<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) May 23, 1997
BRANDYWINE REALTY TRUST
(Exact name of registrant as specified in its charter)
MARYLAND 1-9106 23-2413352
(State or other jurisdiction (Commission file number) (I.R.S. Employer
of incorporation) Identification 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 10 pages
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On May 23, 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 a 10 property portfolio of
office and flex/warehouse space (collectively, the "TA Properties") containing
an aggregate of approximately 687,821 net rentable square feet, as more fully
described below:
1. Oxford Corporate Center, Langhorne, Bucks County, PA,
contains three flex/warehouse buildings aggregating approximately 115,390 net
rentable square feet. As of May 23, 1997, this property was approximately 93.4%
leased to eight tenants. Ecogen, Inc. is the largest tenant.
2. Springhouse Corporate Center, Lower Gwynedd, Montgomery
County, PA, contains two office buildings aggregating approximately 139,467 net
rentable square feet. As of May 23, 1997, this property was 100% leased to 14
tenants. Bisys Plan Services is the largest tenant.
3. Greentree Commons, Evesham Township, Burlington County, NJ,
is a single-story garden office complex aggregating approximately 43,976 net
rentable square feet. As of May 23, 1997, this property was approximately 88.2%
leased to 22 tenants.
4. Highlands Business Center, Westampton, Burlington County,
NJ, contains four flex/warehouse buildings aggregating approximately 388,988 net
rentable square feet. As of May 23, 1997, this property was approximately 97.0%
leased to 11 tenants. The largest tenant is Pepsi Food Services. In addition to
four developed parcels, the property contains eight undeveloped parcels with an
area of approximately 37 acres.
The net purchase price for the TA Properties totaled
$41,625,000. The Operating Partnership paid the purchase price and closing
expenses of approximately $620,000 through a borrowing under the revolving
credit facility previously established with Smith Barney Mortgage Capital Group,
Inc., and NationsBank, N.A.
The sellers of the TA Properties, (i) Advent Realty Limited
Partnership, a Delaware limited partnership, by Advent Realty G.P. Limited
Partnership, a Delaware limited partnership, its general partner, and (ii)
Advent Realty Limited Partnership II, a Delaware limited partnership, by Advent
Realty G.P. II Limited Partnership, a Delaware limited partnership, general
partner and by Advent Real Estate Investment Texas Corporation, a Texas
corporation, general partner (collectively, the "Sellers") are parties
unaffiliated with the Company and the Operating Partnership. The purchase price
for the TA Properties was determined by arm's-length negotiation between the
Company and the Sellers.
-2-
<PAGE>
The table set forth below shows certain information regarding
rental rates and lease expirations for the TA Properties.
Scheduled Lease Expirations
(The TA Properties)
<TABLE>
<CAPTION>
Number of Leases Rentable Square Final Annualized Percentage of Total
Year of Expiring Within Footage Subject Base Rent from the Final Annualized Base
Lease the Year at the to Expiring Leases TA Properties under Rent from the TA Properties
Expiration TA Properties (1) at the TA Properties Expiring Leases (2) Under Expiring Leases
---------- ----------------- -------------------- ------------------- ---------------------
<S> <C> <C> <C> <C>
1997 10 42,372 $ 651,364 11.7%
1998 12 52,542 405,574 7.3%
1999 13 188,693 1,027,218 18.5%
2000 10 84,896 889,084 16.0%
2001 5 58,787 784,630 14.1%
2002 7 195,754 1,606,772 28.9%
2003 - - - -
2004 - - - -
2005 - - - -
2006 and
Thereafter 1 40,188 193,706 3.5%
--------- -------------- ------------------ -------------
Total 58 663,232 $ 5,558,348 100.0%
========= ============== ================== =============
</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.
On May 30, 1997, the Operating Partnership acquired a six
property portfolio of office space (collectively, the "Emmes Properties")
containing an aggregate of approximately 608,008 net rentable square feet, as
more fully described below:
1. Laurel Corporate Center, Mount Laurel, NJ, contains five
office properties (2000, 4000, 9000, 10000 and 15000 Midlantic Drive)
aggregating approximately 495,103 net rentable square feet. As of May 30, 1997,
the properties were approximately 79.8% leased to 21 tenants. Significant
tenants include New Jersey Bell Telephone, QAD, Inc., and Automotive Rentals,
Inc.
2. 7000 Geerdes Boulevard, King of Prussia, PA, is a 112,905
square foot office property. As of May 30, 1997, this property was 100% leased
to Martin Marietta.
-3-
<PAGE>
The net purchase price for the Emmes Properties totaled
$66,200,000. The Operating Partnership paid the purchase price, and closing
expenses of approximately $294,000 as follows: (i) $14,275,000 was paid through
a borrowing under the revolving credit facility previously established with
Smith Barney Mortgage Capital Group, Inc. and NationsBank, N.A. and (ii) the
balance and closing expenses were paid through a borrowing under the Bridge Loan
established with Smith Barney Mortgage Capital Group, Inc. and NationsBank, N.A.
as defined in Item 5 of this filing.
The seller of the Emmes Properties, EDB Property Partners,
L.P. I, a Delaware limited partnership, by Emmes Laurel Property Corp., a
general partner (the "Emmes Seller"), is unaffiliated with the Company and the
Operating Partnership. The purchase price for the Emmes Properties was
determined by arm's-length negotiation between the Company and the Emmes Seller.
The table set forth below shows certain information regarding
rental rates and lease expirations for the Emmes Properties.
Scheduled Lease Expirations
(The Emmes Properties)
<TABLE>
<CAPTION>
Number of Leases Rentable Square Final Annualized Percentage of Total
Year of Expiring Within Footage Subject Base Rent from the Final Annualized Base Rent
Lease the Year at the to Expiring Leases at Emmes Properties under from the Emmes Properties
Expiration Emmes Properties (1) the Emmes Properties Expiring Leases (2) Under Expiring Leases
---------- -------------------- -------------------- ------------------- ---------------------
<S> <C> <C> <C> <C>
1997 2 14,341 $ 194,800 2.8%
1998 3 20,591 255,116 3.6%
1999 4 158,931 1,899,474 27.0%
2000 5 108,323 1,389,319 19.8%
2001 4 76,068 1,042,933 14.8%
2002 2 41,176 790,911 11.3%
2003 - - - -
2004 1 13,956 127,139 1.8%
2005 - - - -
2006 and
Thereafter 1 74,728 1,326,048 18.9%
--------- -------------- ------------------
Total 22 508,114 $ 7,025,740 100.0%
========= ============== ================== =============
</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.
On June 5, 1997, the Operating Partnership acquired two
office buildings, 748 Springdale Road and 855 Springdale Road, located in West
Whiteland Township, Chester County, PA (collectively, "Springdale"), for a net
purchase price of $5,250,000. The buildings contain approximately 64,592 net
rentable square feet. As of June 5, 1997, the buildings were approximately 96%
leased to three tenants. Environmental Resources Management, Inc. is the largest
tenant. The pro forma information contained within this filing does not reflect
the Springdale acquisition.
-4-
<PAGE>
After giving effect to the acquisitions of the TA Properties,
the Emmes Properties and Springdale, the Company's portfolio consists of 69
office properties and 5 industrial properties that contain an aggregate of
approximately 4.2 million net rentable square feet.
-5-
<PAGE>
Item 5. Other Events
On May 12, 1997, the Annual Meeting of Shareholders of the Company was
held and action was taken on four matters described in the Company's proxy
statement prepared in connection with such meeting. A brief description of each
matter and the voting results follows:
1. The election of seven trustees (Anthony A. Nichols, Sr., Gerard H.
Sweeney, Joseph L. Carboni, Richard M. Osborne, Warren V. Musser,
Walter D'Alessio, and Charles P. Pizzi) to the Board of Trustees to
serve a term until the next annual meeting of shareholders and until
his successor is duly elected and qualified. The voting results are
summarized below:
<TABLE>
<CAPTION>
Trustee For Withheld Total
------- --- -------- -----
<S> <C> <C> <C>
Anthony A. Nichols, Sr. 9,017,147 91,455 9,108,602
Gerard H. Sweeney 9,017,552 91,050 9,108,602
Joseph L. Carboni 9,025,247 83,355 9,108,602
Richard M. Osborne 9,005,547 103,055 9,108,602
Warren V. Musser 9,021,786 86,816 9,108,602
Walter D'Alessio 9,016,952 91,650 9,108,602
Charles P. Pizzi 9,022,581 86,021 9,108,602
</TABLE>
2. The conversion of the Company's outstanding Series A convertible
preferred shares of beneficial interest into common shares of
beneficial interest received votes as follows:
6,134,924 Votes in favor
46,758 Votes against
34,119 Abstentions
1,468,064 Broker non-votes
3. An amendment to the Declaration of Trust of the Company to permit the
Board of Trustees to alter the number of authorized shares of
beneficial interest in the Company received votes as follows:
8,722,180 Votes in favor
310,676 Votes against
37,457 Abstentions
1,463,026 Broker non-votes
4. Adoption of the 1997 Long-Term Incentive Plan received votes as
follows:
7,224,607 Votes in favor
1,803,875 Votes against
41,831 Abstentions
1,463,026 Broker non-votes
-6-
<PAGE>
Each of the matters presented above received a sufficient amount of
votes to be approved.
On May 22, 1997, Mr. Joseph L. Carboni died. Mr. Carboni served as a
Trustee of the Company since May 1991. The Company recognizes Mr. Carboni's
valuable contributions and is grateful for his years of service.
Smith Barney Mortgage Capital Group, Inc. and NationsBank, N.A. (the
"Co-Lenders") agreed to loan the Company up to $70,000,000 (the "Bridge Loan")
for the purpose of acquiring the Emmes Properties and other potential
acquisitions. As of the date of this Current Report, the Bridge Loan is
collateralized by first lien mortgages and assignments of rents and leases on
the TA Properties, the Emmes Properties and the Company's recent 5 Eves Drive
and Greentree Executive Campus acquisitions in New Jersey. The Bridge Loan is
also collateralized by certain guaranties and indemnification agreements
supplied by the Company and various subsidiaries.
The Bridge Loan may be funded in up to four separate advances, accrues
interest at a designated Libor rate, and is prepayable without fee or penalty
upon certain designated re-set dates (but not otherwise), and matures on July
30, 1997. The Company expects to refinance the Bridge Loan with an increase
under its existing revolving credit facility.
In the event the Company is unable to refinance the Bridge Loan
through an increase in its existing revolving credit facility, the Company will
be required to refinance the Bridge Loan through an alternative source.
-7-
<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 the TA Properties for the year ended December 31,
1996 and the unaudited statements of revenue and certain
operating expenses for the three months ended March 31, 1997
and March 31, 1996 are included on pages F-13 to F-16.
The audited statement of revenue and certain operating
expenses of the Emmes Properties for the year ended December
31, 1996 and the unaudited statements of revenue and certain
operating expenses for the three months ended March 31, 1997
and March 31, 1996 are included on pages F-17 to F-20.
(b) Pro Forma Financial Information.
Pro forma financial information which reflects the Company's
acquisition of the TA Properties and the Emmes Properties as
of and for the three months ended March 31, 1997 and for the
year ended December 31, 1996 are included on pages F-1 to
F-12.
(c) Exhibits.
3.1 Amended and Restated Declaration of Trust
10.1 Agreement of Purchase and Sale - by and between
Advent Realty Limited Partnership and Advent Realty
Limited Partnership II and the Company regarding
Oxford Corporate Center, Bucks County, PA;
Springhouse Corporate Center, Montgomery County, PA;
Greentree Commons, Burlington County, NJ; and
Highlands Business Center, Burlington County, NJ.
10.2 Agreement of Sale - by and between EDB Property
Partners, L.P. I a Delaware limited partnership and
the Company regarding (i) 7000 Geerdes Boulevard,
located in King of Prussia, Pennsylvania and (ii)
2000/4000 Midlantic Drive, 9000 Midlantic Drive,
10000 Midlantic Drive and 15000 Midlantic Drive,
located in Mount Laurel, New Jersey.
10.3 Amendment No. 3 to Agreement of Limited Partnership
of Brandywine Operating Partnership, L.P.
-8-
<PAGE>
Exhibits 10.4 to 10.11 relate to the Bridge Loan as defined
in Item 5
10.4 $35,000,000 Note (NationsBank, N.A.)
10.5 $35,000,000 Note (Smith Barney Mortgage Capital
Group, Inc.)
