<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 4, 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 4 pages
<PAGE>
Item 5. Other Events
On September 4, 1997, the Company amended its Declaration of Trust
to increase the number of authorized common shares of beneficial interest
from 25,000,000 to 100,000,000.
During the period January 1, 1997 through September 10, 1997, the
Company has acquired 12 individually insignificant properties from parties
unaffiliated with the Company and the Operating Partnership (as defined
below). The aggregate purchase price for these properties was approximately
$48 million. The Company is filing this Current Report on Form 8-K in order
to provide audited financial statements for two of the individually
insignificant property acquisitions in accordance with Regulation S-X, Rule
3-14. The Company has previously provided audited financial statements for
additional individually insignificant property acquisitions in accordance
with Regulations S-X, Rule 3-14, in a previously filed Current Report on Form
8-K.
On August 15, 1997, Brandywine Operating Partnership, L.P. (the
"Operating Partnership"), a limited partnership of which Brandywine Realty Trust
(the "Company") is the sole general partner, acquired two office properties
located in Fort Washington, Pennsylvania ("500 and 501 Office Center Drive" or
the "Properties") containing approximately 211,000 net rentable square feet for
approximately $16.9 million. Reference is made to the Current Report on Form
8-K dated August 22, 1997 for additional information regarding 500 and 501
Office Center Drive and to Item 7 herein for certain financial statements
related to these properties.
-2-
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired.
The audited statement of revenue and certain operating expenses of
500 and 501 Office Center Drive for the year ended December 31, 1996
and the unaudited statement of revenue and certain operating expenses
for the six months ended June 30, 1997 are included on pages F-13 to
F-16.
(b) Pro Forma Financial Information.
Pro forma financial information which reflects the Company's
acquisition of 500 and 501 Office Center Drive as of and for the six
months ended June 30, 1997 and for the year ended December 31, 1996 is
included on pages F-1 to F-12.
(c) Exhibits.
3.1 Articles of Amendment (September 4, 1997)
10.1 Second Amended and Restated Partnership Agreement of Brandywine
Realty Services Partnership
23.1 Consent of Arthur Andersen LLP
-3-
<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: September 10, 1997 By: /s/ Gerard H. Sweeney
------------------ ---------------------------------
Gerard H. Sweeney, President and Chief
Executive Officer
(Principal Executive Officer)
Date: September 10, 1997 By: /s/ Mark S. Kripke
------------------ ---------------------------------
Mark S. Kripke, Chief Financial Officer
and Secretary (Principal Financial and
Accounting Officer)
-4-
<PAGE>
BRANDYWINE REALTY TRUST
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C> <C>
I. UNAUDITED PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION
Pro Forma Condensed Consolidating Balance Sheet as of June 30, 1997.... F-3
Pro Forma Condensed Consolidating Statement of Operations for the Year
Ended December 31, 1996............................................... F-4
Pro Forma Condensed Consolidating Statement of Operations for the Six
Months Ended June 30, 1997............................................ F-5
Notes and Management's Assumptions to Unaudited Pro Forma Condensed
Consolidating Financial Information................................... F-6
II. 500 AND 501 OFFICE CENTER DRIVE
Report of Independent Public Accountants............................... F-13
Statements of Revenue and Certain Expenses for the Year Ended December
31, 1996 (audited) and for the Six Month Period Ended June 30, 1997
(unaudited)........................................................... F-14
Notes to Statements of Revenue and Certain Expenses.................... F-15
</TABLE>
F-1
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION
The following sets forth the pro forma condensed consolidating balance
sheet of Brandywine Realty Trust ("the Company") as of June 30, 1997 and the
pro forma condensed consolidating statements of operations for the six months
ended June 30, 1997 and for the year ended December 31, 1996.
The pro forma condensed consolidating financial information should be
read in conjunction with the historical financial statements of the Company
and those acquisitions deemed significant pursuant to the rules and
regulations of the Securities and Exchange Commission.
The unaudited pro forma condensed consolidating financial information is
presented as if the following events occurred no later than June 30, 1997 for
balance sheet purposes, and at the beginning of the period presented for
purposes of the statements of operations:
- The Company acquired the properties described in Note 1 to these
pro forma financial statements.
- The Company acquired its partnership interests in Brandywine
Operating Partnership, L.P. (the "Operating Partnership").
- The Company issued 4,600,000 Common Shares at $16.50 per share, of
which 600,000 shares related to the underwriter's exercise of the
over-allotment option (the "1996 Offering").
- The Company issued 636,363 Common Shares at $16.50 per share to a
voting trust established for the benefit of the Pennsylvania State
Employees Retirement System ("SERS"), in exchange for $10.5 million
(the "SERS Offering") and contributed such proceeds to the
Operating Partnership in exchange for 636,363 units of general
partnership interest ("GP Units") in the Operating Partnership.
- The Company issued 709,090 Common Shares at $16.50 per share to two
investment funds managed by Morgan Stanley Asset Management Inc.
(the "Morgan Stanley Offering") and contributed the proceeds to the
Operating Partnership in exchange for 709,090 GP Units.
- The Operating Partnership repaid $49,805,000 of mortgage
indebtedness and $764,000 of loans made by Safeguard Scientifics,
Inc. and paid a $500,000 prepayment penalty with a portion of the
proceeds of the 1996 Offering, the SERS Offering and the Morgan
Stanley Offering.
- The Company issued 2,375,500 Common Shares at $20.625 per share, of
which 175,500 shares related to the underwriter's exercise of the
over-allotment option (the "March 1997 Offering").
- The Company issued 11,500,000 Common Shares at $20.75 per share, of
which 1,500,000 shares related to the underwriter's exercise of the
over-allotment option (the "July 1997 Offering"). The net proceeds
from the July 1997 Offering were contributed to the Operating
Partnership in exchange for 11,500,000 GP Units.
- The Operating Partnership repaid $160,775,000 of indebtedness under
the Company's revolving credit facility using proceeds from the
July 1997 Offering.
The pro forma condensed consolidating financial information is unaudited
and is not necessarily indicative of what the actual financial position would
have been at June 30, 1997, nor does it purport to represent the future
financial position and the results of operations of the Company.
F-2
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JUNE 30, 1997 (Notes 1 and 2)
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
BRANDYWINE 500 AND 501
REALTY TRUST GREEN HILLS BERWYN PARK OFFICE
HISTORICAL JULY 1997 PROPERTIES PROPERTIES CENTER DRIVE PRO FORMA
CONSOLIDATED OFFERING (A) (B) (C) (D) CONSOLIDATED
--------------- -------------- -------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Real estate
investments,
net............ $ 344,209 $ -- $ 40,444 $ 37,664 $ 17,091 $ 439,408
Cash and cash
equivalents.... 10,777 64,965 (23,944) (37,664) (2,091) 12,043
Escrowed cash.... 1,213 -- -- -- -- 1,213
Accounts
receivable..... 2,755 -- -- -- -- 2,755
Due from
affiliates..... 293 -- -- -- -- 293
Investment in
management
company........ 202 -- -- -- -- 202
Deferred costs
and other
assets......... 4,980 -- -- -- -- 4,980
--------------- -------------- ------- ------- ------- --------
Total assets..... 364,429 64,965 16,500 -- 15,000 460,894
--------------- -------------- ------- ------- ------- --------
--------------- -------------- ------- ------- ------- --------
LIABILITIES:
Mortgage notes
payable........ 46,960 -- 1,500 -- -- 48,460
Notes payable,
Credit
Facility....... 130,775 (160,775) 15,000 -- 15,000 --
Accrued
interest....... 395 -- -- -- -- 395
Accounts payable
and accrued
expenses....... 2,650 -- -- -- -- 2,650
Distributions
payable........ 4,192 -- -- -- -- 4,192
Tenant security
deposits and
deferred
rents.......... 2,721 -- -- -- -- 2,721
--------------- -------------- ------- ------- ------- --------
Total
liabilities.... 187,693 (160,775) 16,500 -- 15,000 58,418
--------------- -------------- ------- ------- ------- --------
MINORITY
INTEREST....... 5,508 -- -- -- -- 5,508
--------------- -------------- ------- ------- ------- --------
BENEFICIARIES'
EQUITY:
Common shares of
beneficial
interest....... 111 115 -- -- -- 226
Additional
paid-in
capital........ 186,426 225,625 -- -- -- 412,051
Share warrants... 962 -- -- -- -- 962
Cumulative
earnings....... 460 -- -- -- -- 460
Cumulative
distributions.. (16,731) -- -- -- -- (16,731)
--------------- -------------- ------- ------- ------- --------
Total
beneficiaries'
equity......... 171,228 225,740 -- -- -- 396,968
--------------- -------------- ------- ------- ------- --------
Total liabilities
and
beneficiaries'
equity......... $ 364,429 $ 64,965 $ 16,500 $ -- $ 15,000 $ 460,894
--------------- -------------- ------- ------- ------- --------
--------------- -------------- ------- ------- ------- --------
</TABLE>
F-3
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996 (Notes 1 and 3)
(Unaudited)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
BRANDYWINE 1997 EVENTS
REALTY -------------------------
TRUST 1997 500 AND 501 TOTAL
HISTORICAL 1996 OTHER OFFICE CENTER PRO FORMA
CONSOLIDATED (A) EVENTS (B) SUBTOTAL EVENTS (C) DRIVE (E) CONSOLIDATED
-------------------- ------------ ----------- ------------ ----------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE:
Base rents......... $ 8,462 $ 12,646 $ 21,108 $ 35,890 $ 1,754 $ 58,752
Tenant
reimbursements.... 1,372 2,838 4,210 5,356 1,358 10,924
Other............. 196 100 296 504 43 843
---------- ------------ ----------- ------------ ------ ----------------
Total Revenue..... 10,030 15,584 25,614 41,750 3,155 70,519
---------- ------------ ----------- ------------ ------ ----------------
OPERATING EXPENSES:
Interest........... 2,751 513 3,264 (53) 1,125 4,336
Depreciation and
amortization...... 2,836 4,687 7,523 8,618 547 16,688
