company by any Person shall be excluded from the
determination of such Person's Beneficial ownership of
Voting Securities (but such Voting Securities shall be
included in the calculation of the total number of
Voting Securities then outstanding); or
(ii) approval by shareholders of the Company of:
(A) a merger, reorganization or consolidation
involving the Company if the shareholders of the
Company immediately before such merger,
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reorganization or consolidation do not or will not
own directly or indirectly immediately following
such merger, reorganization or consolidation, more
than fifty percent (50%) of the combined voting
power of the outstanding voting securities of the
company resulting from or surviving such merger,
reorganization or consolidation in substantially
the same proportion as their ownership of the
Voting Securities outstanding immediately before
such merger, reorganization or consolidation; or
(B) a complete liquidation or dissolution of the
Company;
(C) an agreement for the sale or other disposition of
all or substantially all of the assets of the
Company; or
(iii) acceptance by shareholders of the Company of shares in a
share exchange if the shareholders of the Company
immediately before such share exchange do not or will
not own directly or indirectly immediately following
such share exchange more than fifty percent (50%) of the
combined voting power of the outstanding voting
securities of the entity resulting from or surviving
such share exchange in substantially the same proportion
as their ownership of the Voting Securities outstanding
immediately before such share exchange.
e. "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
f. "Committee"shall mean the Committee appointed by the Board in
accordance with Section 2 of the Plan, if one is appointed, in which event in
connection with this Plan, the Committee shall possess all of the power and
authority of, and shall be authorized to take any and all actions required to be
taken hereunder by, and make any and all determinations required to be taken
hereunder by, the Board.
g. "Disability"shall mean a disability of an employee or a trustee
which renders such employee or trustee unable to perform the full extent of his
duties and responsibilities by reason of his illness or incapacity which would
entitle that employee or trustee to receive Social Security Disability Income
under the Social Security Act, as amended, and the regulations promulgated
thereunder. "Disabled" shall mean having a Disability. The determination of
whether a Participant is Disabled shall be made by the Board, whose
determination shall be conclusive; provided that,
(i) if a Participant is bound by the terms of an employment
agreement between the Participant and the Company,
whether the Participant is "Disabled" for purposes of
the Plan shall be determined in accordance with the
procedures set forth in said employment agreement, if
such procedures are therein provided; and
(ii) a Participant bound by such an employment agreement
shall not be determined to be Disabled under the Plan
any earlier than he would be determined to be disabled
under his employment agreement.
h. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
i. "Fair Market Value" means, as of any date: (i) the closing price
of the Shares as reported on the principal nationally recognized stock exchange
on which the Shares are traded on such date, or if no Share prices are reported
on such date, the closing price of the Shares on the next preceding date on
which there were reported Share prices; or (ii) if the Shares are not listed or
admitted to unlisted trading privileges on a nationally recognized stock
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exchange, the closing price of the Shares as reported by The NASDAQ Stock Market
on such date, or if no Share prices are reported on such date, the closing price
of the Shares on the next preceding date on which there were reported Share
prices; or (3) if the Shares are not listed or admitted to unlisted trading
privileges on a nationally recognized stock exchange or traded on The NASDAQ
Stock Market, then the Fair Market Value shall be determined by the Board acting
in its discretion.
j. "Incentive Stock Option" means any Option intended to be and
designated as an "Incentive Stock Option" within the meaning of Section 422 of
the Code.
k. "Long-Term Performance Award" or "Long-Term Award" means an award
made pursuant to Section 8 hereof that is payable in cash and/or Shares
(including Restricted Shares, Performance Shares and Performance Units) in
accordance with the terms of the grant, based on Company, business unit and/or
individual performance, in each case as determined by the Committee and as set
forth in the grant letter.
l. "Non-Employee Director" shall have the meaning set forth in Rule
16b-3(b)(3)promulgated by the Securities and Exchange Commission under the
Exchange Act, or any successor definition adopted by the Securities and Exchange
Commission; provided, however, that the Board or the Committee may, in its sole
discretion, substitute the definition of "outside director" provided in the
regulations under Section 162(m) of the Code in place of the definition of
Non-Employee Director contained in the Exchange Act.
m. "Non-Qualified Stock Option" means any Option that is not an
Incentive Stock Option.
n. "Participant" means an employee or trustee of the Company or a
Subsidiary to whom an award is granted pursuant to the Plan.
o. "Performance Share" means an award made pursuant to Section 9
hereof of the right to receive Shares at the end of a specified performance
period.
p. "Performance Unit" means an award made pursuant to Section 10
hereof of the right to receive cash at the end of a specified performance
period.
q. "Restricted Shares" means an award of Shares that is subject to
restrictions pursuant to Section 7 hereof.
r. "Retirement" means termination of the employment of a Participant
with the Company, an Affiliate (including parent) or a Subsidiary other than (i)
a termination effected at the direction of the Company or parent (whether or not
the Company effects such termination for Cause), (ii) termination on account of
Disability, or (iii) termination on account of death. With respect to a trustee
who is not also an employee of the Company, Retirement shall occur at such time
as the individual ceases to be a trustee.
s. "Rules" means Section 16 of the Exchange Act and the regulations
promulgated thereunder.
t. "SAR" means a share appreciation right granted under the Plan and
described in Section 6 hereof.
u. "Securities Broker" means a registered securities broker
acceptable to the Company who agrees to effect the cashless exercise of an
Option pursuant to Section 5(l) hereof.
v. "Share" means a common share of beneficial interest, $.01 par
value per share, of the Company, subject to substitution or adjustment as
provided in Section 3(c) hereof.