10.6 Credit Agreement
10.7 Form of Pennsylvania Mortgage
10.8 Form of New Jersey Mortgage
10.9 Assignment of Leases and Rents
10.10 Guaranty of Payment
10.11 Hazardous Material Guaranty and Indemnification
Agreement
23.1 Consent of Arthur Andersen LLP
-9-
<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: June 9, 1997 By: /s/ Gerard H. Sweeney
---------------------
Title: President and Chief Executive
Officer
-10-
<PAGE>
BRANDYWINE REALTY TRUST
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
I. UNAUDITED PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION
o Pro Forma Condensed Consolidating Balance Sheet as of March 31, 1997..............F - 4
o Pro Forma Condensed Consolidating Statement of Operations for the
Year Ended December 31, 1996......................................................F - 5
o Pro Forma Condensed Consolidating Statement of Operations for the
Three Months Ended March 31, 1997.................................................F - 6
o Notes and Management's Assumptions to Unaudited Pro Forma Condensed
Consolidating Financial Information...............................................F - 7
II TA PROPERTIES
o Report of Independent Public Accountants..........................................F - 13
o Combined Statements of Revenue and Certain Expenses for the Year
Ended December 31, 1996 (audited) and for the Three Month Periods
Ended March 31, 1997 and March 31, 1996 (unaudited)...............................F - 14
o Notes to Combined Statements of Revenue and Certain Expenses......................F - 15
III EMMES PROPERTIES
o Report of Independent Public Accountants..........................................F - 17
o Combined Statements of Revenue and Certain Expenses for the Year
Ended December 31, 1996 (audited) and for the Three Month Periods
Ended March 31, 1997 and March 31, 1996 (unaudited)...............................F - 18
o Notes to Combined Statements of Revenue and Certain Expenses......................F - 19
</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 March 31, 1997 and the
pro forma condensed consolidating statements of operations for the three months
ended March 31, 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 (i) the Company;
(ii) the 19 "SSI/TNC" Properties acquired in August 1996; (iii) the LibertyView
Building acquired in July 1996; (iv) the 1996 Additional Acquisition Properties,
consisting of (a) the nine properties (the "SERS Properties") acquired in
November 1996 from the Pennsylvania State Employees Retirement System ("SERS")
and its subsidiaries, (b) Delaware Corporate Center I, (c) 700/800 Business
Center Drive and (d) 8000 Lincoln Drive; (v) the Columbia Acquisition Properties
acquired in January 1997; (vi) the Main Street Acquisition Properties acquired
in March 1997; (vii) the TA Properties acquired in May 1997; and (viii) the
Emmes Properties acquired in May 1997.
The unaudited pro forma condensed consolidating financial information
is presented as if the following events occurred no later than March 31, 1997,
for balance sheet purposes, and at the beginning of the period presented, for
purposes of the statements of operations:
- The Company acquired the LibertyView Building.
- The Company acquired its partnership interests in Brandywine Operating
Partnership, L.P. (the "Operating Partnership").
- The Operating Partnership acquired the 19 SSI/TNC Properties.
- The $774,000 loan from Turkey Vulture Fund XIII, Ltd. (the "RMO Fund")
was satisfied by the issuance of 46,321 Paired Units to the RMO Fund.
Each Paired Unit consists of one Common Share and a warrant exercisable
for one Common Share at a price of $19.50.
- 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 Operating Partnership acquired the 1996 Additional Acquisition
Properties for: (i) 481,818 Series A Convertible Preferred Shares
convertible into 1,606,060 Common Shares valued at $26,444,000; (ii)
discounted deferred payments of $3,225,000; (iii) warrants to purchase
133,333 Common Shares at an exercise price of $25.50 valued at $56,000
and (iv) $23,658,000 of cash.
- The Company issued 636,363 Common Shares at $16.50 per share to a
voting trust established for the benefit of 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.
F-2
<PAGE>
- 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 Operating Partnership acquired the Columbia Acquisition Properties
for $31,481,000, including closing costs of $181,000, paid as follows:
(i) $7,000,000 of borrowings under the Company's revolving credit
facility, (ii) $12,157,000 through an assumption by the Operating
Partnership of mortgage indebtedness encumbering two of the office
buildings and (iii) the $12,324,000 balance from cash reserves.
- 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 "1997 Offering").
- The Operating Partnership acquired the Main Street Acquisition
Properties for $21,583,000, including $83,000 of closing costs, paid as
follows: (i) cash of $19,683,000 and (ii) assumed debt of $1,900,000.
- The Operating Partnership acquired 1336 Enterprise Drive, Greentree
Executive Campus, Five Eves Drive and Kings Manor (the "Other 1997
Acquisitions") for approximately $21,785,000, including closing costs
of approximately $168,000, paid using existing cash reserves and
borrowings under the Company's revolving credit facility.
- The Operating Partnership acquired the TA Properties for $42,245,000,
including $620,000 of closing costs, paid through a borrowing under the
Company's revolving credit facility.
- The Operating Partnership acquired the Emmes Properties for
$66,494,000, including $294,000 of closing costs, paid as follows: (i)
$14,275,000 of borrowings under the Company's revolving credit facility
and (ii) the balance through a borrowing under the Bridge Loan.
The pro forma condensed consolidating financial information is unaudited
and is not necessarily indicative of what the actual financial position
would have been at March 31, 1997, nor does it purport to represent the
future financial position and the results of operations of the Company.
F-3
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET
AS OF MARCH 31, 1997 (Notes 1 and 2)
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
BRANDYWINE OTHER EVENTS
REALTY TRUST SUBSEQUENT TA EMMES
HISTORICAL TO MARCH 31, PROPERTIES PROPERTIES PRO FORMA
CONSOLIDATED 1997 (A) (B) (C) CONSOLIDATED
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS:
Real estate investments, net $ 208,825 $ 18,147 $ 42,245 $ 66,494 $ 335,711
Cash and cash equivalents 18,398 (3,550) -- -- 14,848
Escrowed cash 1,612 -- -- -- 1,612
Accounts receivable 2,074 -- -- -- 2,074
Due from affiliates 479 -- -- -- 479
Investment in management company 116 -- -- -- 116
Deferred costs and other assets 4,850 -- -- -- 4,850
--------- --------- --------- --------- ---------
Total assets 236,354 14,597 42,245 66,494 359,690
========= ========= ========= ========= =========
LIABILITIES:
Mortgages and notes payable 46,848 14,597 42,245 66,494 170,184
Accrued interest 257 -- -- -- 257
Accounts payable and accrued expenses 3,223 -- -- -- 3,223
Distributions payable 4,064 -- -- -- 4,064
Tenant security deposits and deferred rents 2,157 -- -- -- 2,157
--------- --------- --------- --------- ---------
Total liabilities 56,549 14,597 42,245 66,494 179,885
--------- --------- --------- --------- ---------
MINORITY INTEREST 6,356 -- -- -- 6,356
--------- --------- --------- --------- ---------
CONVERTIBLE PREFERRED SHARES 23,458 -- -- -- 23,458
--------- --------- --------- --------- ---------
BENEFICIARIES' EQUITY:
Common shares of beneficial interest 96 -- -- -- 96
Additional paid-in capital 162,885 -- -- -- 162,885
Share warrants 962 -- -- -- 962
Cumulative deficit (1,198) -- -- -- (1,198)
Cumulative distributions (12,754) -- -- -- (12,754)
--------- --------- --------- --------- ---------
Total beneficiaries' equity 149,991 -- -- -- 149,991
--------- --------- --------- --------- ---------
Total liabilities and beneficiaries equity $ 236,354 $ 14,597 $ 42,245 $ 66,494 $ 359,690
========= ========= ========= ========= =========
</TABLE>
F-4
<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>
1997 EVENTS
BRANDYWINE --------------------------------
REALTY
TRUST TA EMMES TOTAL
HISTORICAL 1996 OTHER PROPERTIES PROPERTIES PRO FORMA
CONSOLIDATED (A) EVENTS (B) SUBTOTAL EVENTS (D) (E) (F) CONSOLIDATED
----------------- ----------- --------- --------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUE:
Base rents $ 8,462 $ 12,646 $ 21,108 $ 11,913 $ 5,102 $ 6,214 $ 44,337
Tenant reimbursements 1,372 2,838 4,210 1,249 735 2,681 8,875
Other 196 100 296 377 9 10 692
-------- -------- -------- -------- -------- -------- --------
Total Revenue 10,030 15,584 25,614 13,539 5,846 8,905 53,904
-------- -------- -------- -------- -------- -------- --------
OPERATING EXPENSES:
Interest 2,751 513 3,264 2,250 3,168 4,987 13,669
Depreciation and amortization 2,836 4,687 7,523 2,334 1,352 2,128 13,337
Property expenses 3,709 6,830 10,539 5,830 1,962 3,482 21,813
General and administrative 825 148 973 -- -- -- 973
-------- -------- -------- -------- -------- -------- --------
Total operating expenses 10,121 12,178 22,299 10,414 6,482 10,597 49,792
-------- -------- -------- -------- -------- -------- --------
Income (loss) before minority
interest (91) 3,406 3,315 3,125 (636) (1,692) 4,112
Minority interest in (income) loss (45) (429) (474) 10 22 59 (383)
-------- -------- -------- -------- -------- -------- --------
Income (loss) before uncombined entity (136) 2,977 2,841 3,135 (614) (1,633) 3,729
Equity in income of management company (26) 66 40 -- 105 65 210
-------- -------- -------- -------- -------- -------- --------
Net income (loss) (162) 3,043 2,881 3,135 (509) (1,568) 3,939
(Income) loss allocated to Preferred Shares (401) (1,847) (2,248) -- -- -- (2,248)
-------- -------- -------- -------- -------- -------- --------
Income (loss) allocated to Common Shares $ (563) $ 1,196 $ 633 $ 3,135 $ (509) $ (1,568) $ 1,691
======== ======== ======== ======== ======== ======== ========
Earnings (loss) per Common Share $ (0.43) $ 0.18
========= ========
Weighted average number of shares
outstanding including share
equivalents 1,302,648 9,291,406
--------- ---------
</TABLE>
F-5
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 (Notes 1 and 3)
(Unaudited)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
1997 EVENTS
BRANDYWINE -----------------------------------
REALTY
TRUST TA EMMES TOTAL
HISTORICAL OTHER PROPERTIES PROPERTIES PRO FORMA
CONSOLIDATED (A) EVENTS (C) (E) (F) CONSOLIDATED
---------------- --------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
REVENUE:
Base rents $ 6,999 $ 1,744 $ 1,292 $ 1,542 $ 11,577
Tenant reimbursements 1,327 212 188 678 2,405
Other 272 25 4 1 302
-------- -------- -------- -------- --------
Total Revenue 8,598 1,981 1,484 2,221 14,284
-------- -------- -------- -------- --------
OPERATING EXPENSES:
Interest 975 341 781 1,230 3,327
Depreciation and amortization 2,310 340 333 525 3,508
Property operating expenses 2,810 910 439 799 4,958
Other expenses 484 -- -- -- 484
-------- -------- -------- -------- --------
Total operating expenses 6,579 1,591 1,553 2,554 12,277
-------- -------- -------- -------- --------
Income (loss) before minority interest 2,019 390 (69) (333) 2,007
Minority interest in (income) loss (94) (14) 2 12 (94)
-------- -------- -------- -------- --------
Income (loss) before uncombined entity 1,925 376 (67) (321) 1,913
Equity in income of management company 125 -- 26 16 167
-------- -------- -------- -------- --------
Net income (loss) 2,050 376 (41) (305) 2,080
(Income) loss allocated to Preferred Shares (499) -- -- -- (499)
-------- -------- -------- -------- --------
Income (loss) allocated to Common Shares $ 1,551 $ 376 $ (41) $ (305) $ 1,581
======== ======== ======== ======== ========
Earnings (loss) per Common Share $ 0.20 $ 0.17
======== ========
Weighted average number of shares
outstanding including share equivalents 7,776,607 9,464,807
--------- ---------
</TABLE>
F-6
<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 March 31, 1997, the Company owned 50 properties. The
Company's interest in 49 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 March 31, 1997, the Company held
a 96.5% 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 1996 Additional Acquisition
Properties, the Columbia Acquisition Properties, the Main Street Acquisition
Properties, the TA Properties and the Emmes Properties. In management's opinion,
all adjustments necessary to reflect the effects of the 1996 Offering, the SERS
Offering, the Morgan Stanley Offering, the 1997 Offering, the acquisitions of
the SSI/TNC Properties, the LibertyView Building, the 1996 Additional
Acquisition Properties, the Columbia Acquisition Properties, the Main Street
Acquisition Properties, the Other 1997 Acquisitions, the TA Properties and the
Emmes Properties by the Company have been made.
2. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET:
(A) Reflects the Company's acquisition of the Other 1997 Acquisitions
(only those acquisitions which occurred after March 31, 1997 are included as
1336 Enterprise Drive is included in the Company's historical March 31, 1997
balance sheet) based upon the respective purchase prices and closing costs as
follows:
TOTAL OTHER
GREENTREE EVENTS
EXECUTIVE FIVE EVES SUBSEQUENT TO
KINGS MANOR CAMPUS DRIVE MARCH 31, 1997
----------- ------ ----- --------------
Purchase Price $ 3,500 $11,150 $ 3,375 $18,025
Closing Costs 50 59 13 122
------- ------- ------- -------
$ 3,550 $11,209 $ 3,388 $18,147
(B) Reflects the Company's acquisition of the TA Properties based upon
the purchase price plus closing costs as follows:
TA Properties
-------------
Purchase Price $ 41,625
Closing Costs 620
-------------
$ 42,245
F-7
<PAGE>
(C) Reflects the Company's acquisition of the Emmes Properties based
upon the purchase price plus closing costs as follows:
Emmes Properties
-------------
Purchase Price $ 66,200
Closing Costs 294
-------------
$ 66,494
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 1996
Properties Pro Forma
and Delaware 700/800 & Other Total
Liberty View SERS Corporate Business Center 8000 Lincoln Offering Pro Forma
Building Properties Center Drive Drive Adjustments 1996 Events
------- ---------- ------ -------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Base rents $ 5,714 $ 4,008 $ 2,036 $ 651 $ 237 $ -- $ 12,646
Tenant reimbursements 2,511 249 -- 76 2 -- 2,838
Other 100 -- -- -- -- -- 100
-------- -------- -------- -------- -------- -------- --------
Total revenue 8,325 4,257 2,036 727 239 -- 15,584
Operating Expenses:
Interest 3,783 194 -- -- -- (3,464) 513
Depreciation and amortization 2,819 818 374 212 89 375 4,687
Property expenses 2,831 2,217 552 270 231 729 6,830
General and administrative 715 -- -- -- -- (567) 148
-------- -------- -------- -------- -------- -------- --------
Total operating expenses 10,148 3,229 926 482 320 (2,927) 12,178
Income (loss) before minority interest (1,823) 1,028 1,110 245 (81) 2,927 3,406
Minority interest in (income) loss 513 -- -- -- -- (942) (429)
Income (loss) before uncombined entity (1,310) 1,028 1,110 245 (81) 1,985 2,977
Equity in income of management company 75 -- -- -- -- (9) 66
-------- -------- -------- -------- -------- -------- --------
Net income (loss) (1,235) 1,028 1,110 245 (81) 1,976 3,043
Income allocated to Preferred Shares -- -- -- -- -- 1,847 1,847
-------- -------- -------- -------- -------- -------- --------
Income (loss) allocated to Common Shares $ (1,235) $ 1,028 $ 1,110 $ 245 $ (81) $ 129 $ 1,196
======== ======== ======== ======== ======== ======== ========
</TABLE>
F-8
<PAGE>
(C) Reflects the pro forma adjustments relating to the Columbia
Acquisition Properties, the Main Street Acquisition Properties and the 1997
Other Acquisitions for the three months ended March 31, 1997 and other pro forma
adjustments to reflect the 1997 Offering for the three months ended March 31,
1997. The operating results reflected below include the historical results and
related pro forma adjustments to reflect the period January 1, 1997 through the
respective acquisition dates. Operating results from those dates forward are
included in the historical results of the Company.
<TABLE>
<CAPTION>
Other 1997 Acquisitions
Main -----------------------------------------
Columbia Street 1336 Greentree Five
Acquisition Acquisition Enterprise Kings Executive Eves 1997 Total Other
Properties Properties Drive Manor Campus Drive Offering 1997 Events
---------- ---------- ----------- ----- ------ ----- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Base rents $ 338 $ 542 $ 78 $ 101 $ 599 $ 86 $ -- $1,744
Tenant reimbursements 24 60 13 26 79 10 -- 212
Other 25 -- -- -- -- -- -- 25
------ ------ ------ ------ ------ ------ ------ ------
Total revenue 387 602 91 127 678 96 -- 1,981
Operating Expenses:
Interest (i) 110 -- -- -- 207 63 (39) 341
Depreciation and amortization (ii) 66 109 21 28 89 27 -- 340
Property expenses 130 379 19 42 303 37 -- 910
General and administrative -- -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Total operating expenses 306 488 40 70 599 127 (39) 1,591
Income (loss) before minority interest 81 114 51 57 79 (31) 39 390
Minority interest in (income) loss (3) (4) (2) (2) (3) 1 (1) (14)
Income (loss) before uncombined entity 78 110 49 55 76 (30) 38 376
Equity in income of management company -- -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Net income (loss) 78 110 49 55 76 (30) 38 376
Income allocated to Preferred Shares -- -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Income (loss) allocated to Common Shares $ 78 $ 110 $ 49 $ 55 $ 76 $ (30) $ 38 $ 376
====== ====== ====== ====== ====== ====== ====== ======
</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 adjustment for the 1997 Offering represents interest
savings related to the payoff of $7 million 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.
F-9
<PAGE>
(D) Reflects the pro forma statements of operations of the Columbia
Acquisition Properties, the Main Street Acquisition Properties and the 1997
Other Acquisitions for the year ended December 31, 1996 and other pro forma
adjustments to reflect the 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.
<TABLE>
<CAPTION>
1997 Other Acquisitions
Main -----------------------------------------
Columbia Street 1336 Greentree Five
Acquisition Acquisition Enterprise Kings Executive Eves 1997 Total Other
Properties Properties Drive Manor Campus Drive Offering 1997 Events
---------- ---------- ----------- ----- ------ ----- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Base rents $ 5,146 $ 3,141 $ 437 $ 411 $ 2,430 $ 348 $ -- $11,913
Tenant reimbursements 359 347 75 107 322 39 -- 1,249
Other 376 -- -- -- -- 1 -- 377
------- ------- ------- ------- ------- ------- ------- -------
Total revenue 5,881 3,488 512 518 2,752 388 -- 13,539
Operating Expenses:
Interest (i) 1,680 -- -- -- 841 254 (525) 2,250
Depreciation and amortization (ii) 1,007 629 117 114 359 108 -- 2,334
Property expenses 1,979 2,194 107 170 1,229 151 -- 5,830
General and administrative -- -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Total operating expenses 4,666 2,823 224 284 2,429 513 (525) 10,414
Income (loss) before minority interest 1,215 665 288 234 323 (125) 525 3,125
Minority interest in (income) loss -- -- -- -- -- -- (29) 10
Income (loss) before uncombined entity 1,215 665 288 234 323 (125) 496 3,135
Equity in income of management company -- -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Net income (loss) 1,215 665 288 234 323 (125) 496 3,135
Income allocated to Preferred Shares -- -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Income (loss) allocated to Common Shares $ 1,215 $ 665 $ 288 $ 234 $ 323 $ (125) $ 496 $ 3,135
======= ======= ======= ======= ======= ======= ======= =======
</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 adjustment for the 1997 Offering represents interest
savings related to the payoff of $7 million 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.
F-10
<PAGE>
(E) Reflects the pro forma statements of operations of the TA
Properties for the three months ended March 31, 1997 and for the year ended
December 31, 1996. All amounts represent historical operations of the TA
Properties except for the pro forma adjustments noted:
TA PROPERTIES
---------------------------
Three
Year Months
Ended Ended
December March
31, 1996 31, 1997
-------- --------
Revenue:
Base rents $ 5,102 $ 1,292
Tenant reimbursements 735 188
Other 9 4
------- -------
Total revenue 5,846 1,484
Operating Expenses:
Interest (i) 3,168 781
Depreciation and amortization (ii) 1,352 333
Property expenses 1,962 439
General and administrative -- --
------- -------
Total operating expenses 6,482 1,553
Income (loss) before minority interest (636) (69)
Minority interest in (income) loss 22 2
Income (loss) before uncombined entity (614) (67)
Equity in income of management company 105 26
------- -------
Net income (loss) (509) (41)
Income allocated to Preferred Shares -- --
------- -------
Income (loss) allocated to Common Shares $ (509) $ (41)
======= =======
(i) Pro forma interest expense is presented assuming an effective rate of 7.5%
on 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.
F-11
<PAGE>
(F) Reflects the pro forma statements of operations of the Emmes
Properties for the three months ended March 31, 1997 and for the year ended
December 31, 1996. All amounts represent historical operations of the Emmes
Properties except for the pro forma adjustments noted:
EMMES PROPERTIES
---------------------------
Three
Year Months
Ended Ended
December March
31, 1996 31, 1997
-------- --------
Revenue:
Base rents $ 6,214 $ 1,542
Tenant reimbursements 2,681 678
Other 10 1
-------- --------
Total revenue 8,905 2,221
Operating Expenses:
Interest (i) 4,987 1,230
Depreciation and amortization (ii) 2,128 525
Property expenses 3,482 799
General and administrative -- --
-------- --------
Total operating expenses 10,597 2,554
Income (loss) before minority interest (1,692) (333)
Minority interest in (income) loss 59 12
Income (loss) before uncombined entity (1,633) (321)
Equity in income of management company 65 16
-------- --------
Net income (loss) (1,568) (305)
Income allocated to Preferred Shares -- --
-------- --------
Income (loss) allocated to Common Shares $ (1,568) $ (305)
======== ========
(i) Pro forma interest expense is presented assuming an effective rate of 7.5%
on 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.
F-12
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Brandywine Realty Trust:
We have audited the combined statement of revenue and certain expenses of the TA
Properties 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 the 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 the TA Properties' 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 TA Properties for
the year ended December 31, 1996, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
May 29, 1997
F-13
<PAGE>
TA PROPERTIES
COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(Notes 1 and 2)
<TABLE>
<CAPTION>
For the For the Three Month Period
Year Ended Ended March 31,
December 31, -------------------------------------
1996 1997 1996
----------------- ---------------- -----------------
(Unaudited)
<S> <C> <C> <C>
REVENUE:
Base rents (Note 2) $ 5,102,000 $ 1,292,000 $ 1,228,000
Tenant reimbursements 735,000 188,000 200,000
Lease termination income (Note 2) 9,000 4,000 1,000
---------------- ---------------- ----------------
Total revenue 5,846,000 1,484,000 1,429,000
---------------- ---------------- ----------------
CERTAIN EXPENSES:
Maintenance and other operating expenses
955,000 197,000 309,000
Utilities 305,000 64,000 73,000
Real estate taxes 702,000 178,000 188,000
---------------- ---------------- ----------------
Total certain expenses 1,962,000 439,000 570,000
---------------- ---------------- ----------------
REVENUE IN EXCESS OF CERTAIN EXPENSES
$ 3,884,000 $ 1,045,000 $ 859,000
================ ================ ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-14
<PAGE>
TA PROPERTIES
NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 1996
1. BASIS OF PRESENTATION:
On May 23, 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 the TA Properties, a ten
property portfolio of office and flex/warehouse space located in Pennsylvania
and New Jersey. The TA Properties contain an aggregate net rentable area of
approximately 687,821 square feet, which was 94% leased as of December 31, 1996.
The net purchase price for the TA Properties was $41,625,000 plus costs. The
purchase price was primarily paid from borrowings under the Company's revolving
credit facility.
The combined statements of revenue and certain expenses reflect the operations
of the TA Properties. This combined statements of revenue and certain expenses
are to be included in the Company's Current Report on Form 8-K as the
acquisition has been deemed significant pursuant to the rules and regulations of
the Securities and Exchange Commission.
The accounting records of the TA Properties 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, and other costs not directly related to the
future operations of the TA Properties.
The combined statements of revenue and certain expenses for the three months
ended March 31, 1997 and 1996 are unaudited. In the opinion of management, all
adjustments necessary to present fairly the revenue and certain expenses of TA
Properties for the three months ended March 31, 1997 and 1996 have been
included. The combined revenue and certain expenses for such interim periods are
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 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.
F-15
<PAGE>
2. OPERATING LEASES:
Base rents for the year ended December 31, 1996, and the three months ended
March 31, 1997 and 1996, includes straight-line adjustments for rental revenue
increases in accordance with generally accepted accounting principles. The
aggregate rental revenue increase resulting from the straight-line adjustments
for the year ended December 31, 1996, and the three months ended March 31, 1997
and 1996, were ($44,000), ($7,000) (unaudited) and $12,000 (unaudited),
respectively.