Property expenses.. 3,709 6,830 10,539 17,215 1,561 29,315
General and
administrative.... 825 148 973 -- -- 973
---------- ------------ ----------- ------------ ------ ----------------
Total operating
expenses......... 10,121 12,178 22,299 25,780 3,233 51,312
---------- ------------ ----------- ------------ ------ ----------------
Income (loss) before
minority
interest......... (91) 3,406 3,315 15,970 (78) 19,207
Minority interest in
(income) loss..... (45) (429) (474) 150 -- (324)
---------- ------------ ----------- ------------ ------ ----------------
Income (loss) before
uncombined
entity............ (136) 2,977 2,841 16,120 (78) 18,883
Equity in income of
management
company........... (26) 66 40 266 76 382
---------- ------------ ----------- ------------ ------ ----------------
Net income (loss)... (162) 3,043 2,881 16,386 (2) 19,265
(Income) loss
allocated to
Preferred
Shares............ (401) (1,847) (2,248) -- -- (2,248)
---------- ------------ ----------- ------------ ------ ----------------
Income (loss)
allocated to
Common Shares..... $ (563) $ 1,196 $ 633 $ 16,386 $ (2) $ 17,017
---------- ------------ ----------- ------------ ------ ----------------
---------- ------------ ----------- ------------ ------ ----------------
Earnings (loss) per
Common Share...... $ (0.43) $ 0.82
---------- ----------------
---------- ----------------
Weighted average
number of shares
outstanding
including share
equivalents....... 1,302,648 20,791,406
---------- ----------------
---------- ----------------
</TABLE>
F-4
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (Notes 1 and 3)
(Unaudited)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
BRANDYWINE 1997 EVENTS
REALTY ---------------------------------
TRUST 1997 500 AND 501 TOTAL
HISTORICAL OTHER OFFICE CENTER PRO FORMA
CONSOLIDATED (A) EVENTS (D) DRIVE (E) CONSOLIDATED
-------------------- ------------ ------------------- ----------------
<S> <C> <C> <C> <C>
REVENUE:
Base rents............................ $ 16,889 $ 13,223 $ 882 $ 30,994
Tenant reimbursements................. 3,285 1,957 733 5,975
Other................................. 544 64 38 646
---------- ------------ ----- ----------------
Total Revenue........................ 20,718 15,244 1,653 37,615
---------- ------------ ----- ----------------
OPERATING EXPENSES:
Interest.............................. 3,059 (1,580) 558 2,037
Depreciation and amortization......... 5,775 3,142 271 9,188
Property operating expenses........... 7,032 5,933 774 13,739
Other expenses........................ 1,187 -- -- 1,187
---------- ------------ ----- ----------------
Total operating expenses............. 17,053 7,495 1,603 26,151
---------- ------------ ----- ----------------
Income (loss) before minority
interest............................. 3,665 7,749 50 11,464
Minority interest in (income) loss..... (174) (19) (1) (194)
---------- ------------ ----- ----------------
Income (loss) before uncombined
entity............................... 3,491 7,730 49 11,270
Equity in income of management
company.............................. 217 113 38 368
---------- ------------ ----- ----------------
Net income (loss)...................... 3,708 7,843 87 11,638
(Income) loss allocated to Preferred
Shares............................... (499) -- -- (499)
---------- ------------ ----- ----------------
Income (loss) allocated to Common
Shares............................... $ 3,209 $ 7,843 $ 87 $ 11,139
---------- ------------ ----- ----------------
---------- ------------ ----- ----------------
Earnings (loss) per Common Share....... $ 0.36 $ 0.53
---------- ----------------
---------- ----------------
Weighted average number of shares
outstanding including share
equivalents.......................... 8,809,379 21,155,886
---------- ----------------
---------- ----------------
</TABLE>
F-5
<PAGE>
BRANDYWINE REALTY TRUST
NOTES AND MANAGEMENT'S ASSUMPTIONS TO
UNAUDITED PRO FORMA CONDENSED CONSOLIDATING
FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
1. BASIS OF PRESENTATION:
Brandywine Realty Trust (the "Company") is a Maryland real estate
investment trust. As of September 10, 1997, the Company owned 85 properties.
The Company's interest in 84 of the Properties is held through Brandywine
Operating Partnership, L.P. (the "Operating Partnership"). The Company is the
sole general partner of the Operating Partnership and as of September 10,
1997, the Company held a 98.6% interest in the Operating Partnership.
These pro forma financial statements should be read in conjunction with
the historical financial statements and notes thereto of the Company, the
SSI/TNC Properties, the LibertyView Building, the nine properties (the "SERS
Properties") acquired in November 1996 from SERS and its subsidiaries,
Delaware Corporate Center I, 700/800 Business Center Drive, the Columbia
Acquisition Properties, the Main Street Acquisition Properties, the TA
Properties, the Emmes Properties, the Greentree Executive Campus Acquisition
Properties, 748 & 855 Springdale Drive, the Green Hills Properties, the
Berwyn Park Properties and 500 & 501 Office Center Drive. In management's
opinion, all adjustments necessary to reflect the effects of the 1996
Offering, the SERS Offering, the Morgan Stanley Offering, the March 1997
Offering, the July 1997 Offering, the acquisitions of the SSI/TNC Properties,
the LibertyView Building, the 1996 Additional Acquisition Properties
(consisting of the SERS Properties, Delaware Corporate Center I, 700/800
Business Center Drive and 8000 Lincoln Drive), the Columbia Acquisition
Properties, the Main Street Acquisition Properties, 1336 Enterprise Drive,
the Greentree Executive Campus, Five Eves Drive, Kings Manor, the TA
Properties, the Emmes Properties, 748 & 855 Springdale Drive, 1974 Sproul
Road, the Green Hills Properties, the Berwyn Park Properties and 500 & 501
Office Center Drive by the Company have been made.
2. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET:
(A) Reflects the July 1997 Offering and the use of a portion of the net
proceeds to repay $160.8 million of indebtedness under the Credit Facility.
(B) Reflects the Company's acquisition of the Green Hills Properties as
follows:
GREEN HILLS
PROPERTIES
-----------
Purchase Price........................... $ 40,000
Closing Costs............................ 444
-----------
$ 40,444
(C) Reflects the Company's acquisition of Berwyn Park as follows:
F-6
<PAGE>
BERWYN PARK
PROPERTIES
------------
Purchase Price........................... $ 37,150
Closing Costs............................ 514
------------
$ 37,664
(D) Reflects the Company's acquisition of 500 and 501 Office Center Drive as
follows:
500 AND 501 OFFICE
CENTER DRIVE
------------------
Purchase Price.......................... $ 16,900
Closing Costs........................... 191
------------------
$ 17,091
3. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS:
(A) Reflects the historical consolidated operations of the Company.
(B) Reflects the historical operations of the SSI/TNC Properties,
LibertyView Building and the 1996 Additional Acquisition Properties from January
1, 1996 through the respective dates of acquisition, plus the pro forma 1996
Offering adjustments. The table below reflects the adjustments:
<TABLE>
<CAPTION>
SSI/TNC
PROPERTIES AND 700/800
LIBERTYVIEW DELAWARE BUSINESS CENTER 8000 LINCOLN
BUILDING SERS PROPERTIES CORPORATE CENTER DRIVE DRIVE
-------------- --------------- ---------------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents............................. $ 5,714 $4,008 $2,036 $651 $237
Tenant reimbursements.................. 2,511 249 -- 76 2
Other.................................. 100 -- -- -- --
------- ------ ------ ----- -----
Total revenue........................ 8,325 4,257 2,036 727 239
Operating Expenses:
Interest............................... 3,783 194 -- -- --
Depreciation and amortization.......... 2,819 818 374 212 89
Property expenses...................... 2,831 2,217 552 270 231
General and administrative............. 715 -- -- -- --
------- ------ ------ ----- -----
Total operating expenses............. 10,148 3,229 926 482 320
Income (loss) before minority interest... (1,823) 1,028 1,110 245 (81)
Minority interest in (income) loss....... 513 -- -- -- --
Income (loss) before uncombined entity... (1,310) 1,028 1,110 245 (81)
Equity in income of management company... 75 -- -- -- --
------- ------ ------ ----- -----
Net income (loss)........................ (1,235) 1,028 1,110 245 (81)
Income allocated to Preferred Shares..... -- -- -- -- --
------- ------ ------ ----- -----
Income (loss) allocated to Common
Shares................................. $(1,235) $1,028 $1,110 $245 $(81)
------- ------ ------ ----- -----
------- ------ ------ ----- -----
<CAPTION>
1996 PRO FORMA
& OTHER OFFERING TOTAL PRO FORMA
ADJUSTMENTS 1996 EVENTS
---------------- ---------------
<S> <C> <C>
Revenue:
Base rents............................. -$- $12,646
Tenant reimbursements.................. -- 2,838
Other.................................. -- 100
------ -------
Total revenue........................ -- 15,584
Operating Expenses:
Interest............................... (3,464) 513
Depreciation and amortization.......... 375 4,687
Property expenses...................... 729 6,830
General and administrative............. (567) 148
------ -------
Total operating expenses............. (2,927) 12,178
Income (loss) before minority interest... 2,927 3,406
Minority interest in (income) loss....... (942) (429)
Income (loss) before uncombined entity... 1,985 2,977
Equity in income of management company... (9) 66
------ -------
Net income (loss)........................ 1,976 3,043
Income allocated to Preferred Shares..... 1,847 1,847
------ -------
Income (loss) allocated to Common
Shares................................. $ 129 $ 1,196
------ -------
------ -------
</TABLE>
F-7
<PAGE>
(C) Reflects the pro forma statements of operations of the Columbia
Acquisition Properties, the Main Street Acquisition Properties, 1336
Enterprise Drive, Kings Manor, Greentree Executive Campus, Five Eves Drive,
the TA Properties, the Emmes Properties, 748 & 855 Springdale Drive, 1974
Sproul Road, the Berwyn Park Properties and the Green Hills Properties for
the year ended December 31, 1996 and other pro forma adjustments to reflect
the March 1997 Offering and the July 1997 Offering for the year ended
December 31, 1996. The operating results reflected below include the
historical results and related pro forma adjustments to reflect the period
January 1, 1996 through the earlier of the respective acquisition dates or
December 31, 1996. Operating results from those dates forward are included in
the historical results of the Company.