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w. "Stock Option" or "Option" means any option to purchase Shares
(including Restricted Shares, if the Committee so determines) granted pursuant
to Section 5 hereof.
x. "Subsidiary" means, in respect of the Company or parent, a
subsidiary company, whether now or hereafter existing, as defined in Sections
424(f) and (g) of the Code.
SECTION 2. ADMINISTRATION. The Plan shall be administered by the
Board. The Board may at any time by a unanimous vote, with each member voting,
appoint a Committee consisting of not less than two persons to administer the
Plan on behalf of the Board, subject to such terms and conditions as the Board
may prescribe, provided that each Committee member shall be a Non-Employee
Director. Members of the Committee shall serve for such period of time as the
Board may determine. Members of the Board or the Committee who are eligible for
awards or have been granted awards may vote on any matters affecting the
administration of the Plan or any awards pursuant to the Plan, except that no
such member shall act upon an award to himself or herself, but any such member
may be counted in determining the existence of a quorum at any meeting of the
Board or Committee during which action is taken with respect to an award to
himself or herself.
If a Committee is appointed, all references to actions to be taken
by the Board in the administration of the Plan shall be construed as references
to the Committee.
From time to time the Board may increase the size of the Committee
and appoint additional members thereto (provided such new members are
Non-Employee Directors), remove members (with or without cause) and appoint new
members in substitution therefor, fill vacancies however caused, or remove all
members of the Committee and thereafter directly administer the Plan.
The Board shall have full authority to grant to eligible persons
under Section 4: (i) Options, (ii) SARs, (iii) Restricted Shares, (iv) Long-Term
Performance Awards, (v) Performance Shares and/or (vi) Performance Units. In
particular, the Board shall have the authority:
a. to select the persons to whom Options, SARs, Restricted Shares,
Long-Term Performance Awards, Performance Shares and Performance Units may from
time to time be granted hereunder;
b. to determine whether and to what extent Incentive Stock Options,
Non-Qualified Stock Options, SARs, Restricted Shares, Long-Term Performance
Awards, Performance Shares and Performance Units, or any combination thereof,
are to be granted hereunder;
c. to determine the number of Shares, if any, to be covered by each
such award granted hereunder;
d. to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder, including, but not limited
to, the Share price and any restriction or limitation, any vesting provisions,
or any vesting acceleration or forfeiture waiver regarding any Option or other
award and/or the Shares relating thereto, or the length of the period following
termination of employment of any Participant during which any Option or SAR may
be exercised (which, in the case of an Incentive Stock Option, shall be no
longer than one year in the case of the termination of employment of a
Participant by reason of death or Disability, or three months in the case of the
termination of employment of a Participant for any reason other than death or
Disability), based on such factors as the Board shall determine, in its sole
discretion;
e. to determine whether and under what circumstances an Option may
be exercised without a payment of cash under Section 5(l); and
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f. to determine whether, to what extent and under what circumstances
Shares and other amounts payable with respect to an award under the Plan may be
deferred either automatically or at the election of the Participant.
The Board shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; to interpret the terms and provisions of the
Plan and any award issued under the Plan (and any agreements relating thereto);
to amend the terms of any agreement relating to any award issued under the Plan,
provided that the Participant consents to such amendment; and to otherwise
supervise the administration of the Plan. The Board may correct any defect,
supply any omission or reconcile any inconsistency in the Plan or in any award
granted in the manner and to the extent it shall deem necessary to carry out the
intent of the Plan.
All decisions made by the Board pursuant to the provisions of the
Plan shall be final and binding on all persons, including the Company and
Participants. No member of the Board shall be liable for any good faith
determination, act or failure to act in connection with the Plan or any award
made under the Plan.
SECTION 3. SHARES SUBJECT TO THE PLAN.
a. Shares Subject to the Plan. The Shares to be subject or related
to awards under the Plan shall be either authorized and unissued Shares or
Shares held in the treasury of the Company. The maximum number of Shares that
may be the subject of awards under the Plan is 750,000 and the Company shall
reserve for the purposes of the Plan, out of its authorized and unissued Shares
or out of Shares held in its treasury, or partly out of each, such number of
Shares. Notwithstanding the foregoing, no individual shall receive, over the
term of the Plan, awards for more than an aggregate of 250,000 Shares, or SARs
with respect to such Shares, authorized for grant under the Plan.
b. Effect of the Expiration or Termination of Awards. If and to the
extent that an award made under the Plan expires, terminates or is canceled or
forfeited for any reason without having been exercised in full, the Shares
associated with the expired, terminated, canceled or forfeited portion of the
award shall again become available for award under the Plan.
c. Other Adjustment. In the event of any merger, reorganization,
consolidation, recapitalization, Share distribution or dividend, Share split or
combination, or other change in entity structure affecting the Shares, such
substitution or adjustment shall be made in the aggregate number, type and
issuer of the securities reserved for issuance under the Plan, in the number and
Option price of securities subject to outstanding Options granted under the Plan
and in the number and price of securities subject to other awards made under the
Plan, as may be determined to be appropriate by the Board in its sole
discretion, provided that the number of securities subject to any award shall
always be a whole number. The Board, in its sole discretion, shall make
appropriate equitable antidilution adjustments to the number of then-outstanding
SARs, and to the fair market value upon which the value of such SARs is based.
SECTION 4. ELIGIBILITY. Trustees and other employees of the Company
or its Subsidiaries are eligible to be granted awards under the Plan. Trustees
who are not employees of the Company or a Subsidiary are eligible to be granted
awards under the Plan, but are not eligible to be granted Incentive Stock
Options.
