<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 19, 1997
BRANDYWINE REALTY TRUST
-----------------------
(Exact name of registrant as specified in its charter)
MARYLAND 1-9106 23-2413352
-------- ------ ----------
(State or other (Commission file (I.R.S. Employer
jurisdiction of number) Identification
incorporation) Number)
16 Campus Boulevard, Newtown Square, Pennsylvania 19073
(Address of principal executive offices)
(610) 325-5600
(Registrant's telephone number, including area code)
Page 1 of 7 pages
<PAGE>
Item 5. Other Events
On September 19, 1997, Brandywine Operating Partnership, L.P. (the
"Operating Partnership"), a limited partnership in which Brandywine Realty
Trust ("the Company") is the sole general partner and in which, as of the
date of this Report, the Company owns an approximately 98.7% partnership
interest, acquired a three-story office building known as 100 Commerce Drive.
This building contains approximately 64,000 net rentable square feet and is
located in Newark, New Castle County, Delaware for a cash purchase price of
approximately $5.5 million. The purchase price was funded from proceeds of
the Company's recently completed public offering of Common Shares. As of
October 3, 1997, 100 Commerce Drive is approximately 97.1% leased to 6
tenants. The Traveler's Bank, Blaze Systems Corporation and KCI Technology,
Inc. are major tenants, occupying approximately 58%, 12% and 10%,
respectively, of the total net rentable square feet of 100 Commerce Drive.
The seller of 100 Commerce Drive, Gender Road Joint Venture (the
"Seller") is a party unaffiliated with the Company and the Operating
Partnership. The Company based its determination of the purchase price on the
expected cash flow, physical condition, location, competitive advantages,
existing tenancies and opportunities to retain and attract additional
tenants. The purchase price was determined by arm's-length negotiation
between the Company and the Seller.
The table below sets forth certain information regarding the rental rates
and lease expirations at 100 Commerce Drive as of October 3, 1997.
-2-
<PAGE>
<TABLE>
<CAPTION>
Year of Number of Leases Rentable Square Final Annualized Percentage of Total
Lease Expiring Within Footage Subject Base Rent under Final Annualized Base Rent
Expiration the Year at(1) to Expiring Leases Expiring Leases(2) Under Expiring Leases
- --------------------------- --------------------- ------------------- ------------------ ---------------------------
<S> <C> <C> <C> <C>
1997....................... -- -- $ -- --
1998....................... 2 2,690 38,370 4.2%
1999....................... 1 1,825 27,831 3.0%
2000....................... 3 14,326 227,632 24.8%
2001....................... 2 43,208 625,603 68.0%
2002....................... -- -- -- --
2003....................... -- -- -- --
2004....................... -- -- -- --
2005....................... -- -- -- --
2006 and Thereafter........ -- -- -- --
--- ------ ---------- -----
Total.................. 8 62,049 $ 919,436 100.0%
--- ------ ---------- -----
--- ------ ---------- -----
</TABLE>
(1) A lease is considered to expire if, and at any time, it is terminable by the
tenant without payment of penalty or premium.
(2) "Final Annualized Base Rent" for each lease scheduled to expire represents
the cash rental rate in the final month prior to expiration multiplied by
twelve.
Concurrently with its acquisition of 100 Commerce Drive, the Company,
through a wholly-owned subsidiary of the Operating Partnership, entered into
two joint ventures with the Seller.
One of these joint ventures, Christiana Center Operating Company I LLC
("Joint Venture I"), was formed by the Seller and a subsidiary of the
Operating Partnership to acquire from the Seller approximately 13.3 acres of
vacant land located in New Castle County, Delaware for a cash purchase price
of approximately $900,000 in anticipation of the development thereon of a
three-story office building containing approximately 150,000 net rentable
square feet. Closing under the agreement of sale is scheduled to occur on or
about October 15, 1997 (subject to customary closing conditions). The
Company's initial percentage interest in Joint Venture I is 50% and its
initial contribution to the equity of Joint Venture I will be approximately
$2.0 million. The total project costs (including the cost of the land) are
estimated to be approximately $15.5 million. The building is anticipated to
be completed in July 1998. However, development of the land is subject to
receipt of a construction loan in the approximate amount of $14.5 million as
well as to certain land development and other necessary approvals, and there
can be no assurance that the joint venture will be able to develop the
building. In connection with its acquisition of the land, Joint Venture I
received an assignment of the lessor's interest in a ten-year lease of the
to-be-built building with Computer Science Corporation ("CSC") pursuant to
which CSC will lease approximately 125,000 net rentable square feet (with
expansion rights) at an initial base rent equal to $13.60 per square foot.
-3-
<PAGE>
The other joint venture, Christiana Center Operating Company II LLC
("Joint Venture II"), was formed to acquire to acquire two parcels of vacant
land containing approximately 4.82 and 6.13 acres, respectively, of vacant
land located in Newark, New Castle County, Delaware for an aggregate cash
purchase price of approximately $1,000,000 in anticipation of the development
thereon of two office buildings. Closing on this land acquisition occurred on
September 19, 1997. The Company's initial percentage interest in Joint
Venture II is 50% and its initial contribution to the equity of Joint Venture
II was approximately $1.0 million. Architectural plans for the development of
the land have not been completed and development of the land is subject to
receipt of a construction loan as well as to certain land development and
other necessary approvals, and there can be no assurance that the joint
venture will be able to develop the building.
On September 29, 1997, the Operating Partnership acquired seven
industrial properties located in Bensalem Township, Bucks County,
Pennsylvania ("Metropolitan Industrial Center") containing approximately
447,000 net rentable square feet. As of October 3, 1997, Metropolitan
Industrial Center was approximately 87.9% leased to 16 tenants. Northtec LLP
individually occupies approximately 27% of the total net rentable area of
Metropolitan Industrial Center.
The purchase price for Metropolitan Industrial Center totaled $16.3
million. The Operating Partnership paid the purchase price and closing
expenses using borrowings under its existing revolving credit facility.
The seller of Metropolitan Industrial Center, Metropolitan Industrial
Associates, is a party unaffiliated with the Company and the Operating
Partnership. The Company based its determination of the purchase price of
Metropolitan Industrial Center on the expected cash flow, physical condition,
location, competitive advantages, existing tenancies and opportunities to
retain and attract additional tenants. The purchase price was determined by
arm's-length negotiation between the Company and Metropolitan Industrial
Associates.
-4-
<PAGE>
The table set forth below shows certain information regarding rental
rates and lease expirations for Metropolitan Industrial Center as of
October 3, 1997.
<TABLE>
<CAPTION>
Year of Number of Leases Rentable Square Final Annualized Percentage of Total
Lease Expiring Within Footage Subject Base Rent under Final Annualized Base Rent
Expiration the Year at(1) to Expiring Leases Expiring Leases(2) Under Expiring Leases
- --------------------------- --------------------- ------------------ ------------------ ---------------------------
<S> <C> <C> <C> <C>
1997....................... 1 42,000 $ 209,160 10.3%
1998....................... 1 14,620 65,790 3.2%
1999....................... 6 114,570 483,155 23.7%
2000....................... 3 31,456 149,622 7.4%
2001....................... 3 38,152 220,950 10.9%
2002....................... 1 33,354 225,140 11.1%
2003....................... -- -- -- --
2004....................... -- -- -- --
2005....................... -- -- -- --
2006 and Thereafter........ 2 118,775 681,651 33.5%
--- ------- ------------ -----
Total.................. 17 392,927 $ 2,035,468 100.0%
--- ------- ------------ -----
--- ------- ------------ -----
</TABLE>
After giving effect to the acquisitions of 100 Commerce Drive and
Metropolitan Industrial Center, the Company's portfolio consists of 77 office
properties and 16 industrial properties that contain an aggregate of
approximately 5.8 million net rentable square feet.
-5-
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
10.1--Agreement of Sale dated September 19, 1997 between Brandywine
Realty Trust and Gender Road Joint Venture (100 Commerce Drive).
10.2--Agreement of Sale dated September 19, 1997 between Christiana
Center Operating Company II LLC and Gender Road Joint Venture
(200 and 300 Commerce Drive).
10.3--Agreement of Sale dated September 19, 1997 between Christiana
Center Operating Company I LLC and Gender Road Joint Venture
(400 Commerce Drive).
10.4--Operating Agreement of Christiana Center Operating Company I LLC
dated as of September 19, 1997 between Brandywine Operating
Partnership, L.P. and Gender Road Joint Venture.
10.5--Operating Agreement of Christiana Center Operating Company II LLC
dated as of September 19, 1997 between Brandywine Operating
Partnership, L.P. and Gender Road Joint Venture.
-6-
<PAGE>
SIGNATURE
- ---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BRANDYWINE REALTY TRUST
Date: October 3, 1997 By: /s/ Gerard H. Sweeney
--------------- ---------------------
Gerard H. Sweeney, President and Chief Executive
Officer (Principal Executive Officer)
Date: October 3, 1997 By: /s/ Mark S. Kripke
--------------- ------------------
Mark S. Kripke, Chief Financial Officer and
Secretary (Principal Financial and Accounting
Officer)
-7-
<PAGE>
AGREEMENT OF SALE
for
100 COMMERCE DRIVE
NEWARK, DELAWARE
between
BRANDYWINE REALTY TRUST
and
GENDER ROAD JOINT VENTURE
Dated: September 19, 1997
<PAGE>
AGREEMENT OF SALE
INDEX
Section Page
1. PROPERTY BEING SOLD.......................................................1
1.1 Real Property..............................................1
1.2 Personal Property..........................................2
1.3 Leases.....................................................2
1.4 Right to Names.............................................2
2. PURCHASE PRICE AND MANNER OF PAYMENT......................................2
2.1 Purchase Price.............................................2
2.2 Manner of Payment..........................................2
2.2.1 Deposit....................................................2
2.2.2 Additional Deposit.........................................3
2.2.3 Cash Balance...............................................3
2.3 Allocation.................................................3
3. TITLE.....................................................................3
4. COVENANTS.................................................................3
4.1 Maintenance.................................................3
4.2 Alterations.................................................3
4.3 Lease.......................................................3
4.4 Security Deposits...........................................4
4.5 Bill Tenants................................................4
4.6 Notice to Buyer.............................................4
4.7 Update Rent Roll............................................4
4.8 Comply with Leases..........................................4
4.9 No New Agreements...........................................5
4.10 Tax Disputes................................................5
4.11 No Removal of Personalty....................................5
5. REPRESENTATIONS AND WARRANTIES..............................5
5.1 Seller's Authority For Binding Agreement....................5
5.2 Employment on "At-Will" Basis...............................5
5.3 Service Contracts...........................................6
5.4 Condemnation................................................6
5.5 No Lawsuits.................................................6
5.6 No Tax Assessments..........................................7
5.7 Leases......................................................7
5.8 Compliance with Law.........................................8
5.9 Insurance...................................................9
5.10 Current Use Unrestricted....................................9
i
<PAGE>
5.11 No Brokers..................................................9
5.12 Utilities...................................................9
5.13 Permits, Approvals and Certificates.........................9
5.14 Good Title to Property.....................................10
5.15 All Taxes and Assessments Paid.............................10
5.16 FIRPTA.....................................................10
5.17 Operating Statement........................................10
5.18 Mechanic's Liens...........................................10
5.19 Inventory Schedule.........................................10
5.20 Charges, Fees and Assessments..............................10
5.21 Rights to Purchase.........................................10
5.22 No Outstanding Obligations.................................11
5.23 Access.....................................................11
5.24 Rollback Taxes.............................................11
5.25 Development Agreements.....................................11
5.26 Correct Copies of Documents................................11
6. POSSESSION...............................................................11
7. BUYER'S REVIEW AND APPROVAL OF TITLE AND SURVEY..........................11
7.1 Title Binder...............................................11
7.2 Survey.....................................................12
7.3 Physical and Financial Inspection..........................12
7.3.1 Leases.....................................................13
7.3.2 Contracts, Licenses, Permits...............................13
7.3.3 Utility Costs..............................................13
7.3.4 Inventory..................................................13
7.3.5 Three Years' Maintenance Expenses..........................13
7.3.6 Three Years' Tax Bills.....................................13
7.3.7 Three Years' Operating Statements..........................13
7.3.8 Schedule of Violations.....................................14
7.3.9 Schedule of Notices........................................14
7.3.10 Schedule of Replacements and Repairs.......................14
7.3.11 Zoning, Site Plan, Subdivision Plan or Plat................14
7.3.12 ...........................................................14
7.3.13 Takings or Changes.........................................14
7.3.14 Tax Assessments, Appeals and Increases.....................14
7.3.15 Litigation.................................................14
7.3.16 Insurance Policies.........................................14
7.3.17 Schedule of Employees......................................15
7.3.18 Title Information..........................................15
7.4 Seller's Failure to Deliver................................15
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES...............................15
9. FIRE OR OTHER CASUALTY...................................................15
ii
<PAGE>
9.1 Maintain Insurance.........................................15
9.2 Minimal Damage.............................................15
9.3 Substantial Damage.........................................15
9.4 Closing After Substantial Damage...........................15
9.5 Rent Insurance.............................................16
10. CONDEMNATION.............................................................16
11. Expense Allocations......................................................16
12. CLOSING..................................................................16
12.1 Time and Date and Place....................................16
12.2 Documents..................................................16
12.2.1 Seller's Documents and Other Items.........................17
12.2.1.1 Deed.......................................................17
12.2.1.2 Bill of Sale...............................................17
12.2.1.3 Original Leases............................................17
12.2.1.4 Original Licenses, Contract Documents and Other Personal
Property...................................................17
12.2.1.5 Assignment of Leases.......................................17
12.2.1.6 Assignment of Licenses, Contract Documents and Other
Personal Property..........................................17
12.2.1.7 FIRPTA Certificates........................................17
12.2.1.8 Tenant Letter..............................................17
12.2.1.9 Estoppel Certificate from Municipality. ...................17
12.2.1.10 Title Insurance Certificates...............................17
12.2.1.11 Updated Rent Roll..........................................18
12.2.1.12 Seller Certificate.........................................18
12.2.1.13 Organization Certifications................................18
12.2.1.14 Keys.......................................................18
12.2.1.15 Tax Bills..................................................18
12.2.1.16 Tax Reduction Rights.......................................18
12.2.1.17 Tenant Estoppels...........................................18
12.2.1.18 Leasing and Management Agreement...........................19
12.2.2 Buyer's Documents..........................................19
12.2.2.1 ...........................................................19
12.2.2.2 ...........................................................19
12.2.2.3 ...........................................................19
12.2.3 Title Insurance............................................19
12.2.4 Necessary Documents........................................19
13. DEFAULT; REMEDIES........................................................19
13.1 ...........................................................19
13.2 ...........................................................20
13.3 Buyer's Out-of-Pocket Costs................................20
iii
<PAGE>
14. CONDITIONS PRECEDENT TO CLOSING..........................................20
14.1 Correctness of Warranties and Representations. ................21
14.2 Compliance with Terms and Conditions...........................21
14.3 Buyer's Satisfaction with Inspection...........................21
14.4 Trustee Approval...............................................21
15. PRORATIONS...............................................................21
15.1 Operating Expenses..................................................21
15.1.1 Rents..........................................................21
15.1.2 Taxes..........................................................21
15.1.3 Deposits. .....................................................22
15.1.4 Water and Sewer Charges........................................22
15.1.5 Assigned Contracts.............................................22
15.1.6 Electricity, gas, steam and fuel...............................22
15.1.7 Security Deposits..............................................22
15.2 Custom and Practice............................................22
15.3 Future Installments of Taxes...................................22
15.4 Application of Prorations......................................22
15.5 Schedule of Prorations.........................................22
15.6 Escalations....................................................22
15.7 Readjustments..................................................23
15.8 Indemnification for Seller's Tax Obligations...................23
15.9 Survival.......................................................23
16. BROKERS..................................................................23
17. ESCROW AGENT.............................................................23
17.1 Payment to Seller..............................................23
17.2 Notice of Dispute..............................................24
17.3 Escrow Subject to Dispute......................................24
17.4 Escrow Agent's Rights and Liabilities..........................24
18. GENERAL PROVISIONS.......................................................24
18.1 Notices........................................................24
18.2 Binding Effect.................................................26
18.3 Entire Agreement...............................................26
18.4 Governing Law..................................................26
18.5 No Recording...................................................26
18.6 Tender.........................................................26
18.7 Execution in Counterparts......................................26
18.8 Further Instruments............................................26
18.9 Time...........................................................26
18.10 Designation of Nominee; Assignment of Agreement................27
18.11 Effective Date.................................................27
18.12 Time for Acceptance............................................27
18.13 Confidentiality................................................27
iv
<PAGE>
18.14 Delivery of Documents..........................................27
19. SEC REPORTING (8-K) REQUIREMENTS.........................................27
20. INDEMNIFICATION..........................................................28
21. EXCULPATION..............................................................29
22. AS-IS....................................................................29
23. Other Transactions.......................................................30
v
<PAGE>
Exhibits to Agreement of Sale
"A" - Legal Description
"B" - Schedule of Inventory
"C" - Permitted Encumbrances
"D" - Rent Roll
"E" - Service Contracts
"F" - Insurance
"G" - Operating Statements
"H" - Form of Tenant Estoppel Certificate
<PAGE>
AGREEMENT OF SALE
100 COMMERCE DRIVE
AGREEMENT OF SALE made this 19th day of September, 1997, between
BRANDYWINE REALTY TRUST, a Maryland Real Estate Investment Trust, its
permitted assignee or nominee, having its principal office at 16 Campus
Boulevard, Suite 150, Newtown Square, Pennsylvania 19073 ("Buyer"), and
GENDER ROAD JOINT VENTURE, a Delaware partnership, having its principal
office at c/o The Commonwealth Group, 62 Read's Way, New Castle, Delaware
19720 ("Seller").
BACKGROUND
The Background of this Agreement is as follows:
A. Seller is the owner of a certain tract of land being comprised of
6.75 plus/minus acres, together with the building and improvements thereon,
including one (1) three (3)-story office building containing approximately
64,000 net rentable square feet, and accessory off-street parking, commonly
known as 100 Commerce Drive, in the City of Newark, New Castle County, Delaware.
B. Seller desires to sell to Buyer and Buyer desires to purchase from
Seller the property referred to in this Agreement, upon the terms and
conditions set forth herein.
TERMS AND CONDITIONS
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and with the preceding Background paragraphs incorporated
by reference, the parties hereto, intending to he legally bound hereby,
covenant and agrees as follows:
1. PROPERTY BEING SOLD.
Seller shall sell, transfer and convey to Buyer on the Closing Date (as
hereinafter defined),
1.1 Real Property. Fee simple interest in the parcel of land, all
as more fully described on Exhibit "A", with the building and improvements
thereon, including one (1) three (3)-story office building containing
approximately 64,000 net rentable square feet, and accessory off-street
parking, commonly known as 100 Commerce Drive, City of Newark, New Castle
County, Delaware, and all of the easements, licenses, rights of way,
privileges, hereditaments, appurtenances, and rights to any land lying in the
beds of any street, road or avenue, open or proposed, adjoining thereto, and
inuring to the benefit of said land (hereinafter collectively referred to as
the "Premises"); and
<PAGE>
1.2 Personal Property. All equipment, fixtures, machinery and
personalty of Seller, of every description attached to or used in connection
with the Premises (and not owned by tenants under leases of the Premises),
including, without limitation, those listed on the Schedule of Inventory
attached hereto as Exhibit "B", all artwork, renderings, flags, awnings,
trade dress, and to the extent legally assignable, all intangible personal
property owned by the Seller and used in connection with the ownership,
operation and maintenance of the land, improvements and other property,
excluding cash on hand but including, without limitation, all contract
rights, guaranties and warranties of any nature, all architects', engineers',
surveyors' and other real estate professionals' plans, specifications,
certifications, contracts, reports, data or other technical descriptions,
reports or audits (including, without limitation, all environmental,
structural and mechanical inspection reports), and all marketing materials
("Contract Documents"), all governmental permits, licenses, certificates, and
approvals in connection with the ownership of the Premises ("Licenses"), all
security deposits, utility deposits, escrow accounts, instruments, documents
of title, general intangibles, all computers, computer software programs and
data and business records pertaining to the Premises, all telephone,
communications and security systems and equipment, and all of Seller's
rights, claims, and causes of action if any, to the extent they are
assignable, under any warranties and/or guarantees of manufacturers,
contractors or installers, all rights against tenants and others relating to
the Premises or the operation or maintenance thereof, including to the extent
applicable, any warranties from any previous owners of the Premises
(hereinafter collectively referred to as "Personal Property"); and
1.3 Leases. All leases, licenses and other occupancy agreements
for any part of the Premises, and all prepaid rent and unapplied security
deposits (the "Leases"); and
1.4 Right to Names. Any and all right, title and interest of
Seller in and to the name of 100 Commerce Drive, and the right to all
printing styles, trademarks and logos ("Name").
The Premises, Personal Property, Leases and Name are sometimes
hereinafter referred to as "Property."
2. PURCHASE PRICE AND MANNER OF PAYMENT.
2.1 Purchase Price. Buyer shall pay the total sum of Five Million
Five Hundred Thousand ($5,500,000) Dollars (hereinafter referred to as the
"Purchase Price") subject to adjustment.
2.2 Manner of Payment. The Purchase Price shall be paid in the
following manner:
2.2.1 Deposit. By delivery, upon Seller's execution and
delivery of this Agreement, of Buyer's good check in the amount of
Eighty-Five Thousand ($85,000) Dollars to the Title Company (hereinafter
referred to as "Escrow Agent" or "Escrowee"). This sum, the sum specified in
Section 2.2.2 below, and all other sums paid by Buyer to the Escrow Agent
under this Agreement (hereinafter referred to as the "Deposit") shall be held
by Escrow Agent in a federally-insured, segregated money market account at an
institution to be designated by Buyer
2
<PAGE>
until termination or consummation of this Agreement. Interest on the Deposit
shall be credited to Buyer at Closing, or paid to the party otherwise
entitled to the Deposit in the event of the termination of this Agreement
prior to Closing.
2.2.2 Additional Deposit. By delivery, within two (2)
business days next following the Inspection Period Expiration Date (as
hereinafter defined), of Buyer's good check in the amount of One Hundred
Seventy Thousand ($170,000) Dollars.
2.2.3 Cash Balance. The balance by delivery to the Seller
on the Closing Date, by wire transfer, the amount of Five Million Two Hundred
Forty-Five Thousand ($5,245,000) Dollars, subject to adjustment as herein
provided.
2.3 Allocation. The Purchase Price shall be allocated between
realty and personalty in the manner provided on Schedule 2.3 attached hereto.
3. TITLE. On the Closing Date, Seller shall convey to Buyer good and
marketable fee simple title to the Premises subject only to those rights of
way, easements, covenants restrictions, and objections to title (hereinafter
"Permitted Exceptions") listed on Exhibit "C" hereto, unless identified by
Buyer as "Title Objections" as hereinafter provided, and subject to the
rights of tenants listed on the rent roll attached hereto as Exhibit "D",
which title shall be insurable at regular rates by a reputable title
insurance company ("Title Company") under an ALTA 1970 Form B (Revised
10/17/70 and 3/30/84) title insurance policy ("Title Policy"), with the
endorsements and affirmative insurance specified in Section 12.2.1.10 below.
Seller and Buyer consent to use, at Buyer's option, Commonwealth Land Title
Insurance Company, Lawyers Title Insurance Corporation or Congress Title
Insurance Company as the Title Company.
4. COVENANTS. In addition to the covenants contained in the other
Sections of this Agreement, Seller covenants that it shall:
4.1 Maintenance. At all times prior to the Closing Date, maintain
the Property in good condition and repair, reasonable wear and tear and
casualty alone excepted, operate the Property with first class management
practices and leasing standards, and pay in the normal course of business
prior to Closing, all sums due for work, materials or service furnished or
otherwise incurred in the ownership and operation prior to Closing.
4.2 Alterations. Not make or permit to be made any alterations,
improvements or additions to the Property without the prior written consent
of Buyer, not to be unreasonably withheld or delayed , except those made by
tenants pursuant to the right to do so under their Leases, or by Seller if
required by applicable law or ordinance, or as required under any Lease.
4.3 Lease. Not enter into any new Lease, nor amend, modify or
terminate any existing Lease without Buyer's consent, not to be unreasonably
withheld or delayed.
4.4 Security Deposits. Not apply any Tenant's security deposit to
the discharge of such Tenant's obligations without Buyer's consent, not to be
unreasonably withheld or delayed.
3
<PAGE>
4.5 Bill Tenants. Timely bill all Tenants for all rent billable
under Leases, and use its best efforts to collect any rent in arrears.
4.6 Notice to Buyer. Notify Buyer promptly of the occurrence of
any of the following:
(i) a fire or other casualty causing damage to the Property,
or any portion thereof;
(ii) receipt of notice of eminent domain proceedings or
condemnation of or affecting the Property, or any portion thereof;
(iii) receipt of notice from any governmental authority or
insurance underwriter relating to the condition, use or occupancy of the
Property, or any portion thereof, or any real property adjacent to any of the
Property, or setting forth any requirements with respect thereto;
(iv) receipt or delivery of any default or termination notice
or claim of offset or defense to the payment of rent from any tenant;
(v) receipt of any notice of default from the holder of any
lien or security interest in or encumbering the Property, or any portion
thereof;
(vi) a change in the occupancy of the leased portions of the
Property;
(vii) notice of any actual or threatened litigation against
Seller or affecting or relating to the Property, or any portion thereof; or
(ix) the commencement of any strike, lock-out, boycott or other
labor trouble affecting the Property, or any portion thereof.
4.7 Update Rent Roll. Provide Buyer with monthly updates of the
rent roll attached as Exhibit "D", each warranted by Seller to be true,
correct and complete, with a final update as of one day prior to the Closing
Date, also warranted by Seller to be true, correct and complete.
4.8 Comply with Leases. Perform all obligations of the landlord as
required by the Leases or by any order or direction of any governmental
authority having jurisdiction thereof, and to the extent required by law or
by any of the Leases, maintain all security deposits held under all Leases in
a segregated account, with interest thereon as required.
4.9 No New Agreements. Except for agreements which can be
terminated on not more than thirty (30) days' notice, not enter into any
other agreements which affect the Property or the transactions contemplated
by this Agreement, without the prior written consent of Buyer, not to be
unreasonably withheld or delayed; and not permit the creation of any
liability which shall bind Buyer or the Premises after Closing.
4
<PAGE>
4.10 Tax Disputes. Notify Buyer of any tax assessment disputes
(pending or threatened) prior to Closing, and not agree to any changes in the
real estate tax assessment, nor settle, withdraw or otherwise compromise any
pending claims with respect to prior tax assessments, without Buyer's prior
written consent. If any proceedings shall result in any reduction of
assessment and/or tax for the tax year in which the Closing occurs, it is
agreed that the amount of tax savings or refund for such tax year, less the
reasonable fees and disbursements in connection with such proceedings, shall
be apportioned between the parties as of the date real estate taxes are
apportioned under this Agreement.
The parties agree that from and after the execution and delivery of
this Agreement, Buyer, at its sole cost, shall have the right to appeal the
current tax assessment of each tax parcel comprising the Premises. Buyer
shall consult with Seller prior to filing tax appeal documents, and shall
afford Seller reasonable advance notice prior to any public hearings or
proceedings at which said appeal will be considered. Seller agrees that
Buyer may file such appeals in its name or in Seller's name, as may be
required, and Seller shall cooperate with Buyer in the prosecution of such
appeal; provided, however, that Buyer agrees to pay the reasonable legal fees
incurred by Seller, if any, in connection with furnishing such cooperation.
4.11 No Removal of Personalty. Not remove any non-consumable
Personal Property from the Premises without replacing it with similar
personal property, new and of equal or better quality.
5. REPRESENTATIONS AND WARRANTIES. In order to induce Buyer to enter
into this Agreement, Seller hereby represents and warrants to Buyer that the
following representations and warranties are true now and will be true at
Closing:
5.1 Seller's Authority For Binding Agreement. Seller is a duly
authorized and validly existing partnership formed under the laws of the
State of Delaware. Seller has full power, right and authority to own its
properties, to carry on its business as now conducted, and to enter into and
fulfill its obligations under this Agreement. Each of the persons executing
this Agreement on behalf of Seller is authorized to do so. This Agreement is
the valid and legally binding obligation of Seller, enforceable against
Seller in accordance with its terms. The execution and delivery of this
Agreement and compliance with its terms will not conflict with or result in
the breach of any law, judgement, order, writ, injunction, decree, rule or
regulation, or conflict with or result in the breach of any other agreement,
document or instrument to which Seller is a party or by which it or the
Property is bound or affected.
5.2 Employment on "At-Will" Basis. All persons and entities
presently employed by Seller in connection with the operation and maintenance
of the Premises are employed on an "at will" basis; are dischargeable upon
thirty (30) days notice, and, unless otherwise directed by Buyer, shall be
terminated by Seller as of Closing. There are no labor disputes pending, nor
to the best of Seller's knowledge, contemplated pertaining to the operation
or maintenance of the Premises, or any part thereof. Seller is not party to
any collective bargaining agreement or labor contract; nor has Seller agreed
to recognize any union or collective bargaining unit. Seller has not received
any requests from any party for recognition as a representative of employees
for collective bargaining purposes; nor has any union or other
5
<PAGE>
collective bargaining unit been certified as representing any of Seller's
employees. Seller has complied in all respects with all applicable laws
relating to the employment of labor, including, without limitation, the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
coverage requirements of group health plans, and those relating to wages,
hours, collective bargaining, unemployment insurance, workers compensation,
equal employment opportunity, age and handicapped discrimination, immigration
control and the payment and withholding of taxes. Seller does not have any
defined benefit, defined contribution, deferred compensation, profit sharing
or retirement or severance arrangements, whether legally binding or not, in
which its personnel are eligible to participate; nor is Seller presently
paying any pension, deferred compensation or retirement allowance to any
person, and Seller has no obligations to continue or to fund such
compensation or other arrangements. Seller has no employment agreements,
either written or oral, with any person which would require Buyer to employ
any such person after the date hereof. Seller acknowledges that it is aware
that Buyer may, but shall have no obligation to, offer employment to any of
the current employees of Seller. Prior to Closing, Seller shall have paid
all of its employees all accrued compensation, including, without limitation,
vacation, sick pay or other similar benefits accrued through the date of
Closing.
5.3 Service Contracts. Exhibit "E" attached hereto is a complete
list of all existing service, equipment, supply and maintenance contracts
with respect to or affecting the Property (the "Service Contracts"), and each
of such Service Contracts is terminable at will without penalty or
cancellation fee upon no more than thirty (30) days notice but, unless
otherwise directed by Buyer, shall not be terminated by Seller as of Closing.
No written notice of default or breach by Seller in the terms of any of such
Service Contracts have been received by Seller. Seller has performed, and at
Closing shall have performed, all obligations which it has under said Service
Contracts.
Anything in this Section 5.3 to the contrary notwithstanding, Seller
represents and warrants that any and all existing management agreements and
exclusive brokerage or leasing agreements shall, unless otherwise directed by
Buyer in writing, or unless otherwise agreed by the parties in writing, be
terminated as of Closing, Seller having fully paid and discharged any and all
obligations accruing thereunder, and Buyer shall assume no liability under or
in respect of any such agreements.
5.4 Condemnation. There is no condemnation or eminent domain
proceeding pending with regard to any part of the Property, and to the best
of Seller's knowledge, no such proceedings are proposed.
5.5 No Lawsuits. There are no claims, lawsuits or proceedings
pending, or to the best of the Seller's knowledge, threatened against or
relating to Seller or the Property, or which could affect them, or either of
them, in any court or before any governmental agency, except for actions for
possession, damages and or rent, if any, against defaulted tenants as
disclosed in Exhibit "D".
5.6 No Tax Assessments. There are no public improvements in the
nature of off-site improvements, or otherwise, which have been ordered to be
made and/or which have not
6
<PAGE>
heretofore been assessed, and, to Seller's knowledge, there are no special or
general assessments currently affecting or pending against the Property,
except as set forth in the Title Binder.
5.7 Leases. There are no oral or written leases or rights of
occupancy or grants or claims of right, title or interest in any portion of
the Premises other than the leases (the "Leases") listed on the rent roll
attached hereto as Exhibit "D". Exhibit "D" identifies (i) each tenant of
the Premises, (ii) the date of that tenant's lease, (iii) the expiration date
of that tenant's lease, (iv) the annual and monthly minimum rental charge,
the tenant's share of building operating costs (including, without
limitation, taxes) and any and all costs, expenses and other charges payable
by the tenant under the Lease, (v) arrearages, if any, and whether the latest
rent due has been paid, (vi) the amount of prepaid rent, if any, (vii) a
description of the documents constituting said tenant's Lease, including all
amendments, modifications, and letter agreements; (viii) the amount or
description of any concessions, allowances, rebates, refunds, escrow or
security deposits made by the tenant under said tenant's Lease; (ix) any
options to renew, extend, purchase, cancel or terminate; (x) any defaults,
outstanding notices of defaults of any kind or nature whatsoever, claims of
defaults or similar claim under Leases, and (xi) such other information as
Buyer or Buyer's investors or lenders may reasonably request. No tenant has
advised Seller that Seller is in default under any of the Leases, or asserted
any claim or basis for any claim for free or reduced rent or right of setoff
against the landlord or the rent under the Leases, and Seller and its agent
have no actual knowledge of any default or any event which has taken place
which, with the passage of time, or the delivery of notice, or both, could
become an event of default. Seller has the sole right to collect rents under
the Leases, and neither such right nor any of the Leases has been assigned,
pledged, hypothecated or otherwise encumbered by Seller except as additional
collateral for the existing mortgage upon the Premises which shall be
satisfied at or before Closing. No holder of any such collateral assignment
has asserted or exercised any of its right to collect such rents. Each of
the Leases is in the standard form of lease previously delivered to Buyer, is
valid and subsisting and in full force and effect, the tenant is in actual
possession in the normal course, and the rents set forth in Exhibit "D" are
the actual rents, income and charges being collected by Seller under the
Leases. Any tenant improvements which Seller is obligated to complete
pursuant to any Lease (or any unsigned lease proposal or lease amendment) has
been completed as of this date or shall be completed as of Closing, and all
costs therefore have been or shall be paid by Seller, and all of Seller's
work has or shall have been accepted by the Tenant without exception on or
before Closing, other than routine punchlist items, which items shall remain
the responsibility of Seller following Closing, and which obligation shall
expressly survive Closing. The amount of each security deposit contains,
where required by law or otherwise applicable, interest which has accrued in
accordance with law. No tenant or other person has any right or option to
acquire the Premises, or any part thereof, or to terminate any of the rights
currently appurtenant to the Premises, and there are no restrictive covenants
in any Leases. No tenant of the Premises under any of the Leases has, and
shall not at Closing have, prepaid any rent under any of the Leases for more
than one (1) month. Except as otherwise set forth on Exhibit "D", no
security deposits by tenants have heretofore been returned or applied to
charges against the tenants.
7
<PAGE>
5.8 Compliance with Law.
(i) The Property and the continued operation and use thereof
comply with all applicable requirements of federal, state and local law, and
all applicable requirements of governmental bodies or agencies having
jurisdiction thereof, and to the best of Seller's knowledge, no portion of
the Property lies within a flood hazard area, flood plain or wetland except
as may be disclosed on the survey, if any, supplied by Seller or obtained by
Buyer, or on the Record Plans for the Property; and there are no outstanding
notices of any violations issued by governmental authority having
jurisdiction over the Property. The zoning classification of the Property is
O-2. Not more than ten (10) days prior to Closing, Seller shall provide
Buyer with a certificate from the zoning code enforcement (or other
appropriate) officer of the City of New Castle County, dated no earlier than
thirty (30) days prior to Closing, confirming that no portion of the Property
is in violation of any applicable codes (provided that such confirmation
shall be within the province of such officer), and that the Property is in
compliance with applicable zoning restrictions.
(ii) To the best of Seller's knowledge, (1) no Hazardous
Substances (defined below) and no Hazardous Wastes (defined below) are
present on the Property including, without limitation, asbestos, flammable
substances, explosives, radioactive materials, hazardous wastes, toxic
substances, pollutants, pollution, contaminant, polychlorinated byphenyls
("PCBs"), urea formaldehyde foam insulation, radon, corrosive, irritant,
biologically infectious materials, petroleum product, garbage, refuse,
sludge, hazardous or waste materials, and (2) there has been no use of the
Property that may, under any federal, state or local environmental statute,
ordinance or regulation, require, at any time, any closure or cessation of
the use or occupancy of the Property and/or impose, at any time, upon the
owner of the Premises any clean-up or other monetary obligation. Seller has
not been identified in any litigation, administrative proceeding or
investigation as a responsible party or potentially responsible party for any
liability for clean-up costs, natural resource damages or other damages or
liability for prior disposal or release of Hazardous Substances, Hazardous
Wastes or other environmental pollutants or contaminants, and no lien or
superlien has been recorded, filed or otherwise asserted against any real or
personal property of Seller for any clean-up costs or other responses costs
incurred in connection with any environmental contamination that is
attributable, in whole or in part, to Seller. Seller hereby indemnifies and
holds Buyer harmless of, from and against any and all liability, loss or
damage suffered or incurred as a result of a claim, demand, cost or judgment
in favor of a third party, including, without limitation, any governmental
authority, arising from the deposit, storage, disposal, burial, dumping,
injecting, spilling, leaking, or other placement or release in or on the
Premises of Hazardous Substances or Wastes first occurring during Seller's
period of ownership. For purposes of this Agreement, "Hazardous Substances"
means those elements and compounds which are designated as such in Section
101(14) of the Comprehensive Response, Compensation and Liability Act
(CERCLA), 42 U.S.C. Section 9601 (14), as amended, all petroleum products and
by-products, and any other hazardous substances as that term may be further
defined in any and all applicable federal, state and local laws; and
"Hazardous Wastes" means any hazardous waste, residential or household waste,
solid waste, or other waste as defined in applicable federal, state and local
laws. Seller has not received any summons, citation, directive, letter or
other communication, written or oral, from any governmental or
quasi-governmental authority concerning any intentional or unintentional
action or omission on Seller's part which (a) resulted
8
<PAGE>
in the releasing, spilling, leaking, pumping, pouring, emitting, emptying or
dumping of Hazardous Substances or Hazardous Wastes, or (b) related in any
way to the generation, storage, transport, treatment or disposal of Hazardous
Substances or Hazardous Wastes. To the best of Seller's knowledge, neither
the Premises nor any portion thereof, have been identified on the federal
CERLIS, the National Priorities List (40 C.F.R. Part 300, App. B) or any
state or local list of potential hazardous waste disposal sites or as an
industrial establishment. Seller has conducted a complete and thorough
inspection and test of the underground storage tanks located on the Premises,
if any, and Seller has confirmed that the results thereof show compliance
with all requirements of the Resource Conservation and Recovery Act ("RCRA"),
42 U.S.C. Sections 6901 et seq. and all other applicable federal, state and
local laws, and Seller has taken all other necessary and appropriate action
to comply fully therewith.
5.9 Insurance. Exhibit "F" attached hereto contains a true and
correct description of all insurance policies affecting the Property and the
operation thereof. All of said insurance policies shall remain in full force
and effect until the completion of Closing hereunder. Seller has not
received any written notice from any insurance company board of fire
underwriters or rating organization (or other body exercising similar
functions) (i) claiming any defects or deficiencies which have not been
addressed and fully cured or corrected, or (ii) requesting the performance of
any repairs, alterations or other work which have not been performed, or
(iii) claiming any default which, if not corrected, would result in a
cancellation of insurance coverage.
5.10 Current Use Unrestricted. The current use of the Premises as
an office building with accessory off-street parking is free from any
restrictions which restrict or prevent the continued use of the Premises as
such.
5.11 No Brokers. No brokerage or leasing commission or other
compensation is now, or will at Closing be, due or payable to any person,
firm, corporation, or other entity with respect to or on account of any of
the Leases, or any extensions or renewals thereof.
5.12 Utilities. All adequate utilities, useable public sanitary and
storm sewers, public water facilities, electric facilities and, if any, gas
facilities (collectively, the "Utilities"), are installed in, and are duly
connected to, the Premises, and can be used without charge except the normal
and usual metered utility charges and water and sewer charges. All Utilities
required for the operation of the Property either enter the Property through
adjoining public streets or, if they pass through adjoining public land, do
so in accordance with valid public easements or private easements which will
inure to the benefit of Buyer at no cost to the owner of the Property. All
of said Utilities are installed and operating and all installation,
connection and "tap-in" charges have been paid for in full.
5.13 Permits, Approvals and Certificates. All required certificates
of occupancy for the Property and for separately demised spaces at the
Property, and all other licenses, permits, authorizations and approvals
necessary for the operation of the Property, have been validly issued and are
in good standing and shall remain so upon consummation of Closing. All
charges and fees for such have been paid in full.
9
<PAGE>
5.14 Good Title to Property. Seller holds good and marketable,
indefeasible fee simple title to the Property, free and clear of liens and
encumbrances, other than the lien of security interests securing any existing
mortgage loans which shall be paid and discharged at or before Closing, and
the Permitted Encumbrances.
5.15 All Taxes and Assessments Paid. Seller will have paid prior to
Closing, all taxes and assessments, including assessments payable in
installments, which are to become due and payable and/or a lien on the
Property, except for taxes for the current year which shall be prorated at
Closing.
5.16 FIRPTA. Seller is not a "foreign person" as such term is
defined in Section 1445(f)(3) of the Internal Revenue Code of 1954, as
amended (the "Code").
5.17 Operating Statement. Exhibit "G" is a correct and complete
list of all (a) actual expenses of the Property, including real estate taxes,
heat, electric, insurance, water, sewer, gas, fuel oil, trash removal,
maintenance and repairs for the three years immediately preceding the date of
this Agreement; and (b) actual income collected from rents and other charges
paid by tenants (but specifically excluding interest in reserves, tenant
security deposits held as such, and interest thereon) for the three (3) years
immediately preceding this Agreement.
5.18 Mechanic's Liens. No work has been performed or is in progress
at, and no materials have been furnished to the Property which, though not
presently the subject of, might give rise to construction, mechanic's,
materialmen's, or other liens against the Property or any portion thereof,
except that for which full and complete releases have been obtained. If any
lien for any such work is filed before or after Closing, Seller shall
promptly discharge the same.
5.19 Inventory Schedule. The Schedule of Inventory contains a
correct and complete list of personal property owned by Seller and located at
or used in connection with the operation of the Property.
5.20 Charges, Fees and Assessments. Any and all applicable
charges, fees and assessments (including condominium fees, office building
association fees, and the like, to the extent applicable) and any and all
other fees, assessments, charges and other sums due under declarations,
cross-easements and like agreements to which the Property or any portion
thereof may be subject, have been paid, and no special assessments thereunder
are pending, and all consents and approvals required to be obtained under any
such declarations, cross-easements and like agreements have been obtained
pursuant to the requirements of such documentation.
5.21 Rights to Purchase. There are no outstanding agreements,
options, rights of first refusal, conditional sales agreements or other
agreements or arrangements, whether oral or written, regarding the purchase
and sale of the Property, or which otherwise affect any portion of or all the
Property.
5.22 No Outstanding Obligations. All debts, liabilities, and
obligations of Seller arising out of the construction, ownership, and
operation of the Property including, but not limited to, construction costs,
salaries, taxes, accounts payable and the like, have been paid as
10
<PAGE>
they became due and payable and shall continue to be so paid from the date
hereof until the Closing Date. No debts, liabilities, claims, or obligations
(whether known or unknown, accrued, absolute, contingent, or otherwise) shall
be outstanding as of the Closing Date.
5.23 Access. All curb cut and street opening permits or licenses
required for vehicular access to and from the Property to any adjoining
public street have been obtained and paid for by Seller and shall be in full
force and effect at the Closing.
5.24 Rollback Taxes. The Property is not, and to Seller's
knowledge has not been, subject to any roll-back or agricultural taxation or
other tax abatement program.
5.25 Development Agreements. Seller is in compliance with and
has fully paid and discharged all obligations arising under any and all
development, tri-party and like agreements, and any and all other agreements
with county, municipal and other governmental and quasi-governmental agencies
and authorities respecting the ownership, development and operation of the
Property and all portions thereof.
5.26 Correct Copies of Documents. Where copies of any documents
have been delivered by Seller to Buyer, whether prior to or pursuant to this
Agreement, such copies: (i) are exact copies of the originals of said
documents, as executed and delivered by all of the parties thereto; (ii) to
the best of Seller's knowledge, constitute, in each case, the entire
agreement between the parties thereto with respect to the subject matter
thereof, and the original instruments in the form delivered to Buyer, are now
in full force and effect, and valid and enforceable in accordance with their
respective terms, and no party thereto is in default, and no claim of default
by any party has been made or is now pending and there does not now exist any
default which, after either the giving of notice or the passing of time, or
both, will or may constitute a default, or would excuse performance by any
party thereto; and (iii) have not been changed or amended except for
amendments, if any, specifically referred to therein.
6. POSSESSION. Possession of the Premises is to be given to Buyer,
subject to the right of tenants under the Leases on the Closing Date, by
delivery of the Deed, and all keys, combinations and security codes at
Closing.
7. BUYER'S REVIEW AND APPROVAL OF TITLE AND SURVEY.
7.1 Title Binder. On or before five (5) business days from the
execution of this Agreement, Seller shall have delivered to Buyer a copy of
its title commitment or policy for the Property (complete with copies of all
exceptions to title), and within ten (10) business days after the receipt of
same, Buyer shall secure a current title commitment (the "Title Binder") from
the Title Company, and shall have until the Inspection Period Expiration Date
(as hereinafter defined) to examine the condition of title, including the
terms and provisions of all items and documents referred to in the Title
Binder, and all information regarding title as disclosed on the Survey
(hereinafter defined), and to approve or disapprove the same. If Buyer shall
disapprove the condition of title, such disapproval shall be set forth in a
notice given to Seller (the "Disapproval Notice") identifying the condition
of title to the Property or any of the terms, provisions or contents of said
items, documents or Survey which are disapproved by Buyer (the "Title
11
<PAGE>
Objections"). Subject to the provisions of the succeeding portion of this
Section 7.1, Seller shall have until the date which is ten (10) days after
the date of the Disapproval Notice (the "Title Cure Expiration Date") in
which to cure or eliminate all items which Buyer disapproves in the
Disapproval Notice, and to furnish evidence satisfactory to Buyer and the
Title Company that all such items have been cured or eliminated or that
arrangements have been made with the Title Company and any parties in
interest to cure or eliminate the same at or prior to the Closing. If Seller
fails to remove any Title Objection in accordance with the provisions of the
immediately preceding sentence, Buyer, nevertheless, may elect (at or prior
to the Closing) to consummate the transaction provided for in this Agreement
subject to any such Title Objection(s) as may exist as of the Closing with a
credit against the Purchase Price equal to the sum necessary to remove any
lien of a fixed or ascertainable amount . If Buyer shall not so elect, Buyer
may terminate this Agreement by notice in writing to Seller, whereupon the
Deposit shall be immediately refunded to Buyer, and this Agreement shall be
null and void, and the parties hereto shall be relieved of all further
obligations and liability under this Agreement.
7.2 Survey. Within ten (10) days after the date of this Agreement,
at Buyer's cost, Seller shall deliver to Buyer a current survey of Property
(the "Survey"), prepared by a duly licensed land surveyor acceptable to
Buyer. The Survey shall be currently dated, shall show the location on the
Property of all buildings and improvements, building and set-back lines,
easements, rights-of-way, encroachments, elevations between public roads
providing access to the Property, and the boundary of the Property, and other
such matters affecting the Property whether physically apparent from the
ground, of record in public offices, or otherwise, and shall contain a legal
description of the boundaries of the Premises by metes and bounds which shall
include a reference to the recorded plat, if any. The surveyor shall certify
to Buyer and to the Title Company and to any lender making a loan to Buyer
secured by the Property that the Survey is correct and was made on the
ground; and that there are no visible discrepancies, conflicts,
encroachments, overlapping of improvements, violations of set-back lines,
easements, rights-of-way or other such matters affecting the Property except
as are shown on the Survey, and that the Survey conforms to all ACTA/ACSM and
Pennsylvania Land Title Association standards and requirements for a Class A
Survey. Any and all recorded matters shown on said Survey shall be legibly
identified by appropriate volume and page recording references with dates of
recording noted. Buyer shall have until the Inspection Period Expiration
Date to approve or disapprove the material contained thereon. If Buyer shall
disapprove such Survey, such disapproval shall be set forth in a Disapproval
Notice as hereinabove provided in Section 7.1, and the provisions of Section
7.1 with respect to Disapproval Notices shall apply.
7.3 Physical and Financial Inspection. For a period (the
"Inspection Period") commencing on the second (2nd) business day next
following the date upon which Buyer shall receive from Seller a
fully-executed counterpart of this Agreement, and expiring twenty (20) days
thereafter (such date is herein referred to as the "Inspection Period
Expiration Date"), Buyer shall have the right to have performed a physical
and mechanical inspection, measurement and audit of the Property and an
inspection of all books and records and financial information pertaining
thereto, and Seller shall cooperate with Buyer and shall furnish to Buyer
such information, materials and documents as Buyer may reasonably request and
shall have its accountant or internal controller available throughout such
period to assist in Buyer's inspection and review. The inspection, audit and
measurement of the Property's operation, condition and maintenance
12
<PAGE>
shall include, without limitation, such environmental and engineering
inspections, reviews and assessments that Buyer deems appropriate. If Buyer
fails to close hereunder for any reason other than Seller's breach or
default, Buyer shall, to the maximum extent practicable, restore the Property
to the condition existing immediately before such tests and assessments. In
the event Seller shall fail to deliver or make available any item or
information material to Buyer's review of the Property and required to be
delivered or made available pursuant to the terms of this Section within five
(5) business days next following the date upon which Buyer shall receive from
Seller a fully-executed counterpart of this Agreement, then at Buyer's
written election, the Inspection Period Expiration Date (and the Closing
Date) shall be extended by one day for each day that the delivery or
availability of such item is delayed. If Buyer, at Buyer's sole and absolute
discretion, shall find such inspection(s) to be unsatisfactory for any reason
whatsoever, Buyer shall have the right, at its option, to terminate this
Agreement on or before the Inspection Period Expiration Date, and upon such
termination, the Deposit shall be immediately refunded to the Buyer, and
thereupon the parties hereto shall have no further liabilities one to the
other with respect to the subject matter of this Agreement. Buyer agrees
that it shall not unreasonably interfere with tenants in performing its
inspection. In connection with such inspection, and without limiting the
generality of Seller's obligations hereunder, Seller agrees to deliver to
Buyer, within five (5) days:
7.3.1 Leases. Copies of all Leases for the Property as of
the date hereof, certified by Seller to be true, complete and correct, and
lease abstracts respecting each Lease;
7.3.2 Contracts, Licenses, Permits. Copies of the Contract
Documents, the Licenses, all building permits, certificates of occupancy,
insurance policies applicable to the Property and any other documents
evidencing rights described in Section 1.2 hereof;
7.3.3 Utility Costs. A break-down of utility costs for the
period the Property has been owned by Seller;
7.3.4 Inventory. Invoices, bills of sale, and other
evidence supporting the Schedule of Inventory;
7.3.5 Three Years' Maintenance Expenses. Information
concerning maintenance costs of the Property for the past three years, or
lesser period, if owned less than three years by the Seller;
7.3.6 Three Years' Tax Bills. A copy of tax bills (i) for
the current year, and (ii) if available, for the preceding two years;
7.3.7 Three Years' Operating Statements. Statements of
operation of the Property for the past three years, or lesser period, if
owned less than three years by Seller, and like statements for the balance of
such three year period during which operations were by a prior owner, if
available, and if not available, any statements as were received from such
prior owner, and such other and further information as Buyer shall reasonably
require in order to obtain a certified audit of the operation of the Property
prepared in accordance with generally accepted accounting principles
consistently applied, by an independent certified public accounting firm
selected and paid for by Buyer;
13
<PAGE>
7.3.8 Schedule of Violations. A schedule setting forth all
violations of any law, ordinance, regulation, rule or requirement of any
governmental body having jurisdiction, whether existing or prospective, of
which Seller has received written notice, issued or noted by any governmental
body during the past three years, and copies of any notices, terminations or
correspondence relating thereto;
7.3.9 Schedule of Notices. A schedule of any written
demands, requests, requirements or recommendations regarding the operation,
maintenance, repair or replacement of the Property or any portion thereof, of
which Seller has received notice during the past three years, from the holder
of any mortgage or deed of trust or any insurance company or any board of
fire underwriters or real estate associations or like body, and copies of all
correspondence relating thereto;
7.3.10 Schedule of Replacements and Repairs. All documentation
in Seller's possession regarding replacements and repairs to the Property;
7.3.11 Zoning, Site Plan, Subdivision Plan or Plat. All
conditional and permanent zoning, site plan, subdivision, building, housing,
safety, fire and health approvals, including, without limitation, the local
governmental applications, resolutions and approvals supporting the same;
7.3.12 Intentionally Omitted.
7.3.13 Takings or Changes. Copies of all written notices to
Seller of proposed or threatened takings or changes with respect to the
Property or major access roads within a reasonable radius which would affect
the access to the Property, or any portion thereof, by prospective occupants;
7.3.14 Tax Assessments, Appeals and Increases. Copies of all
written notices to Seller of all filed, proposed or threatened tax assessment
appeals or tax assessment increases related to the Premises;
7.3.15 Litigation. Copies of all pending and written notices
to Seller of threatened litigation, including litigation involving tenants,
affecting the Property or this transaction;
7.3.16 Insurance Policies. Copies of all insurance policies
of Seller related to the Property;
7.3.17 Schedule of Employees. A schedule of all current
employees of the Property, setting forth the name, residence, salary, hourly
wages, benefit package, bonuses, vacation and sick pay and other
prerequisites of their employment; and
7.3.18 Title Information. Seller's most recently dated title
report or title commitment respecting the Premises.