F-8
<PAGE>
<TABLE>
<CAPTION>
COLUMBIA MAIN STREET GREENTREE
ACQUISITION ACQUISITION 1336 ENTERPRISE EXECUTIVE
PROPERTIES PROPERTIES DRIVE KINGS MANOR CAMPUS
----------------- ------------- ----------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents................... $ 5,146 $ 3,141 $ 437 $ 411 $ 1,862
Tenant reimbursements........ 359 347 75 107 175
Other........................ 376 -- -- -- --
------ ------------- ------- ------ -------
Total revenue.............. 5,881 3,488 512 518 2,037
------ ------------- ------- ------ -------
Operating Expenses:
Interest (i)................. 1,680 -- -- -- 841
Depreciation and amortization
(ii)....................... 1,007 629 117 114 359
Property expenses............ 1,979 2,194 107 170 1,018
General and administrative... -- -- -- -- --
------ ------------- ------- ------ -------
Total operating expenses... 4,666 2,823 224 284 2,218
------ ------------- ------- ------ -------
Income (loss) before minority
interest..................... 1,215 665 288 234 (181)
Minority interest in (income)
loss......................... (20) (11) (5) (4) 3
------ ------------- ------- ------ -------
Income (loss) before uncombined
entity....................... 1,195 654 283 230 (178)
Equity in income of management
company (iii)................ -- -- -- -- --
------ ------------- ------- ------ -------
Net income (loss).............. 1,195 654 283 230 (178)
Income allocated to Preferred
Shares -- -- -- -- --
------ ------------- ------- ------ -------
Income (loss) allocated to
Common Shares................ $ 1,195 $ 654 $ 283 $ 230 $ (178)
------ ------------- ------- ------ -------
------ ------------- ------- ------ -------
</TABLE>
<TABLE>
<CAPTION>
748 & 855
SPRINGDALE
FIVE EVES DRIVE TA PROPERTIES EMMES PROPERTIES DRIVE 1974 SPROUL ROAD
----------------- ------------- ----------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents................... $ 348 $ 5,102 $ 6,214 $ 940 $ 774
Tenant reimbursements........ 39 735 2,681 -- 118
Other........................ 1 9 10 -- --
------ ------------- ------- ------ -------
Total revenue.............. 388 5,846 8,905 940 892
------ ------------- ------- ------ -------
Operating Expenses:
Interest (i)................. 254 3,168 4,987 400 --
Depreciation and amortization
(ii)....................... 108 1,352 2,128 171 134
Property expenses............ 151 1,962 3,482 250 492
General and administrative... -- -- -- -- --
------ ------------- ------- ------ -------
Total operating expenses... 513 6,482 10,597 821 626
------ ------------- ------- ------ -------
Income (loss) before minority
interest..................... (125) (636) (1,692) 119 266
Minority interest in (income)
loss......................... 2 9 27 (2) (5)
------ ------------- ------- ------ -------
Income (loss) before uncombined
entity....................... (123) (627) (1,665) 117 261
Equity in income of management
company (iii)................ -- 105 65 23 22
------ ------------- ------- ------ -------
Net income (loss).............. (123) (522) (1,600) 140 283
Income allocated to Preferred
Shares....................... -- -- -- -- --
------ ------------- ------- ------ -------
Income (loss) allocated to
Common Shares................ $ (123) $ (522) $ (1,600) $ 140 $ 283
------ ------------- ------- ------ -------
------ ------------- ------- ------ -------
</TABLE>
<TABLE>
<CAPTION>
MARCH 1997 JULY 1997 BERWYN PARK GREEN HILLS TOTAL OTHER 1997
OFFERING OFFERING PROPERTIES PROPERTIES (iv) EVENTS
----------------- --------------- ----------------- --------------- -------------------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents.................... $ -- $ -- $ 3,815 $ 7,700 $ 35,890
Tenant reimbursements......... -- -- 720 -- 5,356
Other......................... -- -- 108 -- 504
----- ------ ------- ----- -----
Total revenue............... -- -- 4,643 7,700 41,750
----- ------ ------- ----- -----
Operating Expenses:
Interest (i).................. (525) (12,058) -- 1,200 (53)
Depreciation and amortization
(ii)........................ -- -- 1,205 1,294 8,618
Property expenses............. -- -- 1,991 3,419 17,215
General and administrative.... -- -- -- -- --
----- ------ ------- ----- -----
Total operating expenses.... (525) (12,058) 3,196 5,913 25,780
----- ------ ------- ----- -----
Income (loss) before minority
interest...................... 525 12,058 1,447 1,787 15,970
Minority interest in (income)
loss.......................... 348 (137) (27) (28) 150
Income (loss) before uncombined
entity........................ 873 11,921 1,420 1,759 16,120
Equity in income of management
company (iii)................. -- -- 166 (115) 266
----- ------ ------- ----- -----
Net income (loss)............... 873 11,921 1,586 1,644 16,386
Income allocated to Preferred
Shares........................ -- -- -- -- --
----- ------ ------- ----- -----
Income (loss) allocated to
Common Shares................. $ 873 $ 11,921 $ 1,586 $ 1,644 $ 16,386
----- ------ ------- ----- -----
----- ------ ------- ----- -----
</TABLE>
(i) Pro forma interest expense is presented assuming an effective rate of 7.5%
on borrowings under the Company's revolving credit facility. The
adjustment for the Columbia Acquisition Properties also reflects an
effective interest rate of 9.5% on assumed debt. The
F-9
<PAGE>
adjustments for the March 1997 Offering and the July 1997 Offering
represent interest savings related to the payoff of $7 million and
$160.8 million, respectively, of credit facility borrowings at an
effective rate of 7.5%.
(ii) Pro forma depreciation expense is presented assuming an 80% building and
20% land allocation of the purchase price and capitalized closing costs
and assumes a useful life of 25 years.
(iii) Pro forma equity in income of management company is presented based on
management fees less incremental costs estimated to be incurred.
(iv) Pro forma property expenses exclude $666,000 from historical amounts. Such
amount represents expected salary savings.
(D) Reflects the pro forma adjustments relating to the Columbia Acquisition
Properties, the Main Street Acquisition Properties, 1336 Enterprise Drive, Kings
Manor, Greentree Executive Campus, Five Eves Drive, the TA Properties, the Emmes
Properties, 748 & 855 Springdale Drive and 1974 Sproul Road for the six months
ended June 30, 1997 and other pro forma adjustments to reflect the March 1997
Offering for the six months ended June 30, 1997. The operating results reflected
below include the historical results and related pro forma adjustments to
reflect the period January 1, 1997 through the earlier of the respective
acquisition date or June 30, 1997.