Rental revenues earned under leases with Bisys Qualified Plan were $834,661 and
accounted for 17% of the total base rents of the TA Properties in 1996.
The TA Properties are leased to tenants under operating leases with expiration
dates extending to the year 2009. Future minimum rentals under noncancelable
operating leases, excluding tenant reimbursements of operating expenses, as of
December 31, 1996, were as follows:
1997 $ 4,721,000
1998 3,308,000
1999 2,649,000
2000 1,364,000
2001 589,000
Thereafter 1,538,000
Certain leases also include provisions requiring tenants to reimburse the TA
Properties for management costs and other operating expenses up to stipulated
amounts.
F-16
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Brandywine Realty Trust:
We have audited the combined statement of revenue and certain expenses of the
Emmes Properties 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 the 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 the Emmes Properties' 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 Emmes Properties
for the year ended December 31, 1996, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
June 3, 1997
F-17
<PAGE>
EMMES PROPERTIES
COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
<TABLE>
<CAPTION>
For the For the Three Month Period
Year Ended Ended March 31,
December 31, ------------------------------------
1996 1997 1996
--------------- --------------- ----------------
(unaudited)
<S> <C> <C> <C>
REVENUE:
Base rents (Note 2) $ 6,214,000 $ 1,542,000 $ 1,532,000
Tenant reimbursements 2,681,000 678,000 579,000
Other revenue 10,000 1,000 4,000
--------------- ---------------- ----------------
Total revenue 8,905,000 2,221,000 2,115,000
--------------- ---------------- ----------------
CERTAIN EXPENSES:
Maintenance and other operating
expenses 1,704,000 356,000 296,000
Utilities 1,082,000 283,000 302,000
Real estate taxes 696,000 160,000 174,000
--------------- ---------------- ----------------
Total certain expenses 3,482,000 799,000 772,000
--------------- ---------------- ----------------
REVENUE IN EXCESS OF CERTAIN EXPENSES
$ 5,423,000 $ 1,422,000 $ 1,343,000
=============== ================ ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-18
<PAGE>
EMMES PROPERTIES
NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 1996
1. BASIS OF PRESENTATION:
On May 30, 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 the Emmes Properties, a
portfolio of six office buildings located in New Jersey and Pennsylvania. The
Emmes Properties contain an aggregate net rentable area of approximately 608,008
square feet, which was 83% leased as of December 31, 1996. The net purchase
price for the Emmes Properties was $66.2 million. Approximately $52 million of
the purchase price was paid from a bridge loan taken out by the Company, and the
remaining amount was paid from borrowings under the Company's revolving credit
facility.
The combined statements of revenue and certain expenses reflect the operations
of the Emmes Properties. These combined statement of revenue and certain
expenses are to be included in the Company's Current Report on Form 8-K as the
acquisition has been deemed significant pursuant to the rules and regulations of
the Securities and Exchange Commission.
The accounting records of the Emmes Properties are maintained on an accrual
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, and other costs not directly related to the
future operations of the Emmes Properties.
The combined statements of revenue and certain expenses for the months ended
March 31, 1997 and 1996 are unaudited. In the opinion of management, all
adjustments necessary to present fairly the revenue and certain expenses of the
Emmes Properties for the three months ended March 31, 1997 and 1996 have been
included. The combined revenue and certain expenses for such interim periods are
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 amounts of assets and liabilities which affect the reported amounts
of revenues and expense during the reporting period. The ultimate results could
differ from those estimates.
F-19
<PAGE>
2. OPERATING LEASES:
Base rents for the year ended December 31, 1996, and the three months ended
March 31, 1997 and 1996, include straight-line adjustments for rental revenue
increases in accordance with generally accepted accounting principles. The
aggregate rental revenue increase resulting from the straight-line adjustments
for the year ended December 31, 1996, and the three months ended March 31, 1997
and 1996, were 321,000, $1,000 (unaudited) and $64,000 (unaudited),
respectively.
During 1996, rental revenues earned under leases with Martin Marietta, New
Jersey Bell, QAD, Inc. and Automotive Rentals were $1,433,000, $1,122,000,
$745,000 and $662,000, respectively. Each of these leases individually
represented greater than 10% of the Emmes Properties' total rental revenue in
1996.
The Emmes Properties are leased to tenants under operating leases with
expiration dates extending to the year 2006. Future minimum rentals under
noncancelable operating leases, excluding tenant reimbursements of operating
expenses, as of December 31, 1996, were as follows:
1997 $ 6,263,000
1998 6,166,000
1999 4,465,000
2000 3,573,000
2001 2,758,000
Thereafter 7,172,000
Certain leases also include provisions requiring tenants to reimburse the Emmes
Properties for management costs and other operating expenses up to stipulated
amounts.
F-20
<PAGE>
Exhibit 3.1
BRANDYWINE REALTY TRUST
DECLARATION OF TRUST
(Amended and Restated as of May 12, 1997 at the Annual
Meeting of Shareholders by affirmative vote of the
holders of a majority of the outstanding shares
of the Trust pursuant to Section 8-202(c)
of Title 8 of the Maryland Corporations
and Associations Code)
This DECLARATION OF TRUST ("Declaration of Trust" or
"Declaration") is amended and restated as of the date set forth above by the
undersigned Trustees.
WHEREAS, the Trustees desire to create a real estate
investment trust under Title 8 of the Corporations and Associations Article of
the Annotated Code of Maryland, as amended ("Title 8"); and
WHEREAS, the Trustees desire that this trust qualify as a
"real estate investment trust" under the Internal Revenue Code of 1986, as
amended (the "Code"), so long as such qualification, in the opinion of the
Trustees, is advantageous to the Shareholders; and
WHEREAS, the beneficial interest in the Trust shall be divided
into transferable shares of one or more classes evidenced by certificates;
NOW, THEREFORE, the Trustees hereby declare that they will
hold all property which they have or may hereafter acquire as such Trustees,
together with the proceeds thereof, in trust, and manage the Trust Property (as
defined herein) for the benefit of the Shareholders as provided by this
Declaration of Trust.
ARTICLE 1
THE TRUST; DEFINITIONS
ARTICLE 1 SECTION .1. Name. The name of the trust (the "Trust") is:
Brandywine Realty Trust
So far as may be practicable, the business of the Trust shall be conducted and
transacted under that name, which name (and the word "Trust" wherever used in
this Declaration of Trust, except where the context otherwise requires) shall
refer to the Trustees collectively but not individually or personally and shall
not refer to the Shareholders or to any officers, employees or agents of the
Trust or of such Trustees.
Under circumstances in which the Trustees determine that the
use of the name "Brandywine Realty Trust" is not practicable, they may use any
other designation or name for the Trust.
ARTICLE 1 SECTION .2. Resident Agent. The name of the
resident agent for service of process of the Trust in the State of Maryland is
The Corporation Trust Incorporated, whose post office address is c/o The
Corporation Trust Incorporated, 32 South Street, Baltimore, Maryland 21202.
<PAGE>
The Trust may have such offices or places of business within or without the
State of Maryland as the Trustees may from time to time determine.
ARTICLE 1 SECTION .3. Nature of Trust. The Trust is a real
estate investment trust within the meaning of Title 8. The Trust shall not be
deemed to be a general partnership, limited partnership, joint venture, joint
stock company or, except as provided in Section 11.4, a corporation (but nothing
herein shall preclude the Trust from being treated for tax purposes as an
association under the Code).
ARTICLE 1 SECTION .4. Powers. The Trust shall have all of the
powers granted to real estate investment trusts generally by Title 8 or any
successor statute and shall have any other and further powers as are not
inconsistent with and are appropriate to promote and attain the purposes set
forth in this Declaration of Trust.
ARTICLE 1 SECTION .5. Definitions. As used in this
Declaration of Trust, the following terms shall have the following meanings
unless the context otherwise requires:
"Adviser" means the Person, if any, appointed, employed or
contracted with by the Trust pursuant to Section 4.1.
"Affiliate" or "Affiliated" means, as to any individual,
corporation, partnership, trust or other association (other than the Trust), any
Person (i) that holds beneficially, directly or indirectly, 10% or more of the
outstanding stock or equity interests thereof or (ii) who is an officer,
director, partner or trustee thereof or of any Person which controls, is
controlled by, or is under common control with, such corporation, partnership,
trust or other association or (iii) which controls, is controlled by or under
common control with, such corporation, partnership, trust or other association.
"Book Value Per Share" shall mean an amount equal to the
quotient obtained by dividing (i) the Shareholders' Equity as shown in the
annual or quarterly financial statements of the Trust most recently filed by the
Trust with the Securities and Exchange Commission by (ii) the number of Shares
outstanding as of the date of such financial statements. For purposes of clause
(ii) of the preceding sentence, "outstanding" Shares shall consist of those
Common Shares then actually issued and outstanding and those Common Shares
issuable upon the exercise or conversion of any then outstanding "in-the-money"
warrants, options or other convertible securities.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Person" means an individual, corporation, partnership,
estate, trust (including a trust qualified under Section 401(a) or 501(c)(17) of
the Code), a portion of a trust permanently set aside for or to be used
exclusively for the purposes described in Section 642(c) of the Code,
association, private foundation within the meaning of Section 509(a) of the
Code, joint stock company or other entity, or any government or agency or
political subdivision thereof, and also includes a group as that term is used
-2-
<PAGE>
for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended.
"Real Property" or "Real Estate" means land, rights in land
(including leasehold interests), and any buildings, structures, improvements,
furnishings, fixtures and equipment located on or used in connection with land
and rights or interests in land.
"REIT Provisions of the Code" means Sections 856 through 860
of the Code and any successor or other provisions of the Code relating to real
estate investment trusts (including provisions as to the attribution of
ownership of beneficial interests therein) and the regulations promulgated
thereunder.
"Securities" means Shares, any stock, shares or other
evidences of equity or beneficial or other interests, voting trust certificates,
bonds, debentures, notes or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any instruments
commonly known as "securities" or any certificates of interest, shares or
participations in, temporary or interim certificates for, receipts for,
guarantees of, or warrants, options or rights to subscribe to, purchase or
acquire, any of the foregoing, or shares or other securities of any successor in
interest of the Trust.
"Securities of the Trust" means any Securities issued by the
Trust.
"Shareholders" means holders of record of outstanding Shares.
"Shareholders' Equity" means the total shareholders' equity of
the Trust or, if the Trust has a class of Preferred Shares outstanding as of the
applicable date, "Shareholders' Equity" means the total "common" shareholders'
equity of the Trust (computed with appropriate adjustments to reflect any
entitlement of Preferred Shares to participate equally and ratably with the
Common Shares in the assets of the Trust upon a liquidation of the Trust and
computed to include amounts payable upon exercise or conversion of outstanding
"in-the-money" warrants, options or other convertible securities issued by the
Trust).
"Shares" means shares of Preferred Shares or Common Shares
(all as defined in Section 6.1).
"Specified Properties" means the four real estate projects
held by Brandywine Realty Partners on the date hereof and known as: One
Greentree Centre; Two Greentree Centre; Three Greentree Centre; and Twin Forks.
"Trustees" or "Board of Trustees" means, collectively, all
individuals who have been duly elected and qualify as trustees of the Trust
hereunder.
"Trust Property" means any and all property, real, personal or
otherwise, tangible or intangible, which is transferred or conveyed to the Trust
or the Trustees (including all rents, income, profits and gains therefrom),
which is owned or held by, or for the account of, the Trust.
-3-
<PAGE>
"Voting Shares" means the outstanding Shares entitled to vote
generally in the election of trustees.
ARTICLE 2
TRUSTEES
ARTICLE 2 SECTION .1. Number. The number of Trustees shall be
four, but such number may be increased or decreased by the unanimous vote of the
Trustees then in office from time to time; provided, that the total number of
Trustees shall be not fewer than three and not more than 15. No reduction in the
number of Trustees shall cause the removal of any Trustee from office prior to
the expiration of his term.
ARTICLE 2 SECTION .2. Initial Board; Term. The Trustees, as
of the date on which this Declaration of Trust has been amended and restated, as
set forth above (the "Initial Trustees"), shall be Anthony A. Nichols, Sr.,
Joseph L. Carboni, Richard M. Osborne, Gerard H. Sweeney, Warren V. Musser,
Walter D'Alessio and Charles P. Pizzi, but in each case only for so long as he
shall continue to serve as a Trustee of the Trust hereunder. The term of the
Initial Trustees shall commence on the date hereof and shall continue until the
annual meeting of Shareholders in 1997 and until their successors shall have
been duly elected and shall have qualified.