SECTION 5. OPTIONS. Options granted under the Plan may be of two
types: (i) Incentive Stock Options or (ii) Non-Qualified Stock Options. Options
may be granted alone, in addition to or in tandem with other awards granted
under the Plan. Any Option granted under the Plan shall be in such form as the
Board may from time to time approve.
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The Board shall have the authority to grant any Participant eligible
under Section 4, Incentive Stock Options, Non-Qualified Stock Options, or both
types of Options (in each case with or without SARs). To the extent that any
Option does not qualify as an Incentive Stock Option, it shall constitute a
separate Non-Qualified Stock Option.
Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Board shall deem appropriate;
provided, however, that the provisions of Option awards need to be the same with
respect to each Participant:
a. Option Price. The exercise price per Share purchasable under a
Non-Qualified Stock Option shall be determined by the Board. The exercise price
per Share purchasable under an Incentive Stock Option shall be 100% of the Fair
Market Value of the Share on the date of the grant. However, any Incentive Stock
Option granted to any Participant who, at the time the Option is granted, owns
more than 10% of the voting power of all classes of shares of the Company or of
a Subsidiary, shall have an exercise price per Share of not less than 110% of
Fair Market Value per Share on the date of the grant.
b. Option Term. The term of each Option shall be fixed by the Board,
but no Option shall be exercisable more than ten years after the date the Option
is granted. However, any Incentive Stock Option granted to any Participant who,
at the time such Option is granted, owns more than 10% of the voting power of
all classes of shares of the Company or of a Subsidiary may not have a term of
more than five years. No Option may be exercised by any person after expiration
of the term of the Option.
c. Exercisability. Options shall vest and be exercisable at such
time or times and subject to such terms and conditions as shall be determined by
the Board at the time of grant. If the Board provides, in its discretion, that
any Option is exercisable only in installments, the Board may waive such
installment exercise provisions at any time at or after grant, in whole or in
part, based on such factors as the Board shall determine, in its sole
discretion.
d. Method of Exercise. Subject to the exercise provisions under
Section 5(c) and the termination provisions set forth in Sections 5(f) through
(i), Options may be exercised in whole or in part at any time and from time to
time during the term of the Option, by giving written notice of exercise to the
Company specifying the number of Shares to be purchased. Such notice shall be
accompanied by payment in full of the purchase price, either by certified or
bank check, or such other instrument as the Board may accept. As determined by
the Board, in its sole discretion, at or after grant, payment in full or in part
of the exercise price of an Option may be made in the form of unrestricted
Shares based on the Fair Market Value of the Shares on the date the Option is
exercised; provided, however, that, in the case of an Incentive Stock Option,
the right to make a payment in the form of already owned Shares may be
authorized only at the time the Option is granted
No Shares shall be issued upon exercise of an Option until full
payment therefor has been made. A Participant shall not have the right to
distributions or dividends or any other rights of a shareholder with respect to
Shares subject to the Option until the Participant has given written notice of
exercise, has paid in full for such Shares, and, if requested, has given the
representation described in Section 13(a) hereof.
e. Non-transferability of Options. No Option shall be transferable
by the Participant otherwise than by will or by the laws of descent and
distribution, and all Options shall be exercisable, during the Participant's
lifetime, only by the Participant or, in the event of his Disability, by his
personal representative.
f. Termination by Reason of Death. Subject to Section 5(i), if a
Participant's service with the Company or any Subsidiary terminates by reason of
death, any Option held by such Participant may thereafter be exercised, to the
extent then exercisable or on such accelerated basis as the Board may determine
at or after grant, by the legal representative of the estate or by the legatee
of the Participant under the will of the Participant, for a period expiring (i)
at such time as may be specified by the Board at or after the time of grant, or
(ii) if not specified by the
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Board, then one year from the date of death, or (iii) if sooner than the
applicable period specified under (i) or (ii) above, then upon the expiration of
the stated term of such Option.
g. Termination by Reason of Disability. Subject to Section 5(i), if
an Participant's service with the Company or any Subsidiary terminates by reason
of Disability, any Option held by such Participant may thereafter be exercised
by the Participant or his personal representative, to the extent it was
exercisable at the time of termination, or on such accelerated basis as the
Board may determine at or after grant, for a period expiring (i) at such time as
may be specified by the Board at or after the time of grant, or (ii) if not
specified by the Board, then six months from the date of termination of service,
or (iii) if sooner than the applicable period specified under (i) or (ii) above,
then upon the expiration of the stated term of such Option; provided, however,
that if the Participant dies within such period, any unexercised Option held by
such Participant shall, at the sole discretion of the Board, thereafter be
exercisable to the extent to which it was exercisable at the time of death for a
period of one (1) year from the date of such death (or such other period as may
be specified by the Board) or until the expiration of the stated term of such
Option, whichever period is shorter.
h. Other Termination. Subject to Section 5(i), if a Participant's
service with the Company or any Subsidiary terminates for any reason other than
death or Disability, any Option held by such Participant may thereafter be
exercised by the Participant, to the extent it was exercisable at the time of
such termination or on such accelerated basis as the Board may determine at or
after the time of grant, for a period expiring (i) at such time as may be
specified by the Board at or after the time of grant, or (ii) if not specified
by the Board, then thirty (30) days from the date of termination of service, or
(iii) if sooner than the applicable period specified under (i) or (ii) above,
then upon the expiration of the stated term of such Option.