F-10
<PAGE>
<TABLE>
<CAPTION>
COLUMBIA MAIN STREET GREENTREE
ACQUISITION ACQUISITION 1336 ENTERPRISE EXECUTIVE
PROPERTIES PROPERTIES DRIVE KINGS MANOR CAMPUS
----------------- ------------- ----------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents................... $ 338 $ 542 $ 78 $ 105 $ 602
Tenant reimbursements........ 24 60 13 27 17
Other........................ 25 -- -- -- --
------ ------------- ------- ------ -------
Total revenue.............. 387 602 91 132 619
------ ------------- ------- ------ -------
Operating Expenses:
Interest (i)................. 110 -- -- -- 249
Depreciation and amortization
(ii)....................... 66 109 21 29 106
Property expenses............ 130 379 19 43 272
General and administrative... -- -- -- -- --
------ ------------- ------- ------ -------
Total operating expenses... 306 488 40 72 627
------ ------------- ------- ------ -------
Income (loss) before minority
interest..................... 81 114 51 60 (8)
Minority interest in (income)
loss......................... (1) (2) (1) (1) --
------ ------------- ------- ------ -------
Income (loss) before uncombined
entity....................... 80 112 50 59 (8)
Equity in income of management
company (iii)................ -- -- -- -- --
------ ------------- ------- ------ -------
Net income (loss).............. 80 112 50 59 (8)
Income allocated to Preferred
Shares....................... -- -- -- -- --
------ ------------- ------- ------ -------
Income (loss) allocated to
Common Shares................ $ 80 $ 112 $ 50 $ 59 $ (8)
------ ------------- ------- ------ -------
------ ------------- ------- ------ -------
</TABLE>
<TABLE>
<CAPTION>
748 & 855
SPRINGDALE
FIVE EVES DRIVE TA PROPERTIES EMMES PROPERTIES DRIVE 1974 SPROUL ROAD
----------------- ------------- ----------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents................... $ 103 $ 2,053 $ 2,570 $ 414 $ 354
Tenant reimbursements........ 12 299 1,130 -- 54
Other........................ -- 6 2 -- --
------ ------------- ------- ------ -------
Total revenue.............. 115 2,358 3,702 414 408
------ ------------- ------- ------ -------
Operating Expenses:
Interest (i)................. 75 1,241 2,049 171 --
Depreciation and amortization
(ii)....................... 32 530 875 73 61
Property expenses............ 45 698 1,332 99 225
General and administrative... -- -- -- -- --
------ ------------- ------- ------ -------
Total operating expenses... 152 2,469 4,256 343 286
------ ------------- ------- ------ -------
Income (loss) before minority
interest..................... (37) (111) (554) 71 122
Minority interest in (income)
loss......................... 1 1 9 (1) (2)
------ ------------- ------- ------ -------
Income (loss) before uncombined
entity....................... (36) (110) (545) 70 120
Equity in income of management
company (iii)................ -- 41 27 10 10
------ ------------- ------- ------ -------
Net income (loss).............. (36) (69) (518) 80 130
Income allocated to Preferred
Shares....................... -- -- -- -- --
------ ------------- ------- ------ -------
Income (loss) allocated to
Common Shares................ $ (36) $ (69) $ (518) $ 80 $ 130
------ ------------- ------- ------ -------
------ ------------- ------- ------ -------
</TABLE>
<TABLE>
<CAPTION>
MARCH 1997 JULY 1997 BERWYN PARK GREEN HILLS TOTAL OTHER 1997
OFFERING OFFERING PROPERTIES PROPERTIES (iv) EVENTS
----------------- ------------- ----------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents................... $ -- $ -- $ 2,128 $ 3,936 $ 13,223
Tenant reimbursements........ -- -- 321 -- 1,957
Other........................ -- -- 31 -- 64
------ ------------- ------- ------ -------
Total revenue.............. -- -- 2,480 3,936 15,244
------ ------------- ------- ------ -------
Operating Expenses:
Interest (i)................. (91) (5,979) -- 595 (1,580)
Depreciation and amortization
(ii)....................... -- -- 598 642 3,142
Property expenses............ -- -- 916 1,775 5,933
General and administrative... -- -- -- -- --
------ ------------- ------- ------ -------
Total operating expenses... (91) (5,979) 1,514 3,012 7,495
------ ------------- ------- ------ -------
Income (loss) before minority
interest..................... 91 5,979 966 924 7,749
Minority interest in (income)
loss......................... 36 (27) (17) (14) (19)
------ ------------- ------- ------ -------
Income (loss) before uncombined
entity....................... 127 5,952 949 910 7,730
Equity in income of management
company (iii)................ -- -- 82 (57) 113
------ ------------- ------- ------ -------
Net income (loss).............. 127 5,952 1,031 853 7,843
Income allocated to Preferred
Shares....................... -- -- -- -- --
------ ------------- ------- ------ -------
Income (loss) allocated to
Common Shares................ $ 127 $ 5,952 $ 1,031 $ 853 $ 7,843
------ ------------- ------- ------ -------
------ ------------- ------- ------ -------
</TABLE>
(i) Pro forma interest expense is presented assuming an effective rate of 7.5%
on borrowings under the Company's revolving credit facility. The
adjustment for the Columbia Acquisition Properties also reflects an
effective interest rate of 9.5% on assumed debt. The
F-11
<PAGE>
adjustments for the March 1997 Offering and the July 1997 Offering
represent interest savings related to the payoff of $7 million and
$160.8 million, respectively, of credit facility borrowings at an
effective rate of 7.5%.
(ii) Pro forma depreciation expense is presented assuming an 80% building and
20% land allocation of the purchase price and capitalized closing costs
and assumes a useful life of 25 years.
(iii) Pro forma equity in income of management company is presented based on
management fees less incremental costs estimated to be incurred.
(iv) Pro forma property expenses exclude $333,000 from historical amounts. Such
amount represents expected salary savings.
(E) Reflects the pro forma statements of operations of 500 and 501 Office
Center Drive for the six months ended June 30, 1997 and for the year ended
December 31, 1996. All amounts represent historical operations except for the
pro forma adjustments noted:
<TABLE>
<CAPTION>
500 AND 501 OFFICE CENTER DRIVE
----------------------------------
<S> <C> <C>
YEAR ENDED
DECEMBER 31, SIX MONTHS ENDED
1996 JUNE 30, 1997
------------- -------------------
Revenue:
Base rents.................................................................... $ 1,754 $ 882
Tenant reimbursements......................................................... 1,358 733
Other......................................................................... 43 38
------ -----
Total revenue............................................................... 3,155 1,653
Operating Expenses:
Interest (i).................................................................. 1,125 558
Depreciation and amortization (ii)............................................ 547 271
Property expenses............................................................. 1,561 774
General and administrative.................................................... -- --
------ -----
Total operating expenses.................................................... 3,233 1,603
Income (loss) before minority interest.......................................... (78) 50
Minority interest in (income) loss.............................................. -- (1)
Income (loss) before uncombined entity.......................................... (78) 49
Equity in income of management company (iii).................................... 76 38
------ -----
Net income (loss)............................................................... (2) 87
Income allocated to Preferred Shares............................................ -- --
------ -----
Income (loss) allocated to Common Shares........................................ $ (2) $ 87
------ -----
------ -----
</TABLE>
(i) Pro forma interest expense is presented assuming an effective rate of 7.5%
on $15 million of borrowings under the Company's revolving credit
facility.
(ii) Pro forma depreciation expense is presented assuming an 80% building and
20% land allocation of the purchase price and capitalized closing costs
and assumes a useful life of 25 years.
(iii) Pro forma equity in income of management company is presented based on
management fees less incremental costs estimated to be incurred.
F-12
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Brandywine Realty Trust:
We have audited the combined statement of revenue and certain expenses of 500
& 501 Office Center Drive, described in Note 1, for the year ended December
31, 1996. This financial statement is the responsibility of management. Our
responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
The combined statement of revenue and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the Current Report on Form 8-K of
Brandywine Realty Trust as described in Note 1 and is not intended to be a
complete presentation of 500 & 501 Office Center Drive's revenue and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenue and certain expenses of the 500 & 501
Office Center Drive for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
August 21, 1997
F-13
<PAGE>
500 & 501 OFFICE CENTER DRIVE
COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
<TABLE>
<CAPTION>
FOR THE FOR THE SIX
YEAR ENDED MONTHS ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ -------------
<S> <C> <C>
(UNAUDITED)
-------------
REVENUE:
Base rents (Note 2)............................................................... $1,754,000 $ 882,000
Tenant reimbursements............................................................. 1,358,000 733,000
Other............................................................................. 43,000 38,000
------------ -------------
Total revenue................................................................. 3,155,000 1,653,000
------------ -------------
CERTAIN EXPENSES:
Maintenance and other operating expenses.......................................... 694,000 343,000
Utilities......................................................................... 605,000 301,000
Real estate taxes................................................................. 262,000 130,000
------------ -------------
Total certain expenses........................................................ 1,561,000 774,000
------------ -------------
REVENUE IN EXCESS OF CERTAIN EXPENSES............................................... $1,594,000 $ 879,000
------------ -------------
------------ -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-14
<PAGE>
500 & 501 OFFICE CENTER DRIVE
NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 1996
1. BASIS OF PRESENTATION:
On August 15, 1997, Brandywine Operating Partnership, L.P. (the "Operating
Partnership"), a limited partnership of which Brandywine Realty Trust (the
"Company") is the sole general partner, acquired 500 & 501 Office Center
Drive, a portfolio of two office buildings located in Fort Washington,
Pennsylvania. 500 & 501 Office Center Drive have an aggregate net rentable
area of approximately 211,000 square feet which was 98% leased as of December
31, 1996. The net purchase price for 500 & 501 Office Center Drive was $16.9
million.
The combined statements of revenue and certain expenses reflect the
operations of 500 & 501 Office Center Drive. These combined statements of
revenue and certain expenses are to be included in the Company's Current
Report on Form 8-K, pursuant to the rules and regulations of the Securities
and Exchange Commission.
The accounting records of 500 & 501 Office Center Drive are maintained on a
cash basis. Adjusting entries have been made to present the accompanying
financial statements in accordance with generally accepted accounting
principles. The accompanying financial statements exclude certain expenses
such as interest, depreciation and amortization, professional fees, and other
costs not directly related to the future operations of 500 & 501 Office
Center Drive.