14
<PAGE>
7.4 Seller's Failure to Deliver. If Seller shall have failed to
deliver to Buyer all material documents required to be delivered under
Section 7.3 hereof, Buyer may, at its option, at any time on or after such
date, but prior to the curing of such failure by Seller, give Seller a five
(5) day written notice specifying such default, and if Seller fails to cure
such default within such five (5) day period, Buyer may terminate this
Agreement, receive the return of the Deposit and pursue any other remedy
available to it pursuant to the provisions hereof.
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer and Seller set forth herein shall survive Closing and
delivery of the deed for the applicable period of the statute of limitations
pertaining thereto.
9. FIRE OR OTHER CASUALTY.
9.1 Maintain Insurance. Seller shall maintain in effect until the
Closing Date the insurance policies (or like policies) now in effect with
respect to the Premises and Personal Property as set forth in Exhibit "F".
9.2 Minimal Damage. If prior to the Closing Date any portion of
the Property is damaged or destroyed by fire or other casualty, and the cost
of repair or restoration thereof shall be $50,000 or less (as established by
good faith estimates obtained by Buyer), this Agreement shall remain in force.
9.3 Substantial Damage. If prior to the Closing Date any portion
of the Property is damaged or destroyed by fire or other casualty, and the
cost of repair or restoration thereof shall be more than $50,000 (as
established by good faith estimates obtained by Buyer), Buyer may within ten
(10) days after receipt of notice ("Damage Notice") of said damage or
destruction, terminate this Agreement by giving written notice thereof to
Seller ("Buyer's Notice of Election"), and if this Agreement is so
terminated, then the Deposit shall be immediately refunded to Buyer, and
thereafter neither party shall have any further liability hereunder
thereafter. If Buyer does not so terminate this Agreement, it shall remain in
full force and effect, and the provisions of Section 9.4 below shall apply.
9.4 Closing After Substantial Damage. So long as this Agreement
shall remain in force under Section 9.2 or 9.3, then either (a) (i) all
proceeds of insurance collected prior to Closing, plus the amount of
deductible under Seller's insurance policy, shall be adjusted subject to
Buyer's approval and participation in any adjustment, and shall be credited
to Buyer against the Purchase Price payable by Buyer at Closing, and (ii) all
unpaid claims and rights in connection with losses shall be assigned to Buyer
at Closing, or, (b) at Buyer's option, Seller shall (i) restore the Property
as soon as reasonably practicable to its condition immediately preceding the
casualty, (ii) include Buyer, and obtain Buyer's approval to, any adjustments
made by Seller.
9.5 Rent Insurance. All rental loss insurance and the proceeds
thereof allocable to any period subsequent to Closing shall be paid or
assigned to Buyer at Closing.
10. CONDEMNATION. If, prior to the Closing Date, all or any portion of
the Premises is taken by eminent domain or a notice of any eminent domain
proceedings with respect
15
<PAGE>
to the Premises or any part thereof is received by the Seller, then Seller
shall within five (5) days thereafter give notice thereof to Buyer and Buyer
shall have the option to (a) complete the purchase hereunder or (b) if such
taking, in Buyer's sole and absolute discretion, materially affects the
Premises or its current economic viability, terminate this Agreement, in
which event the Deposit shall be immediately refunded to Buyer, and this
Agreement shall be null and void. Buyer shall deliver written notice of its
election to the Seller within ten (10) days after the date upon which the
Buyer receives written notice of such eminent domain proceedings. If notice
of condemnation is received by Buyer and it fails to deliver said written
notice of its election within said time period, such failure shall constitute
a waiver by Buyer of its right to terminate this Agreement. If this
Agreement is not so terminated, Buyer shall be entitled to all awards or
damages by reason of any exercise of the power of eminent domain or
condemnation with respect to or for the taking of the Premises or any portion
thereof, and until such time as closing has occurred, or this Agreement
terminates. Any negotiation for, or agreement to, and all contests of any
offers and awards relating to eminent domain proceedings shall be conducted
with the joint approval and consent of the Seller and the Buyer.
11. Expense Allocations.
11.1 Seller shall pay for one-half of all applicable realty transfer
taxes related to the execution, delivery and recording of the Deed, Bill of
Sale, and other Closing Documents, and all related recording charges.
11.2 Buyer shall pay for one-half of all applicable realty transfer
taxes, for Buyer's title examination, the survey and for Buyer's title
examination and premiums.
11.3 Buyer and Seller shall be responsible for paying their own
attorney's fees in connection with this transaction.
12. CLOSING.
12.1 Time and Date and Place. The closing ("Closing") on the sale
of the Property (herein referred to as the "Closing Date") shall take place
at a time specified by Buyer in writing to Seller at least five (5) days
prior to the specified Closing Date, but in any event no later than September
19, 1997, at the offices of Pepper, Hamilton & Scheetz, 3000 Two Logan
Square, Eighteenth & Arch Streets, Philadelphia, PA, commencing at 10:00 a.m.
12.2 Documents. At Closing, the parties indicated shall
simultaneously execute and deliver the following:
12.2.1 Seller's Documents and Other Items. Seller shall
execute and deliver or cause to be executed and delivered to Buyer in proper
form for recording:
12.2.1.1 Deed. A special warranty deed prepared by
Buyer's counsel in form acceptable to Seller (the "Deed"), conveying the
Premises to Buyer, duly executed by Seller for recording. The Deed
description shall be based upon the metes and bounds description attached as
Exhibit "A", unless Buyer requests that Seller convey the Premises by the
16
<PAGE>
metes and bounds description shown on the new ALTA/ACSM survey, if any,
obtained by Buyer, in which event the Premises shall be so conveyed.
12.2.1.2 Bill of Sale. A warranty bill of sale prepared
by Buyer's counsel in form acceptable to Seller, assigning, conveying and
transferring to Buyer, all of the Personal Property.
12.2.1.3 Original Leases. All original Leases, tenant
files, tenant correspondence and repair records, certified by Seller as being
true, correct and complete.
12.2.1.4 Original Licenses, Contract Documents and Other
Personal Property. All original Licenses, Contract Documents, and other
Personal Property described in Section 1.2 of this Agreement, certified by
Seller as being true, correct and complete.
12.2.1.5 Assignment of Leases. An assignment and
assumption agreement with reciprocal indemnities, prepared by Buyer's counsel
in form acceptable to Seller (the "Assignment"), duly executed by Seller and
Buyer, assigning, conveying and transferring to Buyer the Leases.
12.2.1.6 Assignment of Licenses, Contract Documents and
Other Personal Property. An assignment agreement prepared by Buyer's
counsel, in form acceptable to Seller, assigning, conveying and transferring
to Buyer the Licenses, Contracts Documents and Other Personal Property,
including, specifically, the Names.
12.2.1.7 FIRPTA Certificates. All certificate(s)
required under Section 1445 of the Code.
12.2.1.8 Tenant Letter. Letters to each tenant advising
of the change in ownership and directing the payment of rent to such party as
the Buyer shall designate, said letter to be in form acceptable to Buyer.
12.2.1.9 Estoppel Certificate from Municipality. All
certificate(s) required by Section 5.8 hereof, and any other certificates
required by New Castle County, or the State of Delaware as a condition of the
conveyance of the Premises or the recording of the Deed.
12.2.1.10 Title Insurance Certificates. Such affidavits
of title or other certifications as shall be required by the Title Company to
insure Buyer's title to the Premises as set forth in Section 3, and to
provide affirmative endorsements (a) against mechanic's liens, (b) insuring
against any violation of existing covenants, conditions or restrictions, and
insuring that future violation will not result in forfeiture of title, (c)
insuring that all foundations in place as of the date of such policy are
within the lot lines and applicable set back lines, (d) insuring that the
buildings and structures on the Premises do not encroach onto adjoining land,
or onto any easements, (e) insuring that confirming that there are no
encroachments of improvements from adjoining land onto the Premises (f)
removing any exceptions for matters
17
<PAGE>
which an accurate survey would disclose, and (g) providing affirmative
insurance with respect to such other matters as Buyer shall reasonably
specify.
12.2.1.11 Updated Rent Roll. An updated schedule of
Tenant Leases, containing all information required to be set forth in Exhibit
"D", which schedule is correct and complete as of the date of closing.
12.2.1.12 Seller Certificate. A written certification
confirming that as of Closing no representation or warranty of Seller
contained in this Agreement, nor any document or certificate delivered to
Buyer pursuant to this Agreement or in connection with the transaction
contemplated hereby, contains any untrue statement of a material fact or
knowingly omits to state a material fact necessary to make any representation
or warranty contained herein misleading.
12.2.1.13 Organization Certifications. Confirmation of
the good standing and existence of Seller and the due authority of those
executing for them, including, without limitation, the following documents
issued no earlier than 30 days prior to Closing: (a) good standing
certificate in state of organization and in the State in which the Premises
are located, (b) articles of incorporation, partnership agreement or other
formation instrument certified by the secretary of state of the state of
incorporation, (c) a certificate from the secretary of the corporation or
managing general partner of the partnership confirming the incumbency of the
signatories and the current force and effect of the resolution authorizing
their execution of the documents required under this Agreement.
12.2.1.14 Keys. All keys, combinations and security codes
for all locks and security devices on the Property;
12.2.1.15 Tax Bills. Current tax bills and, if available,
tax bills for each of the years of Seller's ownership of the Property;
12.2.1.16 Tax Reduction Rights. An instrument assigning
to Buyer any claims for the reduction of real or personal property taxes
assessed against any portion of the Property for the fiscal year in which the
Closing takes place; any refund for such year shall be prorated when received;
12.2.1.17 Tenant Estoppels. Seller shall obtain and
deliver to Buyer, at least five (5) business days prior to Closing, estoppel
certificates in substantially the form attached hereto as Exhibit "H" from
The Traveler's Bank, KCI Technologies, Inc. and Blaze Systems Corporation
(the "Estoppels"). An estoppel certificate which contains material
discrepancies, or any statements inconsistent with representations and
warranties of Seller contained in this Agreement and for which Seller does
not provide Buyer with an explanation in all respects satisfactory to Buyer,
shall not be included when determining the sufficiency of the Estoppels to
meet the required percentage set forth above.
12.2.1.18 Leasing and Management Agreement. A
leasing and management agreement prepared by Buyer's counsel in form
acceptable to Seller (the "Leasing
18
<PAGE>
and Management Agreement") duly executed by Buyer and Commonwealth Management
Group, Ltd., pursuant to which Commonwealth Management Group, Ltd. shall
lease and manage the Property on the terms and conditions more fully set
forth therein.
12.2.2 Buyer's Documents. Buyer shall deliver or cause to
be delivered to Seller:
12.2.2.1 The amounts required to be paid to Seller
pursuant to this Agreement;
12.2.2.2 Confirmation of the existence and subsistence of
Buyer, and the authority of those executing for Buyer, including, without
limitation, the following documents issued no earlier than thirty (30) days
prior to Closing: (a) good standing certificate in State of Maryland, (b)
Buyer's Amendment and Restatement of Declaration of Trust filed on August 27,
1996, as amended, (c) a certificate from any officer of Buyer confirming the
incumbency of the signatories and the current force and effect of the
resolution authorizing their execution of the documents required under this
Agreement.
12.2.2.3 Leasing and Management Agreement. Buyer shall
execute and deliver the Leasing and Management Agreement, as defined above,
pursuant to which Commonwealth Management Group, Ltd. shall lease and manage
the Property on the terms and conditions more fully set forth therein.
12.2.3 Title Insurance. As a condition to Buyer's
obligations at Closing, Title Company shall furnish Buyer at Closing with the
Title Policy, in the form approved by Buyer pursuant to Section 3, in the
full amount of the Purchase Price, wherein the Title Company shall insure fee
simple title to the Property in Buyer or its designee as of the Closing Date
containing no exceptions to title other than those which have been approved
by Buyer in writing pursuant to Section 3 hereof and providing the title
endorsements specified in Section 12.2.1.10 above.
12.2.4 Necessary Documents. Buyer and Seller shall execute
and deliver such other documents and instruments as may be reasonably
necessary to complete the transaction contemplated by this Agreement.
13. DEFAULT; REMEDIES
13.1 In the event that any of Seller's representations or warranties
contained in this Agreement are materially or prejudicially untrue or if
Seller shall have failed to have performed any of the covenants and/or
agreements contained in this Agreement which are to be performed by Seller,
on or before the date set forth in this Agreement for the performance
thereof, or if any of the conditions precedent to Buyer's obligation to
consummate the transaction contemplated by this Agreement shall have failed
to occur, Buyer may, at its option, rescind this Agreement by giving written
notice of such rescission to Seller and Seller shall immediately thereafter
return the Deposit, and thereupon, subject to the provisions of Section 13.3
below, the parties shall have no further liability to each other hereunder.
In the alternative, but without
19
<PAGE>
limitnig Buyer's right upon any default by Seller hereunder to receive the
prompt return of the Deposit, Buyer may seek to enforce specific performance
of this Agreement.
13.2 Buyer recognizes that the Property will be removed by Seller
from the market during the existence of this Agreement and that if this
purchase and sale is not consummated because of Buyer's default Seller shall
be entitled to compensation for such detriment. Seller and Buyer acknowledge
that it is extremely difficult and impracticable ascertain the extent of the
detriment, and to avoid this problem, Seller and Buyer agree that if the
purchase and sale contemplated in this Agreement is not consummated because
of Buyer's default under this Agreement, Seller shall be entitled to retain
the Deposit as liquidated damages. The parties agree that the sum stated
above as liquidated damages shall be in lieu of any other relief to which
Seller might otherwise be entitled, Seller hereby specifically waiving any
and all rights which it may have to damages or specific performance as a
result of Buyer's default under this Agreement.
13.3 Buyer's Out-of-Pocket Costs. In the event of Seller's
breach or default hereunder which results in Buyer's termination of this
Agreement, or in the event that Seller shall fail to perform any term,
covenant or agreement, or satisfy any condition herein stipulated (including,
without limitation, a failure of title), then, in any such event, upon
termination by Buyer hereunder, in addition to receiving the immediate return
of the Deposit, anything in the Agreement contained to the contrary
notwithstanding, Buyer shall also receive from Seller, upon demand, Buyer's
actual, documented out-of-pocket costs and expenses associated with this
Agreement and Buyer's anticipated acquisition of the Property including,
without limitation, Buyer's reasonable counsel fees and costs, title
expenses, survey costs, and other costs and expenses associated with Buyer's
due diligence, including, without limitation, legal, financial and accounting
due diligence, Buyer's structural inspection of the Property and Buyer's
environmental assessment of the Property (collectively, "Transaction Costs").
The foregoing list is not intended to be exclusive, but representative of
the costs and expenses that the parties anticipate that Buyer will incur in
anticipation of this transaction. Seller's maximum reimbursement liability
under this Section 13.3 shall not exceed Twenty Five Thousand ($25,000)
Dollars.
14. CONDITIONS PRECEDENT TO CLOSING.
The obligations of Buyer hereunder are subject to the fulfillment of
the following conditions prior to or on the Closing Date (any one of which
may be waived in whole or in part by Buyer at or prior to the Closing) and in
the event any of the conditions are not complied with, Buyer may terminate
this Agreement by notifying the Seller and Escrow Agent and thereupon shall
be returned the Deposit and thereafter this Agreement shall be null and void:
14.1 Correctness of Warranties and Representations. The warranties
and representations made by Seller in this Agreement shall be true and
correct on the Closing Date as though such representations and warranties
were made on the Closing Date (except for changes in the Leases permitted
under the terms of this Agreement).
14.2 Compliance with Terms and Conditions. Seller shall have
performed and complied with all of the terms and conditions required by this
Agreement to be performed and complied with by it prior to or on the Closing
Date.
20
<PAGE>
14.3 Buyer's Satisfaction with Inspection. Buyer shall have
notified Seller of Buyer's satisfaction with the review and inspection
performed under Section 7 of this Agreement, or shall fail to notify Seller on
or before the Inspection Period Expiration Date, of Buyer's dissatisfaction with
the results of such review and inspection.
14.4 Trustee Approval. This Agreement and the transactions
contemplated hereby shall have received formal approval of Buyer's Board of
Trustees at a meeting duly called during the Inspection Period to consider same.
14.5 Estoppels. Seller shall have delivered to Buyer the required
Estoppels.
15. PRORATIONS.
15.1 Operating Expenses. The following items shall be prorated at
Closing, as of close of business of the day immediately preceding Closing
"Adjustment Date":
15.1.1 Rents. All rent, additional rent, percentage rent (if
any) and all other charges collected under the Leases shall be apportioned on
the Closing Date pro rata on a per diem basis, as if all tenants were current
in the payment of rent for the month during which the Closing shall occur. If
any tenant is in arrears in the payment of rent or additional rent on the
Closing Date, rents received from such within tenant ninety (90) days after the
Closing Date shall be applied in the following order of priority: (a) to the
Buyer, so long as such tenant is in arrears for current or prior rent arising
after Closing, then (b) to Seller for all rent in arrears prior to the Closing
Date; and then (c) to Buyer with no further claim by Seller thereto. Buyer
shall use good faith efforts to collect any rent owed Seller hereunder, but
shall not threaten, and shall be under no obligation to institute, litigation
to collect the same. Except as herein provided, Buyer shall have no obligation
to collect rents in arrears for the benefit of Seller. Any rents which are
delinquent or otherwise not paid at the time of Closing, and collected by Buyer
within ninety (90) days after Closing shall be apportioned as aforesaid and the
portion to which Seller is entitled shall be promptly remitted by Buyer to
Seller. Seller shall have no claim to rents collected ninety (90) days after
the Closing Date.
15.1.2 Taxes. Real estate and personal property taxes, if any,
on the basis of the fiscal year for which assessed. If the Closing shall occur
before the tax rate or assessment is fixed, the apportionment of such real
estate and personal property taxes at the Closing shall be upon the basis of
the tax rate for the next preceding year applied to the latest assessed
valuation. Final adjustment will be made upon the actual tax amount, when
determined.
15.1.3 Deposits. Tax and utility company deposits, if any,
shall be assigned to Buyer.
15.1.4 Water and Sewer Charges. Water and sewer charges and
fire protection and inspection services based upon meter readings to be obtained
by Seller effective as of the Adjustment Date, or if not so obtainable, a date
not more than ten (10) days prior to the Adjustment Date, and the unfixed meter
charges based thereon for the intervening period shall be apportioned on the
basis of such last reading. Upon the taking of a subsequent actual reading,
21
<PAGE>
such apportionment shall be readjusted and Seller or Buyer, as the case may be,
will promptly deliver to the other the amount determined to be so due upon such
readjustment. If Seller is unable to furnish such prior reading, any reading
subsequent to the Closing will be apportioned on a per diem basis from the date
of such reading immediately prior thereto and Seller shall pay the proportionate
charges due up to the date of Closing.
15.1.5 Assigned Contracts. Amounts paid or payable in respect
of any service and maintenance contracts assigned to Buyer in accordance
herewith.
15.1.6 Electricity, gas, steam and fuel. Electricity, gas and
steam and fuel oil, if any, based on meter readings or a fuel company letter
showing measurement on the day immediately preceding Closing, and valued at
current prices.
15.1.7 Security Deposits. Buyer shall receive a check from
Seller for the full amount of any security deposits, with accrued interest, or
a credit against the Purchase Price in said amount.
15.2 Custom and Practice. Except as set forth in this Agreement, the
customs of the State and County in which the Premises are located shall govern
prorations.
15.3 Future Installments of Taxes. If at Closing, the Property or any
part thereof shall be or shall have been affected by an assessment or
assessments which are or may become payable in installments, then for purposes
of this Agreement, all unpaid installments of any such assessment, including
those which are to become due and payable and to be liens upon the Property
shall be paid and discharged by Seller at Closing.
15.4 Application of Prorations. If such prorations result in a payment
due Buyer, the cash payable at Closing shall be reduced by such sum. If such
prorations result in a payment due Seller, the same shall be paid by uncertified
check at Closing.
15.5 Schedule of Prorations. The parties shall endeavor to jointly
prepare a schedule of prorations for the Property no less than five (5) days
prior to Closing.
15.6 Escalations. At least five (5) days prior to Closing, Seller
shall deliver to Buyer a reasonably detailed statement setting forth, as of the
date of Closing (a) the sums collected from tenants under Leases on account of
or in reimbursement of landlord's operating expenses and/or any other payments
made by tenants to landlord on account of sums which are attributable to
expenses paid or incurred by the landlord ("escalation payments") for the
current fiscal year under each such Lease (whether a lease year or calendar or
other year); and (b) the amounts paid or incurred by Seller during the
appropriate fiscal year as aforesaid which Seller expects will be paid or
reimbursed by escalation payments made by tenants.
If Seller shall have collected escalation payments for periods prior to
Closing, whether pursuant to estimates which were in excess of the amounts
actually required to be paid, or otherwise, there shall be an adjustment and
credit to Buyer at Closing for such excess. If the charges were not billed or
have not been collected as of the date of Closing, then, when the
22
<PAGE>
amount of such escalation payments is determined and collected by Buyer from
tenants, Buyer will, upon collection, remit to Seller the portion thereof to
which Seller is entitled to the date of Closing. Buyer shall have the right,
in good faith, to settle or adjust any amount of such escalation payments due
from any tenant without Seller's prior consent, provided that such settlement
or adjustment applies ratably to all amounts of escalation payments due from
such tenant.
15.7 Readjustments. The parties shall correct any errors in
prorations as soon after the Closing as amounts are finally determined.
15.8 Indemnification for Seller's Tax Obligations. Seller shall
indemnify, defend and save and hold harmless Buyer from any loss, cost,
liability or expense (including, without limitation, reasonable counsel fees
and court costs) incurred, paid or suffered by Buyer arising out of or by
reason of any claim made by any state taxing or employment authorities
asserting or indicating any claims or possible claims for unpaid taxes,
penalties, interest or court costs related thereto of Seller or any related
party, due the State of Delaware or its political subdivisions. The
provisions of this Section 15.8 shall specifically survive Closing hereunder.
15.9 Survival. The provisions of this Section 15 shall expressly
survive Closing hereunder.
16. BROKERS. Each party hereby represents and warrants to the other that
it has not employed or retained any broker or finder in connection with the
transactions contemplated by this Agreement other than CB Commercial, and that
other than CB Commercial, neither has had any dealings with any other person or
party which may entitle that person or party to a fee or commission. Each party
shall indemnify the other of and from any claims for commissions by any person
or party claiming such commission by or through the indemnifying party.
17. ESCROW AGENT. The parties hereto have requested that the Deposit be
held in escrow by the Escrow Agent to be applied at the Closing or prior
thereto in accordance with this Agreement. The Escrow Agent will deliver the
Deposit to Seller or to Buyer, as the case may be under the following
conditions:
17.1 Payment to Seller. To Seller on the Closing Date upon the
consummation of Closing;
17.2 Notice of Dispute. If either Seller or Buyer believes that it is
entitled to the Deposit or any part thereof, it shall make written demand
therefor upon the Escrow Agent. The Escrow Agent shall promptly mail a copy
thereof to the other party in the manner specified in Section 18.1 below. The
other party shall have the right to object to the delivery of the Deposit, by
filing written notice of such objections with the Escrow Agent at any time
within ten (10) days after the mailing of such copy to it in the manner
specified in Section 18.1 below, but not thereafter. Such notice shall set
forth the basis for objection to the delivery of the Deposit. Upon receipt
of such notice, the Escrow Agent shall promptly deliver a copy thereof to the
party who filed the written demand.
23
<PAGE>
17.3 Escrow Subject to Dispute. In the event the Escrow Agent shall
have received the notice of objection provided for in 17.2 above of this
Section, in the manner and within the time therein prescribed, the Escrow Agent
shall continue to hold the Deposit until (i) the Escrow Agent receives written
notice from both Seller and Buyer directing the disbursement of the Deposit in
which case the Escrow Agent shall then disburse said Deposit in accordance with
said direction, or (ii) litigation arises between Seller and Buyer, in which
event the Escrow Agent shall deposit the Deposit with the Clerk of the Court in
which said litigation is pending, or (iii) the Escrow Agent takes such
affirmative steps as the Escrow Agent may, at the Escrow Agent's option elect in
order to terminate the Escrow Agent's duties including, but not limited to,
deposit in Court and an action for interpleader.
17.4 Escrow Agent's Rights and Liabilities. Escrow Agent shall not be
required to determine questions of fact or law, and may act upon any instrument
or other writing believed by it in good faith to be genuine and to be signed and
presented by the proper person, and shall not be liable in connection with the
performance of any duties imposed upon Escrow Agent by the provisions of this
Agreement, except for Escrow Agent's own willful default or gross negligence.
Escrow Agent shall have no duties or responsibilities except those set forth
herein. Escrow Agent shall not be bound by any modification of this Agreement,
unless the same is in writing and signed by Buyer and Seller, and, if Escrow
Agent's duties hereunder are affected, unless Escrow Agent shall have given
prior written consent thereto. In the event that Escrow Agent shall be
uncertain as to Escrow Agent's duties or rights hereunder, or shall receive
instructions from Buyer or Seller which, in Escrow Agent's opinion, are in
conflict with any of the provisions hereof, Escrow Agent shall be entitled to
hold and apply the Deposit, pursuant to Section 17.3, and may decline to take
any other action.
18. GENERAL PROVISIONS.
18.1 Notices. All notices or other communications required or
permitted to be given under the terms of this Agreement shall be in writing,
and shall be deemed effective when (i) sent by nationally-recognized overnight
courier, (ii) facsimile with original following by regular mail, or
(iii) deposited in the United States mail and sent by certified mail, postage
prepaid, addressed as follows:
18.1.1 If to Buyer, addressed to:
BRANDYWINE Realty Trust
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
Attn.: Gerard H. Sweeney,
President and Chief Executive Officer
24
<PAGE>
with a copy in each instance to:
Eric L. Stern, Esquire
Pepper, Hamilton & Scheetz LLP
3000 Two Logan Square
Eighteenth & Arch Streets
Philadelphia, PA 19103
18.1.2 If to Seller, addressed to:
Gender Road Joint Venture
c/o The Commonwealth Group
62 Read's Way
New Castle, Delaware 19720
Attn.: Brock J. Vinton, President
with a copy in each instance to:
William S. Gee, Esquire
Saul, Ewing, Remick & Saul
222 Delaware Avenue
Suite 1200
Wilmington, DE 19899
18.1.3 If to Escrow Agent, addressed to:
Commonwealth Land Title Insurance Company
National Title Service
1700 Market Street
Philadelphia, PA 19103
Attn.: M. Gordon Daniels
or to such-other address or addresses and to the attention of such other person
or persons as any of the parties may notify the other in accordance with the
provisions of this Agreement.
18.2 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
18.3 Entire Agreement. All Exhibits attached to this Agreement are
incorporated herein and made a part hereof. [The parties covenant and agree
to use their best efforts to develop within five (5) business days of the
date hereof, and attach to this Agreement, the exhibits required hereunder.
If such exhibits are not agreed upon within ten (10) business days of the
date hereof, Buyer may terminate this Agreement and receive back the
Deposit.] This Agreement constitutes the entire agreement between the parties
hereto and supersedes all prior negotiations, understandings and agreements
of any nature whatsoever with respect to the subject
25
<PAGE>
matter hereof. This Agreement may not be modified or amended other than by
an agreement in writing. The captions included in this Agreement are for
convenience only and in no way define, describe or limit the scope or intent
of the terms of this Agreement.
18.4 Governing Law. This Agreement shall be construed and interpreted
in accordance with the laws of the Commonwealth of Pennsylvania.
18.5 No Recording. This Agreement shall not be recorded in the Office
for the Recording of Deeds or in any other office or place of public record.
18.6 Tender. Tender of Deed by Seller and of the Purchase Price by
Buyer, are hereby mutually waived.
18.7 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories.
18.8 Further Instruments. Seller will, whenever and as often as it
shall be reasonably requested so to do by Buyer, and Buyer will, whenever and
as often as it shall be reasonably requested so to do by Seller, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
any and all conveyances, assignments, correction instruments and all other
instruments and documents as may be reasonably necessary in order to complete
the transaction provided for in this Agreement and to carry out the intent and
purposes of this Agreement. All such instruments and documents shall be
satisfactory to the respective attorneys for Buyer and Seller. The provisions
of this Article shall survive the Closing.
18.9 Time. Time is of the essence. In the event the last day
permitted for the performance of any act required or permitted under this
Agreement falls on a Saturday, Sunday, or legal holiday of the United States
or the Commonwealth of Pennsylvania, the time for such performance will be
extended to the next succeeding business day. Time periods under this Agreement
will exclude the first day and include the last day of such time period.
18.10 Designation of Nominee; Assignment of Agreement. Buyer shall
have the right to designate one or more of its subsidiaries or affiliate
entities to acquire title to the Premises hereunder. Except for the foregoing,
Buyer may not assign this Agreement.
18.11 Effective Date. Whenever the term or phrase "effective date
hereof" or "date hereof" or other similar phrases describing the date this
Agreement becomes binding on Seller and Buyer are used in this Agreement, such
terms or phrases shall mean and refer to the date on which a counterpart or
counterparts of this Agreement executed by Seller and Buyer are deposited with
the Escrow Agent.
26
<PAGE>
18.12 Time for Acceptance. This Agreement shall constitute an
offer to buy or sell the Property, as case may be, on the terms herein set forth
only when executed by the Seller or Buyer. This Agreement may be accepted by
the party receiving such executed Agreement only by executing this Agreement and
delivering an original signed copy hereof to the Escrow Agent and an originally
signed copy hereof to the other party hereto within five (5) business days after
such receipt. Failure to accept in the manner and within the time specified
shall constitute a rejection and termination of such officer.
18.13 Confidentiality. Each of the parties hereto covenants and
agrees to hold the nature and content of this Agreement, including without
limitation, the Purchase Price contained herein, in strict confidence prior to
Closing, and other than disclosure required by the SEC and except as may be
necessary to comply with this Agreement, neither party shall disclose prior to
Closing, the nature, content or the Purchase Price of this Agreement without the
express written consent of the other party.
18.14 Delivery of Documents. If this Agreement (or any of the
Exhibits or Schedules hereto) shall have been prepared by Seller or by its
counsel, then promptly upon execution hereof by the parties hereto, Seller
shall deliver to Buyer one (1) "clean" copy of this Agreement, complete with
all Exhibits and Schedules prepared (or obtained) by Seller or its counsel,
and a copy of this Agreement (and said Exhibits and Schedules, if available)
on disk, compatible with WordPerfect 5.1.
19. SEC REPORTING (8-K) REQUIREMENTS.
For the period of time commencing on the date hereof and continuing
through the first anniversary of the Closing Date, and without limitation of
other document production otherwise required of Seller hereunder, Seller shall,
from time to time, upon reasonable advance written notice from Buyer, provide
Buyer and its representatives, with (I) access to all financial and other
information pertaining to the period of Seller's ownership and operation of the
Property, which information is relevant and reasonably necessary, in the opinion
of Buyer's outside, third party accountants (the "Accountants"), to enable Buyer
and its Accountants to prepare financial statements in compliance with any or
all of (a) Rule 3-05 or 3-14 of Regulation S-X of the Securities and Exchange
Commission (the "Commission"), as applicable; (b) any other rule issued by the
Commission and applicable to Buyer; and (c) any registration statement, report
or disclosure statement filed with the Commission by, or on behalf of Buyer;
and (II) a representation letter, signed by the individual(s) responsible for
Seller's financial reporting, as prescribed by generally accepted auditing
standards promulgated by the Auditing Standards Division of the American
Institute of Certified Public Accountants, which representation letter may be
required by the Accountants in order to render an opinion concerning Seller's
financial statements.
20. INDEMNIFICATION.
Without limitation of any other Seller indemnity obligations set forth
herein, from and after the Closing Date, Seller shall indemnify, defend and save
and hold harmless Buyer, and its respective trustees, directors, officers and
employees, of, from and against any and all loss,
27
<PAGE>
cost, expense, damage, claim, and liability, including reasonable attorney's
fees and court costs, including, without limitation, attorney's fees and
costs associated with the enforcement of Seller's indemnification obligations
hereunder (hereinafter collectively, "Losses") which Buyer may suffer or
incur, resulting from, relating to, or arising in whole or in part, from or
out of (i) any misrepresentation or breach of a representation or warranty by
Seller contained in this Agreement; (ii) any failure to fulfill any covenant
or agreement of Seller contained in this Agreement; (iii) all litigation set
forth in this Agreement and on Exhibit "D"; hereto; and (iv) any and all
actions, suits, investigations, proceedings, demands, assessments, audits,
judgments, and/or claims arising out of or relating to any of the foregoing.
Promptly after receipt by Buyer of written notice of the commencement
of any suit, audit, demand, judgment, action, investigation or proceeding (a
"Third Party Action") or promptly after Buyer incurs a Loss or has knowledge of
the existence of a Loss, Buyer will, if a claim with respect thereto is to be
made against Seller due to Seller's obligation to provide indemnification
hereunder, give Seller written notice of such Loss or the commencement of any
Third Party Action; provided, however, that the failure to provide such notice
within a reasonable period of time shall not relieve Seller of any of its
obligations hereunder, unless Seller is materially prejudiced by such delay.
Promptly after receiving such notice, Seller will, upon notice to Buyer, have
the right to assume and control the defense and settlement of any such Third
Party Action at its own cost and expense; provided, however, that it shall be
a condition precedent to the exercise of such right by Seller that Seller shall
agree in writing that the Loss, or Third Party Action, as the case may be, is
properly within the scope of the indemnification obligation and that as between
the parties, Seller shall be responsible to satisfy and discharge such Third
Party Action. Seller shall not enter into any resolution or other compromise
of a Third Party Action without obtaining the complete release of Buyer for any
liability to all claimants under or pursuant to such Third Party Action.
Buyer shall have the right to participate in any such defense, contest or other
protective action at its own cost and expense.
Notwithstanding the foregoing, Buyer shall have the right to assume and
control the defense and settlement of a Third Party Action (a) if such action
includes claims for equitable relief which, if determined adversely to Buyer,
could reasonably be expected to interfere with its intended business operations
or damage its business reputation or (b) if Seller fails to do so in a timely
manner. In any circumstances in which Buyer undertakes to control the Third
Party Action as provided in this paragraph, it shall (i) not enter into any
resolution or other compromise involving monetary damages without obtaining
the prior written consent of Seller provided that such written consent may not
be withheld if it would interfere with Buyer's business operation and (ii) keep
Seller informed on an ongoing basis of the status of such Third Party Action and
shall deliver to Seller, copies of all documents related to the Third Party
Action reasonably requested by Seller. Buyer shall act to assure that all
attorneys' fees and expenses incurred in connection therewith are reasonable.
21. EXCULPATION.
No recourse shall be had for any obligation of BRANDYWINE Realty Trust
under this Agreement or under any document executed in connection herewith or
pursuant hereto, or for any claim based thereon or otherwise in respect thereof,
against any past, present or future
28
<PAGE>
trustee, shareholder, officer or employee of BRANDYWINE Realty Trust, whether
by virtue of any statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being expressly
waived and released by the Seller and all parties claiming by, through or
under Seller.
22. AS-IS.
Buyer acknowledges and agrees that except as herein elsewhere
specifically provided, Seller has not made, does not make and specifically
negates and disclaims any representations, warranties (other than the special
warranty of title as set out in the deed), promises, covenants, agreements or
guaranties of any kind or character whatsoever, whether express or implied,
statutory, oral or written, past, present or future, of, as to, concerning or
with respect to (A) the value, nature, quality or condition of the Property,
including, without limitation, the water, soil, and geology, (B) the suitability
of the Property for any and all activities and uses which Buyer or any tenant
may conduct thereon, (C) the compliance of or by the Property or its operation
with any laws, rules, ordinances or regulations of any applicable governmental
authority or body, (D) the habitability, merchantability, marketability,
profitability or fitness for a particular purpose of the Property, (E) the
manner or quality of the construction or materials, if any, incorporated into
the Property, (F) the manner, quality, state of repair or lack of repair of the
Property, (G) compliance with any environmental requirements, including the
existence in or on the Property of hazardous materials or (H) any other matter
with respect to the Property. Additionally, no person acting on behalf of
Seller is authorized to make, and by execution hereof, Buyer acknowledges that,
except as herein elsewhere specifically provided, no person has made any
representation, agreement, statement, warranty, guaranty or promise regarding
the Property or the transaction contemplated herein; and no such representation,
warranty, agreement, guaranty, statement or promise, if any, made by any person
acting on behalf of Seller shall be valid or binding upon Seller unless
expressly set forth herein. Buyer further acknowledges and agrees that, except
with respect to information developed by Seller, its principals or affiliates,
any information provided or to be provided with respect to the Property was
obtained from a variety of sources, that Seller has not made any independent
investigation or verification of such information and makes no representations
as to the accuracy, truthfulness or completeness of such information, and the
Buyer may not be entitled to rely on any such information. The foregoing
notwithstanding, Seller has no knowledge that any such information is
inaccurate or misleading. Buyer further acknowledges and agrees that to the
maximum extent permitted by law, and except as herein elsewhere specifically
provided, the sale of the Property as provided for herein is made on an "as is"
condition and basis with all faults. It is understood and agreed that the
purchase price has been adjusted by prior negotiation to reflect that the
Property is sold by Seller and purchased by Buyer subject to the foregoing.
23. Other Transactions. The obligations of the parties to consummate
Closing hereunder shall be expressly conditioned upon (i) Seller and
Brandywine Operating Partnership, L.P., a Delaware limited partnership
("BOP") executing and delivering a mutually satisfactory operating agreement
regarding the governance of Christiana Center Operating Company II LLC, (ii)
the execution and delivery by Seller, as seller, and the said Christiana
Center Operating Company II LLC, as buyer, of a mutually satisfactory
Agreement of Sale regarding the purchase and sale of those certain properties
known by the parties as 200 and 300 Commerce Drive,
29
<PAGE>
Newark, New Castle County, Delaware, and completion of closing thereunder,
(iii) Seller and BOP executing and delivering a mutually satisfactory
operating agreement regarding the governance of Christiana Center Operating
Company I LLC and (iv) the execution and delivery by Seller, as seller, and
the said Christiana Center Operating Company I LLC, as buyer, of a mutually
satisfactory Agreement of Sale regarding the purchase and sale of that
certain property known as and numbered 400 Commerce Drive, Newark, New Castle
County, Delaware, each and all upon terms and conditions acceptable to the
parties, failing which neither party hereto shall have any obligation to
consummate Closing hereunder. If either party shall elect to terminate this
Agreement in such instance, then in that event, the Deposit shall be promptly
refunded to the Buyer and thereupon neither party shall have any further
obligation to the other hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed the day and year first above written.
GENDER ROAD JOINT VENTURE, BRANDYWINE REALTY TRUST,
a Delaware partnership a Maryland Real Estate Investment Trust
By: (SEAL) By: /S/ Gerard H. Sweeney, Presient & CEO(SEAL)
Brock J. Vinton, Managing Gerard H. Sweeney,
Venturer, Hereunto Duly President and Chief Executive
Authorized
30
<PAGE>
EXHIBIT "H"
TENANT ESTOPPEL CERTIFICATE
(__________ Portfolio)
100 Commerce Drive
Newark, DE
__________ __, 1997
Brandywine Realty Trust
Newtown Square Corporate Campus
16 Campus Boulevard
Newtown Square, PA 19073
Attention: Gerard H. Sweeney,
President and Chief Executive Officer
NationsBank, N.A.,
as Agent for the parties listed on
Schedule 1 attached hereto
Real Estate Banking
8300 Greensboro Drive, Suite 300
McLean, VA 22102
Attention: Cheryl D. Fitzgerald, Vice President
Re: Name of Tenant: ___________________
Lease located at Suite _____, ___________ Premises
_____________ Municipality, ___ State (the "Property")
To Whom it May Concern:
The undersigned is the holder of the tenant's interest under the lease
described on Exhibit A attached hereto (the "Lease") demising a portion of
the Property known as Suite _____ (the "Leased Premises"). We understand
that Brandywine Realty Trust, its assignee or nominee ("Brandywine") intends
to acquire the Property, and that NationsBank, N.A., as Agent for the parties
listed on Schedule 1 attached hereto ("Lender") intends to be the holder of a
first mortgage on the Property, and that Brandywine and Lender require this
certification from us.
Accordingly, we hereby certify to Brandywine and Lender as follows:
1. The Lease is in full force and effect and has not been modified,
amended or supplemented in any way, except as follows: None (If appropriate
response is other than "None," insert dates of all modifications, amendments
or supplements): .
<PAGE>
2. There are no other representations, warranties, agreements,
concessions, commitments, or other understandings between the undersigned and
the Landlord regarding the Property other than as set forth in the Lease or
paragraph 1 above.
3. The landlord under the Lease has completed and delivered, and the
undersigned has accepted, the Leased Premises in the condition required by the
Lease and the term of the Lease commenced on __________. The Leased Premises
consists of approximately _________ square feet. The undersigned has taken
possession of and is occupying the Leased Premises on a rent-paying basis and
the monthly base rent payable thereunder is __________, payable in advance.
All improvements and work required under the Lease to be made by the landlord
thereunder and all facilities required under the Lease to be furnished to the
Leased Premises have been completed to the satisfaction of the undersigned,
except as follows: None. (If appropriate response is other than "None,"
insert description of any improvements and work to be completed by the
landlord under the Lease): .
4. The fixed expiration date set forth in the Lease, excluding renewals
and extensions, is _________. The undersigned neither has any option or right
to purchase the Property or any portion thereof nor does the undersigned have
any right or option to terminate the Lease or any of its obligations thereunder
in advance of the scheduled termination date of the Lease as noted above, except
as follows: None. (If appropriate response is other than "None," insert
description of any purchase rights or options, and/or any early termination
rights, together with reference to document (and section or paragraph) where
found): .
5. All rents, additional rents and other sums due and payable under the
Lease have been paid in full and no rents, additional rents or other sums
payable under the Lease have been paid for more than one (1) month in advance
of the due dates thereof.
6. The landlord under the Lease is not in default under any of the
requirements, provisions, terms, conditions or covenants of the Lease to be
performed or complied with by the landlord under the Lease, and no event has
occurred or situation exists which would, with the passage of time and/or the
giving of notice, constitute a default or an event of default by the landlord
under the Lease.
7. The undersigned is not in default under any of the requirements,
provisions, terms, conditions, or covenants of the Lease to be performed or
complied with by the undersigned, and no event has occurred or situation exists
which would, with the passage of time and/or the giving of notice, constitute a
default or an event of default by the undersigned under the Lease.
8. The undersigned has received no notice from any governmental authority
or other person or party claiming a violation of, or requiring compliance with,
any Federal, State or local statute, ordinance, rule, regulation or other
requirement of law, for environmental contamination at the Leased Premises, to
the best knowledge of the undersigned, [NJ only: the undersigned is in
compliance with all applicable provisions of the Industrial Site Recovery Act],
and no hazardous, toxic or polluting substances or wastes have been generated,
treated, manufactured, stored, refined, used, handled, transported, released,
spilled, disposed of or deposited by Tenant on, in or under the Leased Premises.
<PAGE>
9. Neither the undersigned nor the landlord under the Lease has commenced
any action or given or received any notice for the purpose of terminating the
Lease.
10. There are no existing defenses, offsets, claims, or credits against the
payment of rent or the performance of the undersigned's obligations under the
Lease.
11. The undersigned has paid to the landlord under the Lease a security
deposit of _________.
By: ______________________
Name:
Title:
<PAGE>
Exhibit A
(Description of Lease)
Lease dated __________ with ________________, Tenant, for Suite _____,
_____________ Premises, __________________Municipality, _______State.
______________________________
Exhibit A
- (Alternate) -
The undersigned hereby certifies to Brandywine Realty Trust,
NationsBank, N.A., Administrative Agent, Seller with respect to its tenancy
at Suite _____, _______ Premises, ____________ Municipality, ____ State that
attached hereto is a true, correct and complete copy of its lease and all
amendments thereto ("Lease"). It is intended by the undersigned that this
Certificate and the attached documents shall be appended to the within Tenant
Estoppel Certificate delivered by the undersigned Tenant to the
above-mentioned parties.
By: ___________________________
Name:
Title:
<PAGE>
Schedule 1
NationsBank, N.A., Smith Barney Mortgage Capital Group, Inc. and all
other parties to whom a direct participation interest in a certain Credit
Facility are sold, transferred and assigned pursuant to the provisions of a
certain Revolving Credit Agreement and a certain Co-Lender and Servicing
Agreement, each dated as of November 25, 1996.
<PAGE>
AGREEMENT OF SALE
for
200 and 300 COMMERCE DRIVE
NEWARK, DELAWARE
between
CHRISTIANA CENTER OPERATING COMPANY II LLC
and
GENDER ROAD JOINT VENTURE
Dated: September 19, 1997
<PAGE>
AGREEMENT OF SALE
INDEX
Section Page
1. PROPERTY BEING SOLD.......................................................5
1.1 Real Property......................................................5
1.2 Personal Property..................................................6
1.3 Leases.............................................................6
1.4 Right to Names.....................................................6
2. PURCHASE PRICE AND MANNER OF PAYMENT......................................6
2.1 Purchase Price.....................................................6
2.2 Manner of Payment..................................................6
2.2.1 Deposit....................................................6
2.2.2 Additional Deposit.........................................7
2.2.3 Cash Balance...............................................7
2.3 Intentionally Omitted..............................................7
3. TITLE.....................................................................7
4. COVENANTS.................................................................7
4.1 Maintenance........................................................7
4.2 Alterations........................................................7
4.3 Lease..............................................................7
4.4 Intentionally Omitted..............................................7
4.5 Intentionally Omitted..............................................7
4.6 Notice to Buyer....................................................8
4.7 Intentionally Omitted..............................................8
4.8 Intentionally Omitted..............................................8
4.9 No New Agreements..................................................8
4.10 Tax Disputes.......................................................8
4.11 Intentionally Omitted..............................................9
5. REPRESENTATIONS AND WARRANTIES............................................9
5.1 Seller's Authority For Binding Agreement...........................9
5.2 Employment.........................................................9
5.3 Service Contracts..................................................9
5.4 Condemnation.......................................................9
5.5 No Tax Assessments.................................................9
5.6 Leases.............................................................9
5.7 Compliance with Law...............................................10
5.8 No Brokers........................................................11
5.9 Utilities.........................................................11
<PAGE>
5.10 Permits Approvals and Certificates................................11
5.11 Good Title to Property............................................11
5.12 All Taxes and Assessments Paid....................................11
5.13 FIRPTA............................................................12
5.14 Mechanic's Liens..................................................12
5.15 Rights to Purchase................................................12
5.16 No Outstanding Obligations........................................12
5.17 Rollback Taxes....................................................12
5.18 Development Agreements............................................12
5.19 Correct Copies of Documents.......................................12
5.20 No Lawsuits.......................................................12
6. POSSESSION...............................................................13
7. BUYER'S REVIEW AND APPROVAL OF TITLE AND SURVEY..........................13
7.1 Title Binder......................................................13
7.2 Survey............................................................13
7.3 Physical and Financial Inspection.................................14
7.3.1 Intentionally Omitted.....................................14
7.3.2 Contracts, Licenses,Permits...............................14
7.3.3 Intentionally Omitted.....................................14
7.3.4 Intentionally Omitted.....................................14
7.3.5 Intentionally Omitted.....................................15
7.3.6 Three Years' Tax Bills....................................15
7.3.7 Intentionally Omitted.....................................15
7.3.8 Schedule of Violations....................................15
7.3.9 Schedule of Notices.......................................15
7.3.10 Intentionally Omitted.....................................15
7.3.11 Zoning, Site Plan, Subdivision Plan or Plat...............15
7.3.12 Intentionally Omitted.....................................15
7.3.13 Takings or Changes........................................15
7.3.14 Tax Assessments, Appeals and Increases....................15
7.3.15 Litigation................................................15
7.3.16 Insurance Policies........................................15
7.3.17 Intentionally Omitted.....................................15
7.3.18 Title Information.........................................16
7.4 Seller's Failure to Deliver.......................................16
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES...............................16
9. INTENTIONALLY OMITTED....................................................16
10. CONDEMNATION.............................................................16
11. Expense Allocations......................................................16
ii
<PAGE>
12. CLOSING..................................................................17
12.1 Time and Date and Place...........................................17
12.2 Documents.........................................................17
12.2.1 Seller's Documents and Other Items........................17
12.2.1.1 Deed............................................17
12.2.1.2 Bill of Sale....................................17
12.2.1.3 Intentionally Omitted...........................17
12.2.1.4 Original Licenses, Contract Documents and Other
Personal Property...............................17
12.2.1.5 Intentionally Omitted...........................17
12.2.1.6 Assignment of Licenses, Contract Documents and
Other Personal Property.........................17
12.2.1.7 FIRPTA Certificates.............................17
12.2.1.8 Intentionally Omitted...........................17
12.2.1.9 Estoppel Certificate from Municipality. ........17
12.2.1.10 Title Insurance Certificates....................18
12.2.1.11 Intentionally Omitted...........................18
12.2.1.12 Seller Certificate..............................18
12.2.1.13 Organization Certifications.....................18
12.2.1.14 Intentionally Omitted...........................18
12.2.1.15 Tax Bills.......................................18
12.2.1.16 Tax Reduction Rights............................18
12.2.1.17 Intentionally Omitted...........................18
12.2.1.18 Leasing Agreement...............................19
12.2.2 Buyer's Documents.........................................19
12.2.2.1..................................................19
12.2.2.2..................................................19
12.2.2.3..................................................19
12.2.2.4..................................................19
12.2.3 Title Insurance...........................................19
12.2.4 Necessary Documents.......................................19
13. DEFAULT; REMEDIES........................................................19
13.1.....................................................................19
13.2.....................................................................20
13.3 Buyer's Out-of-Pocket Costs.........................................20
14. CONDITIONS PRECEDENT TO CLOSING..........................................20
14.1 Correctness of Warranties and Representations.....................21
14.2 Compliance with Terms and Conditions..............................21
14.3 Buyer's Satisfaction with Inspection..............................21
14.4 Trustee Approval..................................................21
15. PRORATIONS...............................................................21
15.1 Operating Expenses..................................................21
15.1.1 Intentionally Omitted.....................................21
iii
<PAGE>
15.1.2 Taxes.....................................................21
15.1.3 Deposits..................................................21
15.1.4 Water and Sewer Charges...................................21
15.1.5 Assigned Contracts........................................22
15.1.6 Electricity, gas, steam and fuel..........................22
15.1.7 Intentionally Omitted.....................................22
15.2 Custom and Practice...............................................22
15.3 Future Installments of Taxes......................................22
15.4 Application of Prorations.........................................22
15.5 Schedule of Prorations............................................22
15.6 Intentionally Omitted.............................................22
15.7 Readjustments.....................................................22
15.8 Indemnification for Seller's Tax Obligations......................22
15.9 Survival..........................................................22
16. BROKERS..................................................................22
17. ESCROW AGENT.............................................................23
17.1 Payment to Seller.................................................23
17.2 Notice of Dispute.................................................23
17.3 Escrow Subject to Dispute.........................................23
17.4 Escrow Agent's Rights and Liabilities.............................23
18. GENERAL PROVISIONS.......................................................24
18.1 Notices...........................................................24
18.2 Binding Effect....................................................25
18.3 Entire Agreement..................................................25
18.4 Governing Law.....................................................25
18.5 No Recording......................................................25
18.6 Tender............................................................25
18.7 Execution in Counterparts.........................................25
18.8 Further Instruments...............................................25
18.9 Time..............................................................26
18.10 Designation of Nominee; Assignment of Agreement...................26
18.11 Effective Date....................................................26
18.12 Time for Acceptance...............................................26
18.13 Confidentiality...................................................26
18.14 Delivery of Documents.............................................26
19. SEC REPORTING (8-K) REQUIREMENTS.........................................26
20. INDEMNIFICATION..........................................................27
21. EXCULPATION..............................................................28
22. AS-IS....................................................................28
iv
<PAGE>
23. OTHER TRANSACTIONS.......................................................29
v
<PAGE>
AGREEMENT OF SALE
200, 300 COMMERCE DRIVE
AGREEMENT OF SALE made this 19th day of September, 1997, between CHRISTIANA
CENTER OPERATING COMPANY II LLC, a Delaware limited liability company, its
permitted assignee or nominee, having its principal office at c/o Gender Road
Joint Venture, c/oThe Commonwealth Group, 62 Read's Way, New Castle, Delaware
19720 ("Buyer"), and GENDER ROAD JOINT VENTURE, a Delaware partnership, having
its principal office at c/o The Commonwealth Group, 62 Read's Way, New Castle,
Delaware 19720 ("Seller").