i. Change of Control. In the event of a Change of Control, the Board
may, in its sole discretion, cause all outstanding Options to immediately become
fully exercisable.
j. Incentive Stock Option Limitations. To the extent required for
"incentive stock option" status under Section 422 of the Code, the aggregate
Fair Market Value (determined as of the time of grant) of the Shares with
respect to which Incentive Stock Options are exercisable for the first time by
the Participant during any calendar year under the Plan and/or any other plan of
the Company or any Subsidiary shall not exceed $100,000. For purposes of
applying the foregoing limitation, Incentive Stock Options shall be taken into
account in the order granted.
k. Cashless Exercise. The Company may, in the sole discretion of the
Board, cooperate in a "cashless exercise" of an Option. The cashless exercise
shall be effected by the Participant delivering to the Securities Broker
instructions to sell a sufficient number of Shares to cover the costs and
expenses associated therewith.
SECTION 6. SHARE APPRECIATION RIGHTS.
a. Grant. SARs may be granted alone ("Stand-Alone SARs") or in
conjunction with all or part of any Option granted under the Plan ("Tandem
SARs"). In the case of a Non-Qualified Stock Option, a Tandem SAR may be granted
either at or after the time of the grant of such Option. In the case of an
Incentive Stock Option, a Tandem SAR may be granted only at the time of the
grant of such Option.
b. Exercise.
(i) Tandem SARs. A Tandem SAR or applicable portion thereof
shall terminate and no longer be exercisable upon the termination or exercise of
the related Option or portion thereof, except that, unless otherwise determined
by the Board, in its sole discretion at the time of grant, a Tandem SAR granted
with respect to less than the full number of Shares covered by a related Option
shall be reduced only after such related Option is exercised or otherwise
terminated with respect to the number of Shares not covered by the Tandem SAR.
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A Tandem SAR may be exercised by a Participant by surrendering the
applicable portion of the related Option, only at such time or times and to the
extent that the Option to which such Tandem SAR relates shall be exercisable in
accordance with the provisions of Section 5 and this Section 6. Options which
have been so surrendered, in whole or in part, shall no longer be exercisable to
the extent the related Tandem SARs have been exercised.
Upon the exercise of a Tandem SAR, a Participant shall be entitled
to receive, upon surrender to the Company of all (or a portion) of an Option in
exchange for cash and/or Shares, an amount equal to the excess of (A) the Fair
Market Value, as of the date such Option (or such portion thereof) is
surrendered, of the Shares covered by such Option (or such portion thereof) over
(B) the aggregate exercise price of such Option (or such portion thereof).
Upon the exercise of a Tandem SAR, the Option or part thereof to
which such Tandem SAR is related, shall be deemed to have been exercised for the
purpose of the limitation set forth in Section 3 of the Plan on the number of
Shares to be issued under the Plan, but only to the extent of the number of
Shares issued under the Tandem SAR at the time of exercise based on the value of
the Tandem SAR at such time.
A Tandem SAR may be exercised only if and when the Fair Market Value
of the Shares subject to the Option exceeds the exercise price of such Option.
(ii) Stand-Alone SARs. A Stand-Alone SAR may be exercised by a
Participant giving notice of intent to exercise to the Company, provided that
all or a portion of such Stand-Alone SAR shall have become vested and
exercisable as of the date of exercise.
Upon the exercise of a Stand-Alone SAR, a Participant shall be
entitled to receive, in either cash and/or Shares, an amount equal to the
excess, if any, of (A) the Fair Market Value, as of the date such SAR (or
portion of such SAR) is exercised, of the Shares covered by such SAR (or portion
of such SAR) over (B) the Fair Market Value of the Shares covered by such SAR
(or a portion of such SAR ) as of the date such SAR (or a portion of such SAR)
was granted.
c. Terms and Conditions. SARs shall be subject to such terms and
conditions, not inconsistent with the provisions of the Plan, as shall be
determined from time to time by the Board, in its sole discretion; provided,
however, that the provisions of SAR awards need not be the same with respect to
each Participant. Such terms and conditions include the following:
(i) Non-Transferability. No SAR shall be transferable by the
Participant otherwise than by will or by the laws of descent and distribution
and all SARs shall be exercisable, during the Participant's lifetime, only by
the Participant or, in the event of his Disability, by his personal
representative.
(ii) Term of SAR. The term of each SAR shall be fixed by the
Board, provided that the term of a Tandem SAR shall be determined by the terms
of the applicable Option, and provided further that the term of a Stand-Alone
SAR shall be ten (10) years, unless another term is specified by the Board.
(iii) Exercisability. SARs shall vest and be exercisable at
such time or times and subject to such terms and conditions as shall be
determined by the Board at the time of grant, provided that the term of a Tandem
SAR shall be determined by the terms of the applicable Option. A Participant
shall not have any rights as a Shareholder with respect to any SAR.
(iv) Termination of Employment. Unless otherwise specified in
the terms of an award, SARs shall be subject to the terms of Sections 5(f)-(h)
with respect to exercise upon termination of employment.
(v) Change of Control. In the event of a Change of Control,
the Board may, in its sole discretion, cause all outstanding SARs to immediately
become fully exercisable.
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SECTION 7. RESTRICTED SHARES.
a. Administration. Restricted Shares may be issued either alone or
in addition to other awards granted under the Plan. The Board shall determine
the persons to whom, and the time or times at which, grants of Restricted Shares
will be made, the number of Shares to be awarded, the price (if any) to be paid
by the recipient of Restricted Shares, the time or times within which such
awards may be subject to forfeiture, and all other conditions of the awards.