The combined statement of revenue and certain expenses for the six months
ended June 30, 1997 is unaudited. In the opinion of management, all
adjustments (consisting solely of normal recurring adjustments) necessary to
present fairly the revenue and certain expenses of 500 & 501 Office Center
Drive for the six months ended June 30, 1997 have been included. The combined
revenue and certain expenses for such interim period is not necessarily
indicative of the results for the full year.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities which affect the
reported amounts of revenue and expenses during the reporting period. The
ultimate results could differ from those estimates.
2. OPERATING LEASES:
Base rents for the year ended December 31, 1996 and for the six months ended
June 30, 1997, include straight-line adjustments for rental revenue increases
in accordance with generally accepted accounting principles. The aggregate
rental revenue decreases resulting from the straight-line adjustments for the
year ended December 31, 1996 and the six months ended June 30, 1997 were
($25,000), and ($19,000), (unaudited), respectively.
Advanta Corporation's minimum rental payments were $419,000 and were greater
than 10% of the total base rents in 1996.
F-15
<PAGE>
The 500 & 501 Office Center Drive is leased to tenants under operating leases
with expiration dates extending to the year 2002. Future minimum rentals
under noncancelable operating leases, excluding tenant reimbursements of
operating expenses as of December 31, 1996, are as follows:
1997.......................... 1,914,000
1998.......................... 1,273,000
1999.......................... 606,000
2000.......................... 330,000
2001.......................... 123,000
Thereafter.................... 3,000
Certain leases also include provisions requiring tenants to reimburse 500 & 501
Office Center Drive for management costs and other operating expenses up to
stipulated amounts.
F-16
<PAGE>
EXHIBIT 3.1
BRANDYWINE REALTY TRUST
ARTICLES OF AMENDMENT
THIS IS TO CERTIFY THAT:
FIRST: The Declaration of Trust of Brandywine Realty Trust, a Maryland
real estate investment trust (the "Trust"), is hereby amended by deleting
existing Section 6.1 of the Declaration of Trust in its entirety and
substituting in lieu thereof the following new section to read as follows:
SECTION 6.1. Authorized Shares. The total number of shares of
beneficial interest which the Trust is authorized to issue is
105,000,000, of which 5,000,000 shares shall be preferred shares, par
value $.01 per share ("Preferred Shares"), and 100,000,000 shares
shall be common shares, $.01 par value per share ("Common Shares").
The Board of Trustees, without any action by the Shareholders of the
Trust, may amend the Declaration of Trust from time to time to
increase or decrease the aggregate number of shares of beneficial
interest or the number of shares of beneficial interest of any class
that the Company is authorized to issue."
SECOND: Pursuant to Section 8-203(a)(7) of the Corporations and
Associations Article of the Annotated Code of Maryland, the amendment to the
Declaration of Trust of the Trust as hereinabove set forth has been duly
approved by the Board of Trustees of the Trust.
THIRD: The total number of shares of beneficial interest which the Trust
had authority to issue immediately prior to this amendment was 30,000,000 shares
of beneficial interest, consisting of 25,000,000 common shares of beneficial
interest, $.01 par value per share, and 5,000,000 preferred shares of beneficial
interest, $.01 par value per share. The aggregate par value of all shares of
beneficial interest having par value was $300,000.
<PAGE>
The total number of shares of beneficial interest which the Trust has
authority to issue pursuant to the amendment described herein is 105,000,000
shares of beneficial interest, consisting of 100,000,000 common shares of
beneficial interest, $.01 par value per share, and 5,000,000 preferred shares of
beneficial interest, $.01 par value per share. The aggregate par value of all
shares of beneficial interest having par value is $1,050,000.
FOURTH: The undersigned President acknowledges these Articles of Amendment
to be the trust act of the Trust and, as to all matters or facts required to be
verified under oath, the undersigned President acknowledges that to the best of
his knowledge, information and belief, these matters and facts are true in all
material respects and that this statement is made under the penalties for
perjury.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the Trust has caused these Articles of Amendment to be
signed in its name and on its behalf by its President and attested to by its
Secretary on this 4th day of September, 1997.
ATTEST: BRANDYWINE REALTY TRUST
/s/ Mark S. Kripke By: /s/ Gerard H. Sweeney (SEAL)
- ------------------------ ------------------------
Mark S. Kripke Gerard H. Sweeney
Secretary and President and
Chief Financial Officer Chief Executive Officer
<PAGE>
EXHIBIT 10.1
SECOND AMENDED AND RESTATED
PARTNERSHIP AGREEMENT
OF
BRANDYWINE REALTY SERVICES PARTNERSHIP
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 - DEFINED TERMS 2
ARTICLE 2 - ORGANIZATIONAL MATTERS 4
Section 2.1. Organization 4
Section 2.2. Name 4
Section 2.3. Principal Office 4
Section 2.4. Purpose 4
Section 2.5. Powers 4
Section 2.6. Term 4
ARTICLE 3 - PARTNERS AND CAPITAL CONTRIBUTIONS 4
Section 3.1. Partners and Capital Contributions 4
Section 3.2. Percentage Interests 5
Section 3.3. Additional Capital Contributions 5
Section 3.4. Liability of Partners 5
ARTICLE 4 - DISTRIBUTIONS AND ALLOCATIONS 5
Section 4.1. Requirement and Characterization of Distributions 5
Section 4.2. Allocations For Capital Account Purposes 5
Section 4.3. Allocations Upon Changes in Percentage Interests 6
Section 4.4. Code Section 754 Adjustment 6
ARTICLE 5 - RIGHTS AND DUTIES OF THE PARTNERS 6
Section 5.1. Management of Partnership 6
Section 5.2. Voting by Partnership 7
Section 5.3. Outside Activities of the Partners 7
Section 5.4. Contracts with Affiliates 8
ARTICLE 6 - TRANSFER OF A PARTNERSHIP INTEREST;
ADDITIONAL PARTNERS 8
Section 6.1. Transfer of Partnership Interest 8
Section 6.2. Additional Partners 9
Section 6.3. Withdrawal 10
ARTICLE 7 - TAX MATTERS 10
<PAGE>
Section 7.1. Preparation of Tax Returns 10
Section 7.2. Tax Elections 10
Section 7.3. Tax Matters Partner 10
ARTICLE 8 - DISSOLUTION, LIQUIDATION AND TERMINATION
OF THE PARTNERSHIP 12
Section 8.1. Dissolution 12
Section 8.2. Winding Up 13
Section 8.3. Deemed Distribution and Recontribution 14
Section 8.4. Notice of Dissolution 14
ARTICLE 9 - RECORDS AND ACCOUNTING 15
ARTICLE 10 - AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS 15
Section 10.1. Amendments 15
Section 10.2. Meetings of the Partners 15
ARTICLE 11 - MISCELLANEOUS 16
Section 11.1. Notice 16
Section 11.2. Governing Law; Separability of Provisions 16
Section 11.3. Entire Agreement 16
Section 11.4. Headings, etc 16
Section 11.5. Binding Provisions 16
Section 11.6. No Waiver 17
Section 11.7. Further Action 17
Section 11.8. Creditors 17
Section 11.9. Third Party Beneficiaries 17
<PAGE>
SECOND AMENDED AND RESTATED
PARTNERSHIP AGREEMENT OF
BRANDYWINE REALTY SERVICES PARTNERSHIP
THIS SECOND AMENDED AND RESTATED PARTNERSHIP AGREEMENT OF BRANDYWINE
REALTY SERVICES PARTNERSHIP (this "Agreement") is entered into as of
August 1, 1997 between Anthony A. Nichols, Sr. ("Nichols") and Gerard H.
Sweeney ("Sweeney"), each a resident of Pennsylvania, and amends and restates
in its entirety the Partnership Agreement of Brandywine Realty Services
Partnership (the "Partnership") dated August 22, 1996 (the "Original
Agreement"), previously amended and restated in its entirety on October 30,
1996, but effective as of August 22, 1996, by an Amended and Restated
Partnership Agreement (the "First Amendment").
BACKGROUND
On August 22, 1996, Nichols, Sweeney, John P. Gallagher
("Gallagher") and Brian F. Belcher ("Belcher") entered into the Original
Agreement, and on October 30, 1996, Nichols, Sweeney, Gallagher and Belcher
entered into the First Amendment.
On April 1, 1997, the entire interest of Gallagher in the
Partnership was redeemed for $25.00, and on August 1, 1997, the entire
interest of Belcher in the Partnership was redeemed for $25.00. Accordingly,
as of the date hereof, the Partners in the Partnership consist of Nichols and
Sweeney (hereafter sometimes referred to as the "Original Partners"), and
they are entering into this Agreement in order to amend and restate in its
entirety the First Amendment.
The Original Partners are each executive officers of Brandywine
Realty Trust, a Maryland real estate investment trust ("BRT"). The Original
Partners desire to continue the Partnership as a general partnership under
the laws of the Commonwealth of Pennsylvania to hold title to 95% of the
common stock of Brandywine Realty Services Corporation, a Pennsylvania
corporation (the "Company"), the remaining common stock of which and all of
the preferred stock of which is held by Brandywine Operating Partnership,
L.P. upon the terms and subject to the conditions set forth below.
NOW THEREFORE, in consideration of the premises and the covenants
herein contained, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:
1
<PAGE>
AGREEMENT
ARTICLE 1
DEFINED TERMS
The following definitions shall for all purposes, unless
otherwise clearly indicated to the contrary, be applied to the
terms used in this Agreement.