The names and addresses of the Initial Trustees who shall
serve until the annual meeting of the Shareholders held in 1997 and until their
successors are duly elected and qualified are:
Name Address
---- -------
Anthony A. Nichols, Sr. 16 Campus Boulevard
Newtown Square, PA 19073
Joseph L. Carboni 212 Haddon Avenue
Westmont, NJ 08108
Richard M. Osborne 7001 Center Street
Mentor, Ohio 44060
Gerard H. Sweeney 16 Campus Boulevard
Newtown Square, PA 19073
Warren V. Musser 800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19087
Walter D'Alessio 1735 Market Street
Philadelphia, PA 19103
-4-
<PAGE>
Charles P. Pizzi 1234 Market Street
Philadelphia, PA 19107
Beginning with the annual meeting of Shareholders in 1996 and
at each succeeding annual meeting of Shareholders, the Trustees will be elected
to hold office for a term expiring at the succeeding annual meeting. Each
Trustee will hold office for the term for which he is elected and until his
successor is duly elected and qualified.
ARTICLE 2 SECTION .3. Resignation, Removal or Death. Any Trustee may
resign by written notice to the remaining Trustees, effective upon execution and
delivery to the Trust of such written notice or upon any future date specified
in the notice. A Trustee may be removed from office only at a meeting of the
Shareholders called for that purpose, by the affirmative vote of the holders of
not less than a majority of the Shares entitled to vote in the election of
Trustees; provided, however, that in the case of any Trustees elected solely by
holders of a series of Preferred Shares, such Trustees may be removed by the
affirmative vote of a majority of the Preferred Shares of that series then
outstanding and entitled to vote in the election of Trustees, voting together as
a single class. Upon the resignation or removal of any Trustee, or his otherwise
ceasing to be a Trustee, he shall automatically cease to have any right, title
or interest in and to the Trust Property and shall execute and deliver such
documents as the remaining Trustees require for the conveyance of any Trust
Property held in his name, and shall account to the remaining Trustees as they
require for all property which he holds as Trustee. Upon the incapacity or death
of any Trustee, his legal representative shall perform the acts described in the
foregoing sentence.
ARTICLE 2 SECTION .4. Vacancies. Any vacancy (including a vacancy
created by an increase in the number of Trustees) shall be filled, at any
regular or special meeting of Trustees called for that purpose, by a majority of
the Trustees (although less than a quorum). Any individual so elected as Trustee
shall hold office until the next annual meeting of Shareholders and until his
successor has been duly elected and qualified.
-5-
<PAGE>
ARTICLE 2 SECTION .5. Legal Title. Legal title to all Trust Property
shall be vested in the Trustees, but they may cause legal title to any Trust
Property to be held by or in the name of any Trustee, or the Trust, or any other
Person as nominee. The right, title and interest of the Trustees in and to the
Trust Property shall automatically vest in successor and additional Trustees
upon their qualification and acceptance of election or appointment as Trustees,
and they shall thereupon have all the rights and obligations of Trustees,
whether or not conveyancing documents have been executed and delivered pursuant
to Section 2.3 or otherwise. Written evidence of the qualification and
acceptance of election or appointment of successor and additional Trustees may
be filed with the records of the Trust and in such other offices, agencies or
places as the Trustees may deem necessary or desirable.
ARTICLE 3
POWERS OF TRUSTEES
ARTICLE 3 SECTION .1. General. Subject to the express limitations
herein or in the bylaws of the Trust (the "Bylaws"), (i) the business and
affairs of the Trust shall be managed under the direction of the Board of
Trustees and (ii) the Trustees shall have full, exclusive and absolute power,
control and authority over the Trust Property and over the business of the Trust
as if they, in their own right, were the sole owners thereof. The Trustees may
take any actions that, in their sole judgment and discretion, are necessary or
desirable to conduct the business of the Trust. This Declaration of Trust shall
be construed with a presumption in favor of the grant of power and authority to
the Trustees. Any construction of this Declaration of Trust or determination
made in good faith by the Trustees concerning their powers and authority
hereunder shall be conclusive. The enumeration and definition of particular
powers of the Trustees included in this Article 3 shall in no way be limited or
restricted by reference to or inference from the terms of this or any other
provision of this Declaration of Trust or construed or deemed by inference or
otherwise in any manner to exclude or limit the powers conferred upon the
Trustees under the general laws of the State of Maryland as now or hereafter in
force.
ARTICLE 3 SECTION .2. Specific Powers and Authority. Subject only to
the express limitations herein, and in addition to all other powers and
authority conferred by this Declaration or by law, the Trustees, without any
vote, action or consent by the Shareholders, shall have and may exercise, at any
time or times, in the name of the Trust or on its behalf the following powers
and authorities:
(a) Investments. Subject to Section 8.5, to invest in,
purchase or otherwise acquire and to hold real, personal or mixed, tangible or
intangible, property of any kind wherever located, or rights or interests
therein or in connection therewith, all without regard to whether such property,
interests or rights are authorized by law for the investment of funds held by
trustees or other fiduciaries, or whether obligations the Trust acquires have a
term greater or lesser than the term of office of the Trustees
-6-
<PAGE>
or the possible termination of the Trust, for such consideration as the Trustees
may deem proper (including cash, property of any kind or Securities of the
Trust); provided, however, that the Trustees shall take such actions as they
deem necessary and desirable to comply with any requirements of Title 8 relating
to the types of assets held by the Trust.
(b) Sale, Disposition and Use of Property. Subject to
Section 8.5, to sell, rent, lease, hire, exchange, release, partition, assign,
mortgage, grant security interests in, encumber, negotiate, dedicate, grant
easements in and options with respect to, convey, transfer (including transfers
to entities wholly or partially owned by the Trust or the Trustees) or otherwise
dispose of any or all of the Trust Property by deeds (including deeds in lieu of
foreclosure with or without consideration), trust deeds, assignments, bills of
sale, transfers, leases, mortgages, financing statements, security agreements
and other instruments for any of such purposes executed and delivered for and on
behalf of the Trust or the Trustees by one or more of the Trustees or by a duly
authorized officer, employee, agent or nominee of the Trust, on such terms as
they deem appropriate; to give consents and make contracts relating to the Trust
Property and its use or other property or matters; to develop, improve, manage,
use, alter and otherwise deal with the Trust Property; and to rent, lease or
hire from others property of any kind; provided, however, that the Trust may not
use or apply land for any purposes not permitted by applicable law.
(c) Financings. To borrow or in any other manner raise money
for the purposes and on the terms they determine, and to evidence the same by
issuance of Securities of the Trust, which may have such provisions as the
Trustees determine; to reacquire such Securities of the Trust; to enter into
other contracts or obligations on behalf of the Trust; to guarantee, indemnify
or act as surety with respect to payment or performance of obligations of any
Person; to mortgage, pledge, assign, grant security interests in or otherwise
encumber the Trust Property to secure any such Securities of the Trust,
contracts or obligations (including guarantees, indemnifications and
suretyships); and to renew, modify, release, compromise, extend, consolidate or
cancel, in whole or in part, any obligation to or of the Trust or participate in
any reorganization of obligors to the Trust.
(d) Loans. Subject to the provisions of Section 8.5, to lend
money or other Trust Property on such terms, for such purposes and to such
Persons as they may determine.
(e) Issuance of Securities. Subject to the provisions of
Article 6, to create and authorize and direct the issuance (on either a pro-rata
or a non-pro-rata basis) by the Trust, in shares, units or amounts of one or
more types, series or classes, of Securities of the Trust, which may have such
voting rights, dividend or interest rates, preferences, subordinations,
conversion or redemption prices or rights, maturity dates, distribution,
exchange, or liquidation rights or other rights as the Trustees may determine,
without vote of or other action by the Shareholders, to such Persons for such
consideration, at such time or times and in such manner and on such terms as the
Trustees determine; to list any of the Securities of the Trust on any
-7-
<PAGE>
securities exchange; and to purchase or otherwise acquire, hold, cancel,
reissue, sell and transfer any Securities of the Trust.
(f) Expenses and Taxes. To pay any charges, expenses or
liabilities necessary or desirable, in the sole discretion of the Trustees, for
carrying out the purposes of this Declaration of Trust and conducting the
business of the Trust, including compensation or fees to Trustees, officers,
employees and agents of the Trust, and to Persons contracting with the Trust,
and any taxes, levies, charges and assessments of any kind imposed upon or
chargeable against the Trust, the Trust Property, or the Trustees in connection
therewith; and to prepare and file any tax returns, reports or other documents
and take any other appropriate action relating to the payment of any such
charges, expenses or liabilities.
(g) Collection and Enforcement. To collect, sue for and
receive money or other property due to the Trust; to consent to extensions of
the time for payment, or to the renewal, of any Securities or obligations; to
engage or to intervene in, prosecute, defend, compound, enforce, compromise,
release, abandon or adjust any actions, suits, proceedings, disputes, claims,
demands, security interests, or things relating to the Trust, the Trust
Property, or the Trust's affairs; to exercise any rights and enter into any
agreements; and take any other action necessary or desirable in connection with
the foregoing.
(h) Deposits. To deposit funds or Securities constituting part
of the Trust Property in banks, trust companies, savings and loan associations,
financial institutions and other depositories, whether or not such deposits will
draw interest, subject to withdrawal on such terms and in such manner as the
Trustees determine.
(i) Allocation; Accounts. To determine whether moneys,
profits or other assets of the Trust shall be charged or credited to, or
allocated between, income and capital, including whether or not to amortize any
premium or discount and to determine in what manner any expenses or
disbursements are to be borne as between income and capital (regardless of how
such items would normally or otherwise be charged to or allocated between income
and capital without such determination); to treat any dividend or other
distribution on any investment as, or apportion it between, income and capital;
in their discretion to provide reserves for depreciation, amortization,
obsolescence or other purposes in respect of any Trust Property in such amounts
and by such methods as they determine; to determine what constitutes net
earnings, profits or surplus; to determine the method or form in which the
accounts and records of the Trust shall be maintained; and to allocate to the
Shareholders equity account less than all of the consideration paid for Shares
and to allocate the balance to paid-in capital or capital surplus.
-8-
<PAGE>
(j) Valuation of Property. To determine the value of all or
any part of the Trust Property and of any services, Securities, property or
other consideration to be furnished to or acquired by the Trust, and to revalue
all or any part of the Trust Property, all in accordance with such appraisals or
other information as are reasonable, in their sole judgment.
(k) Ownership and Voting Powers. To exercise all of the
rights, powers, options and privileges pertaining to the ownership of any
mortgages, Securities, Real Estate and other Trust Property to the same extent
that an individual owner might, including without limitation to vote or give any
consent, request, or notice or waive any notice, either in person or by proxy or
power of attorney, which proxies and powers of attorney may be for any general
or special meetings or action, and may include the exercise of discretionary
powers.
(l) Officers, Etc.; Delegation of Powers. To elect, appoint
or employ such officers for the Trust and such committees of the Board of
Trustees with such powers and duties as the Trustees may determine or the
Trust's Bylaws provide; to engage, employ or contract with and pay compensation
to any Person (including, subject to Section 8.5, any Trustee and any Person who
is an Affiliate of any Trustee) as agent, representative, Adviser, member of an
advisory board, employee or independent contractor (including advisers,
consultants, transfer agents, registrars, underwriters, accountants,
attorneys-at-law, real estate agents, property and other managers, appraisers,
brokers, architects, engineers, construction managers, general contractors or
otherwise) in one or more capacities, to perform such services on such terms as
the Trustees may determine; to delegate to one or more Trustees, officers or
other Persons engaged or employed as aforesaid or to committees of Trustees or
to the Adviser, the performance of acts or other things (including granting of
consents), the making of decisions and the execution of such deeds, contracts or
other instruments, either in the names of the Trust, the Trustees or as their
attorneys or otherwise, as the Trustees may determine; and to establish such
committees as they deem appropriate.
(m) Associations. Subject to Section 8.5, to cause the Trust
to enter into joint ventures, general or limited partnerships, participation or
agency arrangements or any other lawful combinations, relationships, or
associations of any kind.