The Board may condition the vesting of Restricted Shares upon the
attainment of specified performance goals or such other factors as the Board may
determine, in its sole discretion, at the time of the award.
The provisions of Restricted Share awards need not be the same with
respect to each Participant.
b. Awards and Certificates. The prospective recipient of a
Restricted Share award shall not have any rights with respect to such award,
unless and until such recipient has executed an agreement evidencing the award
and has delivered a fully executed copy thereof to the Company, and has
otherwise complied with the applicable terms and conditions of such award. The
purchase price for Restricted Shares may be zero.
Each Participant receiving a Restricted Share award shall be issued
a share certificate in respect of such Restricted Shares. Such certificate shall
be registered in the name of such Participant, and shall bear an appropriate
legend referring to the terms, conditions, and restrictions applicable to such
award, substantially in the following form:
"The transferability of this certificate and the shares represented
hereby are subject to the terms and conditions (including
forfeiture) of the Brandywine Realty Trust 1997 Long-Term Incentive
Plan and an Agreement entered into between the registered owner and
Brandywine Realty Trust. Copies of such Plan and Agreement are on
file in the principal offices of Brandywine Realty Trust."
The Board shall require that the share certificates evidencing
Restricted Shares be held in custody by the Company until the restrictions
thereon shall have lapsed, and that, as a condition of any Restricted Share
award, the Participant shall have delivered to the Company a share power,
endorsed in blank, relating to the Shares covered by such award.
c. Restrictions and Conditions. The Restricted Shares awarded
pursuant to this Section 7 shall be subject to the following restrictions and
conditions:
(i) During a period set by the Board commencing with the date
of such award (the "Restriction Period"), the Participant shall not be permitted
to sell, transfer, pledge, assign or otherwise encumber Restricted Shares
awarded under the Plan. The Board, in its sole discretion, may provide for the
lapse of such restrictions in installments and may accelerate or waive such
restrictions in whole or in part, based on service, performance and/or such
other factors or criteria as the Board may determine, in its sole discretion.
(ii) Except as provided in this paragraph (ii) and Section
7(c)(i), once the Participant has been issued a certificate or certificates for
Restricted Shares, the Participant shall have, with respect to the Restricted
Shares, all of the rights of a shareholder of the Company, including the right
to vote the Shares, and the right to receive any cash distributions or
dividends. The Board, in its sole discretion, as determined at the time of
award, may permit or require the payment of cash distributions or dividends to
be deferred and, if the Board so determines, reinvested in additional Restricted
Shares to the extent Shares are available under Section 3 of the Plan.
(iii) Subject to the applicable provisions of the award
agreement and this Section 7, upon termination of a Participant's service with
the Company for reasons other than death or Disability during the
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Restriction Period, all Restricted Shares still subject to restriction shall be
forfeited by the Participant. Subject to the provisions of the Plan, the Board,
in its sole discretion, may provide for the lapse of such restrictions in
installments and may waive such restrictions, in whole or in part, at any time,
based on such factors as the Board shall deem appropriate in its sole
discretion. Upon the death or Disability of a Participant during the Restriction
Period, restrictions will lapse with respect to a percentage of the Restricted
Shares award granted to the Participant that is equal to the percentage of the
Restriction Period that has elapsed as of the date of death or the date on which
such Disability commenced (as determined by the Board in its sole discretion),
and a share certificate or share certificates representing such Shares, without
bearing the restrictive legend described in Section 7(b), shall be delivered by
the Company to the Participant or the Participant's estate, as the case may be,
in exchange for the share certificate or share certificates that contain such
restrictive legend.
(iv) In the event of hardship or other special circumstances
of a Participant whose service with the Company is involuntarily terminated
(other than for Cause), the Board may, in its sole discretion, waive in whole or
in part any or all remaining restrictions with respect to such Participant's
Restricted Shares, based on such factors as the Board may deem appropriate.
(v) If and when the Restriction Period expires without a prior
forfeiture of the Restricted Shares subject to such Restriction Period, the
certificates for such Shares, without bearing the restrictive legend described
in Section 7(b), shall be promptly delivered by the Company to the Participant,
in exchange for the share certificate or share certificates that contain such
restrictive legend.
(vi) In the event of a Change of Control, the Board, in its
sole discretion, may cause all Restricted Shares remaining subject to forfeiture
to immediately cease to be subject to forfeiture and a share certificate or
shares certificates representing such Shares, without bearing the restrictive
legend described in Section 7(b), shall be issued by the Company and delivered
to the Participant, in exchange for the share certificate or share certificates
that contain such restrictive legend.
SECTION 8. LONG-TERM PERFORMANCE AWARDS.
a. Awards and Administration. Long-Term Performance Awards may be
awarded either alone or in addition to other awards granted under the Plan.
Prior to award of a Long-Term Performance Award, the Board shall determine the
nature, length and starting date of the performance period (the "performance
period") for each Long-Term Performance Award. Performance periods may overlap
and Participants may participate simultaneously with respect to Long-Term
Performance Awards that are subject to different performance periods and/or
different performance factors and criteria. Prior to award of a Long-Term
Performance Award, the Board shall determine the performance objectives to be
used in awarding Long-Term Performance Awards and determine the extent to which
such Long-Term Performance Awards have been earned. Performance objectives may
vary from Participant to Participant and between groups of Participants and
shall be based upon such Company, business unit and/or individual performance
factors and criteria as the Board may deem appropriate, including, but not
limited to, earnings per Share or return on equity.