BACKGROUND
The Background of this Agreement is as follows:
A. Seller is the owner of two certain parcels of land being comprised of
4.82+/- and 6.13+/- acres, respectively, known or to be known as 200 and 300
Commerce Drive, in the City of Newark, New Castle County, Delaware; and
B. Seller desires to sell to Buyer and Buyer desires to purchase from
Seller the property referred to in this Agreement, upon the terms and conditions
set forth herein.
TERMS AND CONDITIONS
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and with the preceding Background paragraphs incorporated by
reference, the parties hereto, intending to he legally bound hereby, covenant
and agrees as follows:
1. PROPERTY BEING SOLD.
Seller shall sell, transfer and convey to Buyer on the Closing Date
(as hereinafter defined),
1.1 Real Property. Fee simple interest in two (2) certain parcels of
land being comprised of 4.82+/- acres and 6.13+/- acres, respectively, all as
more fully described on Exhibit "A" hereto, in New Castle County, Delaware, and
all of the easements, licenses, rights of way, privileges, hereditaments,
appurtenances, and rights to any land lying in the beds of any street, road or
avenue, open or proposed, adjoining thereto, and inuring to the benefit of said
land (hereinafter collectively referred to as the "Premises"); and
<PAGE>
1.2 Personal Property. All equipment, fixtures, machinery and
personalty of Seller, of every description attached to or used in connection
with the Premises (and not owned by tenants under leases of the Premises), if
any, including, without limitation, those listed on the Schedule of Inventory
attached hereto as Exhibit "B", and to the extent legally assignable, all
intangible personal property owned by the Seller and used in connection with the
ownership, operation and maintenance of the land, improvements and other
property, excluding cash on hand, but including, without limitation, all
contract rights, guaranties and warranties of any nature, all architects',
engineers', surveyors' and other real estate professionals' plans,
specifications, certifications, contracts, reports, data or other technical
descriptions, reports or audits (including, without limitation, all
environmental, structural and mechanical inspection reports), and all marketing
materials ("Contract Documents"), all governmental permits, licenses,
certificates, and approvals in connection with the ownership of the Premises
("Licenses"), all security deposits, utility deposits, escrow accounts,
instruments, documents of title, general intangibles, all computers, computer
software programs and data and business records pertaining to the Premises, all
telephone, communications and security systems and equipment, and all of
Seller's rights, claims, and causes of action if any, to the extent they are
assignable, under any warranties and/or guarantees of manufacturers, contractors
or installers, all rights against tenants and others relating to the Premises or
the operation or maintenance thereof, including to the extent applicable, any
warranties from any previous owners of the Premises (hereinafter collectively
referred to as "Personal Property"); and
1.3 Leases. All leases, licenses and other occupancy agreements for
any part of the Premises, if there be any, and all prepaid rent and unapplied
security deposits (the "Leases"); and
1.4 Right to Names. Any and all right, title and interest of Seller
in and to the name(s) of 200 and 300 Commerce Drive, and the right to all
printing styles, trademarks and logos ("Names").
The Premises, Personal Property, Leases and Names are sometimes
hereinafter referred to as "Property."
2. PURCHASE PRICE AND MANNER OF PAYMENT.
2.1 Purchase Price. Buyer shall pay the total sum of One Million
($1,000,000) Dollars (hereinafter referred to as the "Purchase Price") subject
to adjustment.
2.2 Manner of Payment. The Purchase Price shall be paid in the
following manner:
2.2.1 Deposit. By delivery, upon Seller's execution and
delivery of this Agreement, of Buyer's good check in the amount of Fifteen
Thousand ($15,000) Dollars to the Title Company (hereinafter referred to as
"Escrow Agent" or "Escrowee"). This sum, the sum specified in Section 2.2.2
below, and all other sums paid by Buyer to the Escrow Agent under this Agreement
(hereinafter referred to as the "Deposit") shall be held by Escrow Agent in a
federally-insured, segregated money market account at an institution to be
designated by Buyer until
2
<PAGE>
termination or consummation of this Agreement. Interest on the Deposit shall be
credited to Buyer at Closing, or paid to the party otherwise entitled to the
Deposit in the event of the termination of this Agreement prior to Closing.
2.2.2 Additional Deposit. By delivery, within two (2)
business days next following the Inspection Period Expiration Date (as
hereinafter defined), of Buyer's good check in the amount of Thirty Thousand
($30,000) Dollars.
2.2.3 Cash Balance. The balance by delivery to the Seller on
the Closing Date, by wire transfer, the amount of Nine Hundred Fifty Five
Thousand ($955,000) Dollars, subject to adjustment as herein provided.
2.3 Intentionally Omitted.
3. TITLE. On the Closing Date, Seller shall convey to Buyer good and
marketable fee simple title to the Premises subject only to those rights of way,
easements, covenants restrictions, and objections to title (hereinafter
"Permitted Exceptions") listed on Exhibit "C" hereto, unless identified by Buyer
as "Title Objections" as hereinafter provided, and subject to the rights of
tenants listed on the rent roll attached hereto as Exhibit "D", which title
shall be insurable at regular rates by a reputable title insurance company
("Title Company") under an ALTA 1970 Form B (Revised 10/17/70 and 3/30/84) title
insurance policy ("Title Policy"), with the endorsements and affirmative
insurance specified in Section 12.2.1.10 below. Seller and Buyer consent to
use, at Buyer's option, Commonwealth Land Title Insurance Company, Lawyers Title
Insurance Corporation or Congress Title Insurance Company as the Title Company.
4. COVENANTS. In addition to the covenants contained in the other
Sections of this Agreement, Seller covenants that it shall:
4.1 Maintenance. At all times prior to the Closing Date, maintain
the Property in its current condition, reasonable wear and tear and casualty
alone excepted, and pay in the normal course of business prior to Closing, all
sums due for work, materials or service furnished or otherwise incurred in the
ownership and operation prior to Closing.
4.2 Alterations. Not make or permit to be made any alterations,
improvements or additions to the Property without the prior written consent of
Buyer, not to be unreasonably withheld or delayed, except if required by
applicable law or ordinance.
4.3 Lease. Not enter into any Lease, nor amend, modify or terminate
any existing Lease, without Buyer's consent.
4.4 Intentionally Omitted.
4.5 Intentionally Omitted.
4.6 Notice to Buyer. Notify Buyer promptly of the occurrence of any
of the following:
3
<PAGE>
(i) a fire or other casualty causing damage to the Property,
or any portion thereof;
(ii) receipt of notice of eminent domain proceedings or
condemnation of or affecting the Property, or any portion thereof;
(iii) receipt of notice from any governmental authority or
insurance underwriter relating to the condition, use or occupancy of the
Property, or any portion thereof, or any real property adjacent to any of the
Property, or setting forth any requirements with respect thereto;
(iv) Intentionally Omitted;
(v) receipt of any notice of default from the holder of any
lien or security interest in or encumbering the Property, or any portion
thereof;
(vi) Intentionally Omitted;
(vii) notice of any actual or threatened litigation against
Seller or affecting or relating to the Property, or any portion thereof; or
(ix) the commencement of any strike, lock-out, boycott or
other labor trouble affecting the Property, or any portion thereof.
4.7 Intentionally Omitted.
4.8 Intentionally Omitted.
4.9 No New Agreements. Except for agreements which can be terminated
on not more than thirty (30) days' notice, not enter into any other agreements
which affect the Property or the transactions contemplated by this Agreement,
without the prior written consent of Buyer, and not permit the creation of any
liability which shall bind Buyer or the Premises after Closing.
4.10 Tax Disputes. Notify Buyer of any tax assessment disputes
(pending or threatened) prior to Closing, and not agree to any changes in the
real estate tax assessment, nor settle, withdraw or otherwise compromise any
pending claims with respect to prior tax assessments, without Buyer's prior
written consent. If any proceedings shall result in any reduction of assessment
and/or tax for the tax year in which the Closing occurs, it is agreed that the
amount of tax savings or refund for such tax year, less the reasonable fees and
disbursements in connection with such proceedings, shall be apportioned between
the parties as of the date real estate taxes are apportioned under this
Agreement.
The parties agree that from and after the execution and delivery of
this Agreement, Buyer, at its sole cost, shall have the right to appeal the
current tax assessment of each tax parcel comprising the Premises. Buyer shall
consult with Seller prior to filing tax appeal documents, and
4
<PAGE>
shall afford Seller reasonable advance notice prior to any public hearings or
proceedings at which said appeal will be considered. Seller agrees that Buyer
may file such appeals in its name or in Seller's name, as may be required, and
Seller shall cooperate with Buyer in the prosecution of such appeal; provided,
however, that Buyer agrees to pay the reasonable legal fees incurred by Seller,
if any, in connection with furnishing such cooperation.
4.11 Intentionally Omitted.
5. REPRESENTATIONS AND WARRANTIES. In order to induce Buyer to enter
into this Agreement, Seller hereby represents and warrants to Buyer that the
following representations and warranties are true now and will be true at
Closing:
5.1 Seller's Authority For Binding Agreement. Seller is a duly
authorized and validly existing partnership formed under the laws of the State
of Delaware. Seller has full power, right and authority to own its properties,
to carry on its business as now conducted, and to enter into and fulfill its
obligations under this Agreement. Each of the persons executing this Agreement
on behalf of Seller is authorized to do so. This Agreement is the valid and
legally binding obligation of Seller, enforceable against Seller in accordance
with its terms. The execution and delivery of this Agreement and compliance
with its terms will not conflict with or result in the breach of any law,
judgement, order, writ, injunction, decree, rule or regulation, or conflict with
or result in the breach of any other agreement, document or instrument to which
Seller is a party or by which it or the Property is bound or affected.
5.2 Employment. There are no persons or parties employed by Seller
in connection with the Property.
5.3 Service Contracts. There are no service, equipment, supply or
maintenance contracts with respect to or affecting the Property not terminable
on thirty (30) days notice.
5.4 Condemnation. There are no condemnation or eminent domain
proceedings pending with regard to any part of the Property, and to the best of
the Seller's knowledge, no such proceedings are proposed.
5.5 No Tax Assessments. There are no public improvements in the
nature of off-site improvements, or otherwise, which have been ordered to be
made and/or which have not heretofore been assessed, and, to the Seller's
knowledge, there are no special or general assessments currently affecting or
pending against the Property.
5.6 Leases. There are no oral or written leases or rights of
occupancy or grants or claims of right, title or interest in any portion of the
Property or outstanding letters of intent to lease the Property, or any portion
thereof except as set forth in the CSC Lease (as defined in Section 12.2.2.3).
5.7 Compliance with Law.
5
<PAGE>
(i) To the best of Seller's knowledge, information and
belief, the development of 200 Commerce Drive (Tax Parcel #09 033.00 42) as a
three (3)-story, 64,000 +/- sf. office building with accessory on-site parking
for a minimum of 217 parking spaces (inclusive of 6 handicapped spaces) and the
development of 300 Commerce Drive (Tax Parcel #09.033.00 043) as a three (3)
story 43,200]+/- sf. office building with accessory on-site parking for a
minimum of 181 spaces (inclusive of 2 handicapped spaces) in accordance with the
Record Minor Subdivision Plan recorded in the Office of the Recorder of Deeds in
and for New Castle County, Delaware, at Microfilm No. 11239, is permitted by all
applicable federal, state and local law, and by the requirements of
governmental and quasi-governmental agencies and authorities having jurisdiction
thereof, and there are no outstanding notices of any violations issued by any
governmental or quasi-governmental agency or authority having jurisdiction over
the Property. The zoning classification of the Property is "O-2". Not more
than ten (10) days prior to the Closing, the Seller shall provide Buyer with an
estoppel certificate from the zoning code enforcement (or other appropriate)
officer of New Castle County, confirming that the zoning of the Property and
that the proposed development of the site as hereinabove provided is in
compliance with such zoning.
(ii) To the best of the Seller's knowledge, (1) no Hazardous
Substances (defined below) and no Hazardous Wastes (defined below) are present
on the Property including, without limitation, asbestos, flammable substances,
explosives, radioactive materials, hazardous wastes, toxic substances,
pollutants, pollution, contaminant, polychlorinated byphenyls ("PCBs"), urea
formaldehyde foam insulation, radon, corrosive, irritant, biologically
infectious materials, petroleum product, garbage, refuse, sludge, hazardous or
waste materials, and (2) there has been no use of the Property that may, under
any federal, state or local environmental statute, ordinance or regulation,
require, at any time, any closure or cessation of the use or occupancy of the
Property and/or impose, at any time, upon the owner of the Property any clean-up
or other monetary obligation. The Seller has not been identified in any
litigation, administrative proceeding or investigation as a responsible party or
potentially responsible party for any liability for clean-up costs, natural
resource damages or other damages or liability for prior disposal or release of
Hazardous Substances, Hazardous Wastes or other environmental pollutants or
contaminants, and no lien or superlien has been recorded, filed or otherwise
asserted against any real or personal property of the Seller for any clean-up
costs or other responses costs incurred in connection with any environmental
contamination that is attributable, in whole or in part, to the Seller. The
Seller hereby indemnifies and holds the Buyer harmless of, from and against any
and all liability, loss or damage suffered or incurred as a result of a claim,
demand, cost or judgment in favor of a third party, including, without
limitation, any governmental authority, arising from the deposit, storage,
disposal, burial, dumping, injecting, spilling, leaking, or other placement or
release in or on the Property of Hazardous Substances or Wastes first occurring
during the Seller's period of ownership. For purposes of this Agreement,
"Hazardous Substances" means those elements and compounds which are designated
as such in Section 101(14) of the Comprehensive Response, Compensation and
Liability Act (CERCLA), 42 U.S.C. Section 9601 (14), as amended, all petroleum
products and by-products, and any other hazardous substances as that term may be
further defined in any and all applicable federal, state and local laws; and
"Hazardous Wastes" means any hazardous waste, residential or household waste,
solid waste, or other waste as defined in applicable federal, state and local
laws. The Seller has not received any summons, citation, directive, letter or
other communication, written or oral, from any
6
<PAGE>
governmental or quasi-governmental authority concerning any intentional or
unintentional action or omission on the Seller's part which (a) resulted in the
releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping of
Hazardous Substances or Hazardous Wastes, or (b) related in any way to the
generation, storage, transport, treatment or disposal of Hazardous Substances or
Hazardous Wastes. To the best of the Seller's knowledge, neither the Property
nor any portion thereof, has been identified on the federal CERLIS, the National
Priorities List (40 C.F.R. Part 300, App. B) or any state or local list of
potential hazardous waste disposal sites or as an industrial establishment. The
Seller has conducted a complete and thorough inspection and test of the
underground storage tanks located on the Property, if any, and the Seller has
confirmed that the results thereof show compliance with all requirements of the
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. Sections 6901 et seq.
and all other applicable federal, state and local laws, and the Seller has taken
all other necessary and appropriate action to comply fully therewith.
5.8 No Brokers. Except as disclosed on Schedule 5.8 attached hereto,
no brokerage or leasing commissions or other compensation is now, or will upon
or after the Closing, be due or payable to any person, firm, corporation, or
other entity.
5.9 Utilities. Adequate utilities, useable public sanitary and storm
sewers, public water facilities, electric facilities and, if any, gas facilities
(collectively, the "Utilities"), are available at the lot lines of the Property.
All Utilities required for the operation of the Property either enter the
Property through adjoining public streets or, if they pass through adjoining
public land, do so in accordance with valid public easements or private
easements which will inure to the benefit of the Buyer at no cost to the owner
of the Property.
5.10 Permits Approvals and Certificates. Seller has obtained record
site plan approval from New Castle County, but has not yet obtained the other
licenses, permits, approvals and authorizations necessary for the development of
the Property as provided in Section 5.7(i) above. Seller has no knowledge,
however, of any facts or circumstances, or other reason why all requisite
licenses, permits, approvals and authorizations necessary for such development
will not be obtained in the ordinary course once applications therefore are made
and fees therefore are paid.
5.11 Good Title to Property. The Seller presently holds, and
immediately following the Closing, the Buyer shall hold, good and marketable,
indefeasible fee simple title to the Property, free and clear of liens and
encumbrances, other than the lien of any existing mortgage held by WSFS, which
shall be paid and discharged at or before the Closing.
5.12 All Taxes and Assessments Paid. The Seller will have paid prior
to the Closing, all taxes and assessments, including assessments payable in
installments, which are to become due and payable and/or a lien on the Property,
except for taxes for the current year which shall be prorated between the Seller
and the Buyer as of the Closing.
5.13 FIRPTA The Seller is not a "foreign person" as such term is
defined in Section 1445(f)(3) of the Internal Revenue Code of 1954, as amended
(the "Code").
7
<PAGE>
5.14 Mechanic's Liens. No work has been performed or is in progress
at, and no materials have been furnished to the Property which, though not
presently the subject of, might give rise to construction, mechanic's,
materialmen's, or other liens against the Property or any portion thereof,
except that for which full and complete releases have been obtained. If any
lien for any such work is filed before or after the Closing, the Seller shall
promptly discharge the same.
5.15 Rights to Purchase. There are no outstanding agreements,
options, rights of first refusal, conditional sales agreements or other
agreements or arrangements, whether oral or written, regarding the purchase and
sale of the Property.
5.16 No Outstanding Obligations. All debts, liabilities, and
obligations of the Seller arising out of the Property including, but not limited
to, construction costs, salaries, taxes, accounts payable and the like, have
been paid as they became due and payable and shall continue to be so paid from
the date hereof until the Closing. No debts, liabilities, claims, or
obligations (whether known or unknown, accrued, absolute, contingent, or
otherwise) of the Seller arising out of the Property shall be outstanding as of
the Closing.
5.17 Rollback Taxes. The Property is not subject to any roll-back or
agricultural taxation or other tax abatement program. Any roll-back taxes
payable in connection with the Seller's development of the Property have been
paid in full.
5.18 Development Agreements. The Property and the Seller are in
compliance with and have fully paid and discharged all obligations accrued to
date under any and all development, tri-party and like agreements, and any and
all other agreements with county, municipal and other governmental and
quasi-governmental agencies and authorities respecting the ownership,
development and operation of the Property and all portions thereof.
5.19 Correct Copies of Documents. Where copies of any documents have
been delivered by the Seller to the Buyer, whether prior to or pursuant to this
Agreement, such copies: (i) are exact copies of the originals of said
documents, as executed and delivered by all of the parties thereto; (ii) to
the best of the Seller's knowledge, constitute, in each case, the entire
agreement between the parties thereto with respect to the subject matter
thereof, and the original instruments in the form delivered to the Buyer, are
now in full force and effect, and valid and enforceable in accordance with their
respective terms, and no party thereto is in default, and no claim of default by
any party has been made or is now pending and there does not now exist any
default which, after either the giving of notice or the passing of time, or
both, will or may constitute a default, or would excuse performance by any party
thereto; and (iii) have not been changed or amended except for amendments, if
any, specifically referred to therein.
5.20 No Lawsuits. There are no claims, lawsuits or proceedings
pending, or to the best of the Seller's knowledge, threatened against or
relating to Seller or the Property, or which could affect them, or either of
them, in any court or before any governmental agency.
6. POSSESSION. Possession of the Premises is to be given to Buyer by
delivery of the Deed and possession of the Property.
8
<PAGE>
7. BUYER'S REVIEW AND APPROVAL OF TITLE AND SURVEY.
7.1 Title Binder. On or before five (5) business days from the
execution of this Agreement, Seller shall have delivered to Buyer a copy of its
title commitment or policy for the Property (complete with copies of all
exceptions to title), and within ten (10) business days after the receipt of
same, Buyer shall secure a current title commitment (the "Title Binder") from
the Title Company, and shall have until the Inspection Period Expiration Date
(as hereinafter defined) to examine the condition of title, including the terms
and provisions of all items and documents referred to in the Title Binder, and
all information regarding title as disclosed on the Survey (hereinafter
defined), and to approve or disapprove the same. If Buyer shall disapprove the
condition of title, such disapproval shall be set forth in a notice given to
Seller (the "Disapproval Notice") identifying the condition of title to the
Property or any of the terms, provisions or contents of said items, documents or
Survey which are disapproved by Buyer (the "Title Objections"). Subject to the
provisions of the succeeding portion of this Section 7.1, Seller shall have
until the date which is ten (10) days after the date of the Disapproval Notice
(the "Title Cure Expiration Date") in which to cure or eliminate all items which
Buyer disapproves in the Disapproval Notice, and to furnish evidence
satisfactory to Buyer and the Title Company that all such items have been cured
or eliminated or that arrangements have been made with the Title Company and any
parties in interest to cure or eliminate the same at or prior to the Closing.
If Seller fails to remove any Title Objection in accordance with the provisions
of the immediately preceding sentence, Buyer, nevertheless, may elect (at or
prior to the Closing) to consummate the transaction provided for in this
Agreement subject to any such Title Objection(s) as may exist as of the Closing
with a credit against the Purchase Price equal to the sum necessary to remove
any lien of a fixed or ascertainable amount . If Buyer shall not so elect,
Buyer may terminate this Agreement by notice in writing to Seller, whereupon the
Deposit shall be immediately refunded to Buyer, and this Agreement shall be null
and void, and the parties hereto shall be relieved of all further obligations
and liability under this Agreement.
7.2 Survey. Within ten (10) days after the date of this Agreement,
at Buyer's cost, Seller shall deliver to Buyer a current survey of Property (the
"Survey"), prepared by a duly licensed land surveyor acceptable to Buyer. The
Survey shall be currently dated, shall show the location on the Property of all
buildings and improvements, building and set-back lines, easements,
rights-of-way, encroachments, elevations between public roads providing access
to the Property, and the boundary of the Property, and other such matters
affecting the Property whether physically apparent from the ground, of record in
public offices, or otherwise, and shall contain a legal description of the
boundaries of the Premises by metes and bounds which shall include a reference
to the recorded plat, if any. The surveyor shall certify to Buyer and to the
Title Company and to any lender making a loan to Buyer secured by the Property
that the Survey is correct and was made on the ground; and that there are no
visible discrepancies, conflicts, encroachments, overlapping of improvements,
violations of set-back lines, easements, rights-of-way or other such matters
affecting the Property except as are shown on the Survey, and that the Survey
conforms to all ACTA/ACSM and Pennsylvania Land Title Association standards and
requirements for a Class A Survey. Any and all recorded matters shown on said
Survey shall be legibly identified by appropriate volume and page recording
references with dates of recording noted. Buyer shall have until the Inspection
Period Expiration Date to approve or disapprove the
9
<PAGE>
material contained thereon. If Buyer shall disapprove such Survey, such
disapproval shall be set forth in a Disapproval Notice as hereinabove provided
in Section 7.1, and the provisions of Section 7.1 with respect to Disapproval
Notices shall apply.
7.3 Physical and Financial Inspection. For a period (the
"Inspection Period") commencing on the second (2nd) business day next following
the date upon which Buyer shall receive from Seller a fully-executed counterpart
of this Agreement, and expiring twenty (20) days thereafter (such date is herein
referred to as the "Inspection Period Expiration Date"), Buyer shall have the
right to have performed a physical and mechanical inspection, measurement and
audit of the Property and an inspection of all books and records and financial
information pertaining thereto, and Seller shall cooperate with Buyer and shall
furnish to Buyer such information, materials and documents as Buyer may
reasonably request and shall have its accountant or internal controller
available throughout such period to assist in Buyer's inspection and review.
The inspection, audit and measurement of the Property's operation, condition and
maintenance shall include, without limitation, such environmental and
engineering inspections, reviews and assessments that Buyer deems appropriate.
If Buyer fails to close hereunder for any reason other than Seller's breach or
default, Buyer shall, to the maximum extent practicable, restore the Property to
the condition existing immediately before such tests and assessments. In the
event Seller shall fail to deliver or make available any item or information
material to Buyer's review of the Property and required to be delivered or made
available pursuant to the terms of this Section within five (5) business days
next following the date upon which Buyer shall receive from Seller a
fully-executed counterpart of this Agreement, then at Buyer's written election,
the Inspection Period Expiration Date (and the Closing Date) shall be extended
by one day for each day that the delivery or availability of such item is
delayed. If Buyer, at Buyer's sole and absolute discretion, shall find such
inspection(s) to be unsatisfactory for any reason whatsoever, Buyer shall have
the right, at its option, to terminate this Agreement on or before the
Inspection Period Expiration Date, and upon such termination, the Deposit shall
be immediately refunded to the Buyer, and thereupon the parties hereto shall
have no further liabilities one to the other with respect to the subject matter
of this Agreement. Buyer agrees that it shall not unreasonably interfere with
tenants in performing its inspection. In connection with such inspection, and
without limiting the generality of Seller's obligations hereunder, Seller agrees
to deliver to Buyer, within five (5) days:
7.3.1 Intentionally Omitted.
7.3.2 Contracts, Licenses, Permits. Copies of the Contract
Documents, the Licenses, insurance policies applicable to the Property and any
other documents evidencing rights described in Section 1.2 hereof;
7.3.3 Intentionally Omitted.
7.3.4 Intentionally Omitted.
7.3.5 Intentionally Omitted
7.3.6 Three Years' Tax Bills. A copy of tax bills (i) for
the current year, and (ii) if available, for the preceding two years;
10
<PAGE>
7.3.7 Intentionally Omitted.
7.3.8 Schedule of Violations. A schedule setting forth all
violations of any law, ordinance, regulation, rule or requirement of any
governmental body having jurisdiction, whether existing or prospective, of which
Seller has received written notice, issued or noted by any governmental body
during the past three years, and copies of any notices, terminations or
correspondence relating thereto;
7.3.9 Schedule of Notices. A schedule of any written
demands, requests, requirements or recommendations regarding the operation,
maintenance, repair or replacement of the Property or any portion thereof, of
which Seller has received notice during the past three years, from the holder of
any mortgage or deed of trust or any insurance company or any board of fire
underwriters or real estate associations or like body, and copies of all
correspondence relating thereto;
7.3.10 Intentionally Omitted.
7.3.11 Zoning, Site Plan, Subdivision Plan or Plat. All
conditional and permanent zoning, site plan, subdivision, building, housing,
safety, fire and health approvals, including, without limitation, the local
governmental applications, resolutions and approvals supporting the same;
7.3.12 Intentionally Omitted.
7.3.13 Takings or Changes. Copies of all written notices to
Seller of proposed or threatened takings or changes with respect to the Property
or major access roads within a reasonable radius which would affect the access
to the Property, or any portion thereof, by prospective occupants;
7.3.14 Tax Assessments, Appeals and Increases. Copies of all
written notices to Seller of all filed, proposed or threatened tax assessment
appeals or tax assessment increases related to the Premises;
7.3.15 Litigation. Copies of all pending and written notices
to Seller of threatened litigation, including litigation affecting the Property
or this transaction;
7.3.16 Insurance Policies. Copies of all insurance policies of
Seller related to the Property;
7.3.17 Intentionally Omitted.
7.3.18 Title Information. Seller's most recently dated title
report or title commitment respecting the Premises.
7.4 Seller's Failure to Deliver. If Seller shall have failed to
deliver to Buyer all material documents required to be delivered under Section
7.3 hereof, Buyer may, at its option, at
11
<PAGE>
any time on or after such date, but prior to the curing of such failure by
Seller, give Seller a five (5) day written notice specifying such default, and
if Seller fails to cure such default within such five (5) day period, Buyer may
terminate this Agreement, receive the return of the Deposit and pursue any other
remedy available to it pursuant to the provisions hereof.
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer and Seller set forth herein shall survive Closing and
delivery of the deed for the applicable period of the statute of limitations
pertaining thereto.
9. INTENTIONALLY OMITTED.
10. CONDEMNATION. If, prior to the Closing Date, all or any portion of
the Premises is taken by eminent domain or a notice of any eminent domain
proceedings with respect to the Premises or any part thereof is received by the
Seller, then Seller shall within five (5) days thereafter give notice thereof to
Buyer and Buyer shall have the option to (a) complete the purchase hereunder or
(b) if such taking, in Buyer's sole and absolute discretion, materially affects
the Premises or its current economic viability, terminate this Agreement, in
which event the Deposit shall be immediately refunded to Buyer, and this
Agreement shall be null and void. Buyer shall deliver written notice of its
election to the Seller within ten (10) days after the date upon which the Buyer
receives written notice of such eminent domain proceedings. If notice of
condemnation is received by Buyer and it fails to deliver said written notice of
its election within said time period, such failure shall constitute a waiver by
Buyer of its right to terminate this Agreement. If this Agreement is not so
terminated, Buyer shall be entitled to all awards or damages by reason of any
exercise of the power of eminent domain or condemnation with respect to or for
the taking of the Premises or any portion thereof, and until such time as
closing has occurred, or this Agreement terminates. Any negotiation for, or
agreement to, and all contests of any offers and awards relating to eminent
domain proceedings shall be conducted with the joint approval and consent of the
Seller and the Buyer.
11. Expense Allocations.
11.1 Seller shall pay for one-half of all applicable realty transfer
taxes related to the execution, delivery and recording of the Deed, Bill of
Sale, and other Closing Documents, and all related recording charges.
11.2 Buyer shall pay for one-half of all applicable realty transfer
taxes, for Buyer's title examination, the survey and for Buyer's title
examination and premiums.
11.3 Buyer and Seller shall be responsible for paying their own
attorney's fees in connection with this transaction.
12. CLOSING.
12.1 Time and Date and Place. The closing ("Closing") on the sale of
the Property (herein referred to as the "Closing Date") shall take place at a
time specified by Buyer in writing to Seller at least five (5) days prior to the
specified Closing Date, but in any event no later
12
<PAGE>
than September 19, 1997, at the offices of Pepper, Hamilton & Scheetz, 3000 Two
Logan Square, Eighteenth & Arch Streets, Philadelphia, PA, commencing at 10:00
a.m.
12.2 Documents. At Closing, the parties indicated shall
simultaneously execute and deliver the following:
12.2.1 Seller's Documents and Other Items. Seller shall
execute and deliver or cause to be executed and delivered to Buyer in proper
form for recording:
12.2.1.1 Deed. A special warranty deed prepared by Buyer's
counsel in form acceptable to Seller (the "Deed"), conveying the Premises to
Buyer, duly executed by Seller for recording. The Deed description shall be
based upon the metes and bounds description attached as Exhibit "A", unless
Buyer requests that Seller convey the Premises by the metes and bounds
description shown on the new ALTA/ACSM survey, if any, obtained by Buyer, in
which event the Premises shall be so conveyed.
12.2.1.2 Bill of Sale. A warranty bill of sale prepared by
Buyer's counsel in form acceptable to Seller, assigning, conveying and
transferring to Buyer, all of the Personal Property, if any.
12.2.1.3 Intentionally Omitted
12.2.1.4 Original Licenses, Contract Documents and Other
Personal Property. All original Licenses, Contract Documents, and other
Personal Property described in Section 1.2 of this Agreement, certified by
Seller as being true, correct and complete.
12.2.1.5 Intentionally Omitted
12.2.1.6 Assignment of Licenses, Contract Documents and
Other Personal Property. An assignment agreement prepared by Buyer's counsel,
in form acceptable to Seller, assigning, conveying and transferring to Buyer the
Licenses, Contracts Documents and Other Personal Property, including,
specifically, the Names.
12.2.1.7 FIRPTA Certificates. All certificate(s) required
under Section 1445 of the Code.
12.2.1.8 Intentionally Omitted.
12.2.1.9 Estoppel Certificate from Municipality. All
certificate(s) required by Section 5.7 hereof, and any other certificates
required by New Castle County, or the State of Delaware as a condition of the
conveyance of the Premises or the recording of the Deed.
12.2.1.10 Title Insurance Certificates. Such affidavits of
title or other certifications as shall be required by the Title Company to
insure Buyer's title to the Premises as set forth in Section 3, and to provide
affirmative endorsements (a) against mechanic's
13
<PAGE>
liens, (b) insuring against any violation of existing covenants, conditions or
restrictions, and insuring that future violation will not result in forfeiture
of title, (c) insuring that all foundations in place as of the date of such
policy are within the lot lines and applicable set back lines, (d) insuring that
the buildings and structures on the Premises do not encroach onto adjoining
land, or onto any easements, (e) insuring that confirming that there are no
encroachments of improvements from adjoining land onto the Premises (f) removing
any exceptions for matters which an accurate survey would disclose, and (g)
providing affirmative insurance with respect to such other matters as Buyer
shall reasonably specify.
12.2.1.11 Intentionally Omitted
12.2.1.12 Seller Certificate. A written certification
confirming that as of Closing no representation or warranty of Seller contained
in this Agreement, nor any document or certificate delivered to Buyer pursuant
to this Agreement or in connection with the transaction contemplated hereby,
contains any untrue statement of a material fact or knowingly omits to state a
material fact necessary to make any representation or warranty contained herein
misleading.
12.2.1.13 Organization Certifications. Confirmation of the
good standing and existence of Seller and the due authority of those executing
for them, including, without limitation, the following documents issued no
earlier than 30 days prior to Closing: (a) good standing certificate in state of
organization and in the State in which the Premises are located, (b) articles of
incorporation, partnership agreement or other formation instrument certified by
the secretary of state of the state of incorporation, (c) a certificate from the
secretary of the corporation or managing general partner of the partnership
confirming the incumbency of the signatories and the current force and effect of
the resolution authorizing their execution of the documents required under this
Agreement.
12.2.1.14 Intentionally Omitted
12.2.1.15 Tax Bills. Current tax bills and, if available,
tax bills for each of the years of Seller's ownership of the Property;
12.2.1.16 Tax Reduction Rights. An instrument assigning to
Buyer any claims for the reduction of real or personal property taxes assessed
against any portion of the Property for the fiscal year in which the Closing
takes place; any refund for such year shall be prorated when received;
12.2.1.17 Intentionally Omitted
12.2.1.18 Leasing Agreement. A leasing agreement
prepared by Buyer's counsel in form acceptable to Seller (the "Leasing
Agreement") duly executed by Buyer and Commonwealth Management Group, Ltd.,
pursuant to which Commonwealth Management Group, Ltd. shall lease the property
on terms and conditions more fully set forth therein..
14
<PAGE>
12.2.2 Buyer's Documents. Buyer shall deliver or cause to be
delivered to Seller:
12.2.2.1 The amounts required to be paid to Seller pursuant
to this Agreement;
12.2.2.2 Confirmation of the existence and subsistence of
Buyer, and the authority of those executing for Buyer, including, without
limitation, the following documents issued no earlier than thirty (30) days
prior to Closing: Operating Agreement and Certificate of Formation.
12.2.2.3 Leasing Agreement. Buyer shall execute and
deliver the Leasing Agreement, as defined above, pursuant to which Commonwealth
Management Group, Ltd. shall lease the Property on terms and conditions more
fully set forth therein.
12.2.2.4 Assignment Agreement Regarding CSC Lease. An
agreement prepared by Buyer's counsel, in form acceptable to Seller (the "CSC
Expansion Agreement") duly executed by Buyer and Seller, pursuant to which
Seller shall assign and Buyer shall assume certain obligations regarding
expansion rights of Computer Sciences Corporation under Lease dated July 24,
1997 (the "CSC Lease") with respect to 400 Commerce Drive, all as more fully set
forth in the CSC Expansion Agreement. The foregoing notwithstanding, the
parties agree that they will execute and deliver the CSC Expansion Agreement on
or before closing on Seller's sale of 400 Commerce Drive to Christiana Center
Operating Company I LLC. This provision expressly survives Closing hereunder.
12.2.3 Title Insurance. As a condition to Buyer's obligations
at Closing, Title Company shall furnish Buyer at Closing with the Title Policy,
in the form approved by Buyer pursuant to Section 3, in the full amount of the
Purchase Price, wherein the Title Company shall insure fee simple title to the
Property in Buyer or its designee as of the Closing Date containing no
exceptions to title other than those which have been approved by Buyer in
writing pursuant to Section 3 hereof and providing the title endorsements
specified in Section 12.2.1.10 above.
12.2.4 Necessary Documents. Buyer and Seller shall execute
and deliver such other documents and instruments as may be reasonably necessary
to complete the transaction contemplated by this Agreement.
15
<PAGE>
13. DEFAULT; REMEDIES
13.1 In the event that any of Seller's representations or warranties
contained in this Agreement are materially or prejudicially untrue or if Seller
shall have failed to have performed any of the covenants and/or agreements
contained in this Agreement which are to be performed by Seller, on or before
the date set forth in this Agreement for the performance thereof, or if any of
the conditions precedent to Buyer's obligation to consummate the transaction
contemplated by this Agreement shall have failed to occur, Buyer may, at its
option, rescind this Agreement by giving written notice of such rescission to
Seller and Seller shall immediately thereafter return the Deposit, and
thereupon, subject to the provisions of Section 13.3 below, the parties shall
have no further liability to each other hereunder. In the alternative, but
without limiting Buyer's right upon any default by Seller hereunder to receive
the prompt return of the Deposit, Buyer may seek to enforce specific performance
of this Agreement.
13.2 Buyer recognizes that the Property will be removed by Seller from
the market during the existence of this Agreement and that if this purchase and
sale is not consummated because of Buyer's default Seller shall be entitled to
compensation for such detriment. Seller and Buyer acknowledge that it is
extremely difficult and impracticable ascertain the extent of the detriment, and
to avoid this problem, Seller and Buyer agree that if the purchase and sale
contemplated in this Agreement is not consummated because of Buyer's default
under this Agreement, Seller shall be entitled to retain the Deposit as
liquidated damages. The parties agree that the sum stated above as liquidated
damages shall be in lieu of any other relief to which Seller might otherwise be
entitled, Seller hereby specifically waiving any and all rights which it may
have to damages or specific performance as a result of Buyer's default under
this Agreement.
13.3 Buyer's Out-of-Pocket Costs. In the event of Seller's
breach or default hereunder which results in Buyer's termination of this
Agreement, or in the event that Seller shall fail to perform any term, covenant
or agreement, or satisfy any condition herein stipulated (including, without
limitation, a failure of title), then, in any such event, upon termination by
Buyer hereunder, in addition to receiving the immediate return of the Deposit,
anything in the Agreement contained to the contrary notwithstanding, Buyer shall
also receive from Seller, upon demand, Buyer's actual, documented out-of-pocket
costs and expenses associated with this Agreement and Buyer's anticipated
acquisition of the Property including, without limitation, Buyer's reasonable
counsel fees and costs, title expenses, survey costs, and other costs and
expenses associated with Buyer's due diligence, including, without limitation,
legal, financial and accounting due diligence, Buyer's structural inspection of
the Property and Buyer's environmental assessment of the Property (collectively,
"Transaction Costs"). The foregoing list is not intended to be exclusive, but
representative of the costs and expenses that the parties anticipate that Buyer
will incur in anticipation of this transaction. Seller's maximum reimbursement
liability under this Section 13.3 shall not exceed Twenty Five Thousand
($25,000) Dollars.
14. CONDITIONS PRECEDENT TO CLOSING.
The obligations of Buyer hereunder are subject to the fulfillment of
the following conditions prior to or on the Closing Date (any one of which may
be waived in whole or in part by Buyer at or prior to the Closing) and in the
event any of the conditions are not complied with,
16
<PAGE>
Buyer may terminate this Agreement by notifying the Seller and Escrow Agent and
thereupon shall be returned the Deposit and thereafter this Agreement shall be
null and void:
14.1 Correctness of Warranties and Representations. The warranties
and representations made by Seller in this Agreement shall be true and correct
on the Closing Date as though such representations and warranties were made on
the Closing Date (except for changes in the Leases permitted under the terms of
this Agreement).
14.2 Compliance with Terms and Conditions. Seller shall have
performed and complied with all of the terms and conditions required by this
Agreement to be performed and complied with by it prior to or on the Closing
Date.
14.3 Buyer's Satisfaction with Inspection. Buyer shall have notified
Seller of Buyer's satisfaction with the review and inspection performed under
Section 7 of this Agreement, or shall fail to notify Seller on or before the
Inspection Period Expiration Date, of Buyer's dissatisfaction with the results
of such review and inspection.
14.4 Trustee Approval. This Agreement and the transactions
contemplated hereby shall have received formal approval of Buyer's Board of
Trustees at a meeting duly called during the Inspection Period to consider same.
15. PRORATIONS.
15.1 Operating Expenses. The following items shall be prorated at
Closing, as of close of business of the day immediately preceding Closing
"Adjustment Date":
15.1.1 Intentionally Omitted.
15.1.2 Taxes. Real estate and personal property taxes, if
any, on the basis of the fiscal year for which assessed. If the Closing shall
occur before the tax rate or assessment is fixed, the apportionment of such real
estate and personal property taxes at the Closing shall be upon the basis of the
tax rate for the next preceding year applied to the latest assessed valuation.
Final adjustment will be made upon the actual tax amount, when determined.
15.1.3 Deposits. Tax and utility company deposits, if any,
shall be assigned to Buyer.
15.1.4 Water and Sewer Charges. Water and sewer charges and
fire protection and inspection services based upon meter readings to be obtained
by Seller effective as of the Adjustment Date, or if not so obtainable, a date
not more than ten (10) days prior to the Adjustment Date, and the unfixed meter
charges based thereon for the intervening period shall be apportioned on the
basis of such last reading. Upon the taking of a subsequent actual reading,
such apportionment shall be readjusted and Seller or Buyer, as the case may be,
will promptly deliver to the other the amount determined to be so due upon such
readjustment. If Seller is unable to furnish such prior reading, any reading
subsequent to the Closing will be apportioned on
17
<PAGE>
a per diem basis from the date of such reading immediately prior thereto and
Seller shall pay the proportionate charges due up to the date of Closing.
15.1.5 Assigned Contracts. Amounts paid or payable in respect
of any service and maintenance contracts assigned to Buyer in accordance
herewith.
15.1.6 Electricity, gas, steam and fuel. Electricity, gas and
steam and fuel oil, if any, based on meter readings or a fuel company letter
showing measurement on the day immediately preceding Closing, and valued at
current prices.
15.1.7 Intentionally Omitted.
15.2 Custom and Practice. Except as set forth in this Agreement, the
customs of the State and County in which the Premises are located shall govern
prorations.
15.3 Future Installments of Taxes. If at Closing, the Property or any
part thereof shall be or shall have been affected by an assessment or
assessments which are or may become payable in installments, then for purposes
of this Agreement, all unpaid installments of any such assessment, including
those which are to become due and payable and to be liens upon the Property
shall be paid and discharged by Seller at Closing.
15.4 Application of Prorations. If such prorations result in a
payment due Buyer, the cash payable at Closing shall be reduced by such sum. If
such prorations result in a payment due Seller, the same shall be paid by
uncertified check at Closing.
15.5 Schedule of Prorations. The parties shall endeavor to jointly
prepare a schedule of prorations for the Property no less than five (5) days
prior to Closing.
15.6 Intentionally Omitted.
15.7 Readjustments. The parties shall correct any errors in
prorations as soon after the Closing as amounts are finally determined.
15.8 Indemnification for Seller's Tax Obligations. Seller shall
indemnify, defend and save and hold harmless Buyer from any loss, cost,
liability or expense (including, without limitation, reasonable counsel fees and
court costs) incurred, paid or suffered by Buyer arising out of or by reason of
any claim made by any state taxing or employment authorities asserting or
indicating any claims or possible claims for unpaid taxes, penalties, interest
or court costs related thereto of Seller or any related party, due the State of
Delaware or its political subdivisions. The provisions of this Section 15.8
shall specifically survive Closing hereunder.
15.9 Survival. The provisions of this Section 15 shall expressly
survive Closing hereunder.
16. BROKERS. Each party hereby represents and warrants to the other that
it has not employed or retained any broker or finder in connection with the
transactions contemplated by this Agreement, other than CB Commercial, and that
other than CB Commercial, neither party has
18
<PAGE>
had any dealings with any other person or party which may entitle that person or
party to a fee or commission. Each party shall indemnify the other of and from
any claims for commissions by any person or party claiming such commission by or
through the indemnifying party.
17. ESCROW AGENT. The parties hereto have requested that the Deposit be
held in escrow by the Escrow Agent to be applied at the Closing or prior thereto
in accordance with this Agreement. The Escrow Agent will deliver the Deposit to
Seller or to Buyer, as the case may be under the following conditions:
17.1 Payment to Seller. To Seller on the Closing Date upon the
consummation of Closing;
17.2 Notice of Dispute. If either Seller or Buyer believes that it is
entitled to the Deposit or any part thereof, it shall make written demand
therefor upon the Escrow Agent. The Escrow Agent shall promptly mail a copy
thereof to the other party in the manner specified in Section 18.1 below. The
other party shall have the right to object to the delivery of the Deposit, by
filing written notice of such objections with the Escrow Agent at any time
within ten (10) days after the mailing of such copy to it in the manner
specified in Section 18.1 below, but not thereafter. Such notice shall set
forth the basis for objection to the delivery of the Deposit. Upon receipt of
such notice, the Escrow Agent shall promptly deliver a copy thereof to the party
who filed the written demand.
17.3 Escrow Subject to Dispute. In the event the Escrow Agent shall
have received the notice of objection provided for in 17.2 above of this
Section, in the manner and within the time therein prescribed, the Escrow Agent
shall continue to hold the Deposit until (i) the Escrow Agent receives written
notice from both Seller and Buyer directing the disbursement of the Deposit in
which case the Escrow Agent shall then disburse said Deposit in accordance with
said direction, or (ii) litigation arises between Seller and Buyer, in which
event the Escrow Agent shall deposit the Deposit with the Clerk of the Court in
which said litigation is pending, or (iii) the Escrow Agent takes such
affirmative steps as the Escrow Agent may, at the Escrow Agent's option elect in
order to terminate the Escrow Agent's duties including, but not limited to,
deposit in Court and an action for interpleader.
17.4 Escrow Agent's Rights and Liabilities. Escrow Agent shall not be
required to determine questions of fact or law, and may act upon any instrument
or other writing believed by it in good faith to be genuine and to be signed and
presented by the proper person, and shall not be liable in connection with the
performance of any duties imposed upon Escrow Agent by the provisions of this
Agreement, except for Escrow Agent's own willful default or gross negligence.
Escrow Agent shall have no duties or responsibilities except those set forth
herein. Escrow Agent shall not be bound by any modification of this Agreement,
unless the same is in writing and signed by Buyer and Seller, and, if Escrow
Agent's duties hereunder are affected, unless Escrow Agent shall have given
prior written consent thereto. In the event that Escrow Agent shall be
uncertain as to Escrow Agent's duties or rights hereunder, or shall receive
instructions from Buyer or Seller which, in Escrow Agent's opinion, are in
conflict with any of the provisions hereof, Escrow Agent
19
<PAGE>
shall be entitled to hold and apply the Deposit, pursuant to Section 17.3, and
may decline to take any other action.
18. GENERAL PROVISIONS.
18.1 Notices. All notices or other communications required or
permitted to be given under the terms of this Agreement shall be in writing, and
shall be deemed effective when (i) sent by nationally-recognized overnight
courier, (ii) facsimile with original following by regular mail, or (iii)
deposited in the United States mail and sent by certified mail, postage prepaid,
addressed as follows:
18.1.1 If to Buyer, addressed to:
Brandywine Realty Trust
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
Attn: Gerard H. Sweeney,
President and Chief Executive Officer
with a copy in each instance to:
Eric L. Stern, Esquire
Pepper, Hamilton & Scheetz LLP
3000 Two Logan Square
Eighteenth & Arch Streets
Philadelphia, PA 19103
18.1.2 If to Seller, addressed to:
Gender Road Joint Venture
c/o The Commonwealth Group
62 Read's Way
New Castle, Delaware 19720
Attn.: Brock J. Vinton, President
with a copy in each instance to:
William S. Gee, Esquire
Saul, Ewing, Remick & Saul
222 Delaware Avenue
Suite 1200
Wilmington, DE 19899
20
<PAGE>
18.1.3 If to Escrow Agent, addressed to:
Commonwealth Land Title Insurance Company
National Title Service
1700 Market Street
Philadelphia, PA 19103
Attn.: M. Gordon Daniels
or to such-other address or addresses and to the attention of such other person
or persons as any of the parties may notify the other in accordance with the
provisions of this Agreement.
18.2 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
18.3 Entire Agreement. All Exhibits attached to this Agreement are
incorporated herein and made a part hereof. This Agreement constitutes the
entire agreement between the parties hereto and supersedes all prior
negotiations, understandings and agreements of any nature whatsoever with
respect to the subject matter hereof. This Agreement may not be modified or
amended other than by an agreement in writing. The captions included in this
Agreement are for convenience only and in no way define, describe or limit the
scope or intent of the terms of this Agreement.
18.4 Governing Law. This Agreement shall be construed and interpreted
in accordance with the laws of the Commonwealth of Pennsylvania.
18.5 No Recording. This Agreement shall not be recorded in the Office
for the Recording of Deeds or in any other office or place of public record.
18.6 Tender. Tender of Deed by Seller and of the Purchase Price by
Buyer, are hereby mutually waived.
18.7 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories.
18.8 Further Instruments. Seller will, whenever and as often as it
shall be reasonably request so to do by Buyer, and Buyer will, whenever and as
often as it shall be reasonably requested so to do by Seller, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
any and all conveyances, assignments, correction instruments and all other
instruments and documents as may be reasonably necessary in order to complete
the transaction provided for in this Agreement and to carry out the intent and
purposes of this Agreement. All such instruments and documents shall be
satisfactory to the respective attorneys for Buyer and Seller. The provisions
of this Article shall survive the Closing.
21
<PAGE>
18.9 Time. Time is of the essence. In the event the last day
permitted for the performance of any act required or permitted under this
Agreement falls on a Saturday, Sunday, or legal holiday of the United States or
the Commonwealth of Pennsylvania, the time for such performance will be extended
to the next succeeding business day. Time periods under this Agreement will
exclude the first day and include the last day of such time period.
18.10 Designation of Nominee; Assignment of Agreement. Buyer
shall have the right to designate one or more of its subsidiaries or affiliate
entities to acquire title to the Premises hereunder. Except for the foregoing,
Buyer may not assign this Agreement.
18.11 Effective Date. Whenever the term or phrase "effective date
hereof" or "date hereof" or other similar phrases describing the date this
Agreement becomes binding on Seller and Buyer are used in this Agreement, such
terms or phrases shall mean and refer to the date on which a counterpart or
counterparts of this Agreement executed by Seller and Buyer are deposited with
the Escrow Agent.
18.12 Time for Acceptance. This Agreement shall constitute an
offer to buy or sell the Property, as case may be, on the terms herein set forth
only when executed by the Seller or Buyer. This Agreement may be accepted by
the party receiving such executed Agreement only by executing this Agreement and
delivering an original signed copy hereof to the Escrow Agent and an originally
signed copy hereof to the other party hereto within five (5) business days after
such receipt. Failure to accept in the manner and within the time specified
shall constitute a rejection and termination of such officer.