"Administrative Partner" means the Partner elected by a
majority in interest of the Partners to administer the business
affairs of the Partnership (including, without limitation, to cause
the Partnership to pay its bills as and when due and to file all
reports and returns, including income tax returns, required to be
filed by the Partnership).
"Affiliate" means, with respect to any Person, (i) any
Person directly or indirectly controlling, controlled by or under
common control with such Person, (ii) any Person owning or
controlling ten percent or more of the outstanding voting interests
of such Person, (iii) any Person of which such Person owns or
controls ten percent or more of the voting interests or (iv) any
officer, director, general partner or trustee of such Person or any
Person referred to in clauses (i), (ii), and (iii) above.
"Agreement" means this Partnership Agreement, as
originally executed and as amended, modified, supplemented, or
restated from time to time, as the context requires.
"Capital Account" means the Capital Account maintained
for a Partner in accordance with the rules of Regulation
Section 1.704-1(b)(2)(iv).
"Capital Contribution" means, with respect to any
Partner, any cash, cash equivalents or the net agreed value of
property which such Partner contributes or is deemed to contribute
to the Partnership pursuant to Sections 3.1 and 3.3 hereof.
"Code" means the Internal Revenue Code of 1986, as
amended and in effect from time to time, as interpreted by the
applicable regulations thereunder. Any reference herein to a
specific section or sections of the Code shall be deemed to include
a reference to any corresponding provision of future law.
"Fiscal Year" means the fiscal year ending on the 31st
day of December of each calendar year.
"IRS" means the Internal Revenue Service, which
administers the internal revenue laws of the United States (or any
successor entity thereto).
2
<PAGE>
"Net Income" means, for any taxable period, the excess,
if any, of the Partnership's items of income and gain for such
taxable period over the Partnership's items of loss and deduction
for such taxable period.
"Net Loss" means, for any taxable period, the excess, if
any, of the Partnership's items of loss and deduction for such
taxable period over the Partnership's items of income and gain for
such taxable period.
"Partner(s)" means any Person that becomes a Partner of
the Partnership as provided herein.
"Partnership" means the partnership governed hereby, as
such partnership may from time to time be constituted.
"Partnership Act" means the Uniform Partnership Act of
the Commonwealth of Pennsylvania, set forth as Chapter 83 of Title
15 of the Pennsylvania Consolidated Statutes, as amended from time
to time.
"Partnership Interest" means the entire ownership
interest of a Partner in the Partnership at any particular time,
including the right of such Partner to any and all benefits to
which a Partner may be entitled as provided in this Agreement
together with the obligations of such Partner to comply with the
terms and provisions of this Agreement.
"Percentage Interest" means, as to a Partner, its
interest in the Partnership as specified in Section 3.2 and set
forth on Exhibit A hereto.
"Person" means any individual, partnership, corporation,
unincorporated organization or association, trust or other entity.
"Regulations" means the Income Tax Regulations
promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding
regulations).
"Subsidiary" means, with respect to any Person, any
corporation or other entity of which a majority of (i) the voting
power of the voting equity securities or (ii) the outstanding
equity interests is owned, directly or indirectly, by such Person.
3
<PAGE>
"Transfer" refers to a transaction in which a Partner
purports to assign its Partnership Interest to another Person and
includes a sale, assignment, gift, pledge, hypothecation,
encumbrance, mortgage, exchange, or any other disposition by law or
otherwise.
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1 Organization.
The Partners hereby agree to organize the Partnership as
a general partnership pursuant to the provisions of the Partnership
Act and upon the terms and conditions set forth in this Agreement.
Section 2.2 Name.
The name of the Partnership shall be Brandywine Realty
Services Partnership.
Section 2.3 Principal Office.
The principal office of the Partnership shall be located
at 16 Campus Boulevard, Newtown Square, Pennsylvania 19073.
Section 2.4 Purpose.
The sole purpose of the Partnership is to purchase and
hold 95% of the common stock of the Company.
Section 2.5 Powers.
The Partnership shall have all lawful powers to take any
and all actions and to engage in any and all activities and
transactions as may be necessary or desirable to carry out its
purpose.
Section 2.6 Term.
The term of the Partnership shall commence upon the
execution of this Agreement and shall continue until December 31,
2096, unless it is dissolved sooner pursuant to the provisions of
Article 8 or as otherwise provided by law.
4
<PAGE>
ARTICLE 3
PARTNERS AND CAPITAL CONTRIBUTIONS
Section 3.1 Partners and Capital Contributions. The Partners
shall consist of the Original Partners and such additional Partners
as may be designated from time to time (less such Partners who may
withdraw or who otherwise may transfer their respective Partnership
Interests) pursuant to the provisions of Article 6. Each Original
Partner has made a $25.00 Capital Contribution in cash.
The initial Capital Contributions of each Partner shall
be set forth on Exhibit A hereto.
Section 3.2 Percentage Interests.
The Percentage Interests of each of the Original Partners
shall be equal to 50%. The Percentage Interest of each Partner is
set forth on Exhibit A hereto.
Section 3.3 Additional Capital Contributions.
From time to time, additional Capital Contributions by
the Partners may be necessary to pay the expenses of the
Partnership. In such event, each Partner shall pay its respective
share of such additional Capital Contributions, based on its
respective Percentage Interest, within 20 days of receipt of notice
from the Administrative Partner that such additional Capital
Contribution is required; provided that, in no event shall the
Administrative Partner be entitled to require the Partners to make
additional Capital Contributions of more than $1,000 in the
aggregate, in any Fiscal Year.
Section 3.4 Liability of Partners.
All Partners are jointly and severally liable for all debts
and obligations of the Partnership.
ARTICLE 4
DISTRIBUTIONS AND ALLOCATIONS
Section 4.1 Requirement and Characterization of Distributions.
The Partners will receive quarterly distributions of available
cash after setting aside any amounts necessary to defray potential
or actual liabilities or expenses of the Partnership. All
distributions shall be made to the Partners in accordance with
their respective Percentage Interests.
5
<PAGE>
Section 4.2 Allocations For Capital Account Purposes.
For purposes of maintaining the Capital Accounts and in
determining the rights of the Partners among themselves, the
Partnership's items of income, gain, loss and deduction shall be
allocated among the Partners for each Fiscal Year (or portion
thereof) in accordance with their respective Percentage Interests.
Section 4.3 Allocations Upon Changes in Percentage Interests.
In the event of any change in a Partner's Percentage Interest,
such Partner's distributive share of all items of income, gain,
loss, deduction or credit for the taxable year in which such change
occurs shall be allocated by taking into account the portion of the
year before and after such change or in such other manner as may be
required by Section 706 of the Code.
Section 4.4 Code Section 754 Adjustment.
To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Section 734(b) or 743(b) of the Code
is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, the
amount of such adjustment to the Capital Accounts shall be treated
as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases such basis), and such
item of gain or loss shall be specially allocated to the Partners
in a manner consistent with the manner in which their Capital
Accounts are required to be adjusted pursuant to such Section of
the Regulations.
ARTICLE 5
RIGHTS AND DUTIES OF THE PARTNERS
Section 5.1 Management of Partnership.
Except as otherwise expressly provided in this Agreement, the
Partners hereby agree to do on behalf of the Partnership all things
which are necessary or appropriate to manage the Partnership's
affairs and fulfill the purposes of the Partnership. In
furtherance and not in limitation of the foregoing, the Partners
shall, as necessary or appropriate from time to time, select an
Administrative Partner, and if determined to be necessary or
desirable by the Partners, an alternative Administrative Partner
who shall fulfil the duties of the Administrative Partner from time
to time when the Administrative Partner is unable, for any reason,
to do so. Notwithstanding any other provision of this Agreement,
the Administrative Partner shall have no right or power to cause
the Partnership to acquire or dispose of any assets or to vote any
securities held by the Partnership except in accordance with the
express written direction of a majority in interest of the Partners
pursuant to Section 5.2 hereof.
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Section 5.2 Voting by Partnership.
All decisions requiring the approval of the majority in
interest of the Partners, including without limitation, decisions
regarding the manner in which to vote the stock of the Company held
by the Partnership shall be decided by the Administrative Partner
in accordance with the instructions received by the Partnership
from a majority in interest of the Partners. The Administrative
Partner shall provide each Partner with adequate prior written
notice of any matter with respect to which the Partnership will be
required to decide, including without limitation, decisions
regarding the manner in which to vote the stock of the Company,
together with any information necessary to permit such Partner to
provide instruction in a reasonably informed manner. No Partner
shall grant to any other partner or Person a proxy, power of
attorney or other similar instrument permitting such other Partner
or Person to render instructions as to the manner in which such
Partner desires the Partnership to decide, including without
limitation, decisions regarding the manner in which to vote the
stock of the Company. Each Partner represents, warrants, and
covenants with the Partnership and each other Partner that, in
directing the Administrative Partner regarding decisions requiring
the approval of the majority in interest of the Partners, including
without limitation, decisions regarding the manner in which to vote
the stock of the Company held by the Partnership, such Partner is
acting and shall act solely for its own account and not as an agent
or attorney for or otherwise under the direction or control of any
other Person (including, without limitation, any other Partner).
Section 5.3 Outside Activities of the Partners.