At the beginning of each performance period, the Board shall
determine for each Long-Term Performance Award subject to such performance
period the range of dollar values or number of Shares to be awarded to the
Participant at the end of the performance period if and to the extent that the
relevant measure(s) of performance for such Long-Term Performance Award is (are)
met. Such dollar values or number of Shares may be fixed or may vary in
accordance with such performance and/or other criteria as may be specified by
the Board, in its sole discretion.
b. Adjustment of Awards. In the event of special or unusual events
or circumstances affecting the application of one or more performance objectives
to a Long-Term Performance Award, the Board may revise the performance
objectives and/or underlying factors and criteria applicable to the Long-Term
Performance Awards affected, to the extent deemed appropriate by the Board, in
its sole discretion, to avoid unintended windfalls or hardship.
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c. Termination of Service. Unless otherwise provided in the
applicable award agreements, if a Participant terminates service with the
Company during a performance period because of death, Disability or Retirement,
such Participant (or his estate) shall be entitled to a payment with respect to
each outstanding Long-Term Performance Award at the end of the applicable
performance period:
(i) based, to the extent relevant under the terms of the
award, upon the Participant's performance for the portion of such performance
period ending on the date of termination and the performance of the applicable
business unit(s) for the entire performance period, and
(ii) pro-rated, where deemed appropriate by the Board, for the
portion of the performance period during which the Participant was employed by
or served on the Board of the Company, all as determined by the Board, in its
sole discretion.
However, the Board may provide for an earlier payment in settlement
of such award in such amount and under such terms and conditions as the Board
deems appropriate, in its sole discretion.
Except as otherwise determined by the Board, if a Participant
terminates service with the Company during a performance period for any other
reason, then such Participant shall not be entitled to any payment with respect
to the Long-Term Performance Awards subject to such performance period, unless
the Board shall otherwise determine, in its sole discretion.
In the event of a Change of Control, the Board may, in its sole
discretion, cause all conditions applicable to a Long-Term Performance Award to
immediately terminate and a share certificate or share certificates representing
Shares subject to such award, or cash, as the case may be, to be issued and/or
delivered to the Participant.
d. Form of Payment. The earned portion of a Long-Term Performance
Award may be paid currently or on a deferred basis, together with such interest
or earnings equivalent as may be determined by the Board, in its sole
discretion. Payment shall be made in the form of cash or whole Shares, including
Restricted Shares, either in a lump sum payment or in annual installments
commencing as soon as practicable after the end of the relevant performance
period, all as the Board shall determine at or after grant. If and to the extent
a Long-Term Performance Award is payable in Shares and the full amount of such
value is not paid in Shares, then the Shares representing the portion of the
value of the Long-Term Performance Award not paid in Shares shall again become
available for award under the Plan, subject to Section 3(b). A Participant whose
Long-Term Performance Award is payable in Shares or Restricted Shares shall not
have any rights as a shareholder until such share certificate or share
certificates have been issued to such Participant, and, if requested, the
Participant has given the representation described in Section 13(a) hereof.
Prior to any payment, the Board shall certify that all of the performance goals
or other material terms of the award have been met.
SECTION 9. PERFORMANCE SHARES.
a. Awards and Administration. The Board shall determine the persons
to whom and the time or times at which Performance Shares shall be awarded, the
number of Performance Shares to be awarded to any such person, the duration of
the period (the "performance period") during which, and the conditions under
which, receipt of the Shares will be deferred, and the other terms and
conditions of the award in addition to those set forth below.
The Board may condition the receipt of Shares pursuant to a
Performance Share award upon the attainment of specified performance goals or
such other factors or criteria as the Board shall determine, in its sole
discretion.
The provisions of Performance Share awards need not be the same with
respect to each Participant, and such awards to individual Participants need not
be the same in subsequent years.
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b. Terms and Conditions. Performance Shares awarded pursuant to this
Section 9 shall be subject to the following terms and conditions and such other
terms and conditions, not inconsistent with the terms of this Plan, as the Board
shall deem desirable:
(i) Conditions. The Board, in its sole discretion, shall
specify the performance period during which, and the conditions under which, the
receipt of Shares covered by the Performance Share award will be deferred.
(ii) Share Certificate. At the expiration of the performance
period, if the Board, in its sole discretion, determines that the conditions
specified in the Performance Share agreement have been satisfied, a share
certificate or share certificates representing the number of Shares covered by
the Performance Share award shall be issued and delivered to the Participant. A
Participant shall not be deemed to be the holder of Shares, or to have the
rights of a holder of Shares, with respect to the Performance Shares unless and
until a share certificate or share certificates representing such Shares are
issued to such Participant.
(iii) Death, Disability or Retirement. Subject to the
provisions of the Plan, if a Participant terminates service with the Company
during a performance period because of death, Disability or Retirement, such
Participant (or his estate) shall be entitled to receive, at the expiration of
the performance period, a percentage of Performance Shares that is equal to the
percentage of the performance period that had elapsed as of the date of
termination, provided that the Board, in its sole discretion, determines that
the conditions specified in the Performance Share agreement have been satisfied.
In such event, a share certificate or share certificates representing such
Shares shall be issued and delivered to the Participant or the Participant's
estate, as the case may be.
(iv) Termination of Service. Unless otherwise determined by
the Board at the time of grant, the Performance Shares will be forfeited upon a
termination of service during the performance period for any reason other than
death, Disability or Retirement.
(v) Change of Control. In the event of a Change of Control,
the Board may, in its sole discretion, cause all conditions applicable to the
Performance Shares to immediately terminate and a share certificate or share
certificates representing Shares subject to the Share award to be issued and
delivered to the Participant.