18.13 Confidentiality. Each of the parties hereto covenants and
agrees to hold the nature and content of this Agreement, including without
limitation, the Purchase Price contained herein, in strict confidence prior to
Closing, and other than disclosure required by the SEC and except as may be
necessary to comply with this Agreement, neither party shall disclose prior to
Closing, the nature, content or the Purchase Price of this Agreement without the
express written consent of the other party.
18.14 Delivery of Documents. If this Agreement (or any of the
Exhibits or Schedules hereto) shall have been prepared by Seller or by its
counsel, then promptly upon execution hereof by the parties hereto, Seller shall
deliver to Buyer one (1) "clean" copy of this Agreement, complete with all
Exhibits and Schedules prepared (or obtained) by Seller or its counsel, and a
copy of this Agreement (and said Exhibits and Schedules, if available) on disk,
compatible with WordPerfect 5.1.
19. SEC REPORTING (8-K) REQUIREMENTS.
For the period of time commencing on the date hereof and continuing
through the first anniversary of the Closing Date, and without limitation of
other document production otherwise required of Seller hereunder, Seller shall,
from time to time, upon reasonable advance written notice from Buyer, provide
Buyer and its representatives, with (I) access to all financial and other
information pertaining to the period of Seller's ownership and operation of the
Property, which information is relevant and reasonably necessary, in the opinion
of Buyer's outside, third party accountants (the "Accountants"), to enable Buyer
and its Accountants to
22
<PAGE>
prepare financial statements in compliance with any or all of (a) Rule 3-05 or
3-14 of Regulation S-X of the Securities and Exchange Commission (the
"Commission"), as applicable; (b) any other rule issued by the Commission and
applicable to Buyer; and (c) any registration statement, report or disclosure
statement filed with the Commission by, or on behalf of Buyer; and (II) a
representation letter, signed by the individual(s) responsible for Seller's
financial reporting, as prescribed by generally accepted auditing standards
promulgated by the Auditing Standards Division of the American Institute of
Certified Public Accountants, which representation letter may be required by
the Accountants in order to render an opinion concerning Seller's financial
statements.
20. INDEMNIFICATION.
Without limitation of any other Seller indemnity obligations set forth
herein, from and after the Closing Date, Seller shall indemnify, defend and save
and hold harmless Buyer, and its respective trustees, directors, officers and
employees, of, from and against any and all loss, cost, expense, damage, claim,
and liability, including reasonable attorney's fees and court costs, including,
without limitation, attorney's fees and costs associated with the enforcement of
Seller's indemnification obligations hereunder (hereinafter collectively,
"Losses") which Buyer may suffer or incur, resulting from, relating to, or
arising in whole or in part, from or out of (i) any misrepresentation or breach
of a representation or warranty by Seller contained in this Agreement; (ii) any
failure to fulfill any covenant or agreement of Seller contained in this
Agreement; (iii) all litigation set forth in this Agreement and on Exhibit "D";
hereto; and (iv) any and all actions, suits, investigations, proceedings,
demands, assessments, audits, judgments, and/or claims arising out of or
relating to any of the foregoing.
Promptly after receipt by Buyer of written notice of the commencement
of any suit, audit, demand, judgment, action, investigation or proceeding (a
"Third Party Action") or promptly after Buyer incurs a Loss or has knowledge of
the existence of a Loss, Buyer will, if a claim with respect thereto is to be
made against Seller due to Seller's obligation to provide indemnification
hereunder, give Seller written notice of such Loss or the commencement of any
Third Party Action; provided, however, that the failure to provide such notice
within a reasonable period of time shall not relieve Seller of any of its
obligations hereunder, unless Seller is materially prejudiced by such delay.
Promptly after receiving such notice, Seller will, upon notice to Buyer, have
the right to assume and control the defense and settlement of any such Third
Party Action at its own cost and expense; provided, however, that it shall be a
condition precedent to the exercise of such right by Seller that Seller shall
agree in writing that the Loss, or Third Party Action, as the case may be, is
properly within the scope of the indemnification obligation and that as between
the parties, Seller shall be responsible to satisfy and discharge such Third
Party Action. Seller shall not enter into any resolution or other compromise of
a Third Party Action without obtaining the complete release of Buyer for any
liability to all claimants under or pursuant to such Third Party Action. Buyer
shall have the right to participate in any such defense, contest or other
protective action at its own cost and expense.
Notwithstanding the foregoing, Buyer shall have the right to assume
and control the defense and settlement of a Third Party Action (a) if such
action includes claims for equitable relief which, if determined adversely to
Buyer, could reasonably be expected to interfere with its intended business
operations or damage its business reputation or (b) if Seller fails to do so in
a
23
<PAGE>
timely manner. In any circumstances in which Buyer undertakes to control the
Third Party Action as provided in this paragraph, it shall (i) not enter into
any resolution or other compromise involving monetary damages without obtaining
the prior written consent of Seller provided that such written consent may not
be withheld if it would interfere with Buyer's business operation and (ii) keep
Seller informed on an ongoing basis of the status of such Third Party Action and
shall deliver to Seller, copies of all documents related to the Third Party
Action reasonably requested by Seller. Buyer shall act to assure that all
attorneys' fees and expenses incurred in connection therewith are reasonable.
21. EXCULPATION.
No recourse shall be had for any obligation of Brandywine Realty Trust
under this Agreement or under any document executed in connection herewith or
pursuant hereto, or for any claim based thereon or otherwise in respect thereof,
against any past, present or future trustee, shareholder, officer or employee of
Brandywine Realty Trust, whether by virtue of any statute or rule of law, or by
the enforcement of any assessment or penalty or otherwise, all such liability
being expressly waived and released by the Seller and all parties claiming by,
through or under Seller.
22. AS-IS.
Buyer acknowledges and agrees that except as herein elsewhere
specifically provided, Seller has not made, does not make and specifically
negates and disclaims any representations, warranties (other than the special
warranty of title as set out in the deed), promises, covenants, agreements or
guaranties of any kind or character whatsoever, whether express or implied,
statutory, oral or written, past, present or future, of, as to, concerning or
with respect to (A) the value, nature, quality or condition of the Property,
including, without limitation, the water, soil, and geology, (B) the suitability
of the Property for any and all activities and uses which Buyer or any tenant
may conduct thereon, (C) the compliance of or by the Property or its operation
with any laws, rules, ordinances or regulations of any applicable governmental
authority or body, (D) the habitability, merchantability, marketability,
profitability or fitness for a particular purpose of the Property, (E) the
manner or quality of the construction or materials, if any, incorporated into
the Property, (F) the manner, quality, state of repair or lack of repair of the
Property, (G) compliance with any environmental requirements, including the
existence in or on the Property of hazardous materials or (H) any other matter
with respect to the Property. Additionally, no person acting on behalf of
Seller is authorized to make, and by execution hereof, Buyer acknowledges that,
except as herein elsewhere specifically provided, no person has made any
representation, agreement, statement, warranty, guaranty or promise regarding
the Property or the transaction contemplated herein; and no such representation,
warranty, agreement, guaranty, statement or promise, if any, made by any person
acting on behalf of Seller shall be valid or binding upon Seller unless
expressly set forth herein. Buyer further acknowledges and agrees that, except
with respect to information developed by Seller, its
24
<PAGE>
principals or affiliates, any information provided or to be provided with
respect to the Property was obtained from a variety of sources, that Seller has
not made any independent investigation or verification of such information and
makes no representations as to the accuracy, truthfulness or completeness of
such information, and the Buyer may not be entitled to rely on any such
information. The foregoing notwithstanding, Seller has no knowledge that any
such information is inaccurate or misleading. Buyer further acknowledges and
agrees that to the maximum extent permitted by law, and except as herein
elsewhere specifically provided, the sale of the Property as provided for herein
is made on an "as is" condition and basis with all faults. It is understood and
agreed that the purchase price has been adjusted by prior negotiation to reflect
that the Property is sold by Seller and purchased by Buyer subject to the
foregoing.
23. Other Transactions. The obligations of the parties to consummate
Closing hereunder shall be expressly conditioned upon (i) Seller and Brandywine
Operating Partnership, L.P., a Delaware limited partnership ("BOP") executing
and delivering a mutually satisfactory operating agreement regarding the
governance of Buyer, (ii) closing by Brandywine Realty Trust, or BOP, as buyer,
and Seller, as seller, under that certain Agreement of Sale dated of even date
herewith regarding the purchase and sale of 100 Commerce Drive, Newark, New
Castle County, Delaware, (iii) Seller and BOP executing and delivering a
mutually satisfactory operating agreement regarding the governance of Christiana
Center Operating Company I LLC and (iv) the execution and delivery by Seller, as
seller, and the said Christiana Center Operating Company I LLC as buyer of a
mutually satisfactory Agreement of Sale regarding the purchase and sale of that
certain property known as and numbered 400 Commerce Drive, Newark, New Castle
County, Delaware, each and all upon terms and conditions acceptable to the
parties, failing which neither party hereto shall have any obligation to
consummate Closing hereunder. If either party shall elect to terminate this
Agreement in such instance, then in that event, the Deposit shall be promptly
refunded to the Buyer and thereupon neither party shall have any further
obligation to the other hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed the day and year first above written.
GENDER ROAD JOINT VENTURE, CHRISTIANA CENTER OPERATING
a Delaware partnership COMPANY II LLC, By Its Members
By:_________________(SEAL) BRANDYWINE OPERATING PARTNERSHIP,
Brock J. Vinton, Managing Venturer L.P., a Delaware limited partnership, by
Hereunto Duly Authorized Brandywine Realty Trust, a Maryland Real
Estate Investment Trust, its sole
general partner
By: /S/ Gerard H. Sweeney, President & CEO
-----------------------------------------
Gerard H. Sweeney, President & CEO
[SIGNATURES CONTINUED ON THE NEXT PAGE]
25
<PAGE>
GENDER ROAD JOINT VENTURE,
a Delaware partnership
By:
-----------------------------------------
Brock J. Vinton, Managing Venturer,
Hereunto Duly Authorized
26
<PAGE>
Exhibits to Agreement of Sale
"A" - Legal Description
"B" - Schedule of Inventory
"C" - Permitted Encumbrances
"D" - Rent Roll
Schedules to Agreement of Sale
5.8 - Leasing Commissions
ii
<PAGE>
EXHIBIT "A"
Legal Description
<PAGE>
EXHIBIT "B"
Schedule of Inventory
None
<PAGE>
EXHIBIT "C"
Permitted Encumbrances
<PAGE>
EXHIBIT "D"
Rent Roll
Not Applicable
vii
<PAGE>
AGREEMENT OF SALE
for
400 COMMERCE DRIVE
NEWARK, DELAWARE
between
CHRISTIANA CENTER OPERATING
COMPANY I LLC
and
GENDER ROAD JOINT VENTURE
Dated: September 19, 1997
<PAGE>
AGREEMENT OF SALE
INDEX
Section Page
1. PROPERTY BEING SOLD........................................................1
1.1 Real Property........................................................1
1.2 Personal Property....................................................1
1.3 Leases...............................................................2
1.4 Right to Names.......................................................2
2. PURCHASE PRICE AND MANNER OF PAYMENT.......................................2
2.1 Purchase Price.......................................................2
2.2 Manner of Payment....................................................2
2.2.1 Deposit.......................................................2
2.2.2 Additiona.l Deposit...........................................3
2.2.3 Cash Balance..................................................3
2.3 Intentionally Omitted................................................3
3. TITLE......................................................................3
4. COVENANTS..................................................................3
4.1 Maintenance..........................................................3
4.2 Alterations..........................................................3
4.3 Lease................................................................3
4.4 Security Deposits....................................................3
4.5 Intentionally Omitted................................................3
4.6 Notice to Buyer......................................................4
4.7 Intentionally Omitted................................................4
4.8 Comply with Leases...................................................4
4.9 No New Agreements....................................................4
4.10 Tax Disputes.........................................................4
4.11 Intentionally Omitted................................................5
5. REPRESENTATIONS AND WARRANTIES............................................5
5.1 Seller's Authority For Binding Agreement.............................5
5.2 Employment...........................................................5
5.3 Service Contracts....................................................5
5.4 Condemnation.........................................................5
5.5 No Tax Assessments...................................................5
5.6 Leases...............................................................6
5.7 Compliance with Law..................................................6
5.8 No Brokers...........................................................7
5.9 Utilities............................................................7
5.10 Permits, Approvals and Certificates..................................7
-i-
<PAGE>
5.11 Good Title to Property...............................................8
5.13 FIRPTA...............................................................8
5.14 Mechanic's Liens.....................................................8
5.15 Rights to Purchase...................................................8
5.16 No Outstanding Obligations...........................................8
5.17 Rollback Taxes.......................................................8
5.18 Development Agreements...............................................9
5.19 Charges, Fees and Assessments........................................9
5.20 Correct Copies of Documents..........................................9
6. POSSESSION.................................................................9
7. BUYER'S REVIEW AND APPROVAL OF TITLE AND SURVEY............................9
7.1 Title Binder..........................................................9
7.2 Survey...............................................................10
7.3 Physical and Financial Inspection....................................10
7.3.1 Intentionally Omitted.........................................11
7.3.2 Contracts, Licenses, Permits..................................11
7.3.3 Intentionally Omitted.........................................11
7.3.4 Intentionally Omitted.........................................11
7.3.5 Intentionally Omitted.........................................11
7.3.6 Three Years' Tax Bills........................................11
7.3.7 Intentionally Omitted.........................................11
7.3.8 Schedule of Violations........................................11
7.3.9 Schedule of Notices...........................................11
7.3.10 Intentionally Omitted.........................................12
7.3.11 Zoning, Site Plan, Subdivision Plan or Plat...................12
7.3.12 Intentionally Omitted.........................................12
7.3.13 Takings or Changes............................................12
7.3.14 Tax Assessments, Appeals and Increases........................12
7.3.15 Litigation....................................................12
7.3.16 Insurance Policies............................................12
7.3.17 Intentionally Omitted.........................................12
7.3.18 Title Information.............................................12
7.4 Seller's Failure to Deliver..........................................12
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES................................12
9. INTENTIONALLY OMITTED.....................................................12
10. CONDEMNATION..............................................................12
11. EXPENSE ALLOCATIONS.......................................................13
12. CLOSING...................................................................13
12.1 Time and Date and Place..............................................13
-ii-
<PAGE>
12.2 Documents.........................................................13
12.2.1 Seller's Documents and Other Items........................13
12.2.1.1 Deed..........................................13
12.2.1.2 Bill of Sale..................................14
12.2.1.3 Original Leases...............................14
12.2.1.4 Original Licenses, Contract Documents and
Other Personal Property............................14
12.2.1.5 Assignment of Lease...........................14
12.2.1.6 Assignment of Licenses, Contract Documents
and Other Personal Property........................14
12.2.1.7 FIRPTA Certificates...........................14
12.2.1.8 Tenant Letter.................................14
12.2.1.9 Estoppel Certificate from Municipality........14
12.2.1.10 Title Insurance Certificates..................14
12.2.1.11 Updated Rent Roll.............................15
12.2.1.12 Seller Certificate............................15
12.2.1.13 Organization Certifications...................15
12.2.1.14 Keys..........................................15
12.2.1.15 Tax Bills.....................................15
12.2.1.16 Tax Reduction Rights..........................15
12.2.1.17 Tenant Estoppel...............................15
12.2.1.18 Leasing and Management Agreement..............16
12.2.1.19 Engineer's Certificate........................16
12.2.2 Buyer's Documents.........................................16
12.2.3 Title Insurance...........................................16
12.2.4 Necessary Documents.......................................16
13. DEFAULT; REMEDIES.........................................................17
13.1......................................................................17
13.2......................................................................17
13.3 Buyer's Out-of-Pocket Costs.........................................17
14. CONDITIONS PRECEDENT TO CLOSING...........................................17
14.1 Correctness of Warranties and Representations. .....................18
14.2 Compliance with Terms and Conditions.................................18
14.3 Buyer's Satisfaction with Inspection.................................18
14.4 Trustee Approval.....................................................18
14.5 Estoppel.............................................................18
14.6 Financing............................................................18
15. PRORATIONS................................................................18
15.1 Operating Expenses...................................................18
15.1.1 Intentionally Omitted........................................18
15.1.2 Taxes........................................................18
15.1.3 Deposits. ..................................................19
15.1.4 Water and Sewer Charges......................................19
-iii-
<PAGE>
15.1.5 Assigned Contracts...........................................19
15.1.6 Electricity, gas, steam and fuel.............................19
15.1.7 Security Deposits............................................19
15.2 Custom and Practice..................................................19
15.3 Future Installments of Taxes.........................................19
15.4 Application of Prorations............................................19
15.5 Schedule of Prorations...............................................19
15.6 Intentionally Omitted................................................19
15.7 Readjustments........................................................19
15.8 Indemnification for Seller's Tax Obligations.........................20
15.9 Survival.............................................................20
16. BROKERS...................................................................20
17. ESCROW AGENT..............................................................20
17.1 Payment to Seller....................................................20
17.2 Notice of Dispute....................................................20
17.3 Escrow Subject to Dispute............................................20
17.4 Escrow Agent's Rights and Liabilities................................21
18. GENERAL PROVISIONS........................................................21
18.1 Notices..............................................................21
18.2 Binding Effect.......................................................22
18.3 Entire Agreement.....................................................22
18.4 Governing Law........................................................22
18.5 No Recording.........................................................22
18.6 Tender..........................................................23
18.7 Execution in Counterparts............................................23
18.8 Further Instruments..................................................23
18.9 Time.................................................................23
18.10 Designation of Nominee; Assignment of Agreement.................23
18.11 Effective Date..................................................23
18.12 Time for Acceptance.............................................23
18.13 Confidentiality.................................................23
18.14 Delivery of Documents...........................................24
19. SEC REPORTING (8-K) REQUIREMENTS..........................................24
20.INDEMNIFICATION............................................................24
21. EXCULPATION...............................................................25
22. AS-IS.....................................................................25
23. INTENTIONALLY OMITTED.....................................................26
-iv-
<PAGE>
Exhibits to Agreement of Sale
"A" - Legal Description
"B" - Intentionally Omitted
"C" - Permitted Encumbrances
"D" - Intentionally Omitted
"E" - Intentionally Omitted
"F" - Intentionally Omitted
"G" - Intentionally Omitted
"H" - Form of Tenant Estoppel Certificate
Schedules to Agreement of Sale
5.8 - Leasing Commissions
5.16 - Construction Contracts Relating to the Project
<PAGE>
AGREEMENT OF SALE
400 COMMERCE DRIVE
AGREEMENT OF SALE made this 19th day of September, 1997, between CHRISTIANA
CENTER OPERATING COMPANY I LLC, a Delaware limited liability company, its
permitted assignee or nominee, having its principal office at c/o Gender Road
Joint Venture, c/o The Commonwealth Group, 62 Read's Way, New Castle, Delaware
19720 ("Buyer"), and GENDER ROAD JOINT VENTURE, a Delaware partnership, having
its principal office at c/o The Commonwealth Group, 62 Read's Way, New Castle,
Delaware 19720 ("Seller").
BACKGROUND
The Background of this Agreement is as follows:
A. Seller is the owner of a certain tract of land being comprised of
13.3 acres, known or to be known as 400 Commerce Drive, in New
Castle County, Delaware.
B. Seller desires to sell to Buyer and Buyer desires to purchase from
Seller the property referred to in this Agreement, upon the terms and conditions
set forth herein.
TERMS AND CONDITIONS
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and with the preceding Background paragraphs incorporated by
reference, the parties hereto, intending to he legally bound hereby, covenant
and agrees as follows:
1. PROPERTY BEING SOLD.
Seller shall sell, transfer and convey to Buyer on the Closing Date
(as hereinafter defined),
1.1 Real Property. Fee simple interest in the parcel of land being
comprised of 13.3 acres, all as more fully described on Exhibit "A", New Castle
County, Delaware, and all of the easements, licenses, rights of way, privileges,
hereditaments, appurtenances, and rights to any land lying in the beds of any
street, road or avenue, open or proposed, adjoining thereto, and inuring to the
benefit of said land (hereinafter collectively referred to as the "Premises");
and
1.2 Personal Property. All equipment, fixtures, machinery and
personalty of Seller, of every description attached to or used in connection
with the Premises (and not owned by tenants under leases of the Premises),
including, without limitation, those listed on the Schedule of Inventory
attached hereto as Exhibit "B", all artwork, renderings, flags, awnings, trade
dress, and to the extent legally assignable, all intangible personal property
owned by the
<PAGE>
Seller and used in connection with the ownership, operation and maintenance of
the land, improvements and other property, excluding cash on hand but including,
without limitation, all contract rights, guaranties and warranties of any
nature, all architects', engineers', surveyors' and other real estate
professionals' plans, specifications, certifications, contracts, reports, data
or other technical descriptions, reports or audits (including, without
limitation, all environmental, structural and mechanical inspection reports),
and all marketing materials ("Contract Documents"), all governmental permits,
licenses, certificates, and approvals in connection with the ownership of the
Premises ("Licenses"), all security deposits, utility deposits, escrow accounts,
instruments, documents of title, general intangibles, all computers, computer
software programs and data and business records pertaining to the Premises, all
telephone, communications and security systems and equipment, and all of
Seller's rights, claims, and causes of action if any, to the extent they are
assignable, under any warranties and/or guarantees of manufacturers, contractors
or installers, all rights against tenants and others relating to the Premises or
the operation or maintenance thereof, including to the extent applicable, any
warranties from any previous owners of the Premises (hereinafter collectively
referred to as "Personal Property"); and
1.3 Leases. All leases, licenses and other occupancy agreements for
any part of the Premises, and all prepaid rent and unapplied security deposits
(the "Leases"); and
1.4 Right to Names. Any and all right, title and interest of Seller
in and to the name of 400 Commerce Drive, and the right to all printing styles,
trademarks and logos ("Name").
The Premises, Personal Property, Leases and Name are sometimes
hereinafter referred to as "Property."
2. PURCHASE PRICE AND MANNER OF PAYMENT.
2.1 Purchase Price. Buyer shall pay the total sum of Nine Hundred
Thousand ($900,000) Dollars (hereinafter referred to as the "Purchase Price")
subject to adjustment.
2.2 Manner of Payment. The Purchase Price shall be paid in the
following manner:
2.2.1 Deposit. By delivery, upon Seller's execution and
delivery of this Agreement, of Buyer's good check in the amount of Fifteen
Thousand ($15,000) Dollars to the Title Company (hereinafter referred to as
"Escrow Agent" or "Escrowee"). This sum, the sum specified in Section 2.2.2
below, and all other sums paid by Buyer to the Escrow Agent under this Agreement
(hereinafter referred to as the "Deposit") shall be held by Escrow Agent in a
federally-insured, segregated money market account at an institution to be
designated by Buyer until termination or consummation of this Agreement.
Interest on the Deposit shall be credited to Buyer at Closing, or paid to the
party otherwise entitled to the Deposit in the event of the termination of this
Agreement prior to Closing.
-2-
<PAGE>
2.2.2 Additional Deposit. By delivery, within two (2)
business days next following the Inspection Period Expiration Date (as
hereinafter defined), of Buyer's good check in the amount of Thirty Thousand
($30,000) Dollars.
2.2.3 Cash Balance. The balance by delivery to the Seller on
the Closing Date, by wire transfer, the amount of Eight Hundred Fifty-Five
Thousand ($855,000) Dollars, subject to adjustment as herein provided.
2.3 Intentionally Omitted.
3. TITLE. On the Closing Date, Seller shall convey to Buyer good and
marketable fee simple title to the Premises subject only to those rights of way,
easements, covenants restrictions, and objections to title (hereinafter
"Permitted Exceptions") listed on Exhibit "C" hereto, unless identified by Buyer
as "Title Objections" as hereinafter provided, and subject to the rights of
tenants listed on the rent roll attached hereto as Exhibit "D", which title
shall be insurable at regular rates by a reputable title insurance company
("Title Company") under an ALTA 1970 Form B (Revised 10/17/70 and 3/30/84) title
insurance policy ("Title Policy"), with the endorsements and affirmative
insurance specified in Section 12.2.1.10 below. Seller and Buyer consent to
use, at Buyer's option, Commonwealth Land Title Insurance Company, Lawyers Title
Insurance Corporation or Congress Title Insurance Company as the Title Company.
4. COVENANTS. In addition to the covenants contained in the other
Sections of this Agreement, Seller covenants that it shall:
4.1 Maintenance. At all times prior to the Closing Date, maintain
the Property in good condition and repair, reasonable wear and tear and casualty
alone excepted, continue to diligently prosecute construction of the Project at
the Premises, and pay in the normal course of business prior to Closing, all
sums due for work, materials or service furnished or otherwise incurred in the
ownership and operation prior to Closing.
4.2 Alterations. Not make or permit to be made any alterations,
improvements or additions to the Property other than in accordance with the
project budgets, plans and specifications, construction contracts, if any, and
the CSC Lease (as hereinafter defined) heretofore delivered to Buyer, without
the prior written consent of Buyer, not to be unreasonably withheld or delayed.
4.3 Lease. Not enter into any new Lease, nor amend, modify or
terminate any existing Lease without Buyer's consent.
4.4 Security Deposits. Not apply any Tenant's security deposit to
the discharge of such Tenant's obligations without Buyer's consent, not to be
unreasonably withheld or delayed.
4.5 Intentionally Omitted.
-3-
<PAGE>
4.6 Notice to Buyer. Notify Buyer promptly of the occurrence of any
of the following:
(i) a fire or other casualty causing damage to the Property, or
any portion thereof;
(ii) receipt of notice of eminent domain proceedings or
condemnation of or affecting the Property, or any portion thereof;
(iii) receipt of notice from any governmental authority or
insurance underwriter relating to the condition, use or occupancy of the
Property, or any portion thereof, or any real property adjacent to any of the
Property, or setting forth any requirements with respect thereto;
(iv) receipt or delivery of any default or termination notice or
claim of offset or defense to the payment of rent from any tenant;
(v) receipt of any notice of default from the holder of any lien
or security interest in or encumbering the Property, or any portion thereof;
(vi) intentionally omitted;
(vii) notice of any actual or threatened litigation against
Seller or affecting or relating to the Property, or any portion thereof; or
(ix) the commencement of any strike, lock-out, boycott or other
labor trouble affecting the Property, or any portion thereof.
4.7 Intentionally Omitted.
4.8 Comply with Leases. Perform all obligations of the landlord as
required by the Leases or by any order or direction of any governmental
authority having jurisdiction thereof, and to the extent required by law or by
any of the Leases, maintain all security deposits held under all Leases in a
segregated account, with interest thereon as required.
4.9 No New Agreements. Except for agreements which can be terminated
on not more than thirty (30) days' notice, and construction contracts approved
in advance by Buyer, not enter into any other agreements which affect the
Property or the transactions contemplated by this Agreement, without the prior
written consent of Buyer; and not permit the creation of any liability which
shall bind Buyer or the Premises after Closing.
4.10 Tax Disputes. Notify Buyer of any tax assessment disputes
(pending or threatened) prior to Closing, and not agree to any changes in the
real estate tax assessment, nor settle, withdraw or otherwise compromise any
pending claims with respect to prior tax assessments, without Buyer's prior
written consent. If any proceedings shall result in any reduction of assessment
and/or tax for the tax year in which the Closing occurs, it is agreed that
-4-
<PAGE>
the amount of tax savings or refund for such tax year, less the reasonable fees
and disbursements in connection with such proceedings, shall be apportioned
between the parties as of the date real estate taxes are apportioned under this
Agreement.
The parties agree that from and after the execution and delivery of
this Agreement, Buyer, at its sole cost, shall have the right to appeal the
current tax assessment of each tax parcel comprising the Premises. Buyer shall
consult with Seller prior to filing tax appeal documents, and shall afford
Seller reasonable advance notice prior to any public hearings or proceedings at
which said appeal will be considered. Seller agrees that Buyer may file such
appeals in its name or in Seller's name, as may be required, and Seller shall
cooperate with Buyer in the prosecution of such appeal; provided, however, that
Buyer agrees to pay the reasonable legal fees incurred by Seller, if any, in
connection with furnishing such cooperation.
4.11 Intentionally Omitted.
5. REPRESENTATIONS AND WARRANTIES. In order to induce Buyer to enter
into this Agreement, Seller hereby represents and warrants to Buyer that the
following representations and warranties are true now and will be true at
Closing:
5.1 Seller's Authority For Binding Agreement. Seller is a duly
authorized and validly existing partnership formed under the laws of the State
of Delaware. Seller has full power, right and authority to own its properties,
to carry on its business as now conducted, and to enter into and fulfill its
obligations under this Agreement. Each of the persons executing this Agreement
on behalf of Seller is authorized to do so. This Agreement is the valid and
legally binding obligation of Seller, enforceable against Seller in accordance
with its terms. The execution and delivery of this Agreement and compliance
with its terms will not conflict with or result in the breach of any law,
judgement, order, writ, injunction, decree, rule or regulation, or conflict with
or result in the breach of any other agreement, document or instrument to which
Seller is a party or by which it or the Property is bound or affected.
5.2 Employment. There are no persons or parties employed by the
Seller or any of its affiliates in connection with the Property. Affiliates of
Seller are or may hereafter be engaged by Seller or Buyer in connection with
construction of improvements contemplated by Buyer and Seller at the Property.
5.3 Service Contracts. There are no service, equipment, supply or
maintenance contracts with respect to or affecting the Property not terminable
on thirty (30) days notice, other than construction-related contracts, true
correct and complete copies of which shall be provided by Seller to Buyer for
review and approval prior to execution.
5.4 Condemnation. There are no condemnation or eminent domain
proceedings pending with regard to any part of the Property, and to the best of
the Seller's knowledge, no such proceedings are proposed.
5.5 No Tax Assessments. There are no public improvements in the
nature of off-site improvements, or otherwise, which have been ordered to be
made and/or which have not
-5-
<PAGE>
heretofore been assessed, and, to the Seller's knowledge, there are no special
or general assessments currently affecting or pending against the Property.
5.6 Leases. There are no oral or written leases or rights of
occupancy or grants or claims of right, title or interest in any portion of the
Property or outstanding letters of intent to lease the Property, or any portion
thereof, other than the lease with Computer Sciences Corporation ("CSC") dated
July 28, 1997 (the "CSC Lease"), a true, correct and complete copy of which has
been delivered by Seller to Buyer. CSC has not advised the Seller that the
Seller is in default under the CSC Lease, and the Seller has no knowledge of any
default or of any facts, events or circumstances, which with the passage of
time, or the delivery of notice, or both, would constitute an event of default
under the CSC Lease. The Seller has the sole right to collect rent under the CSC
Lease (once rent becomes due and payable thereunder), and neither such right nor
any interest in the CSC Lease has been assigned, pledged, hypothecated or
otherwise encumbered by the Seller, except as to certain obligations under the
CSC Lease assigned to and assumed by Christiana Center Operating Company II LLC,
and the CSC Lease is valid and subsisting and in full force and effect.
5.7 Compliance with Law.
(i) The development of the Property as a three (3)-story,
150,000 +/- sf. office building with accessory on-site parking for not fewer
than 750 parking spaces is permitted by all applicable federal, state and local
law, and by the requirements of governmental and quasi-governmental agencies
and authorities having jurisdiction thereof, and there are no outstanding
notices of any violations issued by any governmental or quasi-governmental
agency or authority having jurisdiction over the Property. The zoning
classification of the Property is "M-1". Not more than ten (10) days prior to
the Closing, the Seller shall provide the Buyer with an estoppel certificate
from the zoning code enforcement (or other appropriate) officer of New Castle
County, confirming the zoning of the Property and that the proposed development
of the site as hereinabove provided is in compliance with such zoning.
(ii) To the best of the Seller's knowledge, (1) no Hazardous
Substances (defined below) and no Hazardous Wastes (defined below) are present
on the Property including, without limitation, asbestos, flammable substances,
explosives, radioactive materials, hazardous wastes, toxic substances,
pollutants, pollution, contaminant, polychlorinated byphenyls (PCBs), urea
formaldehyde foam insulation, radon, corrosive, irritant, biologically
infectious materials, petroleum product, garbage, refuse, sludge, hazardous or
waste materials, and (2) there has been no use of the Property that may, under
any federal, state or local environmental statute, ordinance or regulation,
require, at any time, any closure or cessation of the use or occupancy of the
Property and/or impose, at any time, upon the owner of the Property any clean-up
or other monetary obligation. The Seller has not been identified in any
litigation, administrative proceeding or investigation as a responsible party or
potentially responsible party for any liability for clean-up costs, natural
resource damages or other damages or liability for prior disposal or release of
Hazardous Substances, Hazardous Wastes or other environmental pollutants or
contaminants, and no lien or superlien has been recorded, filed or otherwise
asserted against any real or personal property of the Seller for any clean-up
costs or other responses costs incurred in connection with any environmental
contamination that is attributable, in whole or in part, to the
-6-
<PAGE>
Seller. The Seller hereby indemnifies and holds the Buyer harmless of, from
and against any and all liability, loss or damage suffered or incurred as a
result of a claim, demand, cost or judgment in favor of a third party,
including, without limitation, any governmental authority, arising from the
deposit, storage, disposal, burial, dumping, injecting, spilling, leaking, or
other placement or release in or on the Property of Hazardous Substances or
Wastes first occurring during the Seller's period of ownership. For purposes
of this Agreement, "Hazardous Substances" means those elements and compounds
which are designated as such in Section 101(14) of the Comprehensive
Response, Compensation and Liability Act (CERCLA), 42 U.S.C. Section 9601
(14), as amended, all petroleum products and by-products, and any other
hazardous substances as that term may be further defined in any and all
applicable federal, state and local laws; and "Hazardous Wastes" means any
hazardous waste, residential or household waste, solid waste, or other waste
as defined in applicable federal, state and local laws. The Seller has not
received any summons, citation, directive, letter or other communication,
written or oral, from any governmental or quasi-governmental authority
concerning any intentional or unintentional action or omission on the
Seller's part which (a) resulted in the releasing, spilling, leaking,
pumping, pouring, emitting, emptying or dumping of Hazardous Substances or
Hazardous Wastes, or (b) related in any way to the generation, storage,
transport, treatment or disposal of Hazardous Substances or Hazardous Wastes.
To the best of the Seller's knowledge, neither the Property nor any portion
thereof, has been identified on the federal CERLIS, the National Priorities
List (40 C.F.R. Part 300, App. B) or any state or local list of potential
hazardous waste disposal sites or as an industrial establishment. The Seller
has conducted a complete and thorough inspection and test of the underground
storage tanks located on the Property, if any, and the Seller has confirmed
that the results thereof show compliance with all requirements of the
Resource Conservation and Recovery Act (RCRA), 42 U.S.C. Sections 6901 et
seq. and all other applicable federal, state and local laws, and the Seller
has taken all other necessary and appropriate action to comply fully
therewith.
5.8 No Brokers. Except as specifically disclosed in Schedule 5.8
hereto, no brokerage or leasing commissions or other compensation is now, or
will upon or after the Closing, be due or payable to any person, firm,
corporation, or other entity with respect to or on account of the CSC Lease, or
any extensions or renewals thereof. Buyer shall be responsible to pay the
leasing commission due CB commercial in connection with the CSC lease.
5.9 Utilities. Adequate utilities, useable public sanitary and storm
sewers, public water facilities, electric facilities and, if any, gas facilities
(collectively, the "Utilities"), are available at the lot lines of the Property
All Utilities required for the operation of the Property either enter the
Property through adjoining public streets or, if they pass through adjoining
public land, do so in accordance with valid public easements or private
easements which will inure to the benefit of Buyer at no cost to the owner of
the Property. All permits for the installation, connection and "tap-in" for
water and sewer have been obtained and all "tap in" charges have been paid.
5.10 Permits, Approvals and Certificates. All licenses, permits,
authorizations and approvals necessary for the development of the Property as a
three (3) story, 150,000 +/- sf. office building with accessory on-site parking
for not less than 750 parking spaces, including, but not limited to street
openings and closing, zoning and use permits, variances and special exceptions,
zoning reclassifications, sewer permits, preliminary and final site plan and
subdivision
-7-
<PAGE>
approvals, earth moving permits, environmental permits and approvals, and
approvals of fire underwriters, have been obtained, are in full force and
effect, are final and all appeal periods have run with no appeals having been
filed, and that each and all such licenses, permits and approvals are
assignable, except for a building permit which have not yet been issued but
which may be obtained by the Buyer in the ordinary course without the
satisfaction of any further conditions other than payment of the required fee(s)
therefor.
5.11 Good Title to Property. The Seller presently holds, and
immediately following the Closing the Buyer shall hold, good and marketable,
indefeasible fee simple title to the Property, free and clear of liens and
encumbrances, other than the lien of any existing mortgage held by PNC Bank,
Delaware, which shall be paid and discharged at or before the Closing.
5.12 All Taxes and Assessments Paid. The Seller will have paid prior
to the Closing, all taxes and assessments, including assessments payable in
installments, which are to become due and payable and/or a lien on the Property,
except for taxes for the current year which shall be prorated between the Seller
and the Buyer as of the Closing.
5.13 FIRPTA. The Seller is not a "foreign person" as such term is
defined in Section 1445(f)(3) of the Code.
5.14 Mechanic's Liens. No work has been performed or is in progress
at, and no materials have been furnished to the Property which, though not
presently the subject of, might give rise to construction, mechanic's,
materialmen's, or other liens against the Property or any portion thereof,
except that for which partial releases covering all services performed or
materials provided prior to Closing have or shall have been obtained. If any
lien for any such work is filed before or after the Closing, the Seller shall
promptly discharge the same. Buyer shall assume responsibility to pay for
services or materials provided after Closing.
5.15 Rights to Purchase. There are no outstanding agreements,
options, rights of first refusal, conditional sales agreements or other
agreements or arrangements, whether oral or written, regarding the purchase and
sale of the Property.
5.16 No Outstanding Obligations. All debts, liabilities, and
obligations of the Seller arising out of the Property including, but not limited
to, construction costs, salaries, taxes, accounts payable and the like, have
been paid as they became due and payable and shall continue to be so paid from
the date hereof until the Closing. No debts, liabilities, claims, or
obligations (whether known or unknown, accrued, absolute, contingent, or
otherwise) of the Seller arising out of the Property shall be outstanding as of
the Closing except for contracts relating to the construction of the Project as
set forth on Schedule 5.16 attached hereto, and the CSC Lease, all of which are
to be assigned to, and assumed by, the Buyer.
5.17 Rollback Taxes. The Property is not subject to any roll-back or
agricultural taxation or other tax abatement program. Any roll-back taxes
payable in connection with the Seller's development of the Property have been
paid in full.
-8-
<PAGE>
5.18 Development Agreements. The Property and the Seller are in
compliance with and have fully paid and discharged all obligations accrued to
date under any and all development, tri-party and like agreements, and any and
all other agreements with county, municipal and other governmental and
quasi-governmental agencies and authorities respecting the ownership,
development and operation of the Property and all portions thereof.
5.19 Charges, Fees and Assessments. Any and all applicable charges,
fees and assessments (including condominium fees, office building association
fees, and the like, to the extent applicable) and any and all other fees,
assessments, charges and other sums due under declarations, cross-easements and
like agreements to which the Property or any portion thereof may be subject,
have been paid, and no special assessments thereunder are pending, and all
consents and approvals required to be obtained under any such declarations,
cross-easements and like agreements have been obtained pursuant to the
requirements of such documentation.
5.20 Correct Copies of Documents. Where copies of any documents have
been delivered by the Seller to the Buyer, whether prior to or pursuant to this
Agreement, such copies: (i) are exact copies of the originals of said
documents, as executed and delivered by all of the parties thereto; (ii) to
the best of the Seller's knowledge, constitute, in each case, the entire
agreement between the parties thereto with respect to the subject matter
thereof, and the original instruments in the form delivered to the Buyer, are
now in full force and effect, and valid and enforceable in accordance with their
respective terms, and no party thereto is in default, and no claim of default by
any party has been made or is now pending and there does not now exist any
default which, after either the giving of notice or the passing of time, or
both, will or may constitute a default, or would excuse performance by any party
thereto; and (iii) have not been changed or amended except for amendments, if
any, specifically referred to therein.
6. POSSESSION. Possession of the Premises is to be given to Buyer,
subject to the right of tenants under the Leases on the Closing Date, by
delivery of the Deed, and all keys, combinations and security codes at Closing.
7. BUYER'S REVIEW AND APPROVAL OF TITLE AND SURVEY.
7.1 Title Binder. On or before five (5) business days from the
execution of this Agreement, Seller shall have delivered to Buyer a copy of its
title commitment or policy for the Property (complete with copies of all
exceptions to title), and within ten (10) business days after the receipt of
same, Buyer shall secure a current title commitment (the "Title Binder") from
the Title Company, and shall have until the Inspection Period Expiration Date
(as hereinafter defined) to examine the condition of title, including the terms
and provisions of all items and documents referred to in the Title Binder, and
all information regarding title as disclosed on the Survey (hereinafter
defined), and to approve or disapprove the same. If Buyer shall disapprove the
condition of title, such disapproval shall be set forth in a notice given to
Seller (the "Disapproval Notice") identifying the condition of title to the
Property or any of the terms, provisions or contents of said items, documents or
Survey which are disapproved by Buyer (the "Title Objections"). Subject to the
provisions of the succeeding portion of this Section 7.1, Seller shall have
until the date which is ten (10) days after the date of the Disapproval Notice
(the "Title Cure Expiration Date") in which to cure or eliminate all items which
Buyer disapproves in the
-9-
<PAGE>
Disapproval Notice, and to furnish evidence satisfactory to Buyer and the Title
Company that all such items have been cured or eliminated or that arrangements
have been made with the Title Company and any parties in interest to cure or
eliminate the same at or prior to the Closing. If Seller fails to remove any
Title Objection in accordance with the provisions of the immediately preceding
sentence, Buyer, nevertheless, may elect (at or prior to the Closing) to
consummate the transaction provided for in this Agreement subject to any such
Title Objection(s) as may exist as of the Closing with a credit against the
Purchase Price equal to the sum necessary to remove any lien of a fixed or
ascertainable amount . If Buyer shall not so elect, Buyer may terminate this
Agreement by notice in writing to Seller, whereupon the Deposit shall be
immediately refunded to Buyer, and this Agreement shall be null and void, and
the parties hereto shall be relieved of all further obligations and liability
under this Agreement.
7.2 Survey. Within ten (10) days after the date of this Agreement,
at Buyer's cost, Seller shall deliver to Buyer a current survey of Property (the
"Survey"), prepared by a duly licensed land surveyor acceptable to Buyer. The
Survey shall be currently dated, shall show the location on the Property of all
buildings and improvements, building and set-back lines, easements,
rights-of-way, encroachments, elevations between public roads providing access
to the Property, and the boundary of the Property, and other such matters
affecting the Property whether physically apparent from the ground, of record in
public offices, or otherwise, and shall contain a legal description of the
boundaries of the Premises by metes and bounds which shall include a reference
to the recorded plat, if any. The surveyor shall certify to Buyer and to the
Title Company and to any lender making a loan to Buyer secured by the Property
that the Survey is correct and was made on the ground; and that there are no
visible discrepancies, conflicts, encroachments, overlapping of improvements,
violations of set-back lines, easements, rights-of-way or other such matters
affecting the Property except as are shown on the Survey, and that the Survey
conforms to all ACTA/ACSM and Pennsylvania Land Title Association standards and
requirements for a Class A Survey. Any and all recorded matters shown on said
Survey shall be legibly identified by appropriate volume and page recording
references with dates of recording noted. Buyer shall have until the Inspection
Period Expiration Date to approve or disapprove the material contained thereon.
If Buyer shall disapprove such Survey, such disapproval shall be set forth in a
Disapproval Notice as hereinabove provided in Section 7.1, and the provisions of
Section 7.1 with respect to Disapproval Notices shall apply.
7.3 Physical and Financial Inspection. For a period (the "Inspection
Period") commencing on the second (2nd) business day next following the date
upon which Buyer shall receive from Seller a fully-executed counterpart of this
Agreement, and expiring twenty (20) days thereafter (such date is herein
referred to as the "Inspection Period Expiration Date"), Buyer shall have the
right to have performed a physical and mechanical inspection, measurement and
audit of the Property and an inspection of all books and records and financial
information pertaining thereto, and Seller shall cooperate with Buyer and shall
furnish to Buyer such information, materials and documents as Buyer may
reasonably request and shall have its accountant or internal controller
available throughout such period to assist in Buyer's inspection and review.
The inspection, audit and measurement of the Property's operation, condition and
maintenance shall include, without limitation, such environmental and
engineering inspections, reviews and assessments that Buyer deems appropriate.
If Buyer fails to close hereunder for any reason other than Seller's breach or
default, Buyer shall, to the maximum extent practicable, restore the
-10-
<PAGE>
Property to the condition existing immediately before such tests and
assessments. In the event Seller shall fail to deliver or make available any
item or information material to Buyer's review of the Property and required to
be delivered or made available pursuant to the terms of this Section within five
(5) business days next following the date upon which Buyer shall receive from
Seller a fully-executed counterpart of this Agreement, then at Buyer's written
election, the Inspection Period Expiration Date (and the Closing Date) shall be
extended by one day for each day that the delivery or availability of such item
is delayed. If Buyer, at Buyer's sole and absolute discretion, shall find such
inspection(s) to be unsatisfactory for any reason whatsoever, Buyer shall have
the right, at its option, to terminate this Agreement on or before the
Inspection Period Expiration Date, and upon such termination, the Deposit shall
be immediately refunded to the Buyer, and thereupon the parties hereto shall
have no further liabilities one to the other with respect to the subject matter
of this Agreement. Buyer agrees that it shall not unreasonably interfere with
tenants in performing its inspection. In connection with such inspection, and
without limiting the generality of Seller's obligations hereunder, Seller agrees
to deliver to Buyer, within five (5) days:
7.3.1 Intentionally Omitted.
7.3.2 Contracts, Licenses, Permits. Copies of the Contract
Documents, the Licenses, all building permits, certificates of occupancy,
insurance policies applicable to the Property and any other documents evidencing
rights described in Section 1.2 hereof;
7.3.3 Intentionally Omitted.
7.3.4 Intentionally Omitted.
7.3.5 Intentionally Omitted.
7.3.6 Three Years' Tax Bills. A copy of tax bills (i) for
the current year, and (ii) if available, for the preceding two years;
7.3.7 Intentionally Omitted.
7.3.8 Schedule of Violations. A schedule setting forth all
violations of any law, ordinance, regulation, rule or requirement of any
governmental body having jurisdiction, whether existing or prospective, of which
Seller has received written notice, issued or noted by any governmental body
during the past three years, and copies of any notices, terminations or
correspondence relating thereto;
7.3.9 Schedule of Notices. A schedule of any written
demands, requests, requirements or recommendations regarding the operation,
maintenance, repair or replacement of the Property or any portion thereof, of
which Seller has received notice during the past three years, from the holder of
any mortgage or deed of trust or any insurance company or any board of fire
underwriters or real estate associations or like body, and copies of all
correspondence relating thereto;
7.3.10 Intentionally Omitted.
-11-
<PAGE>
7.3.11 Zoning, Site Plan, Subdivision Plan or Plat. All
conditional and permanent zoning, site plan, subdivision, building, housing,
safety, fire and health approvals, including, without limitation, the local
governmental applications, resolutions and approvals supporting the same;
7.3.12 Intentionally Omitted.
7.3.13 Takings or Changes. Copies of all written notices to
Seller of proposed or threatened takings or changes with respect to the Property
or major access roads within a reasonable radius which would affect the access
to the Property, or any portion thereof, by prospective occupants;
7.3.14 Tax Assessments, Appeals and Increases. Copies of all
written notices to Seller of all filed, proposed or threatened tax assessment
appeals or tax assessment increases related to the Premises;
7.3.15 Litigation. Copies of all pending and written notices to
Seller of threatened litigation, including litigation involving tenants,
affecting the Property or this transaction;
7.3.16 Insurance Policies. Copies of all insurance policies of
Seller related to the Property;
7.3.17 Intentionally Omitted.
7.3.18 Title Information. Seller's most recently dated title
report or title commitment respecting the Premises.
7.4 Seller's Failure to Deliver. If Seller shall have failed to
deliver to Buyer all material documents required to be delivered under Section
7.3 hereof, Buyer may, at its option, at any time on or after such date, but
prior to the curing of such failure by Seller, give Seller a five (5) day
written notice specifying such default, and if Seller fails to cure such default
within such five (5) day period, Buyer may terminate this Agreement, receive the
return of the Deposit and pursue any other remedy available to it pursuant to
the provisions hereof.
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer and Seller set forth herein shall survive Closing and
delivery of the deed for the applicable period of the statute of limitations
pertaining thereto.
9. INTENTIONALLY OMITTED.
10. CONDEMNATION. If, prior to the Closing Date, all or any portion of
the Premises is taken by eminent domain or a notice of any eminent domain
proceedings with respect to the Premises or any part thereof is received by the
Seller, then Seller shall within five (5) days thereafter give notice thereof to
Buyer and Buyer shall have the option to (a) complete the purchase hereunder or
(b) if such taking, in Buyer's sole and absolute discretion, materially affects
-12-
<PAGE>
the Premises or its current economic viability, terminate this Agreement, in
which event the Deposit shall be immediately refunded to Buyer, and this
Agreement shall be null and void. Buyer shall deliver written notice of its
election to the Seller within ten (10) days after the date upon which the Buyer
receives written notice of such eminent domain proceedings. If notice of
condemnation is received by Buyer and it fails to deliver said written notice of
its election within said time period, such failure shall constitute a waiver by
Buyer of its right to terminate this Agreement. If this Agreement is not so
terminated, Buyer shall be entitled to all awards or damages by reason of any
exercise of the power of eminent domain or condemnation with respect to or for
the taking of the Premises or any portion thereof, and until such time as
closing has occurred, or this Agreement terminates. Any negotiation for, or
agreement to, and all contests of any offers and awards relating to eminent
domain proceedings shall be conducted with the joint approval and consent of the
Seller and the Buyer.
11. EXPENSE ALLOCATIONS.
11.1 Seller shall pay for one-half of all applicable realty transfer
taxes related to the execution, delivery and recording of the Deed, Bill of
Sale, and other Closing Documents, and all related recording charges.
11.2 Buyer shall pay for one-half of all applicable realty transfer
taxes, for Buyer's title examination, the survey and for Buyer's title
examination and premiums.
11.3 Buyer and Seller shall be responsible for paying their own
attorney's fees in connection with this transaction.
12. CLOSING.
12.1 Time and Date and Place. The closing ("Closing") on the sale of
the Property (herein referred to as the "Closing Date") shall take place at a
time specified by Buyer in writing to Seller not later than five (5) days
following the Inspection Period Expiration Date, and in any event no later than
October 15, 1997, at the offices of Pepper, Hamilton & Scheetz, 3000 Two Logan
Square, Eighteenth & Arch Streets, Philadelphia, PA, commencing at 10:00 a.m.
12.2 Documents. At Closing, the parties indicated shall
simultaneously execute and deliver the following:
12.2.1 Seller's Documents and Other Items. Seller shall
execute and deliver or cause to be executed and delivered to Buyer in proper
form for recording:
12.2.1.1 Deed. A special warranty deed prepared by Buyer's
counsel in form acceptable to Seller (the "Deed"), conveying the Premises to
Buyer, duly executed by Seller for recording. The Deed description shall be
based upon the metes and bounds description attached as Exhibit "A", unless
Buyer requests that Seller convey the Premises by the metes and bounds
description shown on the new ALTA/ACSM survey, if any, obtained by Buyer, in
which event the Premises shall be so conveyed.
-13-
<PAGE>
12.2.1.2 Bill of Sale. A warranty bill of sale prepared by
Buyer's counsel in form acceptable to Seller, assigning, conveying and
transferring to Buyer, all of the Personal Property.
12.2.1.3 Original Leases. All original Leases, tenant
files, tenant correspondence and repair records, certified by Seller as being
true, correct and complete.
12.2.1.4 Original Licenses, Contract Documents and Other
Personal Property. All original Licenses, Contract Documents, and other
Personal Property described in Section 1.2 of this Agreement, certified by
Seller as being true, correct and complete.