(n) Reorganizations, Etc. Without limiting the scope of
Section 9.2, to cause to be organized or assist in organizing any Person under
the laws of any jurisdiction to acquire all or any part of the Trust Property or
carry on any business in which the Trust shall have an interest; to sell, rent,
lease, hire, convey, negotiate, assign, exchange or transfer all or any part of
the Trust Property to or with any Person in exchange for Securities of such
Person or otherwise; and to lend money to, subscribe for and purchase the
Securities of, and enter into any contracts with, any Person in which the Trust
holds, or is about to acquire, Securities or any other interests.
-9-
<PAGE>
(o) Reverse Stock Splits. Upon the approval of not less than
80% of the Trustees, to cause the Shares of the Trust to be recapitalized or
consolidated by effectuating a reverse stock split of one or more series or
classes of Shares based upon a reverse stock split ratio (the "Ratio") approved
by not less than 80% of the Trustees, such that following the consummation of
such reverse stock split, each Share of the series or class(es) of Shares in
question will automatically, without vote of or other action by the
Shareholders, be deemed to be a fewer number of Shares computed in accordance
with such Ratio; and, if determined by the Trustees to be appropriate or
desirable, to cause any fractional Shares resulting therefrom to be canceled in
exchange for a cash payment equal to (x) with respect to Common Shares, the
"market value" of such Share determined in accordance with the provisions of
ss.3-601 et seq. of the Maryland General Corporation Law (computed for the
period ending on the business day prior to the effective date of such reverse
stock split), or for Shares other than Common Shares traded on the American
Stock Exchange, as determined by the Trustees in good faith, multiplied by (y)
the applicable fraction.
(p) Insurance. To purchase and pay for out of Trust Property
insurance policies insuring the Trust and the Trust Property against any and all
risks, and insuring the Shareholders, Trustees, officers, employees and agents
of the Trust individually against all claims and liabilities of every nature
arising by reason of holding or having held any such status, office or position
or by reason of any action alleged to have been taken or omitted (including
those alleged to constitute misconduct, gross negligence, reckless disregard of
duty or bad faith) by any such Person in such capacity, whether or not the Trust
would have the power to indemnify such Person against such claim or liability.
(q) Executive Compensation, Pension and Other Plans. To adopt
and implement executive compensation, pension, profit sharing, stock option,
stock bonus, stock purchase, stock appreciation rights, savings, thrift,
retirement, incentive or benefit plans, trusts or provisions, applicable to any
or all Trustees, officers, employees or agents of the Trust, or to other Persons
who have benefitted the Trust, all on such terms and for such purposes as the
Trustees may determine.
(r) Distributions. To declare and pay dividends or other
distributions to Shareholders, subject to the provisions of Section 6.4.
(s) Indemnification. Without regard to the indemnification
provided for in Section 8.4, to indemnify any Person, including any Adviser or
independent contractor, with whom the Trust has dealings.
(t) Charitable Contributions. To make donations for the
public welfare or for community, charitable, religious, educational, scientific,
civic or similar purposes, regardless of any direct benefit to the Trust.
(u) Discontinue Operations; Bankruptcy. To discontinue the
operations of the Trust; to petition or apply for relief under any provision of
federal or state bankruptcy, insolvency or reorganization laws or similar laws
for the relief of debtors; to permit any Trust Property to be foreclosed
-10-
<PAGE>
upon without raising any legal or equitable defenses that may be available to
the Trust or the Trustees or otherwise defending or responding to such
foreclosure; to confess judgment against the Trust; or to take such other action
with respect to indebtedness or other obligations of the Trustees, in such
capacity, the Trust Property or the Trust as the Trustees in their discretion
may determine.
(v) Trustees. To nominate persons for election as Trustees.
(w) Fiscal Year. Subject to the Code, to adopt, and from time
to time change, a fiscal year for the Trust.
(x) Seal. To adopt and use a seal, but the use of a seal
shall not be required for the execution of instruments or obligations of the
Trust.
(y) Bylaws. To adopt, implement and from time to time alter,
amend or repeal Bylaws of the Trust relating to the business and organization of
the Trust which are not inconsistent with the provisions of this Declaration of
Trust.
(z) Accounts and Books. To determine from time to time
whether and to what extent, and at what times and places, and under what
conditions and regulations, the accounts and books of the Trust, or any of them,
shall be open to the inspection of Shareholders.
(aa) Voting Trust. To participate in, and accept Securities
issued under or subject to, any voting trust.
(ab) Proxies. To solicit proxies of the Shareholders at the
expense of the Trust.
(ac) Further Powers. To do all other acts and things and
execute and deliver all instruments incident to the foregoing powers, and to
exercise all powers which they deem necessary, useful or desirable to carry on
the business of the Trust or to carry out the provisions of this Declaration of
Trust, even if such powers are not specifically provided hereby.
ARTICLE 3 SECTION .3. Limitations on Powers and Authority.
Notwithstanding any provision hereof to the contrary, in no event shall the
Trustees have the power or authority to cause the Trust to do any of the
following without the prior approval of the Shareholders:
(a) Commodities Contracts. To invest in commodities or
commodity future contracts other than interest rate futures intended to hedge
the Trust against interest rate risk.
(b) Trading Activities. To engage in trading (as compared
with investment activities) or engage in the underwriting or agency distribution
or sale of securities issued by others.
-11-
<PAGE>
(c) Certain Holdings. To hold property primarily for sale to
customers in the ordinary course of business; provided, however, that the Trust
may sell properties if necessary, advisable or desirable or if effected pursuant
to an intent to liquidate the Trust.
ARTICLE 4
ADVISER
ARTICLE 4 SECTION .1. Appointment. The Trustees are responsible for
setting the general policies of the Trust and for the general supervision of its
business conducted by officers, agents, employees, advisers or independent
contractors of the Trust. However, the Trustees are not required personally to
conduct the business of the Trust, and they may (but need not) appoint, employ
or contract with any Person (including a Person Affiliated with any Trustee) as
an Adviser and may grant or delegate such authority to the Adviser as the
Trustees may, in their sole discretion, deem necessary or desirable. The
Trustees may determine the terms of retention and the compensation of the
Adviser and may exercise broad discretion in allowing the Adviser to administer
and regulate the operations of the Trust, to act as agent for the Trust, to
execute documents on behalf of the Trust and to make executive decisions which
conform to general policies and principles established by the Trustees.
-12-
<PAGE>
ARTICLE 4 SECTION .2. Affiliation and Functions. The Trustees, by
resolution or in the Bylaws, may provide guidelines, provisions or requirements
concerning the affiliation and functions of the Adviser.
ARTICLE 5
INVESTMENT POLICY
The fundamental investment policy of the Trust is to make investments
in such a manner as to comply with the REIT Provisions of the Code and with the
requirements of Title 8, with respect to the composition of the Trust's
investments and the derivation of its income. The Trustees will use their best
efforts to carry out this fundamental investment policy and to conduct the
affairs of the Trust in such a manner as to continue to qualify the Trust for
the tax treatment provided in the REIT Provisions of the Code; however, no
Trustee, officer, employee or agent of the Trust shall be liable for any act or
omission resulting in the loss of tax benefits under the Code, except to the
extent provided in Section 8.2. The Trustees may change from time to time, by
resolution or in the Bylaws of the Trust, such investment policies as they
determine to be in the best interests of the Trust, including prohibitions or
restrictions upon certain types of investments.
ARTICLE 6
SHARES
ARTICLE 6 SECTION .1. Authorized Shares. The total number of shares of
beneficial interest which the Trust is authorized to issue is 30,000,000, of
which 5,000,000 shares shall be preferred shares, par value $.01 per share
("Preferred Shares"), and 25,000,000 shares shall be common shares, $0.01 par
value per share ("Common Shares").
The Board of Trustees, without any action by the Shareholders of the
Company, may amend the Declaration of Trust from time to time to increase or
decrease the aggregate number of shares of beneficial interest or the number of
shares of beneficial interest of any class that the Company is authorized to
issue.
ARTICLE 6 SECTION .2. Common Shares.
(a) Dividend Rights. Subject to the preferential dividend
rights of the Preferred Shares, if any, as may be determined by the Board of
Trustees pursuant to Section 6.3, the holders of Common Shares shall be entitled
to receive such dividends as may be declared by the Board of Trustees.
(b) Rights Upon Liquidation. Subject to the preferential
rights of the Preferred Shares, if any, as may be determined by the Board of
Trustees pursuant to Section 6.3, in the event of any voluntary or involuntary
liquidation, dissolution or winding up of, or any distribution of the assets of,
the Trust, each holder of Common Shares shall be entitled to receive,
-13-
<PAGE>
ratably with each other holder of Common Shares, that portion of the assets of
the Trust available for distribution to the holders of Common Shares that bears
the same relation to the total amount of such assets of the Trust as the number
of Common Shares held by such holder bears to the total number of Common Shares
then outstanding.
(c) Voting Rights. The holders of the Common Shares shall be
entitled to vote on all matters (for which a common shareholder shall be
entitled to vote thereon) at all meetings of the Shareholders of the Trust, and
shall be entitled to one vote for each Common Share entitled to vote at such
meeting, voting together with the holders of the Preferred Shares who are
entitled to vote (except as otherwise may be determined by the Board of Trustees
pursuant to Section 6.3).
ARTICLE 6 SECTION .3. Preferred Shares. With respect to the Preferred
Shares, the Board of Trustees shall have the power from time to time (a) to
classify or reclassify, in one or more series, any unissued Preferred Shares and
(b) to reclassify any unissued shares of any series of Preferred Shares, in the
case of either (a) or (b) by setting or changing the number of shares
constituting such series and the designation, preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of redemption of such shares and, in such event, the
Trust shall file for record with the State Department of Assessments and
Taxation of Maryland articles supplementary to this Declaration of Trust in
substance and form as prescribed by Title 8.
ARTICLE 6 SECTION .4. Dividends or Distributions. The Trustees may
from time to time declare and cause the Trust to pay to Shareholders such
dividends or distributions in cash, property or other assets of the Trust or in
Securities of the Trust or from any other source as the Trustees in their
discretion shall determine. The Trustees shall endeavor to declare and pay such
dividends and distributions as shall be necessary for the Trust to qualify as a
real estate investment trust under the REIT Provisions of the Code; however,
Shareholders shall have no right to any dividend or distribution unless and
until declared by the Trustees. The exercise of the powers and rights of the
Trustees pursuant to this section shall be subject to the provisions of any
class or series of Shares at the time outstanding. The receipt by any Person in
whose name any Shares are registered on the records of the Trust or by his duly
authorized agent shall be a sufficient discharge for all dividends or
distributions payable or deliverable in respect of such Shares and from all
liability to see to the application thereof.
ARTICLE 6 SECTION .5. General Nature of Shares. All Shares shall be
personal property entitling the Shareholders only to those rights provided in
this Declaration of Trust or in the resolution creating any class or series of
Shares. The legal ownership of the Trust Property and the right to conduct the
business of the Trust are vested exclusively in the Trustees; the Shareholders
shall have no interest therein other than beneficial interest in the Trust
conferred by their Shares and shall have no right to compel any partition,
division, dividend or distribution of the Trust or any of the Trust Property.
The death of a Shareholder shall not terminate the Trust or give his legal
representative any rights against other Shareholders, the Trustees
-14-
<PAGE>
or the Trust Property, except the right, exercised in accordance with applicable
provisions of the Bylaws, to receive a new certificate for Shares in exchange
for the certificate held by the deceased Shareholder. Holders of Shares shall
not have any preemptive right to subscribe to any securities of the Trust.
ARTICLE 6 SECTION .6. Restrictions on Ownership and Transfer:
Exchange For Excess Shares.
(a) Definitions. For the purposes of Sections 6.6, 6.7 and
6.8, the following terms shall have the following meanings:
"Beneficial Ownership" shall mean ownership of Shares either directly
or constructively through the application of Section 544 of the Code, as
modified by Section 856(h)(1)(B) of the Code. The terms "Beneficial Owner,"
"Beneficially Owns" and "Beneficially Owned" shall have the correlative
meanings. Accordingly, for purposes hereof, Beneficial Ownership shall be
calculated for any Person by dividing two numbers, (a) the number that is the
numerator being the sum of (i) such Person's ownership of outstanding Shares
plus (ii) the maximum number of Shares issuable upon the exercise or conversion
of outstanding warrants, preferred stock or other securities exercisable for or
convertible into Shares owned by such Person and (b) the number that is the
denominator being the sum of (i) all outstanding Shares plus (ii) the maximum
number of Shares issuable upon the exercise or conversion of outstanding
warrants, preferred stock or other securities exercisable for or convertible
into Shares owned by such Person; provided that the Board of Trustees shall
retain full authority to adopt such other approach to determining Beneficial
Ownership as it may deem appropriate. Notwithstanding the foregoing, for
purposes of determining compliance with this Section 6.6 by any Person to whom
the Trust issues an option or warrant (or any Shareholder of any such Person),
such option or warrant shall not be deemed to confer upon such Person Beneficial
Ownership or Constructive Ownership of the Shares issuable upon the exercise
thereof, and the Shares issuable upon the exercise thereof shall be excluded
from both the numerator and denominator of the foregoing calculation.