SECTION 10. PERFORMANCE UNITS.
a. Awards and Administration. The Board shall determine the persons
to whom and the time or times at which Performance Units shall be awarded, the
number of Performance Units to be awarded to any such person, the duration of
the period (the "performance period") during which, and the conditions under
which, a Participant's right to Performance Units will be vested, the ability of
Participants to defer the receipt of payment of such Performance Units, and the
other terms and conditions of the award in addition to those set forth below.
A Performance Unit shall have a fixed dollar value.
The Board may condition the vesting of Performance Units upon the
attainment of specified performance goals or such other factors or criteria as
the Board shall determine, in its sole discretion.
The provisions of Performance Unit awards need not be the same with
respect to each Participant, and such awards to individual Participants need not
be the same in subsequent years.
b. Terms and Conditions. Performance Units awarded pursuant to this
Section 10 shall be subject to the following terms and conditions and such other
terms and conditions, not inconsistent with the terms of this Plan, as the Board
shall deem desirable:
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(i) Conditions. The Board, in its sole discretion, shall
specify the performance period during which, and the conditions under which, the
Participant's right to Performance Units will be vested.
(ii) Vesting. At the expiration of the performance period, the
Board, in its sole discretion, shall determine the extent to which the
performance goals have been achieved, and the percentage of the Performance
Units of each Participant that have vested.
(iii) Death, Disability or Retirement. Subject to the
provisions of this Plan, if a Participant terminates service with the Company
during a performance period because of death, Disability or Retirement, such
Participant (or the Participant's estate) shall be entitled to receive, at the
expiration of the performance period, a percentage of Performance Units that is
equal to the percentage of the performance period that had elapsed as of the
date of termination, provided that the Board, in its sole discretion, determines
that the conditions specified in the Performance Unit agreement have been
satisfied, and payment thereof shall be made to the Participant or the
Participant's estate, as the case may be.
(iv) Termination of Service. Unless otherwise determined by
the Board at the time of grant, the Performance Units will be forfeited upon a
termination of service during the performance period for any reason other than
death, Disability or Retirement.
(v) Change of Control. In the event of a Change of Control,
the Board may, in its sole discretion, cause all conditions applicable to
Performance Units to immediately terminate and cash representing the full amount
of such award to be paid to the Participant.
SECTION 11. AMENDMENTS AND TERMINATION. The Board may amend, alter
or discontinue the Plan at any time, but no amendment, alteration or
discontinuation shall be made which would impair the rights of a Participant
with respect to an Option, SAR, Restricted Share, Long-Term Performance Award,
Performance Share or Performance Unit which has been granted under the Plan,
without the Participant's consent, or which, without the approval of such
amendment by the Company's shareholders within one year (365 days) of its
adoption by the Board, by a majority of the votes cast at a duly held
shareholder meeting at which a quorum representing a majority of the Company's
outstanding shares is present (either in person or by proxy), would:
a. except as expressly provided in the Plan, increase the total
number of Shares reserved for the purposes of the Plan;
b. change the persons or class of persons eligible to participate in
the Plan; or
c. extend the maximum Option term under Section 5(b) of the Plan.
The Board may substitute new Options for previously granted Options,
including previously granted Options having higher exercise prices.
Subject to the above provisions, the Board shall have broad
authority to amend the Plan to take into account changes in applicable tax laws
and accounting rules, as well as other developments.
SECTION 12. UNFUNDED STATUS OF PLAN. The Plan is intended to
constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant by the Company, nothing
contained herein shall give any such Participant any rights that are greater
than those of a general creditor of the Company. In its sole discretion, the
Board may authorize the creation of trusts or other arrangements to meet the
obligations created under the Plan to deliver Shares or payments in lieu of
Shares or with respect to awards hereunder.
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<PAGE> 45
SECTION 13. GENERAL PROVISIONS.
a. The Board may require each person acquiring Shares or a
Share-based award under the Plan to represent to and agree with the Company in
writing that the Participant is acquiring the Shares or Share-based award for
investment purposes and without a view to distribution thereof and as to such
other matters as the Board believes are appropriate to ensure compliance with
applicable Federal and state securities laws. The certificate evidencing such
award and any securities issued pursuant thereto may include any legend which
the Board deems appropriate to reflect any restrictions on transfer and
compliance with securities laws.
All certificates for Shares or other securities delivered under the
Plan shall be subject to such share-transfer orders and other restrictions as
the Board may deem advisable under the rules, regulations, and other
requirements of the Securities Act of 1933, as amended, the Exchange Act, any
stock exchange upon which the Shares are then listed, and any other applicable
Federal or state securities laws, and the Board may cause a legend or legends to
be put on any such certificates to make appropriate reference to such
restrictions.
b. Nothing contained in the Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to shareholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases.
c. The adoption of the Plan shall not confer upon any employee of
the Company or a Subsidiary any right to continued employment with the Company
or such Subsidiary, nor shall it interfere in any way with the right of the
Company or such Subsidiary to terminate the employment of any of its employees
at any time.
d. No later than the date as of which an amount first becomes
includable in the gross income of the Participant for Federal income tax
purposes with respect to any award under the Plan, the Participant shall pay to
the Company, or make arrangements satisfactory to the Board regarding the
payment, of any Federal, state or local taxes of any kind required by law to be
withheld with respect to such amount. Unless otherwise determined by the Board,
the minimum required withholding obligations may be settled with Shares,
including Shares that are part of the award that gives rise to the withholding
requirement. The obligations of the Company under the Plan shall be conditional
on such payment or arrangements and the Company shall, to the extent permitted
by law, have the right to deduct any such taxes from any payment of any kind
otherwise due to the Participant.