12.2.1.5 Assignment of Lease. An assignment and assumption
agreement with reciprocal indemnities, prepared by Buyer's counsel in form
acceptable to Seller (the "Assignment"), duly executed by Seller and Buyer,
assigning, conveying and transferring to Buyer the CSC Lease, and acknowledging
the interests therein and the obligations thereunder assigned or to be assigned
to Christiana Center Operating Company II LLC.
12.2.1.6 Assignment of Licenses, Contract Documents and
Other Personal Property. An assignment agreement prepared by Buyer's counsel,
in form acceptable to Seller, duly executed by Seller and Buyer assigning,
conveying and transferring to Buyer the Licenses, Contract Documents and Other
Personal Property, including, specifically, the Names as well as the
Construction Management Agreement between Seller and Insite, Inc. (once approved
by Buyer) as well as other construction-related agreements once reviewed and
approved by Buyer as aforesaid.
12.2.1.7 FIRPTA Certificates. All certificate(s) required
under Section 1445 of the Code.
12.2.1.8 Tenant Letter. Letters to each tenant advising of
the change in ownership and directing the payment of rent to such party as the
Buyer shall designate, said letter to be in form acceptable to Buyer.
12.2.1.9 Estoppel Certificate from Municipality. All
certificate(s) required by Section 5.8 hereof, and any other certificates
required by New Castle County, or the State of Delaware as a condition of the
conveyance of the Premises or the recording of the Deed.
12.2.1.10 Title Insurance Certificates. Such affidavits of
title or other certifications as shall be required by the Title Company to
insure Buyer's title to the Premises as set forth in Section 3, and to provide
affirmative endorsements (a) against mechanic's liens, (b) insuring against any
violation of existing covenants, conditions or restrictions, and insuring that
future violation will not result in forfeiture of title, (c) insuring that all
foundations in place as of the date of such policy are within the lot lines and
applicable set back lines, (d) insuring that the buildings and structures on the
Premises do not encroach onto adjoining land, or onto any easements, (e)
insuring that confirming that there are no encroachments of
-14-
<PAGE>
improvements from adjoining land onto the Premises (f) removing any exceptions
for matters which an accurate survey would disclose, and (g) providing
affirmative insurance with respect to such other matters as Buyer shall
reasonably specify.
12.2.1.11 Updated Rent Roll. An updated schedule of Tenant
Leases, containing all information required to be set forth in Exhibit "D",
which schedule is correct and complete as of the date of closing.
12.2.1.12 Seller Certificate. A written certification
confirming that as of Closing no representation or warranty of Seller contained
in this Agreement, nor any document or certificate delivered to Buyer pursuant
to this Agreement or in connection with the transaction contemplated hereby,
contains any untrue statement of a material fact or knowingly omits to state a
material fact necessary to make any representation or warranty contained herein
misleading.
12.2.1.13 Organization Certifications. Confirmation of the
good standing and existence of Seller and the due authority of those executing
for them, including, without limitation, the following documents issued no
earlier than 30 days prior to Closing: (a) good standing certificate in state of
organization and in the State in which the Premises are located, (b) articles of
incorporation, partnership agreement or other formation instrument certified by
the secretary of state of the state of incorporation, (c) a certificate from the
secretary of the corporation or managing general partner of the partnership
confirming the incumbency of the signatories and the current force and effect of
the resolution authorizing their execution of the documents required under this
Agreement.
12.2.1.14 Keys. All keys, combinations and security codes
for all locks and security devices on the Property;
12.2.1.15 Tax Bills. Current tax bills and, if available,
tax bills for each of the years of Seller's ownership of the Property;
12.2.1.16 Tax Reduction Rights. An instrument assigning to
Buyer any claims for the reduction of real or personal property taxes assessed
against any portion of the Property for the fiscal year in which the Closing
takes place; any refund for such year shall be prorated when received;
12.2.1.17 Tenant Estoppel. Seller shall obtain and deliver
to Buyer, at least five (5) business days prior to Closing, an estoppel
certificate in the form prescribed by Buyer or as otherwise appended to this
Agreement as Exhibit "H", from Computer Sciences Corporation, regarding the CSC
Lease (the "Estoppel"). An estoppel certificate which contains material
discrepancies, or any statements inconsistent with representations and
warranties of Seller contained in this Agreement and for which Seller does not
provide Buyer with an explanation in all respects satisfactory to Buyer, shall
not satisfy the requirements of this section.
12.2.1.18 Leasing and Management Agreement. A leasing and
management agreement prepared by Buyer's counsel in form acceptable to Seller
(the "Leasing
-15-
<PAGE>
and Management Agreement") duly executed by Buyer and Commonwealth Management
Group, Ltd., pursuant to which Commonwealth Management Group, Ltd. shall lease
and manage the Property on the terms and conditions more fully set forth
therein.
12.2.1.19 Engineer's Certificate. An engineer's certificate
prepared by Buyer's counsel in form acceptable to Seller's counsel, executed,
sealed and delivered by KCI Technologies, Inc., confirming that the Seller has
obtained all necessary licenses, permits and approvals required for development
of the Property as required by the CSC Lease and as otherwise contemplated by
Buyer.
12.2.2 Buyer's Documents. Buyer shall deliver or cause to be
delivered to Seller:
12.2.2.1 The amounts required to be paid to Seller pursuant
to this Agreement;
12.2.2.2 Confirmation of the existence and subsistence of
Buyer, and the authority of those executing for Buyer, including, without
limitation, the following documents issued no earlier than thirty (30) days
prior to Closing: (a) good standing certificate in State of Maryland, (b)
Buyer's Amendment and Restatement of Declaration of Trust filed on August 27,
1996, as amended, (c) a certificate from any officer of Buyer confirming the
incumbency of the signatories and the current force and effect of the resolution
authorizing their execution of the documents required under this Agreement.
12.2.2.3 Leasing and Management Agreement. Buyer shall
execute and deliver the Leasing and Management Agreement, as defined above,
pursuant to which Commonwealth Management Group, Ltd. shall lease and manage the
Property on the terms and conditions more fully set forth therein.
12.2.3 Title Insurance. As a condition to Buyer's obligations
at Closing, Title Company shall furnish Buyer at Closing with the Title Policy,
in the form approved by Buyer pursuant to Section 3, in the full amount of the
Purchase Price, wherein the Title Company shall insure fee simple title to the
Property in Buyer or its designee as of the Closing Date containing no
exceptions to title other than those which have been approved by Buyer in
writing pursuant to Section 3 hereof and providing the title endorsements
specified in Section 12.2.1.10 above.
12.2.4 Necessary Documents. Buyer and Seller shall execute
and deliver such other documents and instruments as may be reasonably necessary
to complete the transaction contemplated by this Agreement.
13. DEFAULT; REMEDIES
13.1 In the event that any of Seller's representations or warranties
contained in this Agreement are materially or prejudicially untrue or if Seller
shall have failed to have performed any of the covenants and/or agreements
contained in this Agreement which are to be performed by Seller, on or before
the date set forth in this Agreement for the performance
-16-
<PAGE>
thereof, or if any of the conditions precedent to Buyer's obligation to
consummate the transaction contemplated by this Agreement shall have failed to
occur, Buyer may, at its option, rescind this Agreement by giving written notice
of such rescission to Seller and Seller shall immediately thereafter return the
Deposit, and thereupon, subject to the provisions of Section 13.3 below, the
parties shall have no further liability to each other hereunder. In the
alternative, but without limiting Buyer's right upon any default by Seller
hereunder to receive the prompt return of the Deposit, Buyer may seek to enforce
specific performance of this Agreement.
13.2 Buyer recognizes that the Property will be removed by Seller from
the market during the existence of this Agreement and that if this purchase and
sale is not consummated because of Buyer's default Seller shall be entitled to
compensation for such detriment. Seller and Buyer acknowledge that it is
extremely difficult and impracticable ascertain the extent of the detriment, and
to avoid this problem, Seller and Buyer agree that if the purchase and sale
contemplated in this Agreement is not consummated because of Buyer's default
under this Agreement, Seller shall be entitled to retain the Deposit as
liquidated damages. The parties agree that the sum stated above as liquidated
damages shall be in lieu of any other relief to which Seller might otherwise be
entitled, Seller hereby specifically waiving any and all rights which it may
have to damages or specific performance as a result of Buyer's default under
this Agreement.
13.3 Buyer's Out-of-Pocket Costs. In the event of Seller's
breach or default hereunder which results in Buyer's termination of this
Agreement, or in the event that Seller shall fail to perform any term, covenant
or agreement, or satisfy any condition herein stipulated (including, without
limitation, a failure of title), then, in any such event, upon termination by
Buyer hereunder, in addition to receiving the immediate return of the Deposit,
anything in the Agreement contained to the contrary notwithstanding, Buyer shall
also receive from Seller, upon demand, Buyer's actual, documented out-of-pocket
costs and expenses associated with this Agreement and Buyer's anticipated
acquisition of the Property including, without limitation, Buyer's reasonable
counsel fees and costs, title expenses, survey costs, and other costs and
expenses associated with Buyer's due diligence, including, without limitation,
legal, financial and accounting due diligence, Buyer's structural inspection of
the Property and Buyer's environmental assessment of the Property (collectively,
"Transaction Costs"). The foregoing list is not intended to be exclusive, but
representative of the costs and expenses that the parties anticipate that Buyer
will incur in anticipation of this transaction. Seller's maximum reimbursement
liability under this Section 13.3 shall not exceed Twenty Five Thousand
($25,000) Dollars.
-17-
<PAGE>
14. CONDITIONS PRECEDENT TO CLOSING.
The obligations of Buyer hereunder are subject to the fulfillment of
the following conditions prior to or on the Closing Date (any one of which may
be waived in whole or in part by Buyer at or prior to the Closing) and in the
event any of the conditions are not complied with, Buyer may terminate this
Agreement by notifying the Seller and Escrow Agent and thereupon shall be
returned the Deposit and thereafter this Agreement shall be null and void:
14.1 Correctness of Warranties and Representations. The warranties
and representations made by Seller in this Agreement shall be true and correct
on the Closing Date as though such representations and warranties were made on
the Closing Date (except for changes in the Leases permitted under the terms of
this Agreement).
14.2 Compliance with Terms and Conditions. Seller shall have
performed and complied with all of the terms and conditions required by this
Agreement to be performed and complied with by it prior to or on the Closing
Date.
14.3 Buyer's Satisfaction with Inspection. Buyer shall have notified
Seller of Buyer's satisfaction with the review and inspection performed under
Section 7 of this Agreement, or shall fail to notify Seller on or before the
Inspection Period Expiration Date, of Buyer's dissatisfaction with the results
of such review and inspection.
14.4 Trustee Approval. This Agreement and the transactions
contemplated hereby shall have received formal approval of Buyer's Board of
Trustees at a meeting duly called during the Inspection Period to consider same.
14.5 Estoppel. Seller shall have delivered to Buyer the required
Estoppel from Computer Sciences Corporation and the Engineer's Certificate from
KCI Technologies, Inc.
14.6 Financing. Buyer shall have obtained a firm, unconditional,
written commitment from PNC Bank, N.A., or another lender of its choosing,
("Lender") for financing of the Project as contemplated by the Buyer, and Buyer
shall have satisfied all conditions to funding by Lender of the Purchase Price
and the initial draw for hard costs for construction.
15. PRORATIONS.
15.1 Operating Expenses. The following items shall be prorated at
Closing, as of close of business of the day immediately preceding Closing
"Adjustment Date":
15.1.1 Intentionally Omitted.
15.1.2 Taxes. Real estate and personal property taxes, if
any, on the basis of the fiscal year for which assessed. If the Closing shall
occur before the tax rate or assessment is fixed, the apportionment of such real
estate and personal property taxes at the Closing shall be upon the basis of the
tax rate for the next preceding year applied to the latest assessed valuation.
Final adjustment will be made upon the actual tax amount, when determined.
-18-
<PAGE>
15.1.3 Deposits. Tax and utility company deposits, if any,
shall be assigned to Buyer.
15.1.4 Water and Sewer Charges. Water and sewer charges and
fire protection and inspection services based upon meter readings to be obtained
by Seller effective as of the Adjustment Date, or if not so obtainable, a date
not more than ten (10) days prior to the Adjustment Date, and the unfixed meter
charges based thereon for the intervening period shall be apportioned on the
basis of such last reading. Upon the taking of a subsequent actual reading,
such apportionment shall be readjusted and Seller or Buyer, as the case may be,
will promptly deliver to the other the amount determined to be so due upon such
readjustment. If Seller is unable to furnish such prior reading, any reading
subsequent to the Closing will be apportioned on a per diem basis from the date
of such reading immediately prior thereto and Seller shall pay the proportionate
charges due up to the date of Closing.
15.1.5 Assigned Contracts. Amounts paid or payable in respect
of any service and maintenance contracts assigned to Buyer in accordance
herewith.
15.1.6 Electricity, gas, steam and fuel. Electricity, gas and
steam and fuel oil, if any, based on meter readings or a fuel company letter
showing measurement on the day immediately preceding Closing, and valued at
current prices.
15.1.7 Security Deposits. Buyer shall receive a check from
Seller for the full amount of any security deposits, with accrued interest, or a
credit against the Purchase Price in said amount.
15.2 Custom and Practice. Except as set forth in this Agreement, the
customs of the State and County in which the Premises are located shall govern
prorations.
15.3 Future Installments of Taxes. If at Closing, the Property or any
part thereof shall be or shall have been affected by an assessment or
assessments which are or may become payable in installments, then for purposes
of this Agreement, all unpaid installments of any such assessment, including
those which are to become due and payable and to be liens upon the Property
shall be paid and discharged by Seller at Closing.
15.4 Application of Prorations. If such prorations result in a
payment due Buyer, the cash payable at Closing shall be reduced by such sum. If
such prorations result in a payment due Seller, the same shall be paid by
uncertified check at Closing.
15.5 Schedule of Prorations. The parties shall endeavor to jointly
prepare a schedule of prorations for the Property no less than five (5) days
prior to Closing.
15.6 Intentionally Omitted.
15.7 Readjustments. The parties shall correct any errors in
prorations as soon after the Closing as amounts are finally determined.
-19-
<PAGE>
15.8 Indemnification for Seller's Tax Obligations. Seller shall
indemnify, defend and save and hold harmless Buyer from any loss, cost,
liability or expense (including, without limitation, reasonable counsel fees and
court costs) incurred, paid or suffered by Buyer arising out of or by reason of
any claim made by any state taxing or employment authorities asserting or
indicating any claims or possible claims for unpaid taxes, penalties, interest
or court costs related thereto of Seller or any related party, due the State of
Delaware or its political subdivisions. The provisions of this Section 15.8
shall specifically survive Closing hereunder.
15.9 Survival. The provisions of this Section 15 shall expressly
survive Closing hereunder.
16. BROKERS. Each party hereby represents and warrants to the other that
it has not employed or retained any broker or finder in connection with the
transactions contemplated by this Agreement other than CB Commercial, and that
other than CB Commercial, neither has had any dealings with any other person or
party which may entitle that person or party to a fee or commission. Each party
shall indemnify the other of and from any claims for commissions by any person
or party claiming such commission by or through the indemnifying party.
17. ESCROW AGENT. The parties hereto have requested that the Deposit be
held in escrow by the Escrow Agent to be applied at the Closing or prior thereto
in accordance with this Agreement. The Escrow Agent will deliver the Deposit to
Seller or to Buyer, as the case may be under the following conditions:
17.1 Payment to Seller. To Seller on the Closing Date upon the
consummation of Closing;
17.2 Notice of Dispute. If either Seller or Buyer believes that it is
entitled to the Deposit or any part thereof, it shall make written demand
therefor upon the Escrow Agent. The Escrow Agent shall promptly mail a copy
thereof to the other party in the manner specified in Section 18.1 below. The
other party shall have the right to object to the delivery of the Deposit, by
filing written notice of such objections with the Escrow Agent at any time
within ten (10) days after the mailing of such copy to it in the manner
specified in Section 18.1 below, but not thereafter. Such notice shall set
forth the basis for objection to the delivery of the Deposit. Upon receipt of
such notice, the Escrow Agent shall promptly deliver a copy thereof to the party
who filed the written demand.
17.3 Escrow Subject to Dispute. In the event the Escrow Agent shall
have received the notice of objection provided for in 17.2 above of this
Section, in the manner and within the time therein prescribed, the Escrow Agent
shall continue to hold the Deposit until (i) the Escrow Agent receives written
notice from both Seller and Buyer directing the disbursement of the Deposit in
which case the Escrow Agent shall then disburse said Deposit in accordance with
said direction, or (ii) litigation arises between Seller and Buyer, in which
event the Escrow Agent shall deposit the Deposit with the Clerk of the Court in
which said litigation is pending, or (iii) the Escrow Agent takes such
affirmative steps as the Escrow Agent may, at the Escrow Agent's option elect in
order to terminate the Escrow Agent's duties including, but not limited to,
deposit in Court and an action for interpleader.
-20-
<PAGE>
17.4 Escrow Agent's Rights and Liabilities. Escrow Agent shall not be
required to determine questions of fact or law, and may act upon any instrument
or other writing believed by it in good faith to be genuine and to be signed and
presented by the proper person, and shall not be liable in connection with the
performance of any duties imposed upon Escrow Agent by the provisions of this
Agreement, except for Escrow Agent's own willful default or gross negligence.
Escrow Agent shall have no duties or responsibilities except those set forth
herein. Escrow Agent shall not be bound by any modification of this Agreement,
unless the same is in writing and signed by Buyer and Seller, and, if Escrow
Agent's duties hereunder are affected, unless Escrow Agent shall have given
prior written consent thereto. In the event that Escrow Agent shall be
uncertain as to Escrow Agent's duties or rights hereunder, or shall receive
instructions from Buyer or Seller which, in Escrow Agent's opinion, are in
conflict with any of the provisions hereof, Escrow Agent shall be entitled to
hold and apply the Deposit, pursuant to Section 17.3, and may decline to take
any other action.
18. GENERAL PROVISIONS.
18.1 Notices. All notices or other communications required or
permitted to be given under the terms of this Agreement shall be in writing, and
shall be deemed effective when (i) sent by nationally-recognized overnight
courier, (ii) facsimile with original following by regular mail, or (iii)
deposited in the United States mail and sent by certified mail, postage prepaid,
addressed as follows:
18.1.1 If to Buyer, addressed to:
CHRISTIANA CENTER OPERATING COMPANY I LLC
c/o The Commonwealth Group
62 Read's Way
New Castle, DE 19720
with a copy in each instance to:
Eric L. Stern, Esquire
Pepper, Hamilton & Scheetz LLP
3000 Two Logan Square
Eighteenth & Arch Streets
Philadelphia, PA 19103
William S. Gee, Esquire
Saul, Ewing, Remick & Saul
222 Delaware Avenue
Suite 1200
Wilmington, DE 19899
-21-
<PAGE>
18.1.2 If to Seller, addressed to:
Gender Road Joint Venture
c/o The Commonwealth Group
62 Read's Way
New Castle, Delaware 19720
Attn.: Brock J. Vinton, President
with a copy in each instance to:
William S. Gee, Esquire
Saul, Ewing, Remick & Saul
222 Delaware Avenue
Suite 1200
Wilmington, DE 19899
18.1.3 If to Escrow Agent, addressed to:
Commonwealth Land Title Insurance Company
National Title Service
1700 Market Street
Philadelphia, PA 19103
Attn.: M. Gordon Daniels
or to such-other address or addresses and to the attention of such other person
or persons as any of the parties may notify the other in accordance with the
provisions of this Agreement.
18.2 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
18.3 Entire Agreement. All Exhibits attached to this Agreement are
incorporated herein and made a part hereof. [The parties covenant and agree to
use their best efforts to develop within five (5) business days of the date
hereof, and attach to this Agreement, the exhibits required hereunder. If such
exhibits are not agreed upon within ten (10) business days of the date hereof,
Buyer may terminate this Agreement and receive back the Deposit.] This
Agreement constitutes the entire agreement between the parties hereto and
supersedes all prior negotiations, understandings and agreements of any nature
whatsoever with respect to the subject matter hereof. This Agreement may not be
modified or amended other than by an agreement in writing. The captions
included in this Agreement are for convenience only and in no way define,
describe or limit the scope or intent of the terms of this Agreement.
18.4 Governing Law. This Agreement shall be construed and interpreted
in accordance with the laws of the Commonwealth of Pennsylvania.
-22-
<PAGE>
18.5 No Recording. This Agreement shall not be recorded in the Office
for the Recording of Deeds or in any other office or place of public record.
18.6 Tender. Tender of Deed by Seller and of the Purchase Price by
Buyer, are hereby mutually waived.
18.7 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories.
18.8 Further Instruments. Seller will, whenever and as often as it
shall be reasonably request so to do by Buyer, and Buyer will, whenever and as
often as it shall be reasonably requested so to do by Seller, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
any and all conveyances, assignments, correction instruments and all other
instruments and documents as may be reasonably necessary in order to complete
the transaction provided for in this Agreement and to carry out the intent and
purposes of this Agreement. All such instruments and documents shall be
satisfactory to the respective attorneys for Buyer and Seller. The provisions
of this Article shall survive the Closing.
18.9 Time. Time is of the essence. In the event the last day
permitted for the performance of any act required or permitted under this
Agreement falls on a Saturday, Sunday, or legal holiday of the United States or
the Commonwealth of Pennsylvania, the time for such performance will be extended
to the next succeeding business day. Time periods under this Agreement will
exclude the first day and include the last day of such time period.
18.10 Designation of Nominee; Assignment of Agreement. Buyer
shall have the right to designate one or more of its subsidiaries or affiliate
entities to acquire title to the Premises hereunder. Except for the foregoing,
Buyer may not assign this Agreement.
18.11 Effective Date. Whenever the term or phrase "effective date
hereof" or "date hereof" or other similar phrases describing the date this
Agreement becomes binding on Seller and Buyer are used in this Agreement, such
terms or phrases shall mean and refer to the date on which a counterpart or
counterparts of this Agreement executed by Seller and Buyer are deposited with
the Escrow Agent.
18.12 Time for Acceptance. This Agreement shall constitute an
offer to buy or sell the Property, as case may be, on the terms herein set forth
only when executed by the Seller or Buyer. This Agreement may be accepted by
the party receiving such executed Agreement only by executing this Agreement and
delivering an original signed copy hereof to the Escrow Agent and an originally
signed copy hereof to the other party hereto within five (5) business days after
such receipt. Failure to accept in the manner and within the time specified
shall constitute a rejection and termination of such officer.
-23-
<PAGE>
18.13 Confidentiality. Each of the parties hereto covenants and
agrees to hold the nature and content of this Agreement, including without
limitation, the Purchase Price contained herein, in strict confidence prior to
Closing, and other than disclosure required by the SEC and except as may be
necessary to comply with this Agreement, neither party shall disclose prior to
Closing, the nature, content or the Purchase Price of this Agreement without the
express written consent of the other party.
18.14 Delivery of Documents. If this Agreement (or any of the
Exhibits or Schedules hereto) shall have been prepared by Seller or by its
counsel, then promptly upon execution hereof by the parties hereto, Seller shall
deliver to Buyer one (1) "clean" copy of this Agreement, complete with all
Exhibits and Schedules prepared (or obtained) by Seller or its counsel, and a
copy of this Agreement (and said Exhibits and Schedules, if available) on disk,
compatible with WordPerfect 5.1.
19. SEC REPORTING (8-K) REQUIREMENTS.
For the period of time commencing on the date hereof and continuing
through the first anniversary of the Closing Date, and without limitation of
other document production otherwise required of Seller hereunder, Seller shall,
from time to time, upon reasonable advance written notice from Buyer, provide
Buyer and its representatives, with (I) access to all financial and other
information pertaining to the period of Seller's ownership and operation of the
Property, which information is relevant and reasonably necessary, in the opinion
of Buyer's outside, third party accountants (the "Accountants"), to enable Buyer
and its Accountants to prepare financial statements in compliance with any or
all of (a) Rule 3-05 or 3-14 of Regulation S-X of the Securities and Exchange
Commission (the "Commission"), as applicable; (b) any other rule issued by the
Commission and applicable to Buyer; and (c) any registration statement, report
or disclosure statement filed with the Commission by, or on behalf of Buyer; and
(II) a representation letter, signed by the individual(s) responsible for
Seller's financial reporting, as prescribed by generally accepted auditing
standards promulgated by the Auditing Standards Division of the American
Institute of Certified Public Accountants, which representation letter may be
required by the Accountants in order to render an opinion concerning Seller's
financial statements.
20. INDEMNIFICATION.
Without limitation of any other Seller indemnity obligations set forth
herein, from and after the Closing Date, Seller shall indemnify, defend and save
and hold harmless Buyer, and its respective trustees, directors, officers and
employees, of, from and against any and all loss, cost, expense, damage, claim,
and liability, including reasonable attorney's fees and court costs, including,
without limitation, attorney's fees and costs associated with the enforcement of
Seller's indemnification obligations hereunder (hereinafter collectively,
"Losses") which Buyer may suffer or incur, resulting from, relating to, or
arising in whole or in part, from or out of (i) any misrepresentation or breach
of a representation or warranty by Seller contained in this Agreement; (ii) any
failure to fulfill any covenant or agreement of Seller contained in this
Agreement; (iii) all litigation set forth in this Agreement and on Exhibit "D";
hereto; and (iv) any and all actions,
-24-
<PAGE>
suits, investigations, proceedings, demands, assessments, audits, judgments,
and/or claims arising out of or relating to any of the foregoing.
Promptly after receipt by Buyer of written notice of the commencement
of any suit, audit, demand, judgment, action, investigation or proceeding (a
"Third Party Action") or promptly after Buyer incurs a Loss or has knowledge of
the existence of a Loss, Buyer will, if a claim with respect thereto is to be
made against Seller due to Seller's obligation to provide indemnification
hereunder, give Seller written notice of such Loss or the commencement of any
Third Party Action; PROVIDED, HOWEVER, that the failure to provide such notice
within a reasonable period of time shall not relieve Seller of any of its
obligations hereunder, unless Seller is materially prejudiced by such delay.
Promptly after receiving such notice, Seller will, upon notice to Buyer, have
the right to assume and control the defense and settlement of any such Third
Party Action at its own cost and expense; PROVIDED, HOWEVER, that it shall be a
condition precedent to the exercise of such right by Seller that Seller shall
agree in writing that the Loss, or Third Party Action, as the case may be, is
properly within the scope of the indemnification obligation and that as between
the parties, Seller shall be responsible to satisfy and discharge such Third
Party Action. Seller shall not enter into any resolution or other compromise of
a Third Party Action without obtaining the complete release of Buyer for any
liability to all claimants under or pursuant to such Third Party Action. Buyer
shall have the right to participate in any such defense, contest or other
protective action at its own cost and expense.
Notwithstanding the foregoing, Buyer shall have the right to assume
and control the defense and settlement of a Third Party Action (a) if such
action includes claims for equitable relief which, if determined adversely to
Buyer, could reasonably be expected to interfere with its intended business
operations or damage its business reputation or (b) if Seller fails to do so in
a timely manner. In any circumstances in which Buyer undertakes to control the
Third Party Action as provided in this paragraph, it shall (i) not enter into
any resolution or other compromise involving monetary damages without obtaining
the prior written consent of Seller provided that such written consent may not
be withheld if it would interfere with Buyer's business operation and (ii) keep
Seller informed on an ongoing basis of the status of such Third Party Action and
shall deliver to Seller, copies of all documents related to the Third Party
Action reasonably requested by Seller. Buyer shall act to assure that all
attorneys' fees and expenses incurred in connection therewith are reasonable.
21. EXCULPATION.
No recourse shall be had for any obligation of Brandywine Realty Trust
under this Agreement or under any document executed in connection herewith or
pursuant hereto, or for any claim based thereon or otherwise in respect thereof,
against any past, present or future trustee, shareholder, officer or employee of
Brandywine Realty Trust, whether by virtue of any statute or rule of law, or by
the enforcement of any assessment or penalty or otherwise, all such liability
being expressly waived and released by the Seller and all parties claiming by,
through or under Seller.
-25-
<PAGE>
22. AS-IS.
Buyer acknowledges and agrees that except as herein elsewhere
specifically provided, Seller has not made, does not make and specifically
negates and disclaims any representations, warranties (other than the special
warranty of title as set out in the deed), promises, covenants, agreements or
guaranties of any kind or character whatsoever, whether express or implied,
statutory, oral or written, past, present or future, of, as to, concerning or
with respect to (A) the value, nature, quality or condition of the Property,
including, without limitation, the water, soil, and geology, (B) the suitability
of the Property for any and all activities and uses which Buyer or any tenant
may conduct thereon, (C) the compliance of or by the Property or its operation
with any laws, rules, ordinances or regulations of any applicable governmental
authority or body, (D) the habitability, merchantability, marketability,
profitability or fitness for a particular purpose of the Property, (E) the
manner or quality of the construction or materials, if any, incorporated into
the Property, (F) the manner, quality, state of repair or lack of repair of the
Property, (G) compliance with any environmental requirements, including the
existence in or on the Property of hazardous materials or (H) any other matter
with respect to the Property. Additionally, no person acting on behalf of
Seller is authorized to make, and by execution hereof, Buyer acknowledges that,
except as herein elsewhere specifically provided, no person has made any
representation, agreement, statement, warranty, guaranty or promise regarding
the Property or the transaction contemplated herein; and no such representation,
warranty, agreement, guaranty, statement or promise, if any, made by any person
acting on behalf of Seller shall be valid or binding upon Seller unless
expressly set forth herein. Buyer further acknowledges and agrees that, except
with respect to information developed by Seller, its principals or affiliates,
any information provided or to be provided with respect to the Property was
obtained from a variety of sources, that Seller has not made any independent
investigation or verification of such information and makes no representations
as to the accuracy, truthfulness or completeness of such information, and the
Buyer may not be entitled to rely on any such information. The foregoing
notwithstanding, Seller has no knowledge that any such information is inaccurate
or misleading. Buyer further acknowledges and agrees that to the maximum extent
permitted by law, and except as herein elsewhere specifically provided, the sale
of the Property as provided for herein is made on an "as is" condition and basis
with all faults. It is understood and agreed that the purchase price has been
adjusted by prior negotiation to reflect that the Property is sold by Seller and
purchased by Buyer subject to the foregoing.
23. INTENTIONALLY OMITTED.
-26-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed the day and year first above written.
GENDER ROAD JOINT VENTURE, CHRISTIANA CENTER OPERATING
a Delaware partnership COMPANY I LLC, By Its Members
By:_________________(SEAL) BRANDYWINE OPERATING PARTNERSHIP,
Brock J. Vinton, Managing Venturer L.P., a Delaware limited partnership, by
Hereunto Duly Authorized Brandywine Realty Trust, a Maryland Real
Estate Investment Trust, its sole general
partner
By: /S/ Gerard H. Sweeney, President & CEO
-----------------------------------
Gerard H. Sweeney, President & CEO
GENDER ROAD JOINT VENTURE,
a Delaware partnership
By:________________________________
Brock J. Vinton, Managing Venturer,
Hereunto Duly Authorized
-27-
<PAGE>
EXHIBIT "A"
LEGAL DESCRIPTION
TO BE ATTACHED POST EXECUTION BY THE PARTIES
-vi-
<PAGE>
EXHIBIT "C"
PERMITTED ENCUMBRANCES
TO BE ATTACHED POST EXECUTION BY THE PARTIES
-vii-
<PAGE>
SCHEDULE 5.15
CONSTRUCTION CONTRACTS RELATING TO THE PROJECT
TO BE ATTACHED AFTER THEY ARE
DELIVERED TO
AND APPROVED BY THE BUYER
-viii-
<PAGE>
EXHIBIT "H"
TENANT ESTOPPEL CERTIFICATE
(__________ Portfolio)
100 Commerce Drive
Newark, DE
_____________, 1997
Brandywine Realty Trust
Newtown Square Corporate Campus
16 Campus Boulevard
Newtown Square, PA 19073
Attention: Gerard H. Sweeney,
President and Chief Executive Officer
NationsBank, N.A.,
as Agent for the parties listed on
Schedule 1 attached hereto
Real Estate Banking
8300 Greensboro Drive, Suite 300
McLean, VA 22102
Attention: Cheryl D. Fitzgerald, Vice President
Re: Name of Tenant: (COMPANY CAPS)
Lease located at (Suite), (Premises)
(Municipality), (State) (the "Property")
To Whom it May Concern:
The undersigned is the holder of the tenant's interest under the lease
described on Exhibit A attached hereto (the "Lease") demising a portion of the
Property known as (Suite) (the "Leased Premises"). We understand that
Brandywine Realty Trust, its assignee or nominee ("Brandywine") intends to
acquire the Property, and that NationsBank, N.A., as Agent for the parties
listed on Schedule 1 attached hereto ("Lender") intends to be the holder of a
first mortgage on the Property, and that Brandywine and Lender require this
certification from us.
Accordingly, we hereby certify to Brandywine and Lender as follows:
1. The Lease is in full force and effect and has not been modified,
amended or supplemented in any way, except as follows: None (If appropriate
response is other than "None," insert dates of all modifications, amendments or
supplements):
<PAGE>
2. There are no other representations, warranties, agreements,
concessions, commitments, or other understandings between the undersigned and
the Landlord regarding the Property other than as set forth in the Lease or
paragraph 1 above.
3. The landlord under the Lease has completed and delivered, and the
undersigned has accepted, the Leased Premises in the condition required by the
Lease and the term of the Lease commenced on (Lease start). The Leased Premises
consists of approximately (Square feet) square feet. The undersigned has taken
possession of and is occupying the Leased Premises on a rent-paying basis and
the monthly base rent payable thereunder is (Monthly rent), payable in advance.
All improvements and work required under the Lease to be made by the landlord
thereunder and all facilities required under the Lease to be furnished to the
Leased Premises have been completed to the satisfaction of the undersigned,
except as follows: None. (If appropriate response is other than "None,"
insert description of any improvements and work to be completed by the landlord
under the Lease):
4. The fixed expiration date set forth in the Lease, excluding renewals
and extensions, is (Lease exp). The undersigned neither has any option or right
to purchase the Property or any portion thereof nor does the undersigned have
any right or option to terminate the Lease or any of its obligations thereunder
in advance of the scheduled termination date of the Lease as noted above, except
as follows: None. (If appropriate response is other than "None," insert
description of any purchase rights or options, and/or any early termination
rights, together with reference to document (and section or paragraph) where
found):
5. All rents, additional rents and other sums due and payable under the
Lease have been paid in full and no rents, additional rents or other sums
payable under the Lease have been paid for more than one (1) month in advance of
the due dates thereof.
6. The landlord under the Lease is not in default under any of the
requirements, provisions, terms, conditions or covenants of the Lease to be
performed or complied with by the landlord under the Lease, and no event has
occurred or situation exists which would, with the passage of time and/or the
giving of notice, constitute a default or an event of default by the landlord
under the Lease.
7. The undersigned is not in default under any of the requirements,
provisions, terms, conditions, or covenants of the Lease to be performed or
complied with by the undersigned, and no event has occurred or situation exists
which would, with the passage of time and/or the giving of notice, constitute a
default or an event of default by the undersigned under the Lease.
8. The undersigned has received no notice from any governmental authority
or other person or party claiming a violation of, or requiring compliance with,
any Federal, State or local statute, ordinance, rule, regulation or other
requirement of law, for environmental contamination at the Leased Premises, to
the best knowledge of the undersigned, [NJ only: the undersigned is in
compliance with all applicable provisions of the Industrial Site Recovery Act],
and no hazardous, toxic or polluting substances or wastes have been generated,
treated, manufactured, stored, refined, used, handled, transported, released,
spilled, disposed of or deposited by Tenant on, in or under the Leased Premises.
<PAGE>
9. Neither the undersigned nor the landlord under the Lease has
commenced any action or given or received any notice for the purpose of
terminating the Lease.
10. There are no existing defenses, offsets, claims, or credits against
the payment of rent or the performance of the undersigned's obligations under
the Lease.
11. The undersigned has paid to the landlord under the Lease a security
deposit of (Security dep).
(COMPANY CAPS)
By:
-------------------------------
Name:
Title:
<PAGE>
Exhibit A
(Description of Lease)
Lease dated __________ with (Company/Tenant), Tenant, for Suite (Suite),
(Premises), (Municipality), (State).
______________________________
Exhibit A
- (Alternate) -
The undersigned hereby certifies to Brandywine Realty Trust,
NationsBank, N.A., Administrative Agent, (Seller) with respect to its tenancy at
Suite (Suite), (Premises), (Municipality), (State) that attached hereto is a
true, correct and complete copy of its lease and all amendments thereto
("Lease"). It is intended by the undersigned that this Certificate and the
attached documents shall be appended to the within Tenant Estoppel Certificate
delivered by the undersigned Tenant to the above-mentioned parties.
COMPANY CAPS
By:
-----------------------------
Name:
Title:
<PAGE>
Schedule 1
NationsBank, N.A., Smith Barney Mortgage Capital Group, Inc. and all
other parties to whom a direct participation interest in a certain Credit
Facility are sold, transferred and assigned pursuant to the provisions of a
certain Revolving Credit Agreement and a certain Co-Lender and Servicing
Agreement, each dated as of November 25, 1996.
<PAGE>
EXECUTION
OPERATING AGREEMENT
OF
CHRISTIANA CENTER OPERATING COMPANY I LLC
Dated as of September 19, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
GENERAL PROVISIONS..........................................................2
1.1. Formation.............................................................2
1.2. Name and Principal Place of Business..................................2
1.3. Registered Agent......................................................2
1.4. Purpose...............................................................2
1.5. Limitation on Purposes................................................2
1.6. Title to Property.....................................................3
1.7. Term..................................................................3
1.8. Type of Income........................................................3
ARTICLE 2
CAPITAL CONTRIBUTIONS.......................................................3
2.1. Capital Contributions Generally.......................................3
2.2. Capital Contribution of Class A Member................................3
2.3. Capital Contribution of Class B Member................................4
2.4. Initial Capital and Credit to Capital Account.........................4
2.5. Additional Capital Contributions......................................5
2.6. Maintenance of Capital Accounts.......................................6
2.7. Preferred Capital.....................................................7
2.8. No Interest...........................................................7
2.9. Revaluation of Company Property.......................................7
ARTICLE 3
MANAGEMENT..................................................................7
3.1. Management............................................................7
3.2. Manner of Acting......................................................7
3.3. Contact Representatives...............................................8
3.4. Designated Representatives............................................9
3.5. Fees, Compensation and Reimbursement of Expenses......................9
ARTICLE 4
THE MEMBERS................................................................10
4.1. Meeting of Members...................................................10
4.2. Limitation of Liability..............................................10
4.3. Company Records......................................................10
4.4. Duties of Members....................................................10
i
<PAGE>
4.5. Activities of Members................................................10
4.6. Independent Activities of Members....................................10
4.7. Dealings with the Company............................................11
4.8. Covenant not to Withdraw.............................................11
4.9. Additional Members...................................................11
ARTICLE 5
REPRESENTATIONS AND WARRANTIES.............................................12
5.1. Representations and Warranties of Members............................12
ARTICLE 6
INDEMNIFICATION............................................................14
6.1. Liability............................................................14
6.2. Company Indemnification..............................................14
6.3. Member Indemnification...............................................15
6.4. Class B Member Indemnification.......................................15
ARTICLE 7
TRANSFERS..................................................................15
7.1. Transfer Restrictions................................................15
7.2. Permitted Transfers..................................................16
7.3. Conditions of Transfer...............................................16
7.4. Transfers; Recharacterization........................................16
7.5. Conversion of Class B Member.........................................17
ARTICLE 8
BUY-SELL PROVISIONS........................................................17
8.1. Mutual Disagreement..................................................17
8.2. Mandatory Buy-Sell of Interests. ....................................17
8.3. Closing of Purchase or Sale..........................................18
8.4. Definitions..........................................................18
ARTICLE 9
ALLOCATIONS OF PROFITS AND LOSSES..........................................19
9.1. Allocations of Profits...............................................19
9.2. Allocation of Losses.................................................20
9.3. Special Allocations..................................................20
9.4. Curative Allocations.................................................21
9.5. Allocations for Tax Purposes.........................................21
ARTICLE 10
DISTRIBUTIONS..............................................................22
ii
<PAGE>
10.1. Net Cash From Operations............................................22
10.2. Net Cash From Sales or Refinancings.................................23
10.3. Authority to Withhold...............................................24
ARTICLE 11
BOOKS, RECORDS, REPORTS AND ACCOUNTING.....................................24
11.1. Books and Records...................................................24
11.2. Company's Accountants...............................................24
11.3. Fiscal Year. .......................................................24
11.4. Accounting Period...................................................25
11.5. Annual Reports......................................................25
11.6. Quarterly Reports...................................................25
11.7. Preparation of Tax Returns..........................................25
11.8. Tax Controversies...................................................25
11.9. Tax Elections.......................................................25
ARTICLE 12
DISSOLUTION AND LIQUIDATION................................................26
12.1. Dissolution.........................................................26
12.2. Bankruptcy of a Member..............................................26
12.3. Liquidation.........................................................26
12.4. No Liquidating Distributions in Kind................................27
12.5. Deficit Capital Account.............................................27
12.6. Certificate of Cancellation.........................................27
12.7. Non-Recourse........................................................27
ARTICLE 13
MISCELLANEOUS..............................................................28
13.1. Amendments..........................................................28
13.2. Notice..............................................................28
13.3. Governing Law.......................................................29
13.4. Severability........................................................29
13.5. Binding Effect......................................................29
13.6. Titles and Captions.................................................30
13.7. No Third Party Rights...............................................30
13.8. Time is of Essence..................................................30
13.9. Further Assurances..................................................30
13.10 Incorporation by Reference..........................................30
13.11. Legal Representation................................................30
13.12. Entire Agreement....................................................30
13.13. Counterparts........................................................30
13.14. Execution of Certificate of Formation...............................30
iii
<PAGE>
DEFINITIONS OF TERMS......................................................1
iv
<PAGE>
OPERATING AGREEMENT
OF
CHRISTIANA CENTER OPERATING COMPANY I LLC
THIS OPERATING AGREEMENT OF CHRISTIANA CENTER OPERATING COMPANY I
LLC (the "Agreement") is made and entered into as of the 19th day of
September, 1997 by and between Brandywine Operating Partnership, L.P., a
Delaware limited partnership (the "Class A Member") and Gender Road Joint
Venture, a Delaware general partnership (the "Class B Member" and together
with the Class A Member, the "Members") as members of CHRISTIANA CENTER
OPERATING COMPANY I LLC (the "Company").
Capitalized terms used in this Agreement shall have the meanings set
forth on Exhibit A attached hereto unless they are otherwise defined in the
preamble, the Background or the particular section in this Agreement in which
they are used.
BACKGROUND
The Class B Member is the owner of the Land. The Members desire to
organize and form the Company for the purposes of acquiring the Land from the
Class B Member, and developing, constructing and operating the Project, which
will be owned, leased and operated by the Company for the production of
income. In connection with and as a condition of the consummation of the
transactions contemplated by this Agreement, the Company shall enter into (i)
the Land Acquisition Agreement with the Class B Member pursuant to which the
Class B Member shall sell, and the Company shall purchase, the Land and (ii)
the other Collateral Agreements.
This Agreement sets forth the understanding between the Members with
respect to the terms and conditions of the Land Acquisition (to the extent
not inconsistent with the Land Acquisition Agreement), the construction,
management and operation of the Project, and the distribution of proceeds
received from the ownership and/or disposition of the Property.
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and preceding with the Background paragraphs
incorporated by reference, the Members, intending to be legally bound hereby,
covenant and agree as follows:
<PAGE>
ARTICLE 1
GENERAL PROVISIONS
1.1. Formation. The Members desire to form the Company as a limited
liability company under the laws of the State of Delaware, and in connection
therewith desire to set forth their agreements and understandings as stated
in this Agreement. The Members agree that the Company shall be operated
pursuant to the terms and conditions set forth in this Agreement, and to the
extent not inconsistent therewith, the Act. The Members agree to execute or
cause the Company to execute all certificates and documents, including a
Certificate of Formation, required by the Act in order that the Company
qualify as a limited liability company under the Act. The Members shall do
or cause to be done all such other filings, including amendments of the
Certificate of Formation, recordings, or other acts as may be necessary or
appropriate to comply with the laws of formation and operation of a limited
liability company in the State of Delaware and any other jurisdiction in
which the Company may conduct business.
1.2. Name and Principal Place of Business. The name of the Company
shall be "CHRISTIANA CENTER OPERATING COMPANY I LLC" or such other name as
the Members from time to time may select. The principal place of business of
the Company shall be Gender Road Joint Venture c/o The Commonwealth Group, 62
Read's Way, New Castle, Delaware 19720, or such other place as the Members
from time to time shall determine.
1.3. Registered Agent. The registered agent for the Company shall
be The Corporation Trust Company located at Corporation Trust Center, 1209
Orange Street Wilmington, DE 19801.
1.4. Purpose. The sole purpose of the Company shall be to acquire
the Land, and to construct, control, own, manage, operate and maintain the
Project in accordance with the terms of this Agreement and, to the extent
applicable, the Collateral Agreements. In connection therewith, the Company
shall have the authority to do all things necessary and appropriate to
construct, operate, manage and maintain the Project.
1.5. Limitation on Purposes. The Company shall exist solely for the
purposes specified in Section 1.4 hereof and unless the Members agree
otherwise, the Company shall not engage in any business other than the
Project. The Members do not intend and this Agreement shall not be deemed to
create any joint venture, partnership, or other arrangement by and between
the Members with respect to any business or activities of any Member other
than the business and activities specifically set forth in this Agreement.
No Member shall have the power to bind the other Member except with respect
to the business of the Company as specifically set forth in this Agreement.
2
<PAGE>
1.6. Title to Property. All property owned by the Company, whether
real or personal, tangible or intangible, shall be owned by the Company as an
entity and in the name of the Company, and no Member shall have any ownership
interest in such property. The interest of all Members in the Company are,
for all purposes, personal property.
1.7. Term. The term of the Company shall commence upon the filing
of the Certificate of Formation in accordance with the Act and shall continue
until the Company is terminated in accordance with Article 12 of this
Agreement.
1.8. Type of Income. The Class B Member hereby acknowledges and
agrees that Brandywine Realty Trust, the general partner of the Class A
Member, is a real estate investment trust as defined in Section 856 of the
Code, and that as long as the Class A Member is a member of the Company, the
Company shall manage its affairs in a manner such that the Company does not
intentionally earn any income for tax purposes or acquire any assets which
would cause Brandywine Realty Trust to violate any of the provisions of Code
Section 856.
ARTICLE 2
CAPITAL CONTRIBUTIONS
2.1. Capital Contributions Generally. The Members shall make
Capital Contributions to the Company at the Agreed Value set forth in this
Section 2.1 at such times and in such manner, and on such terms and
conditions as set forth in Section 2.2, in the case of the Class A Member,
and as set forth in Section 2.3, in the case of the Class B Member; provided,
however, that any such Capital Contributions shall not be treated as Initial
Capital or credited to such Member's Capital Account until such time as set
forth in Section 2.4 hereof. The Agreed Value of each Member's Capital
Contribution is as follows:
Member Agreed Value
------ ------------
Class A Member $2,000,000
Class B Member $1,910,000
2.2. Capital Contribution of Class A Member. The Class A Member's
Capital Contribution at the Agreed Value set forth in Section 2.1 hereof
shall be reflected in the following manner:
2.2.1.In connection with, and upon the closing of, the Acquisition
and Construction Loan, the Class A Member shall provide, from a suitably
creditworthy financial institution, a letter of credit in an amount up to Two
Million Dollars ($2,000,000) to the extent that such letter of credit (i) is
necessary to facilitate the Company's procurement of the
3
<PAGE>
Acquisition and Construction Loan, or (ii) will result in the Company
obtaining more favorable terms and conditions for the Acquisition and
Construction Loan. Notwithstanding the Class A Member's agreement hereunder,
the parties acknowledge and agree that the Acquisition and Construction Loan
is intended to be funded simultaneously with the closing of the Land
Acquisition, and that the Class A Member's obligation to provide a letter of
credit under this Section 2.2.1 is expressly conditioned upon the closing of
the Land Acquisition and the Acquisition and Construction Loan.
2.2.2. In addition to and not in limitation of the Class A Member's
obligation under Section 2.2.1 hereof, it is anticipated that prior to or
upon completion of the Project, the Acquisition and Construction Loan will be
refinanced with the Permanent Loan and a cash contribution by the Class A
Member in the amount of Two Million Dollars ($2,000,000) less any amounts
advanced under the Letter of Credit plus interest thereon to the extent such
amounts have not been paid or reimbursed by the Company. Accordingly, upon
the date of the funding of the Permanent Loan, the Class A Member shall
contribute to the Company cash in the amount of Two Million Dollars
($2,000,000) less any amounts advanced under the Letter of Credit plus
interest thereon to the extent such amounts have not been paid or reimbursed
by the Company; provided that upon the contribution of cash by the Class A
Member hereunder, the Letter of Credit shall be canceled. The parties hereto
intend that the cash contribution by the Class A Member hereunder, together
with the proceeds of the Permanent Loan, shall be used to satisfy the
Acquisition and Construction Loan.
2.3. Capital Contribution of Class B Member. The Class B Member's Capital
Contribution at the Agreed Value set forth in Section 2.1 hereof, shall be
made or deemed made as follows:
2.3.1. By executing this Agreement, the Class B Member agrees to
provide the Company with the right to purchase the Land and further agrees to
contribute to the Company cash in the amount of Two Hundred Sixty Thousand
Dollars ($260,000), such cash to be contributed upon the funding of the
Permanent Loan.
2.4. Initial Capital and Credit to Capital Account. Upon the funding of
the Permanent Loan, each Member's Capital Contribution shall be treated as
Initial Capital and shall be credited to such Member's Capital Account;
provided, however, that with respect to the Class A Member, to the extent
there is an advance or draw under the Letter of Credit delivered by the Class
A Member pursuant to Section 2.2.1 hereof, then the amount of such advance or
draw plus interest thereon to the extent such amounts have not been paid or
reimbursed by the Company shall be treated as part of the Class A Member
Initial Capital and shall be included in calculating the Class A Member
Preferred Return on Initial Capital to the extent thereof as of the date of
such advance or draw.
4
<PAGE>
2.5. Additional Capital Contributions.
2.5.1. It is not expected that the Members will be required to
contribute any additional capital to the Company other than those Capital
Contributions set forth in Sections 2.2 and 2.3 hereof at the times set forth
therein and at the Agreed Value. In the event, however, that either the
Class A Member or the Class B Member (the "Notifying Member"), in its
reasonable business judgment, determines that additional capital is required
by the Company, whether for capital expenditures, normal operating expenses,
debt service or otherwise in connection with the Project, then the Notifying
Member shall give ten (10) days written notice (the "Capital Notice") to the
other Member (the "Notified Member") specifying in reasonable detail the
amount and purpose of the additional required capital. If the Notified
Member agrees within said ten (10) day period that the capital set forth in
the Capital Notice is needed by the Company, such additional capital shall be
obtained through bank financing or Additional Capital Contributions, as
mutually determined by the Notified Member and the Notifying Member.
2.5.2. If the Notified Member and the Notifying Member are unable to
agree within said ten (10) day period as to whether additional funds are
needed by the Company or are unable to agree as to whether such funds should
be obtained through bank financing or Additional Capital Contributions, then
the Notifying Member and the Notified Member each shall select a
representative who together shall appoint one independent Person, unrelated
to either Member or its Affiliates and who is experienced in the real estate
development industry and has substantial expertise in the financial
marketplace (the "Advisor"), to determine whether and when additional funds
are needed and/or the manner in which such funds shall be obtained by the
Company; provided that, if the Advisor determines that such additional funds
should be obtained from the Members, then both Members shall be required to
make an Additional Capital Contribution to the Company as provided in Section
2.5.3 hereof. The Members hereby agree that, in either case, the Advisor's
determination shall be final and binding on the Members.
2.5.3. If additional funds are obtained from the Members through
Additional Capital Contributions, such contributions shall be made by the
Members, in cash on the same terms and in the same amount, within ten (10)
business days after receipt of (a) the Capital Notice (in the event that the
Members agree to make Additional Capital Contributions pursuant to Section
2.5.1 hereof) or (b) written notice from the Advisor (in the event that the
procedure under Section 2.5.2 hereof is utilized).
2.5.4. If additional funds are obtained from the Members through
Additional Capital Contributions and both Members make their Additional
Capital Contribution hereunder, then, each Member shall be entitled to the
Preferred Return on Additional Capital with respect to its Additional Capital
Contribution as of the Additional Capital Date.