"Beneficiary" shall mean the beneficiary of the Special Trust as
determined pursuant to Section 6.8(e).
"Common Equity Shares" shall mean outstanding Shares that are either
Common Shares or Excess Common Shares.
"Constructive Ownership" shall mean ownership of Shares either directly
or constructively through the application of Section 318(a) of the Code, as
modified by Section 856(d)(5) of the Code. The terms "Constructive Owner,"
"Constructively Owns" and "Constructively Owned" shall have the correlative
meanings. Accordingly, for purposes hereof, Constructive Ownership shall be
calculated for any Person by dividing two numbers, (a) the number that is the
numerator being the sum of (i) such Person's ownership of outstanding Shares
plus (ii) the maximum number of Shares issuable upon the exercise or conversion
of outstanding warrants, preferred stock or other securities exercisable for or
convertible into Shares owned by such Person and (b) the
-15-
<PAGE>
number that is the denominator being the sum of (i) all outstanding Shares plus
(ii) the maximum number of Shares issuable upon the exercise or conversion of
outstanding warrants, preferred stock or other securities exercisable for or
convertible into Shares owned by such Person; provided that the Board of
Trustees shall retain full authority to adopt such other approach to determining
Constructive Ownership as it may deem appropriate. Notwithstanding the
foregoing, for purposes of determining compliance with Sections 6.6(b) and (c)
by any Person to whom the Trust issues an option or warrant (or any Shareholder
of any such Person), such option or warrant shall not be deemed to confer upon
such Person Beneficial Ownership or Constructive Ownership of the Shares
issuable upon the exercise thereof, and the Shares issuable upon the exercise
thereof shall be excluded from both the numerator and denominator of the
foregoing calculation.
"Event" shall have the meaning assigned to it in Section 6.6(c).
"Excess Common Shares" shall mean Excess Shares that would, under
Section 6.8(e)(i), automatically be exchanged for Common Shares in the event of
a transfer of an interest in the Special Trust in which such Excess Shares are
held.
"Excess Preferred Shares" shall mean Excess Shares that would, under
Section 6.8(e)(i), automatically be exchanged for Preferred Shares in the event
of a transfer of an interest in the Special Trust in which such Excess Shares
are held.
"Excess Shares" shall mean, as applicable, Excess Common Shares or
Excess Preferred Shares.
"Exempt Parties" shall mean (i) (A) The Richard M. Osborne Trust
(the "Osborne Trust"), (B) Turkey Vulture Fund XIII, Ltd., (C) Richard M.
Osborne ("Osborne") and all of the members of Osborne's immediate family, as
such term is defined in Section 544(a)(2) of the Code and (D) any Section 544
Subsidiary of the entity or the individuals described in (A), (B) or (C), above
(the entities and individuals described in clauses (A), (B), (C) and (D) above
being collectively referred to herein as the "Osborne Affiliates"), (ii)
Safeguard Scientifics, Inc. and any Section 544 Subsidiary thereof
(collectively, the "SSI Affiliates") and (iii) The Nichols Company and any
Section 544 Subsidiary thereof (collectively, the "Nichols Affiliates"). The
term "Exempt Party" shall mean any of the foregoing.
"Market Price" shall mean the last reported sales price reported on
the American Stock Exchange of Shares on the trading day immediately preceding
the relevant date, or if the Shares are not then traded on the American Stock
Exchange, the last reported sales price of Shares on the trading day immediately
preceding the relevant date as reported on any exchange or quotation system over
which the Shares may be traded, or if the Shares are not then traded over any
exchange or quotation system, then the market price of the Shares on the
relevant date as determined in good faith by the Board of Trustees of the Trust.
The Market Price of the Common Shares shall be determined separately from the
Market Price of any outstanding class of Preferred Shares.
-16-
<PAGE>
"Ownership Limit" shall mean 4.16% in value of the outstanding Shares.
"Ownership Limitation Termination Date" shall mean the first day after
the date on which the Board of Trustees determines that it is no longer in the
best interests of the Trust to attempt to, or continue to, qualify as a REIT.
"Permissible Ownership Threshold" shall mean as to the Osborne
Affiliates, the SSI Affiliates and The Nichols Affiliates, respectively, 33.33%,
35.25% and 9.25%; provided that, once an Exempt Party transfers Shares such that
such Exempt Party following such transfer Beneficially Owns and Constructively
Owns less in value than the Ownership Limit, then such Exempt Party's
Permissible Ownership Threshold shall equal the Ownership Limit; provided,
further, however, that the foregoing proviso shall not restrict SSI Affiliates
or Nichols Affiliates from acquiring Shares upon the redemption of Class A Units
issued to them by Brandywine Operating Partnership, L.P. if such acquisition
would not result in such SSI Affiliates or Nichols Affiliates exceeding the
applicable percentage (35.25% or 9.25%) specified above.
"Person" shall mean an individual, corporation, partnership, limited
liability company, estate, trust (including a trust qualified under Section
401(a) or 501(c)(17) of the Code), a portion of a trust permanently set aside
for or to be used exclusively for the purposes described in Section 642(c) of
the Code, association, private foundation within the meaning of Section 509(a)
of the Code, joint stock company or other entity or any government or agency or
political subdivision thereof and also includes a group as that term is used for
purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended,
but does not include an underwriter which participates in a public offering of
Shares for a period of 25 days following the purchase by such underwriter of
those Shares.
"Purported Beneficial Holder" shall mean, with respect to any event
other than a purported Transfer which results in Excess Shares, the person for
whom the Purported Record Holder of the Shares that were, pursuant to Section
6.6(c), automatically exchanged for Excess Shares upon the occurrence of such
event held such Shares.
"Purported Beneficial Transferee" shall mean, with respect to any
purported Transfer which results in Excess Shares, the purported beneficial
transferee for whom the Purported Record Transferee would have acquired Shares,
if such Transfer had been valid under Section 6.6(b).
"Purported Record Holder" shall mean, with respect to any event other
than a purported Transfer which results in Excess Shares, the record holder of
the Shares that were, pursuant to Section 6.6(c), automatically exchanged for
Excess Shares upon the occurrence of such event.
"Purported Record Transferee" shall mean, with respect to any purported
Transfer which results in Excess Shares, the record holder of the Shares if such
Transfer had been valid under Section 6.6(b).
-17-
<PAGE>
"REIT" shall mean a real estate investment trust under Section 856 of
the Code.
"Section 544 Subsidiary" of any individual or entity shall mean any
entity, over 50% of the ownership interest in which is owned, directly or
indirectly (applying the principles of Section 544 of the Code) by the
individual or entity in question.
"Special Trust" shall mean the trust created pursuant to Section
6.8(a).
"Transfer" shall mean any issuance, sale, transfer, gift, assignment,
devise or other disposition of Shares or capital stock of any Person (including
(i) the granting of any option or entering into any agreement for the sale,
transfer or other disposition of Shares, (ii) the sale, transfer, exercise,
assignment or other disposition of any securities or rights convertible into or
exchangeable for Shares or (iii) the establishment of a put or the granting to a
third party of a call right with respect to Shares), whether voluntary or
involuntary, whether of record or beneficially and whether by operation of law
or otherwise.
"Trustee" shall mean, for purposes of this Article VI only, the Trust,
as trustee for the Special Trust, and any successor trustee appointed by the
Trust.
(b) Restrictions on Ownership and Transfer.
(i) Except as provided in Section 6.6(k), prior to the
Ownership Limitation Termination Date, no Person (other than an Exempt Party)
shall Beneficially Own or Constructively Own any Shares to the extent such
ownership would exceed the Ownership Limit. In addition, except as provided in
Section 6.6(k), prior to the Ownership Limitation Termination Date, no Exempt
Party shall Beneficially Own or Constructively Own any Shares in excess of the
Permissible Ownership Threshold for such Exempt Party.
(ii) Except as provided in Section 6.6(k), prior to the
Ownership Limitation Termination Date, any Transfer that, if effective, would
result in any Person (other than an Exempt Party) Beneficially Owning or
Constructively Owning Shares in excess of the Ownership Limit shall be void ab
initio as to the Transfer of such Shares which would be otherwise Beneficially
Owned or Constructively Owned by such Person in excess of such Ownership Limit;
and the intended transferee shall acquire no rights in or to such Shares.
(iii) Except as provided in Section 6.6(k), prior to the
Ownership Limitation Termination Date, any Transfer that, if effective, would
result in any Exempt Party Beneficially Owning or Constructively Owning Shares
in excess of the Permissible Ownership Threshold for such Exempt Party shall be
void ab initio as to the Transfer of such Shares which would be otherwise
Beneficially Owned or Constructively Owned by such Exempt Party in excess of the
Permissible Ownership Threshold for such Exempt Party; and such Exempt Party
shall acquire no rights in or to such Shares.
-18-
<PAGE>
(iv) Prior to the Ownership Limitation Termination Date, any
Transfer that, if effective, would result in Shares being beneficially owned by
less than 100 Persons (determined without reference to any rules of attribution)
shall be void ab initio as to the Transfer of such Shares which would be
otherwise beneficially owned by the transferee; and the intended transferee
shall acquire no rights in such Shares.
(v) Prior to the Ownership Limitation Termination Date, any
Transfer that, if effective, would result in the Trust being "closely held"
within the meaning of Section 856(h) of the Code shall be void ab initio as to
the Transfer of the Shares which would cause the Trust to be "closely held"
within the meaning of Section 856(h) of the Code; and the intended transferee
shall acquire no rights in such Shares.
(vi) The Board of Trustees shall have the authority to select
the Ownership Limitation Termination Date.
(c) Exchange For Excess Stock.
(i) If, notwithstanding the other provisions contained in
this Section 6.6, at any time prior to the Ownership Limitation Termination
Date, there is a purported Transfer such that any Person (other than an Exempt
Party) would Beneficially Own or Constructively Own Shares in excess of the
Ownership Limit, then, except as otherwise provided in Section 6.6(k), such
number of Shares in excess of such Ownership Limit (rounded up to the nearest
whole Share) shall be automatically exchanged for an equal number of shares of
Excess Shares. Such exchange shall be effective as of the close of business on
the business day prior to the date of the Transfer.
(ii) If, notwithstanding the other provisions contained in
this Section 6.6, at any time prior to the Ownership Limitation Termination
Date, there is a purported Transfer such that an Exempt Party would Beneficially
Own or Constructively Own Shares in excess of the applicable Permissible
Ownership Threshold, then, except as otherwise provided in Section 6.6(k), such
number of Shares in excess of the applicable Permissible Ownership Threshold
(rounded up to the nearest whole Share) shall be automatically exchanged for an
equal number of Excess Shares. Such exchange shall be effective as of the close
of business on the business day prior to the date of the Transfer.
(iii) If, notwithstanding the other provisions contained in
this Section 6.6, at any time prior to the Ownership Limitation Termination
Date, there is a purported Transfer which, if effective, would cause the Trust
to become "closely held" within the meaning of Section 856(h) of the Code, then
the Shares being Transferred which would cause the Trust to be "closely held"
within the meaning of Section 856(h) of the Code (rounded up to the nearest
whole Share) shall be automatically exchanged for an equal number of Excess
Shares. Such exchange shall be effective as of the close of business on the
business day prior to the date of the Transfer.
(iv) If, notwithstanding the other provisions contained in
this Section 6.6, at any time prior to the Ownership Limitation Termination
-19-
<PAGE>
Date, an event other than a purported Transfer (an "Event") occurs which would
(i) cause any Person (other than an Exempt Party) to Beneficially Own or
Constructively Own Shares in excess of the Ownership Limit, or (ii) cause an
Exempt Party to Beneficially Own or Constructively Own Shares in excess of such
Exempt Party's applicable Permissible Ownership Threshold, then, except as
otherwise provided in Section 6.6(k), Shares Beneficially Owned or
Constructively Owned by such Person or Exempt Party, as the case may be (rounded
up to the nearest whole Share), shall be automatically exchanged for an equal
number of Excess Shares to the extent necessary to eliminate such excess
ownership. Such exchange shall be effective as of the close of business on the
business day prior to the date of the Event. In determining which Shares are
exchanged, Shares directly held or Beneficially Owned by any Person who caused
the Event to occur shall be exchanged before any Shares not so held are
exchanged. Where several such Persons exist, the exchange shall be pro rata.