e. At the time of grant of an award under the Plan, the Board may
provide that the Shares received as a result of such grant shall be subject to a
right of first refusal, pursuant to which the Participant shall be required to
offer to the Company any Shares that the Participant wishes to sell, with the
price being the then Fair Market Value of the Shares, subject to such other
terms and conditions as the Board may specify at the time of grant.
f. The reinvestment of distributions or dividends in additional
Restricted Shares (or in other types of Plan awards) at the time of any
distribution or dividend payment shall only be permissible if sufficient Shares
are available under Section 3 of the Plan for such reinvestment (taking into
account then outstanding Options and other Plan awards).
g. The Board shall establish such procedures as it deems appropriate
for a Participant to designate a beneficiary to whom any amounts payable in the
event of the Participant's death are to be paid.
h. The Plan and all awards made and actions taken thereunder shall
be governed by and construed in accordance with the laws of the State of
Maryland.
SECTION 14. EFFECTIVE DATE OF PLAN. This Plan shall become effective
on the date that it is adopted by the Board; provided, however, that it shall
not be an Incentive Stock Option Plan if it is not approved, within one year
(365 days) of its adoption by the Board, by a majority of the votes cast at a
duly held shareholder meeting at
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<PAGE> 46
which a quorum representing a majority of Company's outstanding voting shares is
present, either in person or by proxy. The Board may make awards hereunder prior
to approval of the Plan; provided, however, that any and all Incentive Stock
Options so awarded automatically shall be converted into Non-Qualified Stock
Options if the Plan is not approved by shareholders within 365 days of its
adoption.
SECTION 15. TERM OF PLAN. No Option, SAR, Restricted Share,
Long-Term Performance Award, Performance Share or Performance Unit shall be
granted pursuant to the Plan on or after the tenth (10th) anniversary of the
date of shareholder approval of the Plan, but awards granted prior to such tenth
(10th) anniversary may extend beyond that date.
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<PAGE> 47
BRANDYWINE REALTY TRUST
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned shareholder of Brandywine Realty Trust, a Maryland real
estate investment trust (the "Company"), hereby appoints Anthony A. Nichols, Sr.
and Gerard H. Sweeney, and each of them acting individually, as proxies for the
undersigned, with full power of substitution in each of them, to attend the
Annual Meeting of the Shareholders of Brandywine Realty Trust to be held at
10:00 a.m. on May 12, 1997, and at any postponement or adjournment thereof, to
cast on behalf of the undersigned all votes that the undersigned is entitled to
cast at such meeting and otherwise to represent the undersigned at the meeting
with all powers possessed by the undersigned if personally present at the
meeting.
This Proxy is solicited on behalf of the Board of Trustees. When
properly executed, this Proxy will be voted in the manner directed by the
undersigned shareholder. If this Proxy is executed but no direction is made,
this Proxy will be voted "FOR" the election of the nominees for Trustee listed
on the reverse side hereof and "FOR" each of the other proposals as set forth in
the Proxy Statement. This Proxy also delegates discretionary authority with
respect to any other business which may properly come before the meeting or any
postponement or adjournment thereof.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and of the accompanying Proxy Statement and revokes any
Proxy previously submitted with respect to the meeting.
(Continued and to be dated and signed on the reverse side.)
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<PAGE> 48
PROPOSAL 1 (ELECTION OF TRUSTEES):
The Board of Trustees recommends a "FOR" Election of Trustees.
FOR all nominees listed below / / WITHHOLD AUTHORITY to vote for all
nominees listed below / /
Nominees: Anthony A. Nichols, Sr., Gerard H. Sweeney,
Joseph L. Carboni, Richard M. Osborne, Warren V. Musser, Walter D'Alessio
and Charles P. Pizzi
(Instructions: To withhold authority to vote for any individual nominee/s,
write the name of such nominee/s in the following space:
- --------------------------------------------------------------------------------
PROPOSAL 2 (APPROVE UNLIMITED CONVERTIBILITY OF SERIES A PREFERRED SHARES INTO
COMMON SHARES):
The Board of Trustees recommends a vote "FOR" approval of Unlimited
Convertibility.
/ / FOR / / AGAINST / / ABSTAIN
PROPOSAL 3 (APPROVE THE AMENDMENT TO THE AMENDED AND RESTATED DECLARATION OF
TRUST OF THE COMPANY):
The Board of Trustees recommends a vote "FOR" approval of the Amendment
to the Amended and Restated Declaration of Trust.
/ / FOR / / AGAINST / / ABSTAIN
PROPOSAL 4 (APPROVE ADOPTION OF THE 1997 LONG-TERM INCENTIVE PLAN):
The Board of Trustees recommends a vote "FOR" approval of the adoption
of the 1997 Long-Term Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
/ / CHECK HERE ONLY IF YOU PLAN TO
ATTEND THE MEETING IN PERSON
Please sign exactly as name appears
on the records of the Company and _____________________________
date. If the shares are held jointly, Signature
each holder should sign. When
signing as an attorney, executor, _____________________________
administrator, trustee, guardian or as Signature, if held jointly
an officer signing for a corporation or
other entity, please give the full title
under signature. Dated:___________, 1997
Votes must be indicated (x) in Black or Blue ink. /X/
PLEASE VOTE, DATE AND SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
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