2.5.5. If Additional Capital Contributions are required to be made
by the Members under this Section 2.5 and a Member (the "Defaulting Member")
fails to advance its pro rata share of such Additional Capital Contribution,
then, any amounts advanced by the other Member (the
5
<PAGE>
"Performing Member") shall be treated as a loan by the Performing Member to
the Company, and the Performing Member shall have the right, but not the
obligation, to make a loan to the Company in the amount of the Additional
Capital Contribution due from the Defaulting Member. Any amounts advanced by
the Performing Member under this Section 2.5.5, whether on its own behalf or
on behalf of the Defaulting Member shall be treated as a loan (a "Capital
Loan") notwithstanding that such funds may originally have been advanced by
the Performing Member as an Additional Capital Contribution. All Capital
Loans shall (i) be for a term of five (5) years, (ii) bear annual interest at
a rate of thirteen percent (13%), (iii) be prepayable by the Company in
whole or in part without penalty, and (iv) be repaid in full by the Company
before any distributions may be made to any Member under Sections 10.1, 10.2
or 12.3 hereof. All payments received with respect to a Capital Loan shall
be applied first against accrued and unpaid interest thereunder, and then
against the outstanding principal balance thereof.
2.6. Maintenance of Capital Accounts.
2.6.1. The Company shall maintain a separate Capital Account for
each Member in accordance with Treasury Regulations promulgated under Section
704(b) of the Code, and each Member's Capital Account shall be as follows:
(a) Each Member's Capital Account shall be credited at the
Agreed Value at the time set forth in Section 2.4 hereof.
(b) Each Member's Capital Account shall be (1) increased by
(a) the amount of money contributed by such Member to the capital of the
Company, (b) the Gross Asset Value of any property contributed by such Member
to the capital of the Company (net of liabilities secured by such contributed
property) and (c) the amount of Profits and other items of Company income or
gain allocated to such Member under this Agreement, and (2) decreased by (a)
the amount of money distributed to such Member by the Company pursuant to
this Agreement, (b) the Gross Asset Value of property distributed to such
Member by the Company (net of liabilities secured by such distributed
property) and (c) the amount of Losses and other items of Company deduction,
loss or expense allocated to such Member under this Agreement.
2.6.2. It is intended that the Capital Accounts shall be determined
and maintained throughout the full term of the Company in accordance with the
capital accounting rules set forth in Treasury Regulation Section
1.704-1(b)(2)(iv), and that all provisions in this Agreement shall be
interpreted and applied in a manner consistent therewith. In the event that
the Members determine that it is prudent to modify the manner in which the
Capital Accounts, or any credits or charges thereto, are computed or
maintained in order to comply with such Treasury Regulations, the Members,
upon agreement, shall make such modifications to the extent necessary to
comply with such Treasury Regulations.
6
<PAGE>
2.7. Preferred Capital. It is the intention of the parties hereto that
Section 2.6 shall not apply to, or in any way effect, a Member's Initial
Capital, Additional Capital, Unreturned Initial Capital or Unreturned
Additional Capital, which accounts are maintained for the purpose of
distributions pursuant to Article 10 hereof.
2.8. No Interest. No Member shall be entitled to interest on that
Member's Capital Contributions or Capital Account except as otherwise
provided in this Agreement.
2.9. Revaluation of Company Property. Upon the agreement of the Members,
the Capital Accounts of the Members may be adjusted to reflect a revaluation
of the property of the Company in accordance with, and at such times as
specified in, Treasury Regulation Section 1.704-1(b)(2)(iv)(f); provided that
any adjustments hereunder shall be made in accordance with and to the extent
provided in Treasury Regulations Section 1.704-1(b)(2)(iv)(f) and (g).
ARTICLE 3
MANAGEMENT
3.1. Management. The management of the Company shall be vested in the
Members as set forth in this Article 3. Each Member, subject to the terms,
conditions, restrictions and limitations contained herein, will possess all
of the powers and rights of a member of a limited liability company under the
Act; provided, however, no single Member shall be authorized or empowered to
undertake any action or make any decision on behalf of the Company or in
connection with the Property unless otherwise specifically set forth in this
Agreement or in a Collateral Agreement. Each Member acknowledges and agrees
that it intends to actively participate in the management of the Company and
its operations.
3.2. Manner of Acting. Where this Agreement specifically requires the
vote, consent or determination of the Members and/or in order for the Company
to undertake any Major Action (as defined in this Section 3.2), the approval
at a duly convened meeting or by written consent in lieu of a meeting of each
Member shall be required. For purposes of this Agreement, a "Major Action"
shall mean and include decisions and undertakings relating to:
(a) the acquisition of the Land by the Company pursuant to the
Land Acquisition Agreement;
(b) the construction and completion of the Project, including
construction contracts, schedules and budgets.
(c) any loans, borrowings, financing or refinancing in connection
with the Project, including without limitation, the
Acquisition and Construction Loan and the Permanent Loan;
7
<PAGE>
(d) the management of the Project, including the terms and
conditions of any management and/or leasing agreements;
(e) the annual operating budget and business plan for the
Project;
(f) the sale, conveyance, transfer, assignment or disposition
of the Land and/or the Project;
(g) leases for occupancy of space in the Project by tenants,
including without limitation rents, escalations, allowances
and other business terms;
(h) any contract or agreement giving rise to a financial
commitment or obligation of the Company;
(i) the employment of employees and/or agents in connection with
the operation and management of the Project;
(j) the admission of any additional Members;
(k) the selection of and change of accountants, auditors and/or
legal counsel for the Company; and
(l) significant tax elections required or permitted pursuant to
the Code and/or applicable law of any taxing authority to
which the Company is subject.
3.3. Contact Representatives. Each Member shall designate and appoint
one or more individuals who shall be the contact person (a "Contact
Representative") for such Member and each of whom who shall be authorized by
such Member to act on its behalf in the performance of this Agreement and who
shall be authorized to make decisions in connection with Major Actions on
behalf of such Member. The Class A Member hereby designates and appoints
Anthony A. Nichols, Sr. and Gerard H. Sweeney as its initial Contact
Representatives, and the Class B Member hereby designates and appoints Brock
J. Vinton as its initial Contact Representative. A Member appointing an
individual as a Contact Representative may, at any time, appoint and
designate a new Contact Representative, provided that such Member shall
notify the other Member of such new appointment or designation within a
reasonable time after such appointment.
3.4. Designated Representatives.
8
<PAGE>
3.4.1. The Members acknowledge and agree that while Company
decisions generally shall be made by the Members as set forth in Section 3.2
hereof, the daily operation and management of the Company shall, subject to
the limitations set forth in this Section 3.4 or a Collateral Agreement, be
delegated to the Administrative Officer, who initially shall be Brock J.
Vinton. In addition to the day-to-day management of the Company, the
Administrative Officer shall be responsible for the preparation of quarterly
and annual financial statements as set forth in Sections 11.5 and 11.6
hereof.
3.4.2. The Members also acknowledge and agree that certain functions
of the Company shall, subject to the limitations set forth in this Section
3.4 or a Collateral Agreement, be delegated to the employees or agents of the
Class B Member (any such designated employees or agents of the Class B Member
being referred to herein as a "Designated Representative"), provided that the
Class B Member shall keep the Class A Member apprised of any such employees
or agents and their activities.
3.4.3. The Administrative Officer and any Designated Representative
appointed hereunder shall have the specific power and authority set forth in
this Agreement, in an employment agreement, if any, in a Collateral Agreement
and as otherwise delegated to such Administrative Officer and/or Designated
Representative by the Members; provided that the Administrative Officer and
any Designated Representative shall operate the Company subject to (i) basic
policy decisions adopted by the Members, (ii) specific limitations and
requirements of this Agreement and any other agreement executed by and
between the Administrative Officer and the Company and/or a Designated
Representative and the Company, as the case may be, and (iii) limitations
imposed under the Act. Notwithstanding any provision in this Agreement or
any other agreement to the contrary, neither the Administrative Officer nor
any Designated Representative shall have the authority, either individually
or acting in conjunction with each other or other Designated Representatives,
to do any act, make any decision, or engage in any transaction which requires
the approval of the Members as set forth in Section 3.2 hereof.
3.5. Fees, Compensation and Reimbursement of Expenses. Upon the funding
of the Acquisition and Construction Loan, the Company shall:
(a) reimburse the Class B Member for those costs, fees and
expenses set forth on Schedule 3.5.1 attached hereto; and
(b) reimburse the Class A Member for those costs, fees and
expenses set forth on Schedule 3.5.2 attached hereto.
9
<PAGE>
ARTICLE 4
THE MEMBERS
4.1. Meeting of Members. The Members shall hold meetings on a quarterly
basis or such other periodic basis as the Members may agree at such location
as the Members may agree. Any Member may call for a meeting by giving ten
(10) days prior written notice to the other Member, which notice shall
specify the purpose of the meeting; provided that the ten (10) days notice
period may be waived by the other Member.
4.2. Limitation of Liability. Each Member's liability for the debts,
obligations and liabilities of the Company shall be limited to the maximum
extent permitted by the Act and other applicable law.
4.3. Company Records. Each Member shall have access to all books and
records of the Company and to the Company's officers, attorneys and auditors
for any reasonable business purpose and shall be entitled to make copies of
such books and records at the Company's expense.
4.4. Duties of Members. Each Member shall have a fiduciary duty to the
other Member to take into account the best interests of the Company when
exercising its rights under this Agreement, provided that it shall not be a
breach of any Member's fiduciary duty to exercise any of its rights under
this Agreement. Notwithstanding this Section 4.4, the Class B Member
acknowledges and agrees that to the extent the Class A Member provides any
funds to the Company as lender and not by way of Additional Capital
Contribution in connection with the Permanent Loan, the Class A Member, in
its capacity as a lender to the Company, shall have no fiduciary duty to the
Class B Member hereunder, and all rights, duties and obligations of the Class
A Member shall be limited to and as set forth in the loan documents executed
in connection with such loan.
4.5. Activities of Members. Except as otherwise expressly provided in
this Agreement or in any Collateral Agreement, no Member or Affiliate of any
Member shall be obligated to devote its, his or their exclusive time and
effort to the business or affairs of the Company, but each Member shall
devote sufficient time, effort and resources (including employees or agents
of such Member) to the business or affairs of the Company as in its judgment
is reasonably required to fulfill its obligations and role in the Company's
businesses and to promote the purposes of the Company, provided, however,
that the Class B Member shall employ and maintain such employees and agents
as shall be necessary to fully perform the duties described in Section 3.4
hereof.
4.6. Independent Activities of Members. Except as otherwise expressly
provided in or limited by a Collateral Agreement, each Member (acting on its
own behalf) and its Affiliates may, notwithstanding this Agreement, engage in
any activities it may choose, whether the same operate
10
<PAGE>
the same type of business as the Company or are competitive with the Company
and neither this Agreement nor any activity undertaken pursuant hereto shall
prevent any Member or its Affiliates from engaging in such activities or
require any Member to permit the Company or any other Member to participate
in such activity.
4.7. Dealings with the Company.
4.7.1. Except as otherwise expressly provided in or limited by this
Agreement or a Collateral Agreement, no Member or Affiliate of any Member
shall contract and deal with the Company as an independent contractor,
employee or as an agent for others, or receive fees or other compensation
from such others or the Company, including without limitation, brokerage
fees, commission fees or any other payment on account of the leasing,
operations, management, financing or refinancing in connection with the Land
or Project, unless and until such Member or the Affiliate of such Member
first provides the other Member with the terms of such proposed dealings and
obtains the prior written consent to such dealing, contract or undertaking
from the other Member.
4.7.2. Notwithstanding Section 4.7.1 hereof, each Member hereby
acknowledges and agrees that, in connection with the transactions
contemplated by this Agreement, the Company shall execute the Construction
Management Agreement, the Developer's Agreement, the Land Acquisition
Agreement and the Leasing and Management Agreement pursuant to each of which
the Class B Member or its Affiliates shall perform certain functions set
forth in each agreement and shall receive the fee for the performance of such
functions as set forth therein.
4.8. Covenant not to Withdraw. Notwithstanding any provision in the Act,
each Member hereby covenants and agrees that the Member has entered into this
Agreement and formed the Company based on its expectation that each Member
will continue as a Member of the Company and carry out the duties and
obligations undertaken by it in this Agreement and the Collateral Agreements
and that, except as otherwise expressly required or permitted hereby, each
Member hereby covenants and agrees not to, without the consent of the other
Member (a) take any action to file a certificate of dissolution or its
equivalent with respect to such Member, (b) take any action that would cause
the voluntary Bankruptcy of such Member, (c) withdraw or attempt to withdraw
from the Company, unless pursuant to a Permitted Transfer in accordance with
Section 7.2 hereof, (d) Transfer all or any portion of its Interest in the
Company except as otherwise provided in Article 7 hereof, or (e) demand a
return of such Member's Capital Contribution or Capital Account prior to the
dissolution and liquidation of the Company pursuant to Section 12.1 hereof.
4.9. Additional Members. Additional Members shall be admitted to the
Company upon the unanimous agreement of the Members; provided that such
Members also shall unanimously agree on the capital contributions, if any, to
be made by such additional Member, the Interests in the Company to which such
Member shall be entitled and the expected duties and obligations of such
additional Member. Notwithstanding this Section 4.9, no Person shall be
admitted to the
11
<PAGE>
Company as an additional Member unless such Person executes a counterpart to
this Agreement thereby agreeing to be bound by the terms and provisions of
this Agreement as if he, she or it were an original Member.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1. Representations and Warranties of Members. By execution and
delivery of this Agreement, each Member hereby makes to the other Member the
representations and warranties set forth in this Section 5.1 to the extent
applicable to such Member. Any and all representations and warranties set
forth in this Section 5.1 shall survive the execution of this Agreement. For
purposes of this Article 5, the term "Member" shall include such Member's
Affiliates that are undertaking or performing any services or activities in
connection with the transactions contemplated in this Agreement or any of the
Collateral Agreements, and any representations and warranties made by a
Member hereunder shall be deemed to include representations and warranties,
as appropriate, with respect to such Affiliates.
5.1.1.Organization. Such Member is a limited partnership or general
partnership, as applicable, duly organized and formed, validly existing and
in good standing under the laws of the State of Delaware and has all
requisite power and authority to own, lease and operate its property and to
carry on its business as of the date hereof and as contemplated by this
Agreement. Each Member is duly qualified to do business and is in good
standing as a limited partnership in each jurisdiction in which the failure
to be so licensed or qualified would have a material adverse effect on its
financial condition or its ability to perform its obligations under this
Agreement or any Collateral Agreement.
5.1.2. Proper Authorization and Power. Each Member has the
requisite power and authority to execute and deliver this Agreement and each
Collateral Agreement to which it is a party and to perform its obligations
hereunder and thereunder. The execution, delivery and performance of this
Agreement and each of the Collateral Agreements, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by
all necessary partnership action, and no other action on the part of the
Member or any Person is necessary to authorize the execution, delivery and
performance of this Agreement or any Collateral Agreement or the consummation
of the transactions contemplated hereby or thereby. This Agreement and each
of the Collateral Agreements constitutes a legal, valid and binding
obligation of such Member enforceable against it in accordance with their
respective terms. No consent, waiver, approval, license or authorization of,
or filing, registration or qualification with, or notice to, any governmental
unit or any other person is required to be made, obtained or given by the
Member or any Person in connection with the execution, delivery and
performance of this Agreement or any Collateral Document that has not been
heretofore obtained.
12
<PAGE>
5.1.3. Validity of Contemplated Transactions. The execution,
delivery and performance of this Agreement or any of the Collateral
Agreements and the consummation by the Member of the transactions
contemplated hereby or thereby does not and will not (i) require any filing
or registration with, or consent, authorization, approval or permit of, any
governmental or regulatory authority and (ii) violate, conflict with,
contravene, result in the breach of, or constitute a default under,
accelerate the performance required by, or require the consent,
authorization, or approval under (a) any terms, conditions or provisions of
the certificate of Limited Partnership of such Member, the partnership
agreement of such Member, or any material agreement or instrument to which
such Member is a party or by which such Member is made bound or to which any
of its properties or assets is subject, (b) any of the terms, conditions or
provisions of any law, regulation, order, writ, injunction, decree or
determination of any court or governmental or regulatory agency applicable to
such Member, or (c) any of the terms, conditions or provisions of any
indenture, mortgage, lease agreement or instrument to which such Member is a
party or may be bound or to which its properties or assets is subject.
5.1.4. Litigation. There are no actions, suits, proceedings, or
investigations pending, or to the knowledge of such Member threatened,
against or affecting such Member or any of its businesses, assets or
properties, before any court or governmental or regulatory agency which
could, if adversely determined, reasonably be expected to impair such
Member's ability to perform its obligations under this Agreement or any
Collateral Agreement or to have a material adverse effect on the financial
condition of such Member.
5.1.5. Investment Representations
(a) Such Member's Interest in the Company is intended to be and
is being acquired solely for its own account for investment and with no
present intention of distributing, reselling, pledging or otherwise disposing
of, all or any part thereof;
(b) Such Member is aware that Interests in the Company have not
been registered under the Securities Act or the applicable state securities
laws or the "Blue Sky" laws of any state, that Interests in the Company
cannot be distributed, sold, pledged or otherwise disposed of unless they are
registered thereunder or unless, in the opinion of counsel satisfactory to
the Company, an exemption from such registration is available, and that the
Company has no intention of so registering Interests in the Company
thereunder and is under no obligation to do so and that accordingly the
Member is able and is prepared to bear the economic risk that may be
associated with respect to its Interest in the Company;
(c) Such Member understands that the Interests are being
offered and sold in reliance upon specific exemptions from the registration
requirements of federal and state securities laws and that the Company is
relying upon the truth and accuracy of the representations and warranties set
forth herein in order to determine the applicability of such exemptions and
the suitability of the Members to acquire Interests; and
13
<PAGE>
(d) Such Member agrees that in addition to the other
restrictions on transfer set forth in this Agreement, it will not sell or
otherwise dispose of its Interest unless a registration statement under the
Securities Act shall be in effect with respect thereto and such Member shall
have complied with all provisions of the Securities Act and all applicable
state securities laws or at the Company's request, the Member shall have
obtained an opinion of counsel that such proposed sale or disposition will
not require registration under the Securities Act or any applicable state
securities laws.
ARTICLE 6
INDEMNIFICATION
6.1. Liability. No Member or any Affiliate of any Member or any
Designated Representative, if appointed pursuant to Section 3.4 hereof, shall
be liable, responsible, accountable in damages or otherwise to the Company or
any Member for any act or failure to act hereunder in connection with the
Company and its business or in the operation and maintenance of the Project
unless the act or omission is attributed to gross negligence, willful
misconduct or fraud or constitutes a material breach by such person of any
term or provision of this Agreement or a Collateral Agreement; provided that
nothing in this Section 6.1 is intended to limit, modify or alter any
Member's liability or obligations under any Collateral Agreement except to
the extent expressly set forth therein.
6.2. Company Indemnification. To the fullest extent permitted by law,
each Member and each Affiliate of any Member, as well as each Designated
Representative appointed pursuant to Section 3.4 (each of the foregoing being
referred to herein as an "Indemnitee", and each Affiliate to which each such
Indemnitee is related being referred to herein as such Indemnitee's "Related
Person") shall be indemnified, defended and held harmless by the Company to
the fullest extent permitted by the Act for, from and against any and all
losses, claims, damages, liabilities, expenses (including reasonable
attorneys' fees and costs), judgments, fines, settlements, demands, actions,
or suits relating to or arising out of the business of the Company or the
operation and maintenance of the Project, or the exercise by the Indemnitee
of any authority conferred on it, him or them hereunder or the performance by
the Indemnitee of any of its, his or their duties and obligations under this
Agreement. Notwithstanding anything contained in this Agreement to the
contrary, no Indemnitee shall be entitled to indemnification hereunder with
respect to any claim, issue or matter: (i) in respect of which it, he or its
or his Related Person (or the Company as the result of an act or omission of
such Related Person) has been adjudged liable for fraud, gross negligence or
willful misconduct; (ii) based upon or relating to a material breach by it,
him or his or its Related Person of any term or provision of this Agreement
or any Collateral Agreement; or (iii) for costs or expenses incurred by the
Indemnitee in connection with a claim or action against it, him or his or its
Related Person by another Member or such other Member's Related Person that
is not related to the Indemnitee's actions under this Agreement.
Notwithstanding this Section 6.2, no Member shall be entitled to
indemnification by the Company when or if acting in a
14
<PAGE>
capacity with the Company as other than a Member, in which case, such right
to indemnification shall be governed by an agreement, if any, between the
Company and the Member.
6.3. Member Indemnification. Each Member (the "Indemnitor Member") shall
indemnify, defend and hold harmless the other Member (the "Indemnitee
Member") from and against any and all losses, claims, damages, liabilities,
expenses (including reasonable attorneys' fees and costs), judgments, fines,
settlements, demands, actions, or suits relating to or arising out of any (i)
fraud, gross negligence or willful misconduct for which the Indemnitor Member
or any of its Affiliates or Related Persons (or the Company as the result of
an act or omission of any of the same) has been adjudged liable; (ii)
material breach by the Indemnitor Member of any term or provision of this
Agreement or any Collateral Agreement, and (iii) material breach or
inaccuracy in any representation or warranty made by such Indemnitor Member
in this Agreement or any Collateral Agreement.
6.4. Class B Member Indemnification. Notwithstanding any provision in
this Agreement to the contrary and in addition to the indemnification set
forth in Section 6.3 hereof, the Class B Member shall indemnify, defend and
hold wholly harmless the Class A Member, the Company and Brandywine Realty
Trust from and against any and all Additional Delaware Realty Transfer Taxes
(as defined in this Section 6.4) relating to or arising out of the Company's
obligation to pay Delaware realty transfer taxes due in connection with the
conveyance of the Land to the Company pursuant to the Land Acquisition
Agreement. For purposes of this Section 6.4, "Additional Delaware Realty
Transfer Taxes" shall mean any Delaware realty transfer taxes (in excess of
the amount of Delaware Realty Transfer Taxes paid by the Company at the
closing of the Land Acquisition) that are or become due and payable by the
Company as a result of the conveyance of the Land pursuant to the Land
Acquisition Agreement, including any and all penalties and interests imposed
thereon; provided, however, that Additional Delaware Realty Transfer Taxes
shall not include any Delaware Realty Transfer Taxes imposed on the Company
as a result of obtaining a building permit or a certificate of occupancy in
connection with the Project. Any indemnification hereunder by the Class B
Member shall not be deemed to be a capital contribution to the Company by the
Class B Member but shall constitute an expense of the Class B Member.
ARTICLE 7
TRANSFERS
7.1. Transfer Restrictions. Except as otherwise provided in this
Agreement, no Member shall make any Transfer of all or any portion of its
Interest, including, without limitation, a Transfer of a right to Profits,
Losses or distributions hereunder, unless and until the other Member consents
to the Transfer and the transferor Member and the proposed Transferee comply
with the provisions of this Article 7. Any Transfer in violation of the
requirements of this Agreement shall be null and void ab initio and of no
force or effect whatsoever. Each Member hereby acknowledges the
reasonableness of the restrictions on Transfer imposed by this Agreement in
15
<PAGE>
view of the Company's purpose and the relationship of the Members.
Accordingly, the restrictions on Transfer set forth herein shall be
specifically enforceable.
7.2. Permitted Transfers. Notwithstanding Section 7.1, a Member may
Transfer all or any portion of its Interest in the Company to (i) another
Member, and (ii) one of its Affiliates (in each case, a "Permitted
Transfer"), provided that a Permitted Transfer to an Affiliate shall comply
with the provisions of Section 7.3.
7.3. Conditions of Transfer. Notwithstanding Section 7.2 hereof, a
Transfer (including a Permitted Transfer to an Affiliate under Section 7.2)
shall not be allowed unless and until the following conditions precedent are
satisfied, and once satisfied, the Transferee shall succeed to all rights and
be subject to all obligations of the transferring Member with respect to the
transferred Interest:
7.3.1. all agreements, articles, minutes, written consents and all
other necessary documents and instruments shall have been executed and filed
and all other acts shall have been performed which the non-transferring
Member deems necessary to make the Transferee a substitute Member of the
Company, including, without limitation, the execution by such Transferee of a
counterpart signature page to this Agreement pursuant to which the Transferee
shall assume any and all obligations and have all rights and interests under
this Agreement with respect to the transferred Interest; and
7.3.2. unless otherwise waived by the non-transferring Member, the
non-transferring Member shall have received such assurances as may be
necessary or appropriate in the opinion of counsel to the Company to confirm
that Transfer would not (i) violate the Securities Act or any state
securities laws or cause the Company to register thereunder; (ii) require the
Company to register as an investment company under the Investment Company
Act; (iii) cause the Company to be treated as other than a partnership for
federal income tax purposes; and (iv) will not terminate the Company for
federal income tax purposes;
7.3.3. unless otherwise waived by the non-transferring Member, the
non-transferring Member shall have received such assurances as it deems
necessary or appropriate to confirm that such Transferee has the ability to
perform all of the Transferor's obligations set forth in this Agreement and
the Collateral Agreements, provided that, unless expressly agreed by the
non-transferring Member, the Transferor shall not be relieved of any of its
liabilities or obligations under this Agreement or any Collateral Agreement;
and
7.3.4. all reasonable expenses incurred by the Company and the
non-transferring Member in connection with the Transfer shall have been paid
by or for the account of the Transferee.
7.4. Transfers; Recharacterization. If any Interest is transferred
during any Fiscal Year in compliance with the provisions of this Agreement,
Profits, Losses, each item thereof, and all other
16
<PAGE>
items attributable to such transferred Interest for such period shall be
divided and allocated between the Transferor and the Transferee by taking
into account their varying interests during the period in accordance with
section 706(d) of the Code, using any conventions permitted by law and
reasonably selected by the non-transferring Member.
7.5. Conversion of Class B Member. Notwithstanding the provisions of
this Article 7, the Members acknowledge that subsequent to the closing of the
Land Acquisition, the Class B Member will convert from a Delaware general
partnership to a Delaware limited liability company pursuant to and in
accordance with Delaware law; provided that the Class B Member shall obtain
the prior written consent of the Class A Member, which consent shall not be
unreasonably withheld, as to the conversion, and provided, further, that all
of the representations and warranties set forth in Section 5.1 hereof (other
than Section 5.1.1) and made by the Class B Member shall remain true and
correct with respect to the Class B Member notwithstanding the conversion.
ARTICLE 8
BUY-SELL PROVISIONS
8.1. Mutual Disagreement. In the event of a Mutual Disagreement, the
Members shall have the rights of mandatory purchase and sale provided in this
Article 8. For purposes of this Article 8, "Mutual Disagreement" shall
mean the failure the Members to mutually agree upon a Major Action to be
undertaken by the Company, which failure remains unresolved for a period
ending on the twentieth (20th) day following the submission of a written
notice by one Member to the other Member stating that such failure to agree
on a Major Action has occurred (the "Election Day").
8.2. Mandatory Buy-Sell of Interests.
8.2.1. In the event of a Mutual Disagreement, a Member (the
"Electing Member") may deliver to the other Member (the "Notice Member") a
written notice (the "Election Notice"), which Election Notice shall include
an irrevocable offer by the Electing Member either (i) to sell all but not
less than all of the Electing Member's Interest in the Company to the Notice
Member (the "Offer to Sell"), or (ii) to purchase all, but not less than all,
of the Notice Member's Interest in the Company (the "Offer to Purchase" and
together with the Offer to Sell, the "Offers"). The Election Notice also
shall set forth the Gross Value of the Project to be used in computing the
Net Equity Value of a Member's Interests. The price at which a Member's
Interest may be purchased or sold under this Section 8.2 (the "Buy-Sell
Price") is the Net Equity Value of a Member's Interest, determined as of the
Election Day.
8.2.2. For a period ending on the forty-fifth (45th) day following
the Election Day (the "Election Period"), the Notice Member shall have the
right to accept either the Offer to Sell or the Offer to Purchase. Upon
acceptance by the Notice Member of one of the Offers, the
17
<PAGE>
Electing Member and the Notice Member shall be required to sell or required
to purchase, as the case may be, for the Buy-Sell Price.
8.2.3. If the Notice Member fails to accept either the Offer to Sell
or the Offer to Purchase within the Election Period, then, the Offers
automatically shall expire and be of no force or effect, and the Notice
Member shall be deemed to have made to the Electing Member an offer (the
"Counter-Offer") to sell all, but not less than all, of the Notice Member's
Interest in the Company for the Buy-Sell Price. Pursuant to the
Counter-Offer, the Electing Member shall be obligated to purchase, and the
Notice Member shall be required to sell, all but not less than all of the
Notice Member's Interest in the Company at the Buy-Sell Price.
8.2.4. The Member purchasing the Interests under this Section 8.2,
whether pursuant to one of the Offers or the Counter-Offer, as the case may
be, shall be referred to as the "Purchasing Member" and the Member selling
such Interests as the "Selling Member."
8.3. Closing of Purchase or Sale. The closing of the purchase or sale
under Section 8.2 shall occur on a date and time and at a place mutually
agreeable to the Electing Member and the Notice Member, provided that such
closing shall not be later than forty-five (45) days after the expiration of
the Election Period; and provided, further, that if the Members cannot agree
on the place of the closing, the closing shall take place at the law offices
of Pepper, Hamilton & Scheetz LLP at the address set forth in Section 13.2.1
hereof. At the closing, the Purchasing Member shall pay to the Selling
Member, by cash or other immediately available funds, the Buy-Sell Price,
and the Selling Member shall deliver to the Purchasing Member good title,
free and clear of any liens, claims, encumbrances, security interests or
options of its Interests in the Company, and the Purchasing Member shall
agree to indemnify and hold harmless the Selling Member from any and all
claims arising in connection with said Interests that accrue after the date
of the closing. At the closing, the Purchasing Member and the Selling Member
agree to execute such documents and instruments of conveyance as may be
necessary or appropriate to confirm the transactions contemplated hereby.
8.4. Definitions. For purposes of this Article 8, the following terms
shall have the definitions set forth in this Section 8.4.
(a) "Gross Value of the Project" shall be the fair market value
of the Project as of the Election Day as determined by the Electing Member
and set forth in the Election Notice.
(b) "Net Equity Value of a Member's Interest" shall be, as of
any day, the amount that would be distributed to such Member in liquidation
of the Company pursuant to Section 12.3 hereof if and assuming that the
following first occurred: (i) the Project were sold for the Gross Value of
the Project, (ii) the Company paid all apportionments and costs customarily
made and/or paid in the closing of a real estate transaction in Delaware
(iii) the Company paid its accrued, but unpaid liabilities and established
reserves for any contingent liabilities pursuant to
18
<PAGE>
Section 12.3.3, including without limitation, the Acquisition and
Construction Loan or the Permanent Loan (without prepayment premium or
penalty), as applicable; provided that the Net Equity Value of a Member's
Interest shall be adjusted to reflect (a) the Unreturned Preferred Capital of
the Selling Member and Purchasing Member, (b) the accrued and unpaid
Preferred Returns of the Selling Member and the Purchasing Member, and (c)
any Capital Loans owing to the Selling Member or Purchasing Member.
ARTICLE 9
ALLOCATIONS OF PROFITS AND LOSSES
9.1. Allocations of Profits. After giving effect to the special
allocations set forth in Section 9.3 hereof, Profits for any Fiscal Year
shall be allocated to the Members in the following order and priority:
9.1.1. First, to the Members until the cumulative Profits allocated
pursuant to this Section 9.1.1 are equal to the cumulative Losses allocated
to the Members pursuant to Section 9.2. hereof for all prior periods (without
duplication) in reverse order to which the prior Losses were allocated.
9.1.2. Second, one hundred percent (100%) to the Members, in
accordance with their respective Preferred Return Percentage, until:
(a) the Class A Member has been allocated an amount equal to
the excess, if any, of (1) the sum of the cumulative distributions made to
the Class A Member pursuant to Sections 10.1.1(a), 10.2.1(a) and 12.3.4 in
respect of (i) the Class A Member Preferred Return on Initial Capital from
the Initial Capital Date to the end of the Fiscal Year and (ii) the Class A
Member Preferred Return on Additional Capital from the Additional Capital
Date to the end of the Fiscal Year, over (2) the cumulative amounts allocated
to the Class A Member pursuant to this Section 9.1.2(a) for all prior Fiscal
Years; and
(b) the Class B Member has been allocated an amount equal to
the excess, if any, of (i) the cumulative distributions made to the Class B
Member in respect of the Class B Member Preferred Return on Additional
Capital pursuant to Sections 10.1.1(b), 10.2.1(b) and 12.3.4 from the
Additional Capital Date to the end of the Fiscal Year, over (ii) the
cumulative amounts allocated to the Class B Member pursuant to this Section
9.1.2(b) for all prior Fiscal Years.
9.1.3. Third, one hundred percent (100%) to the Class B Member to
the extent of the excess, if any, of (i) the cumulative distributions made to
the Class B Member in respect of the Class B Member Subordinated Preferred
Return on Initial Capital pursuant to Sections 10.1.2, 10.2.2 and 12.3.4 from
the Initial Capital Date to the end of the Fiscal Year, over (ii) the
19
<PAGE>
cumulative amounts allocated to the Class B Member pursuant to this Section
9.1.3 for all prior Fiscal Years.
9.1.4. Thereafter, to the Members in accordance with their
Percentage Interests.
9.2. Allocation of Losses. After giving effect to the special
allocations set forth in Section 9.3 hereof, Losses for any Fiscal Year
shall be allocated to the Members in the following order and priority:
9.2.1. First, to the extent any Profits have been allocated pursuant
to Section 9.1 hereof, Losses shall be allocated first to offset any Profits
allocated pursuant to Section 9.1.4, then to offset Profits allocated
pursuant to Section 9.1.3, and then to offset Profits allocated pursuant to
Section 9.1.2, in each case in an amount up to the amount of any Profits
previously allocated under the respective section. To the extent Profits are
offset pursuant to this Section 9.2.1, such allocations shall be disregarded
for purposes of computing subsequent allocations pursuant to this Section
9.2.1.
9.2.2. Next, to the Members in accordance with their Percentage
Interests.
9.2.3. Notwithstanding Section 9.2.1 and 9.2.2, no amount of Loss
shall be allocated to a Member to the extent that such allocation would cause
or increase a deficit balance in such Member's Capital Account, as adjusted.
Rather, such amount of Loss shall be allocated to the Member with positive
Capital Account, provided, however, that if no Member has a positive Capital
Account at the time of such allocation, Losses shall be allocated to the
Members in accordance with Section 9.2.2, provided further, that to the
extent that Losses have been allocated to a Member pursuant to this Section
9.2.3, then, notwithstanding Section 9.1 hereof, subsequent Profits shall be
allocated to that Member under this Section 9.2.3 until the aggregate Profits
allocated to such Member hereunder shall be equal to the aggregate Losses
allocated under this Section 9.2.3 for all prior periods.
9.3. Special Allocations. Notwithstanding anything in this Agreement to
the contrary, the following special allocations shall be made as follows:
9.3.1. All Nonrecourse Deductions for each Fiscal Year shall be
allocated to the Members in proportion to their respective Percentage
Interests. For purposes of Treasury Regulation Section 1.752-3, all excess
nonrecourse liabilities of the Company will be allocated between the Members
in proportion to their respective Percentage Interests.
20
<PAGE>
9.3.2.Any items of income, loss, gain or deduction that are
attributable to Member Nonrecourse Debt shall be allocated to those Members
who bear the economic risk of loss for such debt in accordance with Treasury
Regulation Section 1.704-2(i).
9.3.3. If there is a net decrease in Minimum Gain for a taxable year
of the Company, then, unless and except to the extent that the exceptions
provided in Treasury Regulations Section 1.704-2(f)(2) through (5) are
applicable, before any other allocation is made for such taxable year, each
Member shall be allocated items of income and gain for such year (and, if
necessary, for subsequent years) in an amount equal to the portion of such
Member's share of the net decrease in Minimum Gain, as such share is
determined in accordance with Treasury Regulations Section 1.704-2(g)(2).
This Section 9.3.2 is intended to qualify as a "minimum gain chargeback"
under Treasury Regulation Section 1.704-2(f)(1) and shall be interpreted in a
manner consistent therewith.
9.3.4.To the extent that any Member unexpectedly receives any
adjustment, allocation, or distribution described in subparagraphs (4), (5),
or (6) of Treasury Regulation Section 1.704-1(b)(2)(ii)(d), which adjustment,
allocation or distribution creates or increases a deficit in that Member's
Capital Account, then, items of Company income and gain shall be specially
allocated to such Member in an amount and manner sufficient to eliminate the
deficit balance in its Capital Account created by such adjustment,
allocation, or distribution as quickly as possible. Any special allocations
of items of income or gain pursuant to this provision shall be taken into
account in computing subsequent allocations of Profits so that the net amount
of any items so allocated and the Profits, Losses and all other items
allocated to each Member shall, to the extent possible, be equal to the net
amount that would have been allocated to each such Member pursuant to the
other provisions of this Agreement if such unexpected adjustments,
allocations or distributions had not occurred. The foregoing is intended to
qualify as a "qualified income offset" within the meaning of Treasury
Regulation Section 1.704-1(b)(2)(ii)(d) and shall be applied in a manner
consistent with that Treasury Regulation.
9.4. Curative Allocations. The allocations set forth in Sections 9.2.3
and 9.3 (the "Regulatory Allocations") are intended to comply with certain
requirements of Treasury Regulation Section 1.704-1(b) and 1.704-2.
Notwithstanding any other provision of this Article 9 (other than the
Regulatory Allocations), the Regulatory Allocations shall be taken into
account in allocating other items of Company income, gain, loss, deduction or
credit among the Members so that, to the extent possible, the net amount of
such allocations or other items of income, gain, loss, deduction or credit
and the Regulatory Allocations to each Member shall be equal to the net
amount that would have been allocated to each such Member if the Regulatory
Allocations had not occurred.
9.5. Allocations for Tax Purposes. In the event the book value of any
Company asset differs from its adjusted tax basis (upon contribution,
revaluation or otherwise), all income, gain, loss and deduction with respect
to such asset shall be allocated to the Members in a manner that takes into
account the variation between such book value and adjusted tax basis for such
property
21
<PAGE>
for federal income tax purposes, pursuant to section 704(c) of the Code or
pursuant to the principles thereof using any reasonable allocation method
(including curative allocations) as may be determined by the Members or, if
the Members so elect, the Company's accountants. Allocations made under this
Section 9.5 are made solely for federal, state or local income tax purposes
and shall not affect, or in any way be taken into account in computing, any
Member's Capital Account or share of Profits, Losses, or other items or
distributions pursuant to any provision of this Agreement.
ARTICLE 10
DISTRIBUTIONS
10.1. Net Cash From Operations. Except as otherwise provided in Section
12.3 (relating to liquidating distributions), Net Cash From Operations shall
be distributed not later than thirty (30) days after the end of each fiscal
quarter of each Fiscal Year in the following order and priority:
10.1.1. First, one hundred percent (100%) to the Members, in
accordance with their respective Preferred Return Percentage, until:
(a) the Class A Member has been distributed an amount equal to
the excess, if any, of (1) the sum of the (i) the Class A Member Preferred
Return on Initial Capital from the Initial Capital Date to the end of such
fiscal quarter and (ii) the Class A Member Preferred Return on Additional
Capital from the Additional Capital Date to the end of such fiscal quarter,
over (2) the sum of all prior distributions to the Class A Member in respect
of the Class A Member Preferred Return on Initial Capital and the Class A
Member Preferred Return on Additional Capital pursuant to this Section
10.1.1(a) and Section 10.2.1 (a); and
(b) the Class B Member has been distributed an amount equal to
the excess, if any, of (i) the Class B Member Preferred Return on Additional
Capital from the Additional Capital Date to the end of such fiscal quarter,
over (ii) the sum of all prior distributions to the Class B Member in respect
of the Class B Member Preferred Return on Additional Capital pursuant to this
Section 10.1.1(b) and Section 10.2.1 (b)
10.1.2. Second, one hundred percent (100%) to the Class B Member to
the extent of the excess, if any, of (i) the Class B Member Subordinated
Preferred Return on Initial Capital from the Initial Capital Date to the end
of such fiscal quarter, over (ii) the sum of all prior distributions to the
Class B Member in respect of the Class B Member Subordinated Preferred Return
on Initial Capital pursuant to this Section 10.1.2 and Section 10.2.2.
10.1.3. Thereafter, to the Members in accordance with their Percentage
Interests.
-22-
<PAGE>
10.2. Net Cash From Sales or Refinancings. Except as otherwise provided
in Section 12.3 (relating to liquidating distributions), Net Cash From Sales
or Refinancings, if any, realized or available to the Company shall be
distributed as soon as practicable, as determined by the Members, in the
following order and priority:
10.2.1. First, one hundred percent (100%) to the Members, in accordance
with their respective Preferred Return Percentage, until:
(a) the Class A Member has received an amount equal to the
excess, if any, of (1) the sum of (i) the Class A Member Preferred Return on
Initial Capital from the Initial Capital Date to the date on which the event
giving rise to such Net Cash From Sales or Refinancings occurred, and (ii)
the Class A Member Preferred Return on Additional Capital from the Additional
Capital Date to the date on which the event giving rise to such Net Cash From
Sales or Refinancings occurred, over (2) the sum of all prior distributions
to the Class A Member in respect of the Class A Member Preferred Return on
Initial Capital and the Class A Member Preferred Return on Additional Capital
pursuant to this Section 10.2.1(a) and Section 10.1.1(a); and
(b) the Class B Member has received an amount equal to the
excess, if any, of (i) the Class B Member Preferred Return on Additional
Capital from the Additional Capital Date to the date on which the event
giving rise to such Net Cash From Sales or Refinancings occurred, over (ii)
the sum of all prior distributions to the Class B Member in respect of the
Class B Member Preferred Return on Additional Capital pursuant to this
Section 10.2.1(b) and Section 10.1.1(b).
10.2.2. Second, one hundred percent (100%) to the Class B Member to
the extent of the excess, if any, of (i) the Class B Member Subordinated
Preferred Return on Initial Capital from the Initial Capital Date to the date
on which the event giving rise to such Net Cash From Sales or Refinancings
occurred, over (ii) the sum of all prior distributions to the Class B Member
in respect of the Class B Member Subordinated Preferred Return on Initial
Capital pursuant to this Section 10.2.2 and Section 10.1.2.
10.2.3. Third, one hundred percent (100%) to the Members, in accordance
with their respective Preferred Return Percentage, until
(a) the Class A Member has received an amount equal to the sum
of the Class A Member Unreturned Additional Capital and the Class A Member
Unreturned Initial Capital; and
(b) the Class B Member has received an amount equal to the
Class B Member Unreturned Additional Capital.
-23-
<PAGE>
10.2.4. Fourth, one hundred percent (100%) to the Class B Member
until the Class B Member Unreturned Initial Capital has been reduced to zero;
10.2.5. Thereafter, to the Members in accordance with their
Percentage Interests.
10.3. Authority to Withhold. Upon the written advice of the Company's
legal tax counsel, the Company shall be entitled to collect, withhold and
make payments on behalf of or with respect to any Member's allocable share of
Company income or gain, in amounts required to discharge any obligation of
the Company to withhold or make payments to any governmental authority with
respect to any federal, state, and local tax liability of such Member arising
as a result of such Member's Interest in the Company. Any amount withheld
pursuant to the foregoing sentence shall be treated for all purposes of this
Agreement as having been paid or distributed to such Member and shall reduce,
on a dollar for dollar basis, amounts otherwise payable of distributable to
such Member under this Agreement. Each Member hereby agrees to indemnify
and hold harmless the Company for, from and against any liability with
respect to amounts paid or withheld under this Section 10.3 on behalf of or
with respect to such Member.
ARTICLE 11
BOOKS, RECORDS, REPORTS AND ACCOUNTING
11.1. Books and Records. The Company shall keep or cause to be kept at
its principal place of business appropriate books and records, including
without limitation, the following: (a) true and full financial information
regarding the status of the Project and financial condition of the Company,
including without limitation, records of all costs and expenses incurred, all
changes made, all credits made and received, and all income derived in
connection with the business of the Company; (b) promptly after becoming
available, a copy of the Company's federal, state and local income tax
returns for each year; (c) a copy of this Agreement and Certificate of
Formation and all amendments thereto, together with executed copies of any
written powers of attorney pursuant to which this Agreement and the
Certificate of Formation and all amendments thereto have been executed; and
(d) other information regarding the affairs of the Company as is just and
reasonable.
11.2. Company's Accountants. The Members hereby select and appoint
Arthur Andersen LLP to be the Company's independent accountants.
11.3. Fiscal Year. The Fiscal Year of the Company shall be the calendar
year or such other accounting period as shall be required under the Code or
as may be determined by the Company's independent accountants.
11.4. Accounting Period. Unless otherwise determined by the Company's
independent accountants, the Company shall use the accrual method of
accounting in maintaining its books and records and in preparation of its
financial statements for federal income tax purposes.
-24-
<PAGE>
11.5. Annual Reports. Within forty-five (45) days after the close of
each Fiscal Year, the Administrative Officer shall cause the Company to have
prepared, and furnished to each Member, audited financial statements,
presented in accordance with generally accepted accounting principles,
including without limitation, copies of (i) the balance sheet of the Company,
(ii) the Company's income statement, (iii) a statement of the Company's cash
flow, (iv) a statement of the Member's Capital Accounts and Preferred Capital
and (v) a statement of source and application of funds each as of the last
day of the Fiscal Year.
11.6. Quarterly Reports. Within twenty (20) days after the close of each
fiscal quarter, the Administrative Officer shall cause the Company to prepare
and furnish to each Member quarterly reports of (i) the Company's
operations, (ii) quarterly unaudited balance sheets and income statements,
and (iii) quarterly statements of cash flow.
11.7. Preparation of Tax Returns. Within ninety (90) days after the end
of each Fiscal Year, the Administrative Officer shall cause the Company to
arrange for the preparation and timely filing of all tax returns of the
Company for federal, state and local income tax purposes and shall cause to
be furnished to the Members the tax information reasonably required for
federal and state income tax reporting purposes.
11.8. Tax Controversies. The Members hereby appoint and designate the
Class A Member as the initial Tax Matters Member, and the Class A Member
shall authorize and require one of its officers (the "Tax Matters
Representative") to represent the Company (at the Company's expense) in
connection with all examinations of the Company's affairs by tax authorities,
including resulting administrative and judicial proceedings, and to expend
Company funds for professional services and costs associated therewith. Each
Member agrees to cooperate with the Tax Matters Representative and to do or
refrain from doing any or all things reasonably required by the Tax Matters
Representative in conducting those proceedings. The Tax Matters
Representative shall promptly notify the each Member upon the receipt of any
correspondence from any federal, state or local tax authorities relating to
any examination of the Company's affairs.
11.9. Tax Elections. Any and all elections for federal, state and local
tax purposes, including without limitation, any election (i) to adjust the
basis of the Company Property pursuant to Code Section 754, 734(b) and
743(b), or comparable state or local law, in connection with Transfers of
Interests in the Company; and (ii) to extend the statute of limitations for
assessment of tax deficiencies against the Company and the Members with
respect to adjustments to the Companies federal, state or local tax returns
shall be made by the Members.
25
<PAGE>
ARTICLE 12
DISSOLUTION AND LIQUIDATION
12.1. Dissolution. The Company shall dissolve upon the earliest to occur
of any of the following:
(a) upon the affirmative vote of the Members;
(b) upon the sale of the Project and the repayment and
satisfaction in full of any financing undertaken by the
Company in respect thereof;
(c) an entry of a decree of judicial dissolution pursuant to the
Act; or
(d) December 31, 2050.
12.2. Bankruptcy of a Member. The Bankruptcy of a Member shall not
dissolve the Company under the Act. Upon the Bankruptcy of a Member, the
non-Bankrupt Member shall have the sole right to manage the Company, and the
rights of the Bankrupt Member shall be limited to the right to share in the
profits and losses and distributions of the Company to the extent provided in
this Agreement and the Bankrupt Member shall not have any right to
participate in the management or operation of the Company.
12.3. Liquidation. Upon the dissolution of the Company, the Company
shall cease to carry on its business, except insofar as may be necessary for
the winding up of its business, but its separate existence shall continue
until the Certificate of Cancellation has been filed as required by the Act.
Upon dissolution of the Company, the Members shall designate a Person to act
as the liquidating trustee (the "Liquidating Trustee") and the business and
affairs of the Company shall be wound up and subject to Section 12.3 hereof,
the Company liquidated as rapidly as business circumstances permit, and the
proceeds thereof shall be distributed (to the extent permitted by applicable
law) in the following order and priority:
12.3.1. To the payment of the debts and liabilities of the Company
(other than those to Members) in the order of priority provided by law.
12.3.2. To the payment of the expenses of liquidation of the Company
in the order of priority provided by law, provided that the Company shall
first pay, to the extent permitted by law, liabilities or debts owed to
Members.
12.3.3. To the setting up of such reserves as the Liquidating
Trustee may deem reasonably necessary for any contingent or unforeseen
liabilities or obligations of the Company arising out of or in connection
with the Company's business, provided that any such reserve will be held by
the Liquidating Trustee for the purposes of disbursing such reserves in
payment of any of the
-26-
<PAGE>
aforementioned contingencies and at the expiration of such period as the
Liquidating Trustee shall deem advisable (but in no case to exceed eighteen
(18) months from the date of liquidation unless an extension of time is
consented to by the Members), to distribute the balance thereafter remaining
in the manner hereinafter provided.
12.3.4. The balance of the proceeds, if any, to be distributed on or
before the later of (i) the end of the taxable year during which such
liquidation occurs or (ii) ninety (90) days after the date of such
liquidation, in accordance with and in the order set forth in Section 10.2
hereof.
12.4. No Liquidating Distributions in Kind. The Liquidating Trustee
shall not distribute, and no Member may demand or receive, property other
than cash in return for a Member's contributions, loans or advances, unless
the Members unanimously agree to a distribution in kind to any Member;
provided, however, that all Members receive, whether in kind or in cash and
whether from the Company or the Member receiving an in kind distribution, the
amount which such Member is entitled to receive under Section 10.2 hereof.
12.5. Deficit Capital Account. Upon liquidation, each Member shall look
solely to the assets of the Company for the return of that Member's Capital
Contribution. No Member shall be personally liable for a deficit Capital
Account balance of that Member, it being expressly understood that the
distribution of liquidation proceeds shall be made solely from existing
Company assets in the order and priority set forth in Section 12.3 hereof,
and to the extent applicable 12.4.
12.6. Certificate of Cancellation. Following dissolution and liquidation
of the Company, when all debts, liabilities and obligations have been paid,
satisfied, compromised or otherwise discharged, or adequate provisions have
been made therefore, and all of the remaining property and assets have been
distributed to Members, the Liquidating Trustee shall file a Certificate of
Cancellation as required by the Act.
12.7. Non-Recourse. No recourse shall be had for any of the obligations
of the Class A Member hereunder or for any claim based thereon or otherwise
in respect thereof, against any past, present or future trustee, shareholder,
officer or employee of Brandywine Realty Trust, whether by virtue of any
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise, all of such liability being expressly waived and released by the
Class B Member and any such Person who acts through the Class B Member.
-27-
<PAGE>
ARTICLE 13
MISCELLANEOUS
13.1. Amendments. This Agreement may not be amended, modified or revised
in any manner without the prior written consent of each of the Members.
13.2. Notice.
13.2.1. All notices, requests and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
delivered to a Member either personally or by sending a copy thereof by first
class or express mail, postage prepaid, or by telex or TWX (with answer back
received) or courier services, charges prepaid, or by telecopier, to such
Member's address (or to such party's telex, TWX, telecopier, or telephone
number) as follows:
If to the Class A Member:
c/o Brandywine Realty Trust
Newtown Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
Attn: Anthony A. Nichols, Sr., Chairman
Gerard H. Sweeney, President and
Chief Executive Officer
Telephone: (610) 325-5600
Facsimile: (610) 325-5682
with a copy to:
Michael H. Friedman, Esquire
Pepper, Hamilton & Scheetz LLP
3000 Two Logan Square
Eighteenth & Arch Streets
Philadelphia, PA 19103-2799
Telephone: (215) 981-4563
Facsimile: (215) 981- 4750
-28-
<PAGE>
If to the Class B Member:
Gender Road Joint Venture
c/o The Commonwealth Group
62 Read's Way
New Castle, Delaware 19720
Attn.: Brock J. Vinton, President
Telephone: (302) 323-9700
Facsimile: (302) 323-9703
with a copy to:
William S. Gee, Esquire
Saul, Ewing, Remick & Saul
P.O. Box 1266
Wilmington, DE 19899-1266
Telephone: (302) 421-6823
Facsimile: (302) 421-5874
13.2.2. Any such notice, request or communication shall be deemed to
be delivered, given and received for all purposes of this Agreement (i) as of
the date so delivered, if delivered personally or by telecopy to the person
entitled thereto, (ii) three (3) business days after being deposited in the
United States mail, if delivered by first class or express mail, postage
prepaid or (iii) one (1) business day after being deposited with a telegraph
office or courier service for delivery if notice is sent by telegraph, or
courier services.