(d) Remedies For Breach. If the Board of Trustees or its
designee(s) shall at any time determine that a Transfer has taken place in
violation of Section 6.6(b) or that a Person intends to acquire or has attempted
to acquire beneficial ownership (determined without reference to any rules of
attribution) of any Shares that would result in Shares being beneficially owned
by less than 100 persons as contemplated by Section 6.6(b)(iv), or in Beneficial
Ownership or Constructive Ownership of any Shares in violation of Section
6.6(b), the Board of Trustees or its designees shall take such action as it
deems advisable to refuse to give effect to or to prevent such Transfer (or any
Transfer related to such intent), including, but not limited to, refusing to
give effect to such Transfer on the books of the Trust or instituting
proceedings to enjoin such Transfer; provided, however, that any Transfers or
attempted Transfers in violation of Sections 6.6(b)(ii), (iii), (iv) or (v)
shall automatically result in the exchange described in Section 6.6(c),
irrespective of any action (or non-action) by the Board of Trustees or its
designees.
(e) Notice of Ownership or Attempted Ownership in Violation
of Section 6.6(b). Any Person who acquires or attempts to acquire Beneficial
Ownership or Constructive Ownership of Shares in violation of Section 6.6(b)
shall immediately give written notice to the Trust of such acquisition or
attempted acquisition and shall provide to the Trust such other information as
the Trust may request in order to determine the effect, if any, of such
acquisition or attempted acquisition on the Trust's status as a REIT.
(f) Owners Required to Provide Information. Prior to the
Ownership Limitation Termination Date:
(i) every Beneficial Owner or Constructive Owner of
more than 4.0% in value of the outstanding Shares shall, within 30 days after
January 1 of each year, give written notice to the Trust stating the name and
address of such Beneficial Owner or Constructive Owner, the number of Shares
Beneficially Owned or Constructively Owned, and a description of how such Shares
are held. Each such Beneficial Owner or Constructive Owner shall provide to the
Trust such additional information as the Trust may request in
-20-
<PAGE>
order to determine the effect, if any, of such Beneficial Ownership or
Constructive Ownership on the Trust's status as a REIT.
(ii) Each Person who is a Beneficial Owner or
Constructive Owner of Shares and each Person (including the shareholder of
record) who is holding Shares for a Beneficial Owner or Constructive Owner shall
provide to the Trust such information as the Trust may request in order to
determine the Trust's status as a REIT or to comply with regulations promulgated
under the REIT provisions of the Code.
(g) Remedies Not Limited. Nothing contained in this Section
6.6 shall limit the authority of the Board of Trustees to take such other action
as it deems necessary or advisable to protect the Trust and the interests of its
Shareholders by preserving the Trust's REIT status.
(h) Ambiguity. In the case of an ambiguity in the application
of any of the provisions of this Article VI including any definition contained
in Section 6.6(a) and any ambiguity with respect to which Shares are to be
exchanged for Excess Shares in a given situation, the Board of Trustees shall
have the authority to determine the application of the provisions of this
Section 6.6 with respect to any situation based on the facts known to it.
(i) Increase in Ownership Limit. Subject to the
limitations provided in Section 6.6(j), the Board of Trustees may from time to
time increase the Ownership Limit.
(j) Limitations on Modifications.
(i) The Ownership Limit may not be increased if, after
giving effect to such increase, five Beneficial Owners of Shares would
Beneficially Own, in the aggregate, more than 49.9% of the outstanding Shares.
(ii) Prior to an increase in the Ownership Limit
pursuant to Section 6.6(i), the Board of Trustees may require such opinions of
counsel or the Trust's tax accountants, affidavits, undertakings or agreements
as it may deem necessary or advisable in order to determine or ensure the
Trust's status as a REIT.
(k) Exceptions. The Board of Trustees, with a ruling from the
Internal Revenue Service or an opinion of counsel or the Trust's tax accountants
to the effect that such exemption will not result in the Trust being "closely
held" within the meaning of Section 856(h) of the Code, may exempt a Person from
the Ownership Limit or the Permissible Ownership Threshold, as the case may be,
if the Board of Trustees obtains such representations and undertakings from such
Person as the Board of Trustees may deem appropriate and such Person agrees that
any violation or attempted violation of any of such representations or
undertakings will result in, to the extent necessary or otherwise deemed
appropriate by the Board of Trustees, the exchange of Shares held by such Person
for Excess Shares in accordance with Section 6.6(c).
-21-
<PAGE>
(l) American Stock Exchange Transactions. Nothing in this
Section 6.6 shall preclude the settlement of any transaction entered into
through the facilities of the American Stock Exchange, any successor exchange or
quotation system thereto, or any other exchange or quotation system over which
the Shares may be traded from time to time.
6 SECTION .7. Legend. (a) Each certificate for Common Shares hereafter
issued shall bear the following legend:
"The Common Shares represented by this certificate are subject
to restrictions on ownership and transfer for the purpose of the Trust's
maintenance of its status as a real estate investment trust under the Internal
Revenue Code of 1986, as amended (the "Code"). No Person may Beneficially Own or
Constructively Own Shares in excess of 4.16% in value (or such greater
percentage as may be determined by the Board of Trustees) of the outstanding
Shares of the Trust (unless such Person is an Exempt Party). No Person who is an
Exempt Party may Beneficially Own or Constructively Own Shares in excess of the
Permissible Ownership Threshold for such Exempt Party. Any Person who attempts
to Beneficially Own or Constructively Own Shares in excess of the above
limitations must immediately notify the Trust. All capitalized terms used in
this legend have the meanings set forth in the Declaration of Trust, a copy of
which, including the restrictions on ownership and transfer, will be sent
without charge to each Shareholder who so requests. If the restrictions on
ownership and transfer are violated, the Common Shares represented hereby will
be automatically exchanged for Excess Shares which will be held in trust by the
Trust."
(b) Each certificate for Preferred Shares hereafter issued
shall bear the following legend:
-22-
<PAGE>
"The Preferred Shares represented by this certificate are
subject to restrictions on ownership and transfer for the purpose of the Trust's
maintenance of its status as a real estate investment trust under the Internal
Revenue Code of 1986, as amended (the "Code"). No Person may Beneficially Own or
Constructively Own Shares in excess of 4.16% in value (or such greater
percentage as may be determined by the Board of Trustees) of the outstanding
Shares of the Trust (unless such Person is an Exempt Party). No Person who is an
Exempt Party may Beneficially Own or Constructively Own Shares in excess of the
Permissible Ownership Threshold for such Exempt Party. Any Person who attempts
to Beneficially Own or Constructively Own Shares in excess of the above
limitations must immediately notify the Trust. All capitalized terms used in
this legend have the meanings set forth in the Declaration of Trust, a copy of
which, including the restrictions on ownership and transfer, will be sent
without charge to each Shareholder who so requests. If the restrictions on
ownership and transfer are violated, the Preferred Shares represented hereby
will be automatically exchanged for Excess Shares which will be held in trust by
the Trust."
6 SECTION .8. Excess Shares.
(a) Ownership in Trust. Upon any purported Transfer or
Event that results in an exchange of Shares for Excess Shares pursuant to
Section 6.6(c), such Excess Shares shall be deemed to have been transferred to
the Trust, as Trustee of a Special Trust for the exclusive benefit of the
Beneficiary or Beneficiaries to whom an interest in such Excess Shares may later
be transferred pursuant to Section 6.8(e). Excess Shares so held in trust shall
be issued and outstanding Shares of the Trust. The Purported Record Transferee
or Purported Record Holder shall have no rights in such Excess Shares except as
and to the extent provided in Section 6.8(e).
(b) Dividend Rights. Excess Shares shall not be entitled to
any dividends or distributions. Any dividend or distribution paid prior to the
discovery by the Trust that the Shares with respect to which the dividend or
distribution was made had been exchanged for Excess Shares shall be repaid to
the Trust upon demand.
(c) Rights Upon Liquidation. In the event of any voluntary
or involuntary liquidation, dissolution or winding up of, or any distribution of
the assets of, the Trust, (i) subject to the preferential rights of the
Preferred Shares, if any, as may be determined by the Board of Trustees pursuant
to Section 6.3 and the preferential rights of the Excess Preferred Shares, if
any, each holder of Excess Common Shares shall be entitled to receive, ratably
with each other holder of Common Shares and Excess Common Shares, that portion
of the assets of the Trust available for distribution to the holders of Common
Shares or Excess Common Shares which bears the same relation to the total amount
of such assets of the Trust as the number of Excess Common Shares held by such
holder bears to the total number of Common Shares and Excess Common Shares then
outstanding and (ii) each holder of Excess Preferred Shares shall be entitled to
receive that portion of the assets of the Trust which a holder of the Preferred
Shares that were exchanged for such Excess Preferred Shares would have been
entitled to receive had such Preferred Shares remained outstanding. The Trust,
as holder of the
-23-
<PAGE>
Excess Shares in trust, or if the Trust shall have been dissolved, any trustee
appointed by the Trust prior to its dissolution, shall distribute ratably to the
Beneficiaries of the Special Trust, when determined, any such assets received
in respect of the Excess Shares in any liquidation, dissolution or winding up
of, or any distribution of the assets of the Trust.
(d) Voting Rights. The holders of Excess Shares shall not be
entitled to vote on any matters (except as required by law).
(e) Restrictions On Transfer: Designation of Beneficiary.
(i) Excess Shares shall not be transferrable. The
Purported Record Transferee or Purported Record Holder may freely designate a
Beneficiary of an interest in the Special Trust (representing the number of
Excess Shares held by the Special Trust attributable to a purported Transfer or
Event that resulted in the Excess Shares) if (i) the Excess Shares held in the
Special Trust would not be Excess Shares in the hands of such Beneficiary and
(ii) the Purported Beneficial Transferee or Purported Beneficial Holder does not
receive a price, as determined on a Share-by-Share basis, for designating such
Beneficiary that reflects a price for such Excess Shares that, (I) in the case
of a Purported Beneficial Transferee, exceeds (x) the price such Purported
Beneficial Transferee paid for the Shares in the purported Transfer that
resulted in the exchanges of Shares for Excess Shares, or (y) if the Purported
Beneficial Transferee did not give value for such Shares (having received such
Shares pursuant to a gift, devise or other transaction), the Market Price of
such Shares on the date of the purported Transfer that resulted in the exchange
of Shares for Excess Shares or (II) in the case of a Purported Beneficial
Holder, exceeds the Market Price of the Shares that were automatically exchanged
for such Excess Shares on the date of such exchange. Upon such a transfer of an
interest in the Special Trust, the corresponding shares of Excess Shares in the
Special Trust shall be automatically exchanged for an equal number of Common
Shares or Preferred Shares (depending upon the type of Shares that were
originally exchanged for such Excess Shares) and such Common Shares or Preferred
Shares shall be transferred of record to the transferee of the interest in the
Special Trust if such Common Shares or Preferred Shares would not be Excess
Shares in the hands of such transferee. Prior to any transfer of any interest in
the Special Trust, the Purported Record Transferee or Purported Record Holder,
as the case may be, must give advance notice to the Trust of the intended
transfer and the Trust must have waived in writing its purchase rights under
Section 6.8(f).
(ii) Notwithstanding the foregoing, if a Purported
Beneficial Transferee or Purported Beneficial Holder receives a price for
designating a Beneficiary of an interest in the Special Trust that exceeds the
amounts allowable under Section 6.8(e)(i), such Purported Beneficial Transferee
or Purported Beneficial Holder shall pay, or cause such Beneficiary to pay, such
excess to the Trust.
(f) Purchase Right in Excess Shares. Excess Shares shall be
deemed to have been offered for sale to the Trust, or its designee, at a price
per share equal to, (I) in the case of Excess Shares resulting from a
-24-
<PAGE>
purported Transfer, the lesser of (i) the price per share in the transaction
that created such Excess Shares (or, in the case of a gift, devise or other
transaction, the Market Price at the time of such gift, devise or other
transaction) or (ii) the Market Price on the date the Trust, or its designee,
accepts such offer or (II) in the case of Excess Shares created by an Event, the
lesser of (i) the Market Price of the Shares originally exchanged for the Excess
Shares on the date of such exchange