Subject to any agreements entered into by a Partner or its
Affiliates with the Partnership and/or the Company, any Partner and
any officer, director, employee, agent, trustee, Affiliate or
shareholder of any Partner shall be entitled to and may have
business interests and engage in business activities in addition to
those relating to the Partnership, except for any such business
interests and activities that are in direct competition with the
Partnership and/or the Company. Neither the Partnership nor any
other Partner shall have any rights by virtue of this Agreement in
any business venture of any Partner. None of the Partners nor any
other Person shall have any rights by virtue of this Agreement or
the partnership relationship established hereby in any business
ventures of any other Person, and such Partner shall have no
obligation pursuant to this Agreement to offer any interest in any
such business ventures to the Partnership, any Partner or any other
Person even if such opportunity is of a character which, if
presented to the Partnership, any Partner or such other Person,
could be taken by such Person.
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Section 5.4 Contracts with Affiliates.
Except as expressly permitted in this Agreement, no Partner
nor any of its Affiliates shall sell, transfer or convey any
property to, or purchase any property from, the Partnership,
directly or indirectly, except pursuant to transactions that are on
terms that are fair and reasonable and no less favorable to the
Partnership than would be obtained from an unaffiliated third
party.
ARTICLE 6
TRANSFER OF A PARTNERSHIP INTEREST;
ADDITIONAL PARTNERS
Section 6.1 Transfer of Partnership Interest.
In the event that any Partner at any time shall desire to
Transfer all or any portion of such Partner's Partnership Interest
or any right or interest therein, such Partner (the "Transferring
Partner") shall first give written notice of intention to Transfer,
in the manner hereinafter provided (the "Transfer Notice"), to the
other Partners. Such notice must specify the full name and address
of the proposed transferee, the Percentage Interest to be
transferred (the "Offered Interest"), the price to be paid by the
proposed transferee for the Offered Interest, the terms under which
the Transfer is to be made, and a statement signed by the proposed
transferee that the terms specified are a bona fide offer to
purchase and that the proposed transferee has the financial and
other capability necessary to complete the transaction as proposed.
The Offered Interest shall be subject to the following rights and
options by the other Partners and by the Company.
(i) For thirty (30) days following receipt by
the other Partners of a Transfer Notice from the Transferring
Partner, the other Partners (referred to as the "Offeree Partners")
shall have the right and option to elect by notice to the
Transferring Partner and to the Company to elect to purchase the
Offered Interest or any portion thereof. In the event that more
than one Offeree Partner elects to purchase the Offered Interest,
then each such Offeree Partner shall purchase its pro rata share of
the Offered Interest (based on their respective Partnership
Interests (the "Pro Rata Portion")). The purchase price for the
Offered Interest (the "Purchase Price") shall be the purchase price
offered to the Transferring Partner by the prospective third party
purchaser.
(ii) If the Offeree Partners do not elect to
exercise their right and option to purchase the entire Offered
Interest within said thirty (30) day period, then during the
thirty-first (31st) through sixtieth (60th) days following receipt
of such notice by the Partners, the Company shall have the right
and option to elect by notice sent to the Transferring Partner to
purchase any remaining portion of the Offered Interest subject to
the Transfer Notice (but not less than all of the remaining portion
of the Offered Interest) at a price equal to the Purchase Price.
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(iii) If the Company does not elect to
exercise its right and option to purchase all the Partnership
Interests specified in said notice with said sixty (60) day period,
the Transferring Partner may transfer the Offered Interest to the
proposed transferee at the price and on the terms specified in said
Transfer Notice at any time after said sixty (60) day period but
within ninety (90) days from the date said notice is received by
the Offeree Partners. The transferee will receive and hold said
Partnership Interests subject to this right of first refusal, and
shall be required to become a party to this Agreement. Any
Transfer of Partnership Interests specified in said Transfer Notice
after the end of said ninety (90) day period or any change in the
terms of the sale from the terms set forth in the original notice
shall require a new notice of intention to transfer be given to the
Partners and the Company and shall again give rise to their
respective rights and options to purchase provided in this Section
6.1.
(iv) In the event that the Company shall elect
to exercise its rights to purchase a Partnership Interest under
Section 6.1(ii), the Company shall have the right, and the Partners
shall use their best efforts to cause the Company, to assign its
rights to any other Person who would be permitted to be a Partner
under Section 6.2.A.
Section 6.2 Additional Partners.
A. The admission of a new Partner to the Partnership
shall require the consent of the Partners who hold in the aggregate
80% of the Percentage Interests in the Partnership (in their sole
and absolute discretion). The admission of any Person as an
additional Partner shall become effective on the date upon which
the name of such Person is recorded on the books and records of the
Partnership.
B. In connection with the admission to the Partnership
of any Partner pursuant to Section 6.2.A hereof, the Partners shall
take all steps necessary and appropriate under the Act to amend the
records of the Partnership and, if necessary, to prepare as soon as
practical, an amendment to this Agreement memorializing such
admission.
Section 6.3 Withdrawal.
No Partner shall have the right to withdraw from the
Partnership (other than as a result of a transfer of the Partner's
Partnership Interest in accordance with this Article VI).
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In the event that a Partner withdraws from the
Partnership in violation hereof, the remaining Partners agree to
perform and continue the Partnership in accordance with the terms
of the Agreement.
ARTICLE 7
TAX MATTERS
Section 7.1 Preparation of Tax Returns.
The Administrative Partner shall arrange for the preparation
and timely filing of all returns of Partnership income, gains,
deductions, losses and other items required of the Partnership for
federal and state income tax purposes and shall use all reasonable
efforts to furnish, within 90 days of the close of each taxable
year, the tax information reasonably required by Partners for
federal and state income tax reporting purposes.
Section 7.2 Tax Elections.
Except as otherwise provided herein, the Partners appoint the
Administrative Partner to determine whether to make any available
election pursuant to the Code; provided, however, that the
Administrative Partner shall make the election under Section 754 of
the Code in accordance with applicable regulations thereunder. The
Administrative Partner shall have the right to seek to revoke any
such election (including, without limitation, the election under
Section 754 of the Code) upon such Partner's determination in its
sole and absolute discretion that such revocation is in the best
interests of the Partners.
Section 7.3. Tax Matters Partner.
A. The Partners appoint the Administrative Partner to be the
"tax matters partner" of the Partnership for federal income tax
purposes. Pursuant to Section 6223(c)(3) of the Code, upon receipt
of notice from the IRS of the beginning of an administrative
proceeding with respect to the Partnership, the tax matters partner
shall furnish the IRS with the name, address and profit interest of
each Partner; provided, however, that such information is provided
to the Partnership by the Partners.
B. The tax matters partner is authorized, but not required:
(1) to enter into any settlement with the IRS with
respect to any administrative or judicial proceedings for the
adjustment of partnership items required to be taken into account
by a Partner for income tax purposes (such administrative
proceedings being referred to as a "tax audit" and such judicial
proceedings being referred to as "judicial review"), and in the
settlement agreement the tax matters partner may expressly state
that such agreement shall bind all Partners, except that such
settlement agreement shall not bind any Partner (i) who (within the
time
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prescribed pursuant to the Code and Regulations) files a
statement with the IRS providing that the tax matters partner shall
not have the authority to enter into a settlement agreement on
behalf of such Partner or (ii) who is a "notice partner" (as
defined in Section 6231 of the Code) or a member of a "notice
group" (as defined in Section 6223(b)(2) of the Code);
(2) in the event that a notice of a final
administrative adjustment at the Partnership level of any item
required to be taken into account by a Partner for tax purposes (a
"final adjustment") is mailed to the tax matters partner, to seek
judicial review of such final adjustment, including the filing of a
petition for readjustment with the Tax Court or the United States
Claims Court, or the filing of a complaint for refund with the
District Court of the United States for the district in which the
Partnership's principal place of business is located;
(3) to intervene in any action brought by any other
Partner for judicial review of a final adjustment;
(4) to file a request for an administrative
adjustment with the IRS at any time and, if any part of such
request is not allowed by the IRS, to file an appropriate pleading
(petition or complaint) for judicial review with respect to such
request;
(5) to enter into an agreement with the IRS to
extend the period for assessing any tax which is attributable to
any item required to be taken into account by a Partner for tax
purposes, or an item affected by such item; and
(6) to take any other action on behalf of the
Partners of the Partnership in connection with any tax audit or
judicial review proceeding to the extent permitted by applicable
law or regulations.
The taking of any action and the incurring of any expense
by the tax matters partner in connection with any such proceeding,
except to the extent required by law, is a matter in the sole and
absolute discretion of the tax matters partner.
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C. The tax matters partner shall receive no
compensation for its services. All third party costs and expenses
incurred by the tax matters partner in performing his duties as
such (including legal and accounting fees) shall be borne by the
Partnership. Nothing herein shall be construed to restrict the
Partnership from engaging an accounting firm to assist the tax
matters partner in discharging his duties hereunder, so long as the
compensation paid by the Partnership for such services is
reasonable.
ARTICLE 8
DISSOLUTION, LIQUIDATION AND TERMINATION
OF THE PARTNERSHIP
Section 8.1. Dissolution.
A. The Partnership shall be dissolved upon the happening of
any of the following events ("Liquidating Events"):
(1) the expiration of its term under Section 2.6
hereof;
(2) the sale or other disposition of all or
substantially all of the assets of the Partnership;
(3) a final and non-appealable judgment is entered
by a court with appropriate jurisdiction ruling that a partner is
bankrupt or insolvent, or a final and non-appealable order for
relief is entered by a court with appropriate jurisdiction against
the Partner, in each case under any federal or state bankruptcy or
insolvency laws or now or hereafter in effect; or
(4) a termination otherwise required by operation
of law.