13.3. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware and, to the maximum
extent possible, in such manner as to comply with all of the terms and
conditions of the Act.
13.4. Severability. If any provision of this Agreement shall be
conclusively determined by a court of competent jurisdiction to be invalid or
unenforceable to any extent, such provision shall be ineffective only to the
extent of such invalidity or unenforceability without invalidating or
affecting the remainder of this Agreement thereby.
13.5. Binding Effect. This Agreement shall inure to the benefit of and
be binding upon the Members and their respective successors and, where
permitted, their assigns and Affiliates.
-29-
<PAGE>
13.6. Titles and Captions. All article, section and paragraph titles and
captions contained in this Agreement are for convenience only and are not a
part of the context hereof.
13.7. No Third Party Rights. This Agreement is intended to create
enforceable rights between the parties hereto only, and creates no rights in,
or obligations to, any other Persons whatsoever.
13.8. Time is of Essence. Time is of the essence in the performance of
each and every obligation herein imposed.
13.9. Further Assurances. Each Member, upon the request of the other
Member, shall execute all further instruments and perform all further acts
which are or may become reasonably necessary to effectuate and to carry out
the matters contemplated by this Agreement.
13.10. Incorporation by Reference. Any reference to an Exhibit or
Schedule or Attachment herein, is hereby incorporated by reference in this
Agreement as if such Exhibit, Schedule or Attachment was set out in full in
the text of this Agreement.
13.11. Legal Representation. Each party to this Agreement acknowledges
that such party is represented by competent legal counsel and that such
counsel has fully reviewed this Agreement. This Agreement shall be construed
in accordance with its fair meaning without any presumption against the party
responsible for drafting this Agreement.
13.12. Entire Agreement. This Agreement contains the entire agreement
between the parties hereto and supersedes any and all prior and
contemporaneous agreements, arrangements or understandings between the
parties relating to the subject matter hereof. No oral understandings, oral
statements, oral promises or oral inducements exist. No representations,
warranties, covenants or conditions, express or implied, whether by statute
or otherwise, other than as set forth herein, have been made by the parties
hereto.
13.13. Counterparts. This Agreement may be signed in any number of
counterparts. with the same effect as if all of the Members had signed the
same document. All counterparts shall be construed together and shall
constitute but one and the same agreement. Any and all counterparts may be
executed by facsimile.
13.14. Execution of Certificate of Formation. The Members acknowledge and
agree that Kathleen A. Shea, Esquire of Pepper, Hamilton & Scheetz LLP has
the power and authority to execute and file the Certificate of Formation with
the Secretary of State of the State of Delaware on behalf of the Members in
order to form the Company under the Act.
[SPACE INTENTIONALLY LEFT BLANK]
-30-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Operating
Agreement of CHRISTIANA CENTER OPERATING COMPANY I LLC effective as of the
day and year first above written.
MEMBERS:
CLASS A MEMBER:
BRANDYWINE OPERATING PARTNERSHIP, L.P.,
a Delaware limited partnership, by
Brandywine Realty Trust, a Maryland Real
Estate Investment Trust, its sole general partner
By:___________________________________
Gerard H. Sweeney, President and
Chief Executive Officer
CLASS B MEMBER:
GENDER ROAD JOINT VENTURE,
a Delaware partnership
By:______________________________________
Brock J. Vinton, Managing Venturer,
Hereunto Duly Authorized
[END OF EXECUTIONS]
-31-
<PAGE>
EXHIBIT A
TO
OPERATING AGREEMENT OF
CHRISTIANA CENTER OPERATING COMPANY I LLC
DEFINITIONS OF TERMS
The following terms used in this Agreement shall have the meanings
described below:
"Acquisition and Construction Loan" shall mean the loan made or
committed to be made to the Company in respect of the Project at the time of
the acquisition of the Land, of which a portion of the proceeds in the amount
of $900,000 shall be used to fund the Land Acquisition Price and the
remainder of which shall provide financing for the construction of the
Project and related costs approved by the Members.
"Act" shall mean the Delaware Limited Liability Company Act, 6 Del.
C. Section 18-101 et. seq., as amended from time to time.
"Additional Capital Contributions" shall mean, with respect to a
Member, any additional contributions to the capital of the Company made
pursuant to Section 2.5 hereof.
"Additional Capital Date" shall mean the date on which the Members
make Additional Capital Contributions to the Company pursuant to and in
accordance with Section 2.5 hereof; provided that such date shall be the same
for both Members.
"Administrative Officer" shall be the Person designated as such
pursuant to Section 3.4 hereof to undertake the day to day operation of the
Company as provided in Section 3.4 hereof.
"Advisor" shall have the meaning set forth in Section 2.5.1 hereof.
"Affiliate" shall mean a Person who, with respect to any Member (a)
directly or indirectly controls, is controlled by or is under common control
with such Member; (b) owns or controls 10 percent (10%) or more of the
outstanding voting securities of such Member; or (c) is an officer, director,
manager, trustee, partner, or member of such Member.
"Agreed Value" with respect to a Member shall mean the aggregate
value of such Member's Initial Capital contributed to the Company as set
forth in Section 2.1 hereof but shall not include Additional Capital
Contributions.
"Agreement" means this operating agreement, as it may be amended,
restated or supplemented from time to time.
"Bankruptcy" means, with respect to a Member, the happening of any
of the following: (a) the making of a general assignment for the benefit of
creditors; (b) the filing of a voluntary petition in bankruptcy or the filing
of a pleading in any court of record admitting in writing an inability to pay
A-1
<PAGE>
debts as they become due; (c) the entry of an order, judgment or decree by
any court of competent jurisdiction adjudicating such Member to be bankrupt
or insolvent; (d) the filing of a petition or answer seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation; (e) the
filing of an answer or other pleading admitting the material allegations of,
or consenting to, or defaulting in answering, a bankruptcy petition filed
against a Member in any bankruptcy proceeding; (f) the filing of an
application or other pleading or any action otherwise seeking, consenting to
or acquiescing in the appointment of a liquidating trustee, receiver or other
liquidator of all or any substantial part of a Member's properties; and (g)
the commencement of any proceeding seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under
any statute, law or regulation which has not been quashed or dismissed within
180 days.
"Buy-Sell Price" shall have the meaning set forth in Section 8.2.1
hereof.
"Capital Account" shall mean the accounting record of each Member's
capital interest in the Company maintained pursuant to and in accordance with
Section 2.6 hereof.
"Capital Contribution" shall mean, with respect to each Member, the
Agreed Value set forth in Section 2.1 hereof with respect to such Member
which has been credited to such Member's Capital Account pursuant to Section
2.4 hereof.
"Capital Notice" shall have the meaning set forth in Section 2.5.1
hereof.
"Certificate of Formation" shall mean the certificate of formation
of the Company, as amended or restated from time to time, filed in the Office
of the Secretary of State of the State of Delaware in accordance with the Act.
"Certificate of Cancellation" shall mean the certificate of
cancellation filed by the Liquidating Trustee under the Act at such time as
set forth in Section 12.6 hereof.
"Class A Member" shall have the meaning set forth in the first
paragraph of this Agreement.
"Class A Member Additional Capital" shall mean the Additional
Capital Contributions, if any, made by the Class A Member pursuant to Section
2.5 hereof. The Class A Member Additional Capital shall provide the basis
upon which the Class A Member Preferred Return on Additional Capital is
calculated.
"Class A Member Aggregate Preferred Return" shall mean the sum of
the Class A Member Preferred Return on Initial Capital and the Class A
Member Preferred Return on Additional Capital.
A-2
<PAGE>
"Class A Member Initial Capital" shall mean the Capital Contribution
made by Class A Member pursuant to Section 2.2.2 and treated as Initial
Capital pursuant to Section 2.4 hereof, provided that to the extent there is
an advance or draw on the Letter of Credit delivered by the Class A Member
pursuant to Section 2.2.1 hereof, any such advance or draw, plus interest
thereon not paid or reimbursed by the Company, shall be treated as a Capital
Contribution and shall be part of the Class A Member Initial Capital as of
the date of such advance or draw. The Class A Member Initial Capital shall
provide the basis upon which the Class A Member Preferred Return on Initial
Capital shall be calculated.
"Class A Member Preferred Return on Additional Capital" shall mean
the Preferred Return on Additional Capital to which the Class A Member is
entitled under this Agreement.
"Class A Member Preferred Return on Initial Capital" shall mean the
cumulative right given to the Class A Member to receive in respect of each
Fiscal Year a sum equal to ten percent (10%) per annum (determined on the
basis of a year of 365 days, for the actual number of days occurring in the
period for which the Class A Member Preferred Return on Initial Capital is
being determined, cumulative to the extent not distributed in any quarter
pursuant to Section 10.1.1(a) or 10.2.1(a) hereof, but not compounded) of the
average daily balance of the Class A Member Unreturned Initial Capital from
time to time during the period to which the Class A Member Preferred Return
on Initial Capital relates. The Class A Member Preferred Return on Initial
Capital shall commence on the Initial Capital Date and shall be payable as
provided in this Agreement.
"Class A Member Unreturned Additional Capital" shall mean the Class
A Member Additional Capital reduced by cash distributions in respect of the
Class A Member Additional Capital under Section 10.2.3 hereof.
"Class A Member Unreturned Initial Capital" shall mean the Class A
Member Initial Capital reduced by cash distributions in respect of the Class
A Member Initial Capital made pursuant to Section 10.2.3.
"Class B Member" shall have the meaning set forth in the first
paragraph of this Agreement.
"Class B Member Additional Capital" shall mean the Additional
Capital Contributions, if any, made by the Class B Member under Section 2.5.
The Class B Member Additional Capital shall provide the basis upon which the
Class B Member Preferred Return on Additional Capital shall be calculated.
"Class B Member Initial Capital" shall mean the Capital Contribution
made by Class B Member pursuant to Section 2.3 hereof and treated as Initial
Capital pursuant to Section 2.4. The Class B Member Initial Capital shall
provide the basis upon which the Class B Member Subordinated Preferred Return
on Initial Capital shall be calculated.
"Class B Member Preferred Return on Additional Capital" shall mean
the Preferred Return on Additional Capital to which the Class B Member is
entitled under this Agreement.
A-3
<PAGE>
"Class B Member Subordinated Preferred Return on Initial Capital"
shall mean the cumulative right given to the Class B Member to receive in
respect of each Fiscal Year a sum equal to ten percent (10%) per annum
(determined on the basis of a year of 365 days, for the actual number of days
occurring in the period for which the Class B Member Subordinated Preferred
Return on Initial Capital is being determined, cumulative to the extent not
distributed in any quarter pursuant to Section 10.1.2 or 10.2.2 hereof, but
not compounded) of the average daily balance of the Class B Member Unreturned
Initial Capital from time to time during the period to which the Class B
Member Subordinated Preferred Return on Initial Capital relates. The Class B
Member Subordinated Preferred Return on Initial Capital shall be calculated
commencing on the Initial Capital Date and shall be payable as provided in
this Agreement; provided that the Class B Member Subordinated Preferred
Return on Initial Capital is specifically subordinated to the Class A Member
Preferred Return on Initial Capital, the Class A Member Preferred Return on
Additional Capital and the Class B Member Preferred Return on Additional
Capital.
"Class B Member Unreturned Additional Capital" shall mean the Class
B Member Additional capital reduced by cash distributions in respect of the
Class B Member Additional Capital under Section 10.2.3 hereof.
"Class B Member Unreturned Initial Capital" shall mean the Class B
Member Initial Capital reduced by cash distributions in respect of the Class
B Member Initial Capital made pursuant to Sections 10.2.4 hereof.
"Code" shall mean the Internal Revenue Code of 1986 (or successor
thereto), as amended from time to time.
"Collateral Agreements" shall mean each of the documents, agreements
and instruments, including without limitation, the Construction Management
Agreement, the Leasing and Management Agreement, the Developer's Agreement
and the Land Acquisition Agreement, executed, delivered or performed or to be
executed, delivered or performed in connection with, or as a condition of,
the consummation of the transactions provided in or contemplated by this
Agreement.
"Company" means the limited liability company which is the subject
of this Agreement, as such limited liability company may from time to time be
constituted.
"Construction Management Agreement" shall mean that certain
agreement by and between the Company and InSite, Inc. for the provisions of
construction management services in connection with the Project.
"Contact Representative" shall have the meaning set forth in Section
3.3 hereof.
"CSC" shall have the meaning set forth in Section 5.2.5 hereof.
"CSC Lease" shall have the meaning set forth in Section 5.2.5 hereof.
"Defaulting Member" shall have the meaning set forth in Section
2.5.5 hereof.
A-4
<PAGE>
"Depreciation" shall mean, for each Fiscal Year or other period, an
amount equal to the depreciation, amortization, or other cost recovery
deduction allowable for federal income tax purposes with respect to an asset
for such Fiscal Year or other period, except that if the Gross Asset Value of
an asset differs from its adjusted basis for federal income tax purposes at
the beginning of such Fiscal Year or other period, Depreciation shall be an
amount which bears the same ratio to such beginning Gross Asset Value as the
federal income tax depreciation, amortization, or other cost recovery
deduction for such Fiscal Year or other period bears to such beginning
adjusted tax basis. In the event that the federal income tax depreciation,
amortization, or other cost recovery deduction is zero, Depreciation shall be
determined with reference to such beginning Gross Asset Value using any
reasonable method.
"Designated Representatives" shall have the meaning set forth in
Section 3.4 hereof.
"Developer's Agreement" shall mean that certain agreement by and
between the Company and Commonwealth Group, Ltd. for the provision of
development services in connection with the Project.
"Electing Member" shall have the meaning set forth in Section 8.2.1
hereof.
"Election Notice" shall have the meaning set forth in Section 8.2.1
hereof.
"Election Period" shall have the meaning set forth in Section 8.2.1
hereof.
"Fiscal Year" means the year on which the accounting and federal
income tax records of the Company are kept.
"Gross Asset Value" shall mean with respect to any asset of the
Company, the asset's adjusted basis for federal income tax purposes, except
that (i) where an asset has been revalued on the books of the Company the
Gross Asset Value shall be adjusted to reflect such revaluation, (ii) where
an asset has been contributed to the Company by a Member, the Gross Asset
Value shall be its fair market value as established by the Members and (iii)
the Gross Asset Value of Company assets shall be adjusted to reflect
Depreciation taken into account with respect to such assets for purposes of
determining Profits or Losses.
"Gross Value of the Project" shall have the meaning set forth in
Section 8.4 hereof.
"Indemnitee" shall have the meaning as set forth in Section 6.2
hereof.
"Indemnitee Member" shall have the meaning set forth in Section 6.3
hereof.
"Indemnitor Member" shall have the meaning as set forth in Section
6.3 hereof.
"Initial Capital" shall mean, where no distinction of the Members is
required, the initial Capital Contribution of such Member at the Agreed Value
upon which a preferred return with respect to such Member is calculated.
A-5
<PAGE>
"Initial Capital Date" shall mean with respect to the Class A Member
for purposes of calculating the Class A Member Preferred Return on Initial
Capital and with respect to the Class B Member for purposes of calculating
the Class B Member Subordinated Preferred Return on Initial Capital, the date
on which the Permanent Loan is funded; provided, however, that with respect
to the Class A Member, to the extent there is an advance or draw on the
Letter of Credit delivered by the Class A Member pursuant to Section 2.2.1
hereof, then the Initial Capital Date with respect to such advance and draw
shall be the date on which such advance or draw is made under the Letter of
Credit.
"Interest" shall mean with respect to a Member such Member's
interest in the rights, powers, privileges, duties and obligations as
specified in this Agreement.
"Land" shall mean the unimproved real property located in New Castle
County, Delaware, as more fully described in the Land Acquisition Agreement.
"Land Acquisition" shall mean the acquisition of the Land pursuant
to and in accordance with the Land Acquisition Agreement.
"Land Acquisition Agreement" shall mean the agreement dated even
date herewith executed between the Company, as purchaser, and the Class B
Member, as seller, for the acquisition of the Land.
"Land Acquisition Price" shall mean Nine Hundred Thousand Dollars
($900,000).
"Leasing and Management Agreement" shall mean that certain agreement
by and between the Company and Commonwealth Management Group, Ltd. pursuant
to which Commonwealth Management Group, Ltd shall provide property management
and leasing services in connection with the Project.
"Letter of Credit" shall mean the letter of credit provided by the
Class A Member pursuant to and in accordance with Section 2.2.1 hereof.
"Liquidating Trustee" shall have the meaning set forth in Section
12.3 hereof.
"Major Action" shall have the meaning set forth in Section 3.2
hereof.
"Members" shall have the meaning set forth in the first paragraph of
this Agreement and shall be used where no distinction between the Class A
Member and the Class B Member is required. The term "Members" shall include
any Person that is admitted to the Company as an additional or substitute
member, in accordance with the terms of the Agreement.
"Member Minimum Gain" shall mean an amount determined by computing
with respect to each Member Nonrecourse Debt, the Minimum Gain that would
result if such Member Nonrecourse Debt were treated as a nonrecourse
liability, determined in accordance with Treasury Regulation Section
1.704-2(i)(3).
A-6
<PAGE>
"Member Nonrecourse Debt" shall mean nonrecourse indebtedness of
the Company with respect to which any Member has a direct or indirect risk of
loss, as more fully defined in Treasury Regulation Section 1.704-2(b)(4).
"Member Nonrecourse Deduction" shall mean, for each Fiscal Year, the
Company deductions which are attributable to Member Nonrecourse Debt and are
characterized as "partner nonrecourse deductions" under Treasury Regulation
Section 1.704-2(i)(l).
"Minimum Gain" shall mean and refer to, at any time, with respect to
all nonrecourse liabilities of the Company (within the meaning of Treasury
Regulation Section 1.704-2(b)(3)) the aggregate amount of gain (of whatever
character), if any, that would be realized by the Company if it disposed of
(in a taxable transaction) all Company Property subject to such liabilities
in full satisfaction thereof, and as further defined in Treasury Regulation
Section 1.704-2(d).
"Mutual Disagreement" shall have the meaning set forth in Section
8.1 hereof.
"Net Cash From Operations" shall mean the gross cash proceeds from
the ownership or operation of the Property (excluding Capital Contributions,
Additional Capital Contributions and proceeds from Capital Loans) less the
portion thereof used to pay or establish reserves for all Company expenses,
debt payments, capital improvements, replacements and contingencies, all as
determined by the Members. Net Cash From Operations shall not be reduced by
depreciation, amortization, cost recovery deductions or similar allowances,
but shall be increased by any reductions to reserves previously established.
"Net Cash from Sales or Refinancings" shall mean the net cash
proceeds from all sales or other dispositions of the Property (other than in
the ordinary course of business) and all proceeds realized by the Company
upon any refinancing of Company indebtedness, less (i) expenses incident to
such refinancing and satisfaction of any indebtedness being refinanced, and
(ii) any portion thereof used to establish reserves, all as determined by the
Members. "Net Cash from Sales or Refinancings" shall include all principal
and interest payments with respect to any note or other obligation received
by the Company in connection with any sales and other dispositions of the
Property.
"Net Equity Value of a Member's Interest" shall have the meaning set
forth in Section 8.4(b) hereof.
"Nonrecourse Deductions" shall have the meaning set forth in
Treasury Regulation Section 1.704-2(b)(1).
"Notified Member" shall have the meaning set forth in Section 2.5.1
hereof.
"Notifying Member" shall have the meaning set forth in
Section 2.5.1 hereof.
"Percentage Interest" shall mean with respect to a Member, such
Member's Interest expressed as a percentage in relation to the Interests held
by the other Members, as adjusted from time to time by the admission or
withdrawal of Members for any reason as provided in this Agreement or as
agreed to by the unanimous consent of the Members and reflected on a schedule
A-7
<PAGE>
attached hereto as Exhibit B. The initial Percentage Interest of each Member
shall be fifty percent (50%) as set forth on Exhibit B attached hereto.
"Performing Member" shall have the meaning set forth in Section
2.5.5 hereof.
"Permanent Loan" shall mean the loan to be obtained by the Company,
the proceeds of which, together with the Class A Member Initial Capital,
shall be applied to reduce or repay the Acquisition and Construction Loan.
"Permitted Transfer" shall have the meaning set forth in Section 7.2
hereof.
"Person" means an individual, firm, corporation, partnership,
limited liability company, association, estate, trust, pension or
profit-sharing plan, or any other entity.
"Preferred Return on Additional Capital" shall mean, with respect to
each of the Class A Member and the Class B Member, the cumulative right given
to each Member to receive in respect of each Fiscal Year a sum equal to ten
percent (10%) per annum (determined on the basis of a year of 365 days, for
the actual number of days occurring in the period for which the Preferred
Return on Additional Capital is being determined, cumulative to the extent
not distributed in any quarter to such Member pursuant to Sections 10.1.1(a)
or (b) and/or Sections 10.2.1(a) or (b), as the case may be, but not
compounded) of the average daily balance of such Member's Unreturned
Additional Capital from time to time during the period to which such
Preferred Return on Additional Capital relates. Each Member's Preferred
Return on Additional Capital shall commence on the Additional Capital Date
and shall be payable as provided in this Agreement.
"Preferred Return Percentage" shall mean, with respect to the Class
A Member, that percentage, the numerator of which is the Class A Member
Aggregate Preferred Return and the denominator of which is the sum of the
Class A Member Aggregate Preferred Return and the Class B Member Preferred
Return on Additional Capital, and shall mean, with respect to the Class B
Member, that percentage, the numerator of which is the Class B Member
Preferred Return on Additional Capital, and the denominator of which is the
sum of the Class A Member Aggregate Preferred Return and the Class B Member
Preferred Return on Additional Capital.
"Profits" and "Losses" shall mean, for each Fiscal Year or other
period, an amount equal to the Company's taxable income or loss for such year
or period, as computed for federal income tax purposes and determined in
accordance with Section 703(a) of the Code (for this purpose, all items of
income, gain, loss, or deduction required to be stated separately pursuant to
Section 703(a)(l) of the Code shall be included in taxable income or loss),
with the following adjustments:
(a) Any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Profits or
Losses shall be added to such taxable income or loss;
(b) Any expenditures of the Company described in Section
705(a)(2)(B) of the Code or treated as such expenditures pursuant to Treasury
Regulation Section 1.704-l(b)(2)(iv)(i), and
A-8
<PAGE>
not otherwise taken into account in computing Profits or Losses shall be
subtracted from such taxable income or loss;
(c) Gain or loss resulting from any disposition of Company
Property with respect to which gain or loss is recognized for federal income
tax purposes shall be computed by reference to the Gross Asset Value of the
Property disposed of, notwithstanding that the adjusted tax basis of such
property differs from its Gross Asset Value.
(d) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing taxable income or loss,
Depreciation shall be taken into account for such Fiscal Year or other period
in computing taxable income or loss;
(e) Notwithstanding any other provision of this definition,
Nonrecourse, Deductions, Member Nonrecourse Deductions and any items of
income, gain, loss or deduction which are specially allocated pursuant to
Section 9.3 of this Agreement, shall not be taken into account in computing
taxable income or loss; and
(f) In any case where, in accordance with Treasury Regulation
Section 1.704-1(b)(2)(iv)(e) or (f) Company Property is revalued on the books
of the Company to reflect its fair market value, the amount of such
revaluation (to the extent not previously taken into account) shall be taken
into account as gain or loss from a taxable disposition of such Property for
purposes of computing taxable income or loss.
"Project" shall mean the three (3) story Class A mid-rise office
building containing 150,000 +/- net rentable square feet, and shall include
fixtures, machinery, equipment, and all other improvements hereafter
constructed on the Land, including site improvements and parking facilities
for 750 vehicles, and all equipment, fixtures, furnishings and other
personalty used in connection therewith.
"Property" shall mean the Land and the Project, collectively.
"Regulatory Allocations" shall have the meaning as set forth in
Section 9.4 hereof.
"Related Person" shall have the meaning set forth in Section 6.2
hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Tax Matters Member" means the "tax matters member" as defined in
Code section 6231(a)(7).
"Tax Matters Representative" shall have the meaning set forth in
Section 11.8 hereof.
"Transfer" means to sell, assign, transfer, give, donate, pledge,
deposit, alienate, bequeath, devise or otherwise dispose of or encumber all
or any portion of an Interest to any Person other than the Company.
A-9
<PAGE>
"Transferee" shall mean a Person to whom a Transfer is made.
"Transferor" shall mean a Member making a Transfer under this
Agreement.
"Treasury Regulations" or "Regulations" shall mean pronouncements,
as amended from time to time, or their successor pronouncements, which
clarify, interpret and apply the provisions of the Code, and which are
designated as "Treasury Regulations" by the United States Department of the
Treasury.
"Unreturned Additional Capital" shall mean the Class A Member
Unreturned Additional Capital and/or the Class B Member Unreturned Additional
Capital, as applicable.
"Unreturned Initial Capital" shall mean the Class A Member
Unreturned Initial Capital and/or the Class B Unreturned Initial Capital, as
applicable.
END OF EXHIBIT A
A-10
<PAGE>
EXHIBIT B
TO
OPERATING AGREEMENT OF
CHRISTIANA CENTER OPERATING COMPANY I LLC
PERCENTAGE INTERESTS
PERCENTAGE
MEMBER INTEREST
------ ----------
Class A Member 50%
Class B Member 50%
A-11
<PAGE>
EXHIBIT C
TO
OPERATING AGREEMENT OF
CHRISTIANA CENTER OPERATING COMPANY I LLC
COPY OF CSC LEASE
A-12
<PAGE>
SCHEDULE 3.5.1
Class B Member Reimbursable Fees
A-13
<PAGE>
SCHEDULE 3.5.2
Class A Member Reimbursable Fees
A-14
<PAGE>
SCHEDULE 5.2.7
Brokerage or Leasing Fees on CSC Lease
A-15
<PAGE>
SCHEDULE 5.2.15
Construction Contracts
A-16
<PAGE>
A-17
<PAGE>
EXECUTION
OPERATING AGREEMENT
OF
CHRISTIANA CENTER OPERATING COMPANY II LLC
Dated as of September 19, 1997
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1
GENERAL PROVISIONS........................................................1
1.1. Formation...........................................................1
1.2. Name and Principal Place of Business................................2
1.3. Registered Agent....................................................2
1.4. Purpose.............................................................2
1.5. Limitation on Purposes..............................................2
1.6. Title to Property...................................................2
1.7. Term................................................................2
1.8. Type of Income......................................................2
ARTICLE 2
CAPITAL CONTRIBUTIONS.....................................................3
2.1. Initial Capital Contribution of BOP.................................3
2.2. Initial Capital Contribution of Gender Road.........................3
2.3. Additional Capital Contributions....................................3
2.4. Maintenance of Capital Accounts.....................................4
2.5. No Interest.........................................................5
2.6. Revaluation of Company Property.....................................5
ARTICLE 3
MANAGEMENT................................................................5
3.1. Management..........................................................5
3.2. Manner of Acting....................................................6
3.3. Contact Representatives.............................................7
3.4. Designated Representatives..........................................7
3.5. Fees, Compensation and Reimbursement of Expenses....................7
ARTICLE 4
THE MEMBERS...............................................................8
4.1. Meeting of Members..................................................8
4.2. Limitation of Liability.............................................8
4.3. Company Records.....................................................8
4.4. Duties of Members...................................................8
4.5. Activities of Members...............................................8
4.6. Independent Activities of Members...................................8
4.7. Dealings with the Company...........................................9
-i-
<PAGE>
Page
----
4.8. Covenant not to Withdraw............................................9
4.9. Additional Members..................................................9
ARTICLE 5
REPRESENTATIONS AND WARRANTIES...........................................10
5.1. Representations and Warranties of Members..........................10
ARTICLE 6
INDEMNIFICATION..........................................................12
6.1. Liability..........................................................12
6.2. Company Indemnification............................................12
6.3. Member Indemnification.............................................13
6.4. Gender Road Indemnification........................................13
ARTICLE 7
TRANSFERS................................................................13
7.1. Transfer Restrictions..............................................13
7.2. Permitted Transfers................................................14
7.3. Conditions of Transfer.............................................14
7.4. Transfers; Recharacterization......................................15
7.5. Conversion of Gender Road..........................................15
ARTICLE 8
BUY-SELL PROVISIONS......................................................15
8.1. Mutual Disagreement................................................15
8.2. Mandatory Buy-Sell of Interests....................................15
8.3. Closing of Purchase or Sale........................................16
8.4. Definitions........................................................16
ARTICLE 9
ALLOCATIONS OF PROFITS AND LOSSES........................................17
9.1. Allocations of Profits.............................................17
9.2. Allocation of Losses...............................................17
9.3. Special Allocations................................................18
9.4. Curative Allocations...............................................19
9.5. Allocations for Tax Purposes.......................................19
-ii-
<PAGE>
Page
----
ARTICLE 10
DISTRIBUTIONS............................................................19
10.1. Distributions Generally...........................................19
10.2. Distributions of Available Cash Flow..............................20
10.3. Authority to Withhold.............................................20
ARTICLE 11
BOOKS, RECORDS, REPORTS AND ACCOUNTING...................................20
11.1. Books and Records.................................................20
11.2. Company's Accountants.............................................21
11.3. Fiscal Year.......................................................21
11.4. Accounting Period.................................................21
11.5. Annual Reports....................................................21
11.6. Quarterly Reports.................................................21
11.7. Preparation of Tax Returns........................................21
11.8. Tax Controversies.................................................21
11.9. Tax Elections.....................................................22
ARTICLE 12
DISSOLUTION AND LIQUIDATION..............................................22
12.1. Dissolution.......................................................22
12.2. Bankruptcy of a Member............................................22
12.3. Liquidation.......................................................22
12.4. No Liquidating Distributions in Kind..............................23
12.5. Deficit Capital Account...........................................23
12.6. Certificate of Cancellation.......................................23
12.7. Non-Recourse......................................................23
ARTICLE 13
MISCELLANEOUS............................................................24
13.1. Amendments........................................................24
13.2. Notice............................................................24
13.3. Governing Law.....................................................25
13.4. Severability......................................................25
13.5. Binding Effect....................................................25
13.6. Titles and Captions...............................................26
13.7. No Third Party Rights.............................................26
13.8. Time is of Essence................................................26
13.9. Further Assurances................................................26
-iii-
<PAGE>
Page
----
13.10 Incorporation by Reference.......................................26
13.11. Legal Representation.............................................26
13.12. Entire Agreement.................................................26
13.13. Counterparts.....................................................26
13.14. Execution of Certificate of Formation.............................26
-iv-
<PAGE>
OPERATING AGREEMENT
OF
CHRISTIANA CENTER OPERATING COMPANY II LLC
THIS OPERATING AGREEMENT OF CHRISTIANA CENTER OPERATING COMPANY II LLC
(the "Agreement") is made and entered into as of the 19th day of September, 1997
by and between Brandywine Operating Partnership, L.P., a Delaware limited
partnership ("BOP"), and Gender Road Joint Venture, a Delaware general
partnership ("Gender Road" and together with BOP, the "Members"), as members of
CHRISTIANA CENTER OPERATING COMPANY II LLC (the "Company").
Capitalized terms used in this Agreement shall have the meanings set
forth on Exhibit A attached hereto unless they are otherwise defined in the
---------
preamble, the Background or the particular section in this Agreement in which
they are used.
BACKGROUND
Gender Road is the owner of the Pad Sites. The Members desire to
organize and form the Company for the purpose of acquiring the Pad Sites from
Gender Road.
This Agreement sets forth the understanding between the Members with
respect to the terms and conditions of the acquisition of the Pad Sites, the
management and operation of the Company, the future development of the Pad Sites
and the distribution of proceeds received from the development, ownership and/or
disposition of the Pad Sites.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and preceding with the Background paragraphs incorporated by
reference, the Members, intending to be legally bound hereby, covenant and agree
as follows:
ARTICLE 1
GENERAL PROVISIONS
1.1. Formation. The Members desire to form the Company as a limited
---------
liability company under the laws of the State of Delaware, and in connection
therewith desire to set forth their agreements and understandings as stated in
this Agreement. The Members agree that the Company shall be operated pursuant
to the terms and conditions set forth in this Agreement, and to the extent not
inconsistent therewith, the Act. The Members agree to execute or cause the
Company to execute all certificates and documents, including a Certificate of
Formation, required by the Act in order that the Company qualify as a limited
liability company under the Act. The Members shall do or cause to be done all
such other filings, including amendments of the
<PAGE>
Certificate of Formation, recordings, or other acts as may be necessary or
appropriate to comply with the laws of formation and operation of a limited
liability company in the State of Delaware and any other jurisdiction in which
the Company may conduct business.
1.2. Name and Principal Place of Business. The name of the Company shall
------------------------------------
be "CHRISTIANA CENTER OPERATING COMPANY II LLC" or such other name as the
Members from time to time may select. The principal place of business of the
Company shall be Gender Road Joint Venture c/o The Commonwealth Group, 62 Read's
Way, New Castle, Delaware 19720, or such other place as the Members from time to
time shall determine.
1.3. Registered Agent. The registered agent for the Company shall be The
----------------
Corporation Trust Company located at Corporation Trust Center, 1209 Orange
Street, Wilmington, Delaware 19801.
1.4. Purpose. The sole purpose of the Company shall be to acquire the Pad
-------
Sites, with a view toward the future commercial development, management and
operation of the Pad Sites. In connection therewith, the Company shall have the
authority to do all things necessary and appropriate in connection with the
development, construction, operation, management, financing and maintenance of
the Pad Sites as provided in and/or limited by this Agreement or a Collateral
Agreement.
1.5. Limitation on Purposes. The Company shall exist solely for the
----------------------
purposes specified in Section 1.4 hereof and unless the Members agree otherwise,
the Company shall not engage in any business other than the acquisition,
development and management of the Pad Sites. The Members do not intend and this
Agreement shall not be deemed to create any joint venture, partnership, or other
arrangement by and between the Members with respect to any business or
activities of any Member other than the business and activities specifically set
forth in this Agreement. No Member shall have the power to bind the other
Member except with respect to the business of the Company as specifically set
forth in this Agreement.
1.6. Title to Property. All property owned by the Company, whether real or
-----------------
personal, tangible or intangible, shall be owned by the Company as an entity and
in the name of the Company, and no Member shall have any ownership interest in
such property. The interest of all Members in the Company are, for all
purposes, personal property.
1.7. Term. The term of the Company shall commence upon the filing of the
----
Certificate of Formation in accordance with the Act and shall continue until the
Company is terminated in accordance with Article 12 of this Agreement.
1.8. Type of Income. Gender Road hereby acknowledges and agrees that
--------------
Brandywine Realty Trust, the general partner of BOP is a real estate investment
trust as defined in Section 856 of the Code, and that as long as BOP is a member
of the Company, the Company shall manage its affairs in a manner such that the
Company does not intentionally earn any income for tax purposes
2
<PAGE>
or acquire any assets which would cause Brandywine Realty Trust to violate any
of the provisions of Code Section 856.
ARTICLE 2
CAPITAL CONTRIBUTIONS
2.1. Initial Capital Contribution of BOP. In connection with, and upon the
-----------------------------------
closing of, the Pad Sites Acquisition, BOP shall contribute to the capital of
the Company cash in the amount of One Million Dollars ($1,000,000).
Notwithstanding BOP's agreement hereunder, the parties acknowledge and agree
that BOP's obligation to make the capital contribution hereunder is expressly
conditioned upon the closing of the Pad Sites Acquisition.
2.2. Initial Capital Contribution of Gender Road. By executing this
-------------------------------------------
Agreement, Gender Road agrees to provide the Company with the right to purchase
the Pad Sites and agrees to perform services in connection with the future
development of the Pad Sites, such services to be mutually determined by the
Members.
2.3. Additional Capital Contributions.
--------------------------------
2.3.1. It is not expected that the Members will be required to
contribute any additional capital to the Company other than those Capital
Contributions set forth in Sections 2.1. and 2.2 hereof. In the event, however,
that either Member (the "Notifying Member"), in its reasonable business
judgment, determines that additional capital is required by the Company, whether
for capital expenditures, normal operating expenses, debt service or otherwise
in connection with the acquisition, development, management or operation of the
Pad Sites, then the Notifying Member shall give ten (10) days written notice
(the "Capital Notice") to the other Member (the Notified Member") specifying in
reasonable detail the amount and purpose of the additional required capital. If
the Notified Member agrees within said ten (10) day period that the capital set
forth in the Capital Notice is needed by the Company, then, unless the Members
mutually agree otherwise, the Company shall obtain such additional capital from
BOP as an Additional Capital Contribution in the amount set forth in the Capital
Notice.
2.3.2. If the Notified Member disagrees that additional funds are
needed by the Company or determines that such additional capital should be
obtained in a manner other than additional capital contributions by BOP, then,
Section 2.3.1 to the contrary notwithstanding, the Notified Member shall notify
the Notifying Member of such decision with said ten (10) day period. In that
event, the Notifying Member and the Notified Member each shall select a
representative who together shall appoint one independent Person, unrelated to
either Member or its Affiliates and who is experienced in the real estate
development industry and has substantial expertise in the financial marketplace
(the "Advisor"), to determine whether and when additional funds are needed
and/or the manner in which such funds shall be obtained by the Company;
3
<PAGE>
provided that, if the Advisor determines that such additional funds should be
obtained from capital contributions, then the Company shall obtain such
additional capital from BOP as an Additional Capital Contribution in the amount
determined by the Advisor to be needed by the Company. The Members hereby agree
that, in either case, the Advisor's determination shall be final and binding on
the Members.
2.3.3. If additional funds are obtained from BOP through Additional
Capital Contributions, such contributions shall be made by BOP, in cash within
ten (10) business days after receipt of (a) the Capital Notice (in the event
that the Notified Member and Notifying Member agree that additional capital is
required) or (b) written notice from the Advisor (in the event that the
procedure under Section 2.3.2 hereof is utilized).
2.3.4. If an Additional Capital Contribution is made to the Company by
BOP hereunder, BOP shall be entitled to the Preferred Return on such Additional
Capital Contribution, provided that such Preferred Return shall be calculated as
of the date that BOP makes such Additional Capital Contribution to the Company.
2.3.5. If the Advisor determines that Additional Capital Contributions
are required to be made under this Section 2.3 and BOP fails to advance such
Additional Capital Contribution to the Company, then, Gender Road shall have the
right, but not the obligation, to make an Additional Capital Contribution to the
Company in the amount of the Additional Capital Contribution originally due from
BOP. Any amounts advanced by Gender Road under this Section 2.3.5 as an
Additional Capital Contribution shall be entitled to a preferred return thereon
equal to, and calculated in the same manner as, the BOP Preferred Return;
provided that such preferred return shall be calculated as of the date Gender
Road makes such Additional Capital Contribution. Anything to the contrary in
Article 10 hereof notwithstanding, to the extent Gender Road is entitled to a
preferred return hereunder, such preferred return and the return of Additional
Capital Contribution by Gender Road shall be paid by the Company pari passu and
pro rata with the payment of the BOP Preferred Return and the return of BOP's
Capital Contribution and Additional Capital Contributions. In the event that
Gender Road elects not to make an Additional Capital Contribution hereunder, and
additional capital required by the Company cannot be obtained through any other
means, then, the requirement for additional capital hereunder shall be deemed to
be a Mutual Disagreement under Article 8 hereof.
2.4. Maintenance of Capital Accounts.
-------------------------------
2.4.1. The Company shall maintain a separate Capital Account for each
Member in accordance with Treasury Regulations promulgated under Section 704(b)
of the Code, and each Member's Capital Account shall be as follows:
(a) Each Member's Capital Account shall be credited with such
Member's Capital Contribution, if any; provided that, Gender Road's initial
Capital Account shall be zero.
4
<PAGE>
(b) Each Member's Capital Account shall be (1) increased by (a)
the amount of money contributed by such Member to the capital of the Company,
(b) the Gross Asset Value of any property contributed by such Member to the
capital of the Company (net of liabilities secured by such contributed property)
and (c) the amount of Profits and other items of Company income or gain
allocated to such Member under this Agreement, and (2) decreased by (a) the
amount of money distributed to such Member by the Company pursuant to this
Agreement, (b) the Gross Asset Value of property distributed to such Member by
the Company (net of liabilities secured by such distributed property) and (c)
the amount of Losses and other items of Company deduction, loss or expense
allocated to such Member under this Agreement.
2.4.2. It is intended that the Capital Accounts shall be determined
and maintained throughout the full term of the Company in accordance with the
capital accounting rules set forth in Treasury Regulation Section
1.704-1(b)(2)(iv), and that all provisions in this Agreement shall be
interpreted and applied in a manner consistent therewith. In the event that the
Members determine that it is prudent to modify the manner in which the Capital
Accounts, or any credits or charges thereto, are computed or maintained in order
to comply with such Treasury Regulations, the Members, upon agreement, shall
make such modifications to the extent necessary to comply with such Treasury
Regulations, provided that in no event shall such modifications affect (i) BOP's
right to, or the amount of, the BOP Preferred Return or a return of the BOP's
Capital Contribution and Additional Capital Contributions in the time and manner
set forth herein. or (ii) Gender Road's right to, or the amount of, if any,
Gender Road's preferred return or a return Gender Road's Additional Capital
Contribution as provided in Section 2.3.5 hereof in the time and manner set
forth herein.
2.5. No Interest. No Member shall be entitled to interest on that Member's
-----------
Capital Contributions or Capital Account except as otherwise provided in this
Agreement.
2.6. Revaluation of Company Property. Upon the agreement of the Members,
-------------------------------
the Capital Accounts of the Members may be adjusted to reflect a revaluation of
the property of the Company in accordance with, and at such times as specified
in, Treasury Regulation Section 1.704-1(b)(2)(iv)(f); provided that any
adjustments hereunder shall be made in accordance with and to the extent
provided in Treasury Regulations Section 1.704-1(b)(2)(iv)(f) and (g).
ARTICLE 3
MANAGEMENT
3.1. Management. The management of the Company shall be vested in the
----------
Members as set forth in this Article 3. Each Member, subject to the terms,
conditions, restrictions and limitations contained herein, will possess all of
the powers and rights of a member of a limited liability company under the Act;
provided, however, no single Member shall be authorized or empowered to
undertake any action or make any decision on behalf of the Company or in
5
<PAGE>
connection with the development of the Pad Sites unless otherwise specifically
set forth in this Agreement or a Collateral Agreement. Each Member acknowledges
and agrees that it intends to actively participate in the management of the
Company and its operations and the development, management and operation of the
Pad Sites.
3.2. Manner of Acting. Where this Agreement specifically requires the
----------------
vote, consent or determination of the Members and/or in order for the Company to
undertake any Major Action (as defined in this Section 3.2), the approval at a
duly convened meeting or by written consent in lieu of a meeting of each Member
shall be required. For purposes of this Agreement, a "Major Action" shall mean
and include, without limitation, decisions and undertakings relating to:
(a) the acquisition of the Pad Sites by the Company;
(b) the development or construction of the Pad Sites,
(c) operation or management of the Pad Sites;
(c) any loans, borrowings, financing or refinancing in
connection with the development of the Pad Sites, including
without limitation, obtaining construction loans and
permanent financing in connection with the development of
the Pad Sites;
(d) the annual operating budget and business plan for the
Company;
(e) any contract or agreement giving rise to a financial
commitment or obligation of the Company;
(f) Subject to Section 3.4 hereof, the employment of employees
and/or agents in connection with the Company or the
development of the Pad Sites;
(g) the admission of any additional Members;
(h) the selection of and change of accountants, auditors and/or
legal counsel for the Company; and
(i) significant tax elections required or permitted pursuant to
the Code and/or applicable law of any taxing authority to
which the Company is subject.
6
<PAGE>
3.3. Contact Representatives. Each Member shall designate and appoint one
-----------------------
or more individuals who shall be the contact person (a "Contact Representative")
for such Member and each of whom shall be authorized by such Member to act on
its behalf in the performance of this Agreement and who shall be authorized to
make decisions in connection with Major Actions on behalf of such Member. BOP
hereby designates and appoints Anthony A. Nichols, Sr. and Gerard H. Sweeney as
its initial Contact Representatives, and Gender Road hereby designates and
appoints Brock J. Vinton as its initial Contact Representative. A Member
appointing an individual as a Contact Representative may, at any time, appoint
and designate a new Contact Representative, provided that such Member shall
notify the other Member of such new appointment or designation within a
reasonable time after such appointment.
3.4. Designated Representatives.
--------------------------
3.4.1. The Members acknowledge and agree that while Company decisions
generally shall be made by the Members, the daily operation and management of
the Company shall, subject to the limitations set forth in this Section 3.4 or a
Collateral Agreement, be delegated to the Administrative Officer, who initially
shall be Brock J. Vinton. In addition to the day-to-day management of the
Company, the Administrative Officer shall be responsible for the preparation of
quarterly and annual financial statements as set forth in Sections 11.5 and 11.6
hereof.
3.4.2. The Members also acknowledge and agree that certain functions
of the Company shall, subject to the limitations set forth in this Section 3.4
or a Collateral Agreement, be delegated to the employees or agents of Gender
Road (any such designated employees or agents of Gender Road being referred to
herein as a "Designated Representative"), provided that Gender Road shall keep
BOP apprised of any such employees or agents and their activities.
3.4.3. The Administrative Officer and any Designated Representative
appointed hereunder shall have the specific power and authority set forth in
this Agreement, in an employment agreement, if any, in a Collateral Agreement
and as otherwise delegated to such Administrative Officer and/or Designated
Representative by the Members; provided that the Administrative Officer and any
Designated Representative shall operate the Company subject to (i) basic policy
decisions adopted by the Members, (ii) specific limitations and requirements of
this Agreement and any other agreement executed by and between the
Administrative Officer and the Company and/or a Designated Representative and
the Company, as the case may be, and (iii) limitations imposed under the Act.
Notwithstanding any provision in this Agreement or any other agreement to the
contrary, neither the Administrative Officer nor any Designated Representative
shall have the authority, either individually or acting in conjunction with each
other or other Designated Representatives, to do any act, make any decision, or
engage in any transaction which requires the approval of the Members as set
forth in Section 3.2 hereof.
3.5. Fees, Compensation and Reimbursement of Expenses. None of the
------------------------------------------------
Administrative Officer or any Designated Representative shall be entitled to
fees, compensation or reimbursement
7
<PAGE>
of expenses by the Company, except as otherwise specifically set forth in a
Collateral Agreement, an employment agreement or other agreement between the
Company and such Person.
ARTICLE 4
THE MEMBERS
4.1. Meeting of Members. The Members shall hold meetings on a quarterly
------------------
basis or such other periodic basis as the Members may agree at such location as
the Members may agree. Any Member may call for a meeting by giving ten (10)
days prior written notice to the other Member, which notice shall specify the
purpose of the meeting; provided that the ten (10) days notice period may be
waived by the other Member.
4.2. Limitation of Liability. Each Member's liability for the debts,
-----------------------
obligations and liabilities of the Company shall be limited to the maximum
extent permitted by the Act and other applicable law.
4.3. Company Records. Each Member shall have access to all books and
---------------
records of the Company and to the Company's officers, attorneys and auditors for
any reasonable business purpose and shall be entitled to make copies of such
books and records at the Company's expense.
4.4. Duties of Members. Each Member shall have a fiduciary duty to the
-----------------
other Member to take into account the best interests of the Company when
exercising its rights under this Agreement, provided that it shall not be a
breach of any Member's fiduciary duty to exercise any of its rights under this
Agreement.
4.5. Activities of Members. Except as otherwise expressly provided in this
---------------------
Agreement, no Member or Affiliate of any Member shall be obligated to devote
its, his or their exclusive time and effort to the business or affairs of the
Company or the development of the Pad Sites, but each Member shall devote
sufficient time, effort and resources (including employees or agents of such
Member) to the business or affairs of the Company as in its judgment is
reasonably required to fulfill its obligations and role in the Company's
businesses and to promote the purposes of the Company; provided, however, that
Gender Road shall employ and maintain such employees and agents as shall be
necessary to fully perform and undertake the daily operation of the Company as
set forth in Section 3.4 hereof.
4.6. Independent Activities of Members. Except as otherwise expressly
---------------------------------
provided in or limited by this Agreement or a Collateral Agreement, each Member
(acting on its own behalf) and its Affiliates may, notwithstanding this
Agreement, engage in any activities it may choose, whether the same operate the
same type of business as the Company or are competitive with the Company, and
neither this Agreement nor any activity undertaken pursuant hereto shall prevent
any Member
8
<PAGE>
or its Affiliates from engaging in such activities or require any Member to
permit the Company or any other Member to participate in such activity.
4.7. Dealings with the Company.
-------------------------
4.7.1. Except as otherwise expressly provided in or limited by this
Agreement or a Collateral Agreement, no Member or Affiliate of any Member shall
contract and deal with the Company as an independent contractor, employee or as
an agent for others, or receive fees or other compensation from such others or
the Company, including without limitation, brokerage fees or commission fees, or
any other payment on account of the leasing, operations, management, financing
or refinancing in connection with the Pad Sites or the development thereof,
unless and until such Member or the Affiliate of such Member first provides the
other Member with the terms of such proposed dealings and obtains the prior
written consent to such dealing, contract or undertaking from the other Member.
4.7.2. Notwithstanding Section 4.7.1 hereof, each Member acknowledges
and agrees that, in connection with the transactions contemplated by this
Agreement and the future development of the Pad Sites, the Company shall execute
a leasing and management agreement pursuant to which Gender Road or its
Affiliates shall perform certain functions set forth in such agreement and shall
receive a fee for the performance of such functions as set forth therein.
4.8. Covenant not to Withdraw. Notwithstanding any provision in the Act,
------------------------
each Member hereby covenants and agrees that the Member has entered into this
Agreement and formed the Company based on its expectation that each Member will
continue as a Member of the Company and carry out the duties and obligations
undertaken by it in this Agreement and the Collateral Agreements in
contemplation of the development of the Pad Sites and that, except as otherwise
expressly required or permitted hereby, each Member hereby covenants and agrees
not to, without the consent of the other Member (a) take any action to file a
certificate of dissolution or its equivalent with respect to such Member, (b)
take any action that would cause the voluntary Bankruptcy of such Member, (c)
withdraw or attempt to withdraw from the Company, unless pursuant to a Permitted
Transfer in accordance with Section 7.2 hereof, (d) Transfer all or any portion
of its Interest in the Company except as otherwise provided in Article 7 hereof,
or (e) demand a return of such Member's Capital Contribution or Capital Account
prior to the dissolution and liquidation of the Company pursuant to Section 12.1
hereof.
4.9. Additional Members. Additional Members shall be admitted to the
------------------
Company upon the unanimous agreement of the Members; provided that such Members
also shall unanimously agree on the capital contributions, if any, to be made by
such additional Member, the Interests in the Company to which such Member shall
be entitled and the expected duties and obligations of such additional Member.
Notwithstanding this Section 4.9, no Person shall be admitted to the Company as
an additional Member unless such Person executes a counterpart to this Agreement
9
<PAGE>
thereby agreeing to be bound by the terms and provisions of this Agreement as if
he, she or it were an original Member.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1. Representations and Warranties of Members. By execution and delivery
-----------------------------------------
of this Agreement, each Member hereby makes to the other Member the
representations and warranties set forth in this Section 5.1 to the extent
applicable to such Member. Any and all representations and warranties set forth
in this Section 5.1 shall survive the execution of this Agreement. For purposes
of this Article 5, the term "Member" shall include such Member's Affiliates that
are intended to undertake or perform any services or activities in connection
with the Company or the future development of the Pad Sites, as contemplated at
this time, and any representations and warranties made by a Member hereunder
shall be deemed to include representations and warranties, as appropriate, with
respect to such Affiliates.
5.1.1.Organization. Each Member is a limited or general partnership,
------------
as applicable, duly organized and formed, validly existing and in good standing
under the laws of the State of Delaware and has all requisite power and
authority to own, lease and operate its property and to carry on its business as
of the date hereof and as contemplated by this Agreement. Each Member is duly
qualified to do business and is in good standing as a limited partnership in
each and every jurisdiction in which the failure to be so licensed or qualified
would have a material adverse effect on its financial condition or its ability
to perform its obligations under this Agreement and each of the Collateral
Agreements.
5.1.2. Proper Authorization and Power. Each Member has the requisite
------------------------------
power and authority to execute and deliver this Agreement and each of the
Collateral Agreements and to perform its obligations hereunder and thereunder.
The execution, delivery and performance of this Agreement and each of the
Collateral Agreements, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by all necessary partnership
action, and no other action on the part of the Member or any Person is necessary
to authorize the execution, delivery and performance of this Agreement or any of
the Collateral Agreements, or the consummation of the transactions contemplated
hereby or thereby. This Agreement and each of the Collateral Agreements
constitutes a legal, valid and binding obligation of such Member enforceable
against it in accordance with their respective terms. No consent, waiver,
approval, license or authorization of, or filing, registration or qualification
with, or notice to, any governmental unit or any other person is required to be
made, obtained or given by the Member or any Person in connection with the
execution, delivery and performance of this Agreement or any Collateral Document
that has not been heretofore obtained.
10
<PAGE>
5.1.3. Validity of Contemplated Transactions. The execution, delivery
-------------------------------------
and performance of this Agreement or any of the Collateral Agreements and the
consummation by the Member of the transactions contemplated hereby or thereby
does not and will not (i) require any filing or registration with, or consent,
authorization, approval or permit of, any governmental or regulatory authority
and (ii) violate, conflict with, contravene, result in the breach of, or
constitute a default under, accelerate the performance required by, or require
the consent, authorization, or approval under (a) any terms, conditions or
provisions of the certificate of Limited Partnership of such Member, the
partnership agreement of such Member, or any material agreement or instrument to
which such Member is a party or by which such Member is made bound or to which
any of its properties or assets is subject, (b) any of the terms, conditions or
provisions of any law, regulation, order, writ, injunction, decree or
determination of any court or governmental or regulatory agency applicable to
such Member, (c) any of the terms, conditions or provisions of any indenture,
mortgage, lease agreement or instrument to which such Member is a party or may
be bound or to which its properties or assets is subject.
5.1.4. Litigation. There are no actions, suits, proceedings, or
----------
investigations pending, or to the knowledge of such Member threatened against or
affecting such Member or any of its businesses, assets or properties, before
any court or governmental or regulatory agency which could, if adversely
determined, reasonably be expected to impair such Member's ability to perform
its obligations under this Agreement or any Collateral Agreement or to have a
material adverse effect on the financial condition of such Member.
5.1.5. Investment Representations
--------------------------
(a) Such Member's Interest in the Company is intended to be and
is being acquired solely for its own account for investment and with no present
intention of distributing, reselling, pledging or otherwise disposing of, all or
any part thereof;
(b) Such Member is aware that Interests in the Company have not
been registered under the Securities Act or applicable state securities laws or
the "Blue Sky" laws of any state, that Interests in the Company cannot be
distributed, sold, pledged or otherwise disposed of unless they are registered
thereunder or unless, in the opinion of counsel satisfactory to the Company, an
exemption from such registration is available, and that the Company has no
intention of so registering Interests in the Company thereunder and is under no
obligation to do so and that accordingly the Member is able and is prepared to
bear the economic risk that may be associated with respect to its Interest in
the Company;
(c) Such Member understands that the Interests are being offered
and sold in reliance upon specific exemptions from the registration requirements
of federal and state securities laws and that the Company is relying upon the
truth and accuracy of the representations and warranties set forth herein in
order to determine the applicability of such exemptions and the suitability of
the Members to acquire Interests; and
11
<PAGE>
(d) Such Member agrees that in addition to the other restrictions
on transfer set forth in this Agreement, it will not sell or otherwise dispose
of its Interest unless a registration statement under the Securities Act shall
be in effect with respect thereto and such Member shall have complied with all
provisions of the Securities Act and all applicable state securities laws or at
the Company's request, the Member shall have obtained an opinion of counsel that
such proposed sale or disposition will not require registration under the
Securities Act or any applicable state securities laws.
ARTICLE 6
INDEMNIFICATION
6.1. Liability. No Member or any Affiliate of any Member or any Designated
---------
Representative, if appointed pursuant to Section 3.4 hereof, shall be liable,
responsible, accountable in damages or otherwise to the Company or any Member
for any act or failure to act hereunder in connection with the Company and its
business, the development of the Pad Sites or in the operation and maintenance
of the Pad Sites once developed, unless the act or omission is attributed to
gross negligence, willful misconduct or fraud or constitutes a material breach
by such person of any term or provision of this Agreement or a Collateral
Agreement; provided that nothing in this Section 6.1 is intended to limit,
modify or alter any Member's liability or obligations under any Collateral
Agreement except to the extent expressly set forth therein.
6.2. Company Indemnification. To the fullest extent permitted by law, each
-----------------------
Member and each Affiliate of any Member, as well as each Designated
Representative appointed pursuant to Section 3.4 (each of the foregoing being
referred to herein as an "Indemnitee", and each Affiliate to which each such
Indemnitee is related being referred to herein as such Indemnitee's "Related
Person") shall be indemnified, defended and held harmless by the Company to the
fullest extent permitted by the Act for, from and against any and all losses,
claims, damages, liabilities, expenses (including reasonable attorneys' fees and
costs), judgments, fines, settlements, demands, actions, or suits relating to or
arising out of the business of the Company or the, the development of the Pad
Sites or the exercise by the Indemnitee of any authority conferred on it, him or
them hereunder or the performance by the Indemnitee of any of its, his or their
duties and obligations under this Agreement. Notwithstanding anything contained
in this Agreement to the contrary, no Indemnitee shall be entitled to
indemnification hereunder with respect to any claim, issue or matter: (i) in
respect of which it, he or its or his Related Person (or the Company as the
result of an act or omission of such Related Person) has been adjudged liable
for fraud, gross negligence or willful misconduct; (ii) based upon or relating
to a material breach by it, him or his or its Related Person of any term or
provision of this Agreement or any Collateral Agreement; or (iii) for costs or
expenses incurred by the Indemnitee in connection with a claim or action against
it, him or his or its Related Person by another Member or such other Member's
Related Person that is not related to the Indemnitee's actions under this
Agreement. Notwithstanding this Section 6.2, no Member shall be entitled to
indemnification by the Company when or if acting in a capacity with
12
<PAGE>
the Company as other than a Member, in which case, such right to indemnification
shall be governed by an agreement, if any, between the Company and the Member.
6.3. Member Indemnification. Each Member (the "Indemnitor Member") shall
----------------------
indemnify, defend and hold harmless the other Member (the "Indemnitee Member")
from and against any and all losses, claims, damages, liabilities, expenses
(including reasonable attorneys' fees and costs), judgments, fines, settlements,
demands, actions, or suits relating to or arising out of any (i) fraud, gross
negligence or willful misconduct for which the Indemnitor Member or any of its
Affiliates or Related Persons (or the Company as the result of an act or
omission of any of the same) has been adjudged liable; (ii) material breach by
the Indemnitor Member of any term or provision of this Agreement or any
Collateral Agreement; and (iii) a material breach or inaccuracy in any
representation or warranty made by such Indemnitor Member in this Agreement or
any Collateral Agreement.
6.4. Gender Road Indemnification. Notwithstanding any provision in this
---------------------------
Agreement to the contrary and in addition to the indemnification set forth in
Section 6.3 hereof, Gender Road shall indemnify, defend and hold wholly
harmless BOP, the Company and Brandywine Realty Trust from and against any and
all Additional Delaware Realty Transfer Taxes (as defined in this Section 6.4)
relating to or arising out of the Company's obligation to pay Delaware realty
transfer taxes due in connection with the conveyance of the Pad Sites to the
Company pursuant to the Pad Sites Acquisition Agreement. For purposes of this
Section 6.4, "Additional Delaware Realty Transfer Taxes" shall mean any Delaware
realty transfer taxes (in excess of the amount of Delaware Realty Transfer Taxes
paid by the Company upon the closing of the Pad Sites Acquisition) that are or
become due and payable by the Company as a result of the conveyance of the Pad
Sites to the Company pursuant to the Pad Sites Acquisition Agreement, including
any and all penalties and interests imposed thereon; provided, however, that
Additional Delaware Realty Transfer Taxes shall not include any Delaware Realty
Transfer Taxes imposed on the Company in connection with the construction and
development of the Pad Sites as a result of obtaining a building permit or a
certificate of occupancy in connection with the development of the Pad Sites.
ARTICLE 7
TRANSFERS
7.1. Transfer Restrictions. Except as otherwise provided in this
---------------------
Agreement, no Member shall make any Transfer of all or any portion of its
Interest, including, without limitation, a Transfer of a right to Profits,
Losses or distributions hereunder, unless and until the other Member consents to
the Transfer and the Transferor and the proposed Transferee comply with the
provisions of this Article 7. Any Transfer in violation of the requirements of
this Agreement shall be null and void ab initio and of no force or effect
whatsoever. Each Member hereby acknowledges the reasonableness of the
restrictions on Transfer imposed by this Agreement in
13
<PAGE>
view of the Company's purpose and the relationship of the Members. Accordingly,
the restrictions on Transfer set forth herein shall be specifically enforceable.
7.2. Permitted Transfers. Notwithstanding Section 7.1, a Member may
-------------------
Transfer all or any portion of its Interest in the Company to a (i) another
Member, and (ii) to one of its Affiliates (in each case, a "Permitted
Transfer"), provided that a Permitted Transfer to an Affiliate shall comply with
the provisions of Section 7.3.
7.3. Conditions of Transfer. Notwithstanding Section 7.2 hereof, a
----------------------
Transfer (including a Permitted Transfer to an Affiliate under Section 7.2)
shall not be allowed unless and until the following conditions precedent are
satisfied, and once satisfied, the Transferee shall succeed to all rights and be
subject to all obligations of the Transferor with respect to the transferred
Interest:
7.3.1. all agreements, articles, minutes, written consents and all
other necessary documents and instruments shall have been executed and filed and
all other acts shall have been performed which the non-transferring Member deems
necessary to make the Transferee a substitute Member of the Company, including,
without limitation, the execution by such Transferee of a counterpart signature
page to this Agreement pursuant to which the Transferee shall assume any and all
obligations and have all rights and interests under this Agreement with respect
to the transferred Interest; and
7.3.2. unless otherwise waived by the non-transferring Member, the
non-transferring Member shall have received such assurances as may be necessary
or appropriate in the opinion of counsel to the Company to confirm that Transfer
would not (i) violate the Securities Act or any state securities laws or cause
the Company to register thereunder; (ii) require the Company to register as an
investment company under the Investment Company Act; (iii) cause the Company to
be treated as other than a partnership for federal income tax purposes; and (iv)
cause the termination of the Company for federal income tax purposes;
7.3.3. unless otherwise waived by the non-transferring Member, the
non-transferring Member shall have received such assurances as it deems
necessary or appropriate to confirm that such Transferee has the ability to
perform all of the Transferor's obligations set forth in this Agreement and the
Collateral Agreements, provided, however, that, unless expressly agreed by the
non-transferring Member, the Transferor shall not be relieved of any of its
liabilities or obligations under this Agreement or any Collateral Agreement; and
7.3.4. all reasonable expenses incurred by the Company and the
non-transferring Member in connection with the Transfer shall have been paid by
or for the account of the Transferee.
7.4. Transfers; Recharacterization. If any Interest is transferred during
-----------------------------
any Fiscal Year in compliance with the provisions of this Agreement, Profits,
Losses, each item thereof, and all other items attributable to such transferred
Interest for such period shall be divided and allocated
14
<PAGE>
between the Transferor and the Transferee by taking into account their varying
interests during the period in accordance with section 706(d) of the Code, using
any conventions permitted by law and reasonably selected by the non-transferring
Member.
7.5. Conversion of Gender Road. Notwithstanding the provisions of this
-------------------------
Article 7, the Members acknowledge that subsequent to the closing of the Pad
Sites Acquisition, Gender Road will convert from a Delaware general partnership
to a Delaware limited liability company pursuant to and in accordance with
Delaware law; provided that Gender Road shall obtain the prior written consent
of BOP, which consent shall not be unreasonably withheld, as to the conversion,
and provided, further, that all of the representations and warranties set forth
in Section 5.1 hereof (other than Section 5.1.1) and made by Gender Road shall
remain true and correct with respect to Gender Road notwithstanding the
conversion.
ARTICLE 8
BUY-SELL PROVISIONS
8.1. Mutual Disagreement. In the event of a Mutual Disagreement, the
-------------------
Members shall have the rights of mandatory purchase and sale provided in this
Article 8. For purposes of this Article 8, "Mutual Disagreement" shall mean the
failure the Members to mutually agree upon a Major Action to be undertaken by
the Company, which failure remains unresolved for a period ending on the
twentieth (20th) day following the submission of a written notice by one Member
to the other Member stating that such failure to agree on a Major Action has
occurred (the "Election Day").
8.2. Mandatory Buy-Sell of Interests.
-------------------------------
8.2.1. In the event of a Mutual Disagreement, a Member (the "Electing
Member") may deliver to the other Member (the "Notice Member") a written notice
(the "Election Notice"), which Election Notice shall include an irrevocable
offer by the Electing Member either (i) to sell all but not less than all of the
Electing Member's Interest in the Company to the Notice Member (the "Offer to
Sell"), or (ii) to purchase all, but not less than all, of the Notice Member's
Interest in the Company (the "Offer to Purchase" and together with the Offer to
Sell, the "Offers"). The Election Notice also shall set forth the Gross Value
of the Company to be used in computing the Net Equity Value of a Member's
Interests. The price at which a Member's Interest may be purchased or sold
under this Section 8.2 (the "Buy-Sell Price") is the Net Equity Value of a
Member's Interest, determined as of the Election Day.
8.2.2. For a period ending on the forty-fifth (45th) day following the
Election Day (the "Election Period"), the Notice Member shall have the right to
accept either the Offer to Sell or the Offer to Purchase. Upon acceptance by
the Notice Member of one of the Offers, the
15
<PAGE>
Electing Member and the Notice Member shall be required to sell or required
to purchase, as the case may be, for the Buy-Sell Price.
8.2.3. If the Notice Member fails to accept either the Offer to Sell
or the Offer to Purchase within the Election Period, then, the Offers
automatically shall expire and be of no force or effect, and the Notice Member
shall be deemed to have made to the Electing Member an offer (the
"Counter-Offer") to sell all, but not less than all, of the Notice Member's
Interest in the Company for the Buy-Sell Price. Pursuant to the Counter-Offer,
the Electing Member shall be obligated to purchase, and the Notice Member shall
be required to sell, all but not less than all of the Notice Member's Interest
in the Company at the Buy-Sell Price.
8.2.4. The Member purchasing the Interests under this Section 8.2,
whether pursuant to one of the Offers or the Counter-Offer, as the case may be,
shall be referred to as the "Purchasing Member" and the Member selling such
Interests as the "Selling Member."
8.3. Closing of Purchase or Sale. The closing of the purchase or sale
under Section 8.2 shall occur on a date and time and at a place mutually
agreeable to the Electing Member and the Notice Member, provided that such
closing shall not be later than forty-five (45) days after the expiration of the
Election Period; and provided, further, that if the Members cannot agree on the
place of the closing, the closing shall take place at the law offices of Pepper,
Hamilton & Scheetz LLP at the address set forth in Section 13.2.1 hereof. At
the closing, the Purchasing Member shall pay to the Selling Member, by cash or
other immediately available funds, the Buy-Sell Price, and the Selling Member
shall deliver to the Purchasing Member good title, free and clear of any liens,
claims, encumbrances, security interests or options of its Interests in the
Company, and the Purchasing Member shall agree to indemnify and hold harmless
the Selling Member from any and all claims arising in connection with said
Interests that accrue after the date of the closing. At the closing, the
Purchasing Member and the Selling Member agree to execute such documents and
instruments of conveyance as may be necessary or appropriate to confirm the
transactions contemplated hereby.
8.4. Definitions. For purposes of this Article 8, the following terms
shall have the definitions set forth in this Section 8.4.
(a) "Gross Value of the Company" shall be the fair market value
of the assets of the Company as of the Election Day as determined by the
Electing Member and set forth in the Election Notice.
(b) "Net Equity Value of a Member's Interest" shall be, as of any
day, the amount that would be distributed to such Member in liquidation of the
Company pursuant to Section 12.3 hereof if and assuming that the following first
occurred: (i) the assets of the Company were sold for the Gross Value of the
Company, and (ii) the Company paid all apportionments and costs customarily made
and/or paid in the closing of a real estate transaction in Delaware (iii) the
Company paid its accrued, but unpaid liabilities and established reserves for
-16-
<PAGE>
any contingent liabilities pursuant to Section 12.3.3; provided that the Net
Equity Value of a Member's Interest shall be adjusted to reflect payment of
(a) the BOP Unreturned Preferred Capital, (b) the accrued and unpaid BOP
Preferred Return; (c) Gender Road's preferred return on Additional Capital
Contributions, if any, as provided in Section 2.3.5 hereof, and (d) the
return of Gender Road's Additional Capital Contribution, if any, as provided
in Section 2.3.5 hereof.
ARTICLE 9
ALLOCATIONS OF PROFITS AND LOSSES
9.1. Allocations of Profits. After giving effect to the special
allocations set forth in Section 9.3 hereof, Profits for any Fiscal Year shall
be allocated to the Members in the following order and priority:
9.1.1. First, to the Members until the cumulative Profits allocated
pursuant to this Section 9.1.1 are equal to the cumulative Losses allocated to
the Members pursuant to Section 9.2. hereof for all prior periods (without
duplication) in reverse order to which the prior Losses were allocated.
9.1.2. Second, one hundred percent (100%) to BOP in respect of the BOP
Preferred Return to the extent of the excess, if any, of (i) the cumulative
distributions received by BOP in respect of the BOP Preferred Return pursuant to
Sections 10.2.1 and 12.3.4 from the Preferred Capital Date to the end of the
Fiscal Year, over (ii) the cumulative amounts allocated to BOP pursuant to this
Section 9.1.2 for all prior Fiscal Years.
9.1.3. Thereafter, to the Members in accordance with their Percentage
Interests.
9.1.4. The foregoing provisions of Section 9.1 shall be deemed amended
as appropriate to take into consideration the situation whereby Gender Road has
been paid a preferred return on its Additional Capital Contribution, if any,
pursuant to Section 2.3.5 hereof, such that the allocations hereunder reflect
the distribution of cash under Section 10.2 hereof.
9.2. Allocation of Losses. After giving effect to the special allocations
set forth in Section 9.3 hereof, Losses for any Fiscal Year shall be allocated
to the Members in the following order and priority:
9.2.1. First, to the extent any Profits have been allocated pursuant
to Section 9.1.3 hereof, Losses shall be allocated to offset any Profits
allocated pursuant to Section 9.1.3 in an amount up to the amount of Profits
previously allocated under Section 9.1.3. To the extent Profits are offset
pursuant to this Section 9.2.1, such allocations shall be disregarded for
purposes of computing subsequent allocations pursuant to this Section 9.2.1.
-17-
<PAGE>
9.2.2. Next, to the Members in accordance with their Percentage
Interests.
9.2.3. Notwithstanding Section 9.2.1 and 9.2.2, no amount of Loss
shall be allocated to a Member to the extent that such allocation would cause or
increase a deficit balance in such Member's Capital Account, as adjusted.
Rather, such amount of Loss shall be allocated to the Member with positive
Capital Account, provided, however, that if no Member has a positive Capital
Account at the time of such allocation, Losses shall be allocated to the Members
in accordance with Section 9.2.2, provided further, that to the extent that
Losses have been allocated to a Member pursuant to this Section 9.2.3, then,
notwithstanding Section 9.1 hereof, subsequent Profits shall be allocated to
that Member under this Section 9.2.3 until the aggregate Profits allocated to
such Member hereunder shall be equal to the aggregate Losses allocated under
this Section 9.2.3 for all prior periods.
9.3. Special Allocations. Notwithstanding anything in this Agreement to
the contrary, the following special allocations shall be made as follows:
9.3.1. All Nonrecourse Deductions for each Fiscal year shall be
allocated to the Members in proportion to their respective Percentage
Interests. For purposes of Treasury Regulation Section 1.752-3, all excess
nonrecourse liabilities of the Company will be allocated between the Members
in proportion to their respective Percentage Interests.
9.3.2.Any items of income, loss, gain or deduction that are
attributable to Member Nonrecourse Debt shall be allocated to those Members who
bear the economic risk of loss for such debt in accordance with Treasury
Regulation Section 1.704-2(i).
9.3.3. If there is a net decrease in Minimum Gain for a taxable year
of the Company, then, unless and except to the extent that the exceptions
provided in Treasury Regulations Section 1.704-2(f)(2) through (5) are
applicable, before any other allocation is made for such taxable year, each
Member shall be allocated items of income and gain for such year (and, if
necessary, for subsequent years) in an amount equal to the portion of such
Member's share of the net decrease in Minimum Gain, as such share is determined
in accordance with Treasury Regulations Section 1.704-2(g)(2). This Section
9.3.3 is intended to qualify as a "minimum gain chargeback" under Treasury
Regulation Section 1.704-2(f)(1) and shall be interpreted in a manner consistent
therewith.
9.3.4.To the extent that any Member unexpectedly receives any
adjustment, allocation, or distribution described in subparagraphs (4), (5), or
(6) of Treasury Regulation Section 1.704-1(b)(2)(ii)(d), which adjustment,
allocation or distribution creates or increases a deficit in that Member's
Capital Account, then, items of Company income and gain shall be specially
allocated to such Member in an amount and manner sufficient to eliminate the
deficit balance in its Capital Account created by such adjustment, allocation,
or distribution as quickly as possible. Any special allocations of items of
income or gain pursuant to this provision shall be taken into account in
computing subsequent allocations of Profits so that the net amount of any items
so
-18-
<PAGE>
allocated and the Profits, Losses and all other items allocated to each Member
shall, to the extent possible, be equal to the net amount that would have been
allocated to each such Member pursuant to the other provisions of this Agreement
if such unexpected adjustments, allocations or distributions had not occurred.
The foregoing is intended to qualify as a "qualified income offset" within the
meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be applied
in a manner consistent with that Treasury Regulation.
9.4.Curative Allocations. The allocations set forth in Sections 9.2.3 and
9.3 (the "Regulatory Allocations") are intended to comply with certain
requirements of Treasury Regulation Section 1.704-1(b) and 1.704-2.
Notwithstanding any other provision of this Article 9 (other than the Regulatory
Allocations), the Regulatory Allocations shall be taken into account in
allocating other items of Company income, gain, loss, deduction or credit among
the Members so that, to the extent possible, the net amount of such allocations
or other items of income, gain, loss, deduction or credit and the Regulatory
Allocations to each Member shall be equal to the net amount that would have been
allocated to each such Member if the Regulatory Allocations had not occurred.
9.5. Allocations for Tax Purposes. In the event the book value of any
Company asset differs from its adjusted tax basis (upon contribution,
revaluation or otherwise), all income, gain, loss and deduction with respect to
such asset shall be allocated to the Members in a manner that takes into account
the variation between such book value and adjusted tax basis for such property
for federal income tax purposes, pursuant to section 704(c) of the Code or
pursuant to the principles thereof using any reasonable allocation method
(including curative allocations) as may be determined by the Members or, if the
Members so elect, the Company's accountants. Allocations made under this
Section 9.5 are made solely for federal, state or local income tax purposes and
shall not affect, or any way be taken into account in computing, any Member's
Capital Account or share of Profits, Losses, or other items or distributions
pursuant to any provision of this Agreement.
ARTICLE 10
DISTRIBUTIONS
10.1. Distributions Generally. Except as otherwise provided in Section
12.3 (relating to liquidating distributions), Available Cash Flow, if any, shall
be distributed as mutually determined by the Members, except that any
distributions to be made under Section 10.2.1 hereof to BOP in respect of the
BOP Preferred Return shall be made at the end of the first quarter in which the
Company has Available Cash Flow and thereafter shall be payable quarterly to the
extent of Available Cash Flow.
10.2. Distributions of Available Cash Flow. Except as otherwise provided
in Sections 2.3.5 (in connection with Gender Road's preferred return on
Additional Capital Contributions, if
-19-
<PAGE>
any) and 12.3 (relating to liquidating distributions) and subject to Section
10.1 hereof, distributions of Available Cash Flow shall be made in the following
order and priority:
10.2.1. First, one hundred percent (100%) to BOP in respect of the BOP
Preferred Return until BOP has received an amount equal to the excess, if any,
of (i) the BOP Preferred Return from the Preferred Capital Date to the date of
such distribution, over (ii) the sum of all prior distributions to BOP in
respect of the BOP Preferred Return pursuant to this Section 10.2.1.
10.2.2. Second, one hundred percent (100%) to BOP until the BOP
Unreturned Preferred Capital has been reduced to zero;
10.2.3. Thereafter, to the Members in accordance with their Percentage
Interests.
10.3. Authority to Withhold. Upon the written advice of the Company's
legal tax counsel, the Company shall be entitled to collect, withhold and make
payments on behalf of or with respect to any Member's allocable share of Company
income or gain, in amounts required to discharge any obligation of the Company
to withhold or make payments to any governmental authority with respect to any
federal, state, and local tax liability of such Member arising as a result of
such Member's Interest in the Company. Any amount withheld pursuant to the
foregoing sentence shall be treated for all purposes of this Agreement as having
been paid or distributed to such Member and shall reduce, on a dollar for dollar
basis, amounts otherwise payable of distributable to such Member under this
Agreement. Each Member hereby agrees to indemnify and hold harmless the
Company for, from and against any liability with respect to amounts paid or
withheld under this Section 10.3 on behalf of or with respect to such Member.
ARTICLE 11
BOOKS, RECORDS, REPORTS AND ACCOUNTING
11.1. Books and Records. The Company shall keep or cause to be kept at its
principal place of business appropriate books and records, including without
limitation, the following: (a) true and full financial information regarding the
Company and the status of the development of the Pad Sites and financial
condition of the Company, including without limitation, records of all costs and
expenses incurred, all changes made, all credits made and received, and all
income derived in connection with the business of the Company; (b) promptly
after becoming available, a copy of the Company's federal, state and local
income tax returns for each year; (c) a copy of this Agreement and Certificate
of Formation and all amendments thereto, together with executed copies of any
written powers of attorney pursuant to which this Agreement and the Certificate
of Formation and all amendments thereto have been executed; and (d) other
information regarding the affairs of the Company as is just and reasonable.
-20-
<PAGE>
11.2. Company's Accountants. The Members hereby select and appoint Arthur
Andersen LLP to be the Company's independent accountants.
11.3. Fiscal Year. The Fiscal Year of the Company shall be the calendar
year or such other accounting period as shall be required under the Code or as
may be determined by the Company's independent accountants.
11.4. Accounting Period. Unless otherwise determined by the Company's
independent accountants to be in the best interests of the Company, the Company
shall use the accrual method of accounting in maintaining its books and records
and in preparation of its financial statements for federal income tax purposes.
11.5. Annual Reports. Within forty-five (45) days after the close of each
Fiscal Year, the Administrative Officer shall cause the Company to have prepared
and furnished to each Member, audited financial statements, presented in
accordance with generally accepted accounting principles, including without
limitation, copies of (i) the balance sheet of the Company, (ii) the Company's
income statement, (iii) a statement of the Company's cash flow, (iv) a statement
of the Member's Capital Accounts and Preferred Capital and (v) a statement of
source and application of funds each as of the last day of the Fiscal Year.
11.6. Quarterly Reports. Within twenty (20) days after the close of each
fiscal quarter, the Administrative Officer shall cause the Company to prepare
and furnish to each Member quarterly reports of (i) the Company's operations,
(ii) quarterly unaudited balance sheets and income statements, and (iii)
quarterly statements of cash flow.
11.7. Preparation of Tax Returns. Within sixty (60) days after the end of
each Fiscal Year, the Administrative Officer shall cause the Company to arrange
for the preparation and timely filing of all tax returns of the Company for
federal, state and local income tax purposes and shall cause the Company to be
furnish to each Member the tax information reasonably required for federal and
state income tax reporting purposes.
11.8. Tax Controversies. The Members hereby appoint and designate BOP as
the initial Tax Matters Member, and BOP shall authorize and require one of its
officers (the "Tax Matters Representative") to represent the Company (at the
Company's expense) in connection with all examinations of the Company's affairs
by tax authorities, including resulting administrative and judicial proceedings,
and to expend Company funds for professional services and costs associated
therewith. Each Member agrees to cooperate with the Tax Matters Representative
and to do or refrain from doing any or all things reasonably required by the Tax
Matters Representative in conducting those proceedings. The Tax Matters
Representative shall promptly notify the each Member upon the receipt of any
correspondence from any federal, state or local tax authorities relating to any
examination of the Company's affairs.
-21-
<PAGE>
11.9. Tax Elections. Any and all elections for federal, state and local
tax purposes, including without limitation, any election (i) to adjust the basis
of the Company Property pursuant to Code Section 754, 734(b) and 743(b), or
comparable state or local law, in connection with Transfers of Interests in the
Company; and (ii) to extend the statute of limitations fro assessment of tax
deficiencies against the Company and the Members with respect to adjustments to
the Companies federal, state or local tax returns, shall be made by the Members.
ARTICLE 12
DISSOLUTION AND LIQUIDATION
12.1. Dissolution. The Company shall dissolve upon the earliest to occur
of any of the following:
(a) the affirmative vote of the Members;
(b) upon the sale of all of the assets of the Company and the
repayment and satisfaction in full of any financing undertaken by the Company in
respect thereof;
(c) an entry of a decree of judicial dissolution pursuant to the
Act; or
(d) December 31, 2050.
12.2. Bankruptcy of a Member. The Bankruptcy of a Member shall not cause a
dissolution of the Company under the Act. Upon the Bankruptcy of a Member, the
non-Bankrupt Member shall have the sole right to manage the Company, and the
Bankrupt Member shall not have any right to participate in the management or
operation of the Company. Rather, the rights of the Bankrupt Member shall be
limited to the right to share in the profits and losses of the Company to the
extent provided in this Agreement.
12.3. Liquidation. Upon the dissolution of the Company, the Company shall
cease to carry on its business, except insofar as may be necessary for the
winding up of its business, but its separate existence shall continue until the
Certificate of Cancellation has been filed as required by the Act. Upon
dissolution of the Company, the Members shall designate a Person to act as the
liquidating trustee (the "Liquidating Trustee") and the business and affairs of
the Company shall be wound up and, subject to Section 12.4 hereof, the Company
liquidated as rapidly as business circumstances permit, and the proceeds thereof
shall be distributed (to the extent permitted by applicable law) in the
following order and priority:
12.3.1. To the payment of the debts and liabilities of the Company
(other than those to Members) in the order of priority provided by law.
-22-
<PAGE>
12.3.2. To the payment of the expenses of liquidation of the Company
in the order of priority provided by law, provided that the Company shall first
pay, to the extent permitted by law, liabilities or debts owed to Members.
12.3.3. To the setting up of such reserves as the Liquidating Trustee
may deem reasonably necessary for any contingent or unforeseen liabilities or
obligations of the Company arising out of or in connection with the Company's
business, provided that any such reserve will be held by the Liquidating Trustee
for the purposes of disbursing such reserves in payment of any of the
aforementioned contingencies and at the expiration of such period as the
Liquidating Trustee shall deem advisable (but in no case to exceed eighteen (18)
months from the date of liquidation unless an extension of time is consented to
by the Members), to distribute the balance thereafter remaining in the manner
hereinafter provided.
12.3.4. The balance of the proceeds, if any, to be distributed on or
before the later of (i) the end of the taxable year during which such
liquidation occurs or (ii) ninety (90) days after the date of such liquidation,
in accordance with and in the order set forth in Section 10.2 and, to the extent
applicable, Section 2.3.5.
12.4. No Liquidating Distributions in Kind. The Liquidating Trustee shall
not distribute, and no Member may demand or receive, property other than cash in
return for a Member's contributions, loans or advances, unless the Members
unanimously agree to a distribution in kind to any Member; provided, however,
that all Members receive, whether in kind or in cash and whether from the
Company or the Member receiving an in kind distribution, the amount which such
Member is entitled to receive under Section 10.2 hereof.
12.5. Deficit Capital Account. Upon liquidation, each Member shall look
solely to the assets of the Company for the return of that Member's Capital
Contribution. No Member shall be personally liable for a deficit Capital
Account balance of that Member, it being expressly understood that the
distribution of liquidation proceeds shall be made solely from existing Company
assets in the order and priority set forth in Section 12.3 hereof, and to the
extent applicable 12.4.
12.6. Certificate of Cancellation. Following dissolution and liquidation
of the Company, when all debts, liabilities and obligations have been paid,
satisfied, compromised or otherwise discharged, or adequate provisions have been
made therefore, and all of the remaining property and assets have been
distributed to Members, the Liquidating Trustee shall file a Certificate of
Cancellation as required by the Act.
12.7. Non-Recourse. No recourse shall be had for any of the obligations of
BOP hereunder or for any claim based thereon or otherwise in respect thereof,
against any past, present or future trustee, shareholder, officer or employee of
Brandywine Realty Trust, whether by virtue of any statute or rule of law, or by
the enforcement of any assessment or penalty or otherwise, all of such liability
being expressly waived and released by Gender Road.
-23-
<PAGE>
ARTICLE 13
MISCELLANEOUS
13.1. Amendments. This Agreement may not be amended, modified or revised
in any manner without the prior written consent of each of the Members.
13.2. Notice.
13.2.1. All notices, requests and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
delivered to a Member either personally or by sending a copy thereof by first
class or express mail, postage prepaid, or by telex or TWX (with answer back
received) or courier services, charges prepaid, or by telecopier, to such
Member's address (or to such party's telex, TWX, telecopier, or telephone
number) as follows:
If to BOP:
c/o Brandywine Realty Trust
Newtown Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
Attn: Anthony A. Nichols, Sr., Chairman
Gerard H. Sweeney, President and
Chief Executive Officer
Telephone: (610) 325-5600
Facsimile: (610) 325-5682 or 5622
with a copy to:
Michael H. Friedman, Esquire
Pepper, Hamilton & Scheetz LLP
3000 Two Logan Square
Eighteenth & Arch Streets
Philadelphia, PA 19103-2799
Telephone: (215) 981-4563
Facsimile: (215) 981- 4750
-24-
<PAGE>
If to Gender Road:
Gender Road Joint Venture
c/o The Commonwealth Group
62 Read's Way
New Castle, Delaware 19720
Attn.: Brock J. Vinton, President
Telephone: (302) 323-9700
Facsimile: (302) 323- 9703
with a copy to:
William S. Gee, Esquire
Saul, Ewing, Remick & Saul
P.O. Box 1266
Wilmington, DE 19899-1266
Telephone: (302) 421-6823
Facsimile: (302) 421-5874
13.2.2. Any such notice, request or communication shall be deemed to
be delivered, given and received for all purposes of this Agreement (i) as of
the date so delivered, if delivered personally or by telecopy to the person
entitled thereto, (ii) three (3) business days after being deposited in the
United States mail, or (iii) one (1) business day after being deposited in the
United States mail or with a telegraph office or courier service for delivery if
notice is sent by telegraph, or courier services.
13.3. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware and, to the maximum extent
possible, in such manner as to comply with all of the terms and conditions of
the Act.
13.4. Severability. If any provision of this Agreement shall be
conclusively determined by a court of competent jurisdiction to be invalid or
unenforceable to any extent, such provision shall be ineffective only to the
extent of such invalidity or unenforceability without invalidating or affecting
the remainder of this Agreement thereby.
13.5. Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the Members and their respective successors and, where permitted,
their assigns and Affiliates.
-25-
<PAGE>
13.6. Titles and Captions. All article, section and paragraph titles and
captions contained in this Agreement are for convenience only and are not a part
of the context hereof.
13.7. No Third Party Rights. This Agreement is intended to create
enforceable rights between the parties hereto only, and creates no rights in, or
obligations to, any other Persons whatsoever.
13.8. Time is of Essence. Time is of the essence in the performance of
each and every obligation herein imposed.
13.9. Further Assurances. Each Member, upon the request of the other
Member, shall execute all further instruments and perform all further acts which
are or may become reasonably necessary to effectuate and to carry out the
matters contemplated by this Agreement.
13.10. Incorporation by Reference. Any reference to an Exhibit or Schedule
or Attachment herein, is hereby incorporated by reference in this Agreement as
if such Exhibit, Schedule or Attachment was set out in full in the text of this
Agreement.
13.11. Legal Representation. Each party to this Agreement acknowledges
that such party is represented by competent legal counsel and that such counsel
has fully reviewed this Agreement. This Agreement shall be construed in
accordance with its fair meaning without any presumption against the party
responsible for drafting this Agreement.
13.12. Entire Agreement. This Agreement contains the entire agreement
between the parties hereto and supersedes any and all prior and contemporaneous
agreements, arrangements or understandings between the parties relating to the
subject matter hereof. No oral understandings, oral statements, oral promises
or oral inducements exist. No representations, warranties, covenants or
conditions, express or implied, whether by statute or otherwise, other than as
set forth herein, have been made by the parties hereto.
13.13. Counterparts. This Agreement may be signed in any number of
counterparts. with the same effect as if all of the Members had signed the same
document. All counterparts shall be construed together and shall constitute but
one and the same agreement. Any and all counterparts may be executed by
facsimile.
13.14.Execution of Certificate of Formation. The Members acknowledge and
agree that Kathleen A. Shea, Esquire of Pepper, Hamilton & Scheetz LLP has the
power and authority to execute and file the Certificate of Formation with the
Secretary of State of the State of Delaware on behalf of the Members in order to
form the Company under the Act.
[SPACE INTENTIONALLY LEFT BLANK]
-26-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Operating Agreement
of CHRISTIANA CENTER OPERATING COMPANY II LLC effective as of the day and year
first above written.
MEMBERS:
BRANDYWINE OPERATING PARTNERSHIP, L.P.,
a Delaware limited partnership, by
Brandywine Realty Trust, a Maryland Real
Estate Investment Trust, its sole general partner
By:/S/ Gerard H. Sweeney, President & CEO
Gerard H. Sweeney, President and
Chief Executive Officer
GENDER ROAD JOINT VENTURE,
a Delaware partnership
By:______________________________
Brock J. Vinton, Managing Venturer,
Hereunto Duly Authorized
[END OF EXECUTIONS]
-27-
<PAGE>
EXHIBIT A
TO
OPERATING AGREEMENT OF
CHRISTIANA CENTER OPERATING COMPANY II LLC
DEFINITIONS OF TERMS
The following terms used in this Agreement shall have the meanings
described below:
"Act" shall mean the Delaware Limited Liability Company Act, 6 Del. C.
Section 18-101 et. seq., as amended from time to time.
"Additional Capital Contributions" shall mean, with respect to a
Member, any additional contributions to the capital of the Company pursuant to
Section 2.3 hereof.
"Administrative Officer" shall mean the Person designated as such
pursuant to Section 3.4 hereof to undertake the day to day operation of the
Company as provided in Section 3.4 hereof.
"Advisor" shall have the meaning set forth in Section 2.3 hereof.
"Affiliate" shall mean a Person who, with respect to any Member: (a)
directly or indirectly controls, is controlled by or is under common control
with such Member; (b) owns or controls 10 percent (10%) or more of the
outstanding voting securities of such Member; or (c) is an officer, director,
manager, trustee, partner or member of such Member.
"Agreement" means this operating agreement, as it may be amended,
restated or supplemented from time to time.
"Available Cash Flow" shall mean and consist of all cash proceeds
received by the Company (other than Capital Contributions and Additional
Capital Contributions), including, but not limited to, proceeds realized by the
Company upon any financing or refinancing, proceeds generated by Company
operations, and proceeds derived from sales or other dispositions of Company
property, less the portion thereof used to pay or establish reserves for the
Company's working capital needs, expenses, fees, principal and interest payments
on Company debt and contingencies, all as determined by the Members.
"Bankruptcy" means, with respect to a Member, the happening of any of
the following: (a) the making of a general assignment for the benefit of
creditors; (b) the filing of a voluntary petition in bankruptcy or the filing of
a pleading in any court of record admitting in writing an inability to pay debts
as they become due; (c) the entry of an order, judgment or decree by any court
of competent jurisdiction adjudicating such Member to be bankrupt or insolvent;
(d) the filing of a petition or answer seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
statute, law or regulation; (e) the filing of an answer or other pleading
admitting the material allegations of, or consenting to, or defaulting in
answering, a bankruptcy petition filed against a Member in any bankruptcy
proceeding; (f) the filing of an
A-1
<PAGE>
application or other pleading or any action otherwise seeking, consenting to or
acquiescing in the appointment of a liquidating trustee, receiver or other
liquidator of all or any substantial part of a Member's properties; and (g) the
commencement of any proceeding seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any statute, law
or regulation which has not been quashed or dismissed within 180 days.
"Buy-Sell Price" shall have the meaning set forth in Section 8.2.1
hereof.
"BOP Preferred Capital" shall mean the Capital Contribution made by
BOP pursuant to Section 2.1 and all Additional Capital Contributions made by
BOP pursuant to Section 2.3 hereof, which shall provide the basis upon which the
BOP Preferred Return shall be calculated.
"BOP Preferred Return" shall mean the right given to BOP to receive,
in respect of each Fiscal Year, a sum equal to ten percent (10%) per annum
(determined on the basis of a year of 365 days, for the actual number of days
occurring in the period for which the BOP Preferred Return is being determined,
cumulative to the extent not distributed pursuant to Section 10.2.1 hereof, but
not compounded), of the average daily balance of the BOP Unreturned Preferred
Capital from time to time during the period to which BOP Preferred Return
relates. The calculation of the BOP Preferred Return shall commence upon the
Preferred Capital Date and shall be payable as provided in this Agreement.
"BOP Unreturned Preferred Capital" shall mean the BOP Preferred
Capital reduced by cash distributions made pursuant to Sections 10.2.2 and 12.3
hereof.
"Capital Account" shall mean the accounting record of each Member's
capital interest in the Company maintained pursuant to and in accordance with
Section 2.4 hereof.
"Capital Contribution" shall mean, with respect to each Member, the
amount contributed by such Member to the Capital of the Company, if any, as set
forth in Sections 2.1 and 2.2 hereof, as applicable.
"Certificate of Formation" shall mean the certificate of formation of
the Company, as amended or restated from time to time, filed in the Office of
the Secretary of State of the State of Delaware in accordance with the Act.
"Certificate of Cancellation" shall mean the certificate of
cancellation filed by the Liquidating Trustee under the Act at such time as set
forth in Section 12.6 hereof.
"Code" shall mean the Internal Revenue Code of 1986 (or successor
thereto), as amended from time to time.
A-2
<PAGE>
"Collateral Agreements" shall mean each of the documents, agreements
and instruments, including without limitation, the Pad Sites Agreement of Sale,
executed, delivered or performed or to be executed, delivered or performed in
connection with, or as a condition of, the consummation of the transactions
provided in or contemplated by this Agreement, including without limitation,
those documents, agreements and instruments in connection with the development
of the Pad Sites to which the Company is a party.
"Company" means the limited liability company which is the subject of
this Agreement, as such limited liability company may from time to time be
constituted.
"Contact Representative" shall have the meaning set forth in Section
3.3 hereof.
"Defaulting Member" shall have the meaning set forth in Section 2.3
hereof.
"Depreciation" shall mean, for each Fiscal Year or other period, an
amount equal to the depreciation, amortization, or other cost recovery deduction
allowable for federal income tax purposes with respect to an asset for such
Fiscal Year or other period, except that if the Gross Asset Value of an asset
differs from its adjusted basis for federal income tax purposes at the beginning
of such Fiscal Year or other period, Depreciation shall be an amount which bears
the same ratio to such beginning Gross Asset Value as the federal income tax
depreciation, amortization, or other cost recovery deduction for such Fiscal
Year or other period bears to such beginning adjusted tax basis. In the event
that the federal income tax depreciation, amortization, or other cost recovery
deduction is zero, Depreciation shall be determined with reference to such
beginning Gross Asset Value using any reasonable method.
"Designated Representatives" shall have the meaning set forth in
Section 3.4 hereof.
"Electing Member" shall have the meaning set forth in Section 8.2.1
hereof.
"Election Notice" shall have the meaning set forth in Section 8.2.1
hereof.
"Election Period" shall have the meaning set forth in Section 8.2.3
hereof.
"Fiscal Year" means the year on which the accounting and federal
income tax records of the Company are kept.
"Gross Asset Value" shall mean with respect to any asset of the
Company, the asset's adjusted basis for federal income tax purposes, except that
(i) where an asset has been revalued on the books of the Company the Gross Asset
Value shall be adjusted to reflect such revaluation, (ii) where an asset has
been contributed to the Company by a Member, the Gross Asset Value shall be its
fair market value as established by the Members and (iii) the Gross Asset Value
of Company assets shall be adjusted to reflect Depreciation taken into account
with respect to such assets for purposes of determining Profits or Losses.
"Gross Value of the Company" shall have the meaning set forth in
Section 8.4 hereof.
A-3
<PAGE>
"Indemnitee" shall have the meaning as set forth in Section 6.2
hereof.
"Indemnitee Member" shall have the meaning as set forth in Section 6.3
hereof.
"Indemnitor Member" shall have the meaning as set forth in Section 6.3
hereof.
"Interest" shall mean with respect to a Member such Member's interest
in the rights, powers, privileges, duties and obligations with respect to the
company as specified in this Agreement.
"Liquidating Trustee" shall have the meaning set forth in Section 12.3
hereof.
"Major Action" shall have the meaning set forth in Section 3.2 hereof.
"Members" shall have the meaning set forth in the first paragraph of
this Agreement and shall be used where no distinction between BOP and Gender
Road is required. To the extent applicable, the term "Members" shall include
any Person that is admitted to the Company as an additional or substitute
member, in accordance with the terms of this Agreement.
"Member Minimum Gain" shall mean an amount determined by computing
with respect to each Member Nonrecourse Debt, the Minimum Gain that would result
if such Member Nonrecourse Debt were treated as a nonrecourse liability,
determined in accordance with Treasury Regulation Section 1.704-2(i)(3).
"Member Nonrecourse Debt" shall mean nonrecourse indebtedness of the
Company with respect to which any Member has a direct or indirect risk of loss,
as more fully defined in Treasury Regulation Section 1.704-2(b)(4).
"Member Nonrecourse Deduction" shall mean, for each Fiscal Year, the
Company deductions which are attributable to Member Nonrecourse Debt and are
characterized as "partner nonrecourse deductions" under Treasury Regulation
Section 1.704-2(i)(l).
"Minimum Gain" shall mean and refer to, at any time, with respect to
all nonrecourse liabilities of the Company (within the meaning of Treasury
Regulation Section 1.704-2(b)(3)) the aggregate amount of gain (of whatever
character), if any, that would be realized by the Company if it disposed of (in
a taxable transaction) all Company Property subject to such liabilities in full
satisfaction thereof, and as further defined in Treasury Regulation Section
1.704-2(d).
"Mutual Disagreement" shall have the meaning set forth in Section 8.1
hereof.
"Net Equity of a Member's Interest" shall have the meaning set forth
in Section 8.4 hereof.
"Nonrecourse Deductions" shall have the meaning set forth in Treasury
Regulation Section 1.704-2(b)(1).
A-4
<PAGE>
"Notified Member" shall have the meaning set forth in Section 2.3
hereof.
"Notifying Member" shall have the meaning set forth in Section 2.3
hereof.
"Pad Sites" shall mean the two (2) existing vacant, approved,
partially improved parcels of land located in New Castle County, Delaware, as
more fully described in the Pad Sites Agreement of Sale.
"Pad Sites Acquisition" shall mean the acquisition of the Pad Sites
pursuant to and in accordance with the Pad Sites Agreement of Sale.
"Pad Sites Agreement of Sale" shall mean that certain agreement
executed by and between the Company, as purchaser, and Gender Road, as seller,
for the acquisition of the Pad Sites.
"Percentage Interest" shall mean with respect to a Member, such
Member's Interest expressed as a percentage in relation to the Interests held by
the other Members, as adjusted from time to time by the admission or withdrawal
of Members for any reason as provided in this Agreement or as agreed to by the
unanimous consent of the Members and reflected on Exhibit B attached hereto.
The initial Percentage Interest of each Member shall be fifty percent (50%) as
set forth on Exhibit B attached hereto.
"Performing Member" shall have the meaning set forth in Section 2.3
hereof.
"Permitted Transfer" shall have the meaning set forth in Section 7.2
hereof.
"Person" means an individual, firm, corporation, partnership, limited
liability company, association, estate, trust, pension or profit-sharing plan,
or any other entity.
"Preferred Capital Date" shall mean, for purposes of calculating the
BOP Preferred Return, the date on which BOP makes an initial capital
contribution to the Company pursuant to Section 2.1 hereof; provided that with
respect to Additional Capital Contributions, the Preferred Capital Date for
purposes of calculating the BOP Preferred Return on such Additional Capital
Contributions shall be the date on which such Additional Capital Contributions
are made by BOP to the Company.
"Profits" and "Losses" shall mean, for each Fiscal Year or other
period, an amount equal to the Company's taxable income or loss for such year or
period, as computed for federal income tax purposes and determined in accordance
with Section 703(a) of the Code (for this purpose, all items of income, gain,
loss, or deduction required to be stated separately pursuant to Section
703(a)(l) of the Code shall be included in taxable income or loss), with the
following adjustments:
(a) Any income of the Company that is exempt from federal income
tax and not otherwise taken into account in computing Profits or Losses shall be
added to such taxable income or loss;
A-5
<PAGE>
(b) Any expenditures of the Company described in Section
705(a)(2)(B) of the Code or treated as such expenditures pursuant to Treasury
Regulation Section 1.704-l(b)(2)(iv)(i), and not otherwise taken into account in
computing Profits or Losses shall be subtracted from such taxable income or
loss;
(c) Gain or loss resulting from any disposition of Property with
respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the Property disposed
of, notwithstanding that the adjusted tax basis of such property differs from
its Gross Asset Value.
(d) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing taxable income or loss,
Depreciation shall be taken into account for such Fiscal Year or other period in
computing taxable income or loss;
(e) Notwithstanding any other provision of this definition,
Nonrecourse, Deductions, Member Nonrecourse Deductions and any items of income,
gain, loss or deduction which are specially allocated pursuant to Section 9.3 of
this Agreement, shall not be taken into account in computing taxable income or
loss; and
(f) In any case where, in accordance with Treasury Regulation
Section 1.704-1(b)(2)(iv)(e) or (f) Company property is revalued on the books of
the Company to reflect its fair market value, the amount of such revaluation (to
the extent not previously taken into account) shall be taken into account as
gain or loss from a taxable disposition of such property for purposes of
computing taxable income or loss.
"Regulatory Allocations" shall have the meaning as set forth in
Section 9.4 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Tax Matters Member" means the "tax matters member" as defined in Code
section 6231(a)(7) and is selected under Section 11.7 hereof.
"Tax Matters Representative" shall have the meaning set forth in
Section 11.8 hereof.
"Transfer" means to sell, assign, transfer, give, donate, pledge,
deposit, alienate, bequeath, devise or otherwise dispose of or encumber all or
any portion of an Interest to any Person other than the Company.
"Transferee" shall mean a Person to whom a Transfer is made pursuant
to Article 7.
"Transferor" shall mean a Member making a Transfer under this
Agreement pursuant to Article 7.
"Treasury Regulations" or "Regulations" shall mean pronouncements, as
amended from time to time, or their successor pronouncements, which clarify,
interpret and apply the
A-6
<PAGE>
provisions of the Code, and which are designated as "Treasury Regulations" by
the United States Department of the Treasury.
[END OF EXHIBIT A]
A-7
<PAGE>
EXHIBIT B
TO
OPERATING AGREEMENT OF
CHRISTIANA CENTER OPERATING COMPANY II LLC
PERCENTAGE INTERESTS
PERCENTAGE
MEMBER INTEREST
______ _____________
BOP 50%
GENDER ROAD 50%
A-8
<PAGE>
A-9