B. Dissolution of the Partnership shall be effective on
the day on which the event occurs giving rise to the dissolution,
but the Partnership shall not terminate until the assets of the
Partnership have been distributed as provided in Section 8.2.
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C. If the Partnership dissolves pursuant to Section
8.1.A(3) or (4), each of the Partners hereby agrees to re-form the
Partnership immediately subsequent to such dissolution on terms
substantially similar to those set forth herein and to continue the
Partnership in accordance with such terms.
Section 8.2. Winding Up.
A. Upon the occurrence of a Liquidating Event, then
unless Section 8.1.C shall be applicable, the Partnership shall
continue solely for the purposes of winding up its affairs in an
orderly manner, liquidating its assets, and satisfying the claims
of its creditors and Partners. A Person elected by Partners
holding in the aggregate 65% of the outstanding interests (the
"Liquidator") shall be responsible for overseeing the winding up
and dissolution of the Partnership and shall take full account of
the Partnership's liabilities and property and, the Partnership
property shall be liquidated as promptly as is consistent with
obtaining the fair value thereof.
B. After adjusting the Capital Accounts of the Partners
for any gains or losses realized or deemed realized with respect to
the disposition of Partnership assets, the assets of the
Partnership shall be paid out by the end of the taxable year in
which the liquidation occurs or, if later, within 90 days of the
date of liquidation in the following order:
(1) First, to the discharge of all the
Partnership's debts and liabilities to creditors other than the
Partners;
(2) Second, to the payment and discharge of all of
the Partnership's debts and liabilities to the Partners;
(3) Third, to fund reserves for contingent and
unforeseen liabilities of the Partnership to the extent deemed
reasonable by the Partners holding 51% of the outstanding
Percentage Interests in the Partnership; and
(4) The balance, if any, to the Partners in
accordance with their Capital Accounts, after giving effect to all
contributions, distributions and allocations for all periods.
C. Notwithstanding the provisions of Section 8.2.B
hereof which require liquidation of the assets of the Partnership,
but subject to the order of priorities set forth therein, if prior
to or upon dissolution of the Partnership, Partners holding 51% of
the outstanding Percentage Interests in the Partnership determine
that an immediate sale of part or all of the Partnership's assets
would be impractical or would cause undue loss to the Partners, the
Partners may defer for a reasonable time the liquidation of any
assets except those necessary to satisfy liabilities of the
Partnership (including to those Partners as creditors) and/or
distribute to the Partners, in lieu of cash, as tenants in common
and in accordance with the provisions of Section 8.2.B hereof,
undivided interests in such
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Partnership assets as the Partners deem not suitable for liquidation. Any
such distributions in kind shall be made only if Partners holding 51% of the
outstanding Percentage Interests in the Partnership believe that such
distributions in kind are in the best interest of the Partners, and shall be
subject to such conditions relating to the disposition and management of such
properties as the Partners deem reasonable and equitable and to any
agreements governing the operation of such properties at such time.
D. Upon dissolution and liquidation of the Partnership, after any
allocations of profits or losses, but before any distributions upon such
liquidation, the Partners shall contribute to the capital of the Partnership
an amount equal to the negative amount, if any, of the Capital Accounts of
the Partners.
E. Any reserves established by the Partners pursuant to Section
8.2.B(3) shall be held for so long as the Partners deem necessary in a
special account maintained for the purpose of paying contingent and
unforeseen liabilities or obligations and shall thereafter be distributed in
accordance with Section 8.2.B.
F. For purposes of this Section 8.2, expenses of dissolution and
liquidation shall be treated as debts and obligations of the Partnership.
Section 8.3. Deemed Distribution and Recontribution.
Notwithstanding any other provisions of this Article 8, in the event
the Partnership is liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Partnership's
Property shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged, and the Partnership's affairs shall not be wound up.
Instead, the Partnership shall be deemed to have distributed the Property in
kind to the Partners, who shall be deemed to have assumed and taken such
property subject to all Partnership liabilities, all in accordance with their
respective Capital Accounts. Immediately thereafter, the Partners shall be
deemed to have recontributed the Partnership property in kind to the
Partnership, which shall be deemed to have assumed and taken such property
subject to all such liabilities.
Section 8.4. Notice of Dissolution.
In the event a Liquidating Event occurs, a Partner appointed by the
Partners shall, within 30 days thereafter, provide written notice thereof to
each of the Partners and to all other parties with whom the Partnership
regularly conducts business.
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ARTICLE 9
RECORDS AND ACCOUNTING
The Administrative Partners shall keep or cause to be
kept proper and complete records and books of account of the
business of the Partnership, including a current and updated list
of the names, business addresses, Capital Contributions, Capital
Accounts, and Percentage Interests of the Partners, which shall be
maintained at the Partnership's principal place of business, and
the Partners or their duly authorized representatives shall have
access to them, upon reasonable notice, at all reasonable times
during business hours. Any records maintained by or on behalf of
the Partnership in the regular course of its business may be kept
on, or be in the form of, punch cards, magnetic tape, photographs,
micrographics or any other information storage device, provided
that the records so maintained are convertible into clearly legible
written form within a reasonable period of time.
ARTICLE 10
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 10.1. Amendments.
Amendments to this Agreement may be proposed by any Partner.
The Partners shall take a written vote on the proposed amendment or
shall call a meeting to vote thereon and to transact any other
business that it may deemed appropriate. For purposes of obtaining
a written vote, the response must be given within a reasonable
specified time, but not less than 10 days, and failure to respond
in such time period shall constitute a vote which is consistent
with the majority of the Partner's recommendations with respect to
the proposal. A proposed amendment shall be adopted and be
effective as an amendment hereto only if it receives the consent of
Partners holding, in the aggregate, 80% of the outstanding
interests in the Partnership.
Section 10.2. Meetings of the Partners.
Meetings of the Partners may be called by any Partner.
Notice of any such meeting shall be given to the Partners not less
than seven days nor more than 30 days prior to the date of such
meeting.
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ARTICLE 11
MISCELLANEOUS
Section 11.1. Notice.
A. Any notice, demand, request or report required or
permitted to be given or made to a Partner under this Agreement
shall be in writing and shall be deemed given or made when
delivered in person or when sent by a recognized overnight courier,
first class United States mail or by other means of written
communication to the Partner at the address set forth in Section
11.1.B hereof.
B. Any notice to Partners shall be sent to the address
of such Partner as set forth on Exhibit A hereto or such other
address as such Partner advises in writing.
Section 11.2. Governing Law; Separability of Provisions.
The laws of the Commonwealth of Pennsylvania shall govern
the validity of this Agreement, the construction of its terms and
interpretation of the rights and duties of the parties. If any
provision of this Agreement shall be held to be invalid, the
remainder of this Agreement shall not be affected thereby.
Section 11.3. Entire Agreement.
This constitutes the entire agreement among the parties; it
supersedes any prior agreement or understandings among them, oral
or written, all of which are hereby canceled.
Section 11.4 Headings, etc.
The headings in this Agreement are inserted for convenience of
reference only and shall not affect interpretation of this
Agreement. Wherever from the context it appears appropriate, each
term stated in either the singular or the plural shall include the
singular and the plural, and pronouns stated in either the
masculine or the neuter gender shall include the masculine, the
feminine and the neuter.
Section 11.5. Binding Provisions.
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The covenants and agreements contained herein shall be
binding upon and inure to the benefit of the heirs, executors,
administrators, successors and assigns of the respective parties
hereto.
Section 11.6. No Waiver.
The failure of any Partner to seek redress for violation,
or to insist on strict performance, of any covenant or condition of
this Agreement shall not prevent a subsequent act which would have
constituted a violation from having the effect of an original
violation.
Section 11.7. Further Action.
The parties shall execute and deliver all documents,
provide all information and take or refrain from taking action as
may be necessary or appropriate to achieve the purposes of this
Agreement.
Section 11.8. Creditors.
None of the provisions of this Agreement shall be for the
benefit of, or shall be enforceable by, any creditor of the
Partnership.
Section 11.9. Third Party Beneficiaries.
No Person but a named party to this Agreement shall have any
rights under or as a result of this Agreement, whether by reason of
such Person's relationship to or ownership of an interest in a
party to this Agreement or otherwise.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
/s/ Anthony A. Nichols, Sr.
---------------------------
Anthony A. Nichols, Sr.
/s/ Gerard H. Sweeney
---------------------------
Gerard H. Sweeney
BRANDYWINE REALTY SERVICES CORPORATION:
(solely for the purpose of joining in
Section 6.1 and Section 6.2 hereof)
By: /s/ Gerard H. Sweeney
---------------------
Title: Gerard H. Sweeney
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EXHIBIT A
INITIAL CAPITAL CONTRIBUTIONS AND PERCENTAGE INTERESTS
Initial Capital Percentage
Name and Address of Partner Contribution Interest
- -----------------------------------------------------------------
Anthony A. Nichols, Sr. $25.00 50%
16 Campus Boulevard
Newtown Square, PA 19073
Gerard H. Sweeney $25.00 50%
16 Campus Boulevard
Newtown Square, PA 19073
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated August 21, 1997 included in this Form 8-K, into the
Company's previously filed Registration Statements on Forms S-3 (File No.
333-20991 and File No. 333-20999) and Forms S-8 (File No. 333-14243 and File
No. 333-28427).
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
September 10, 1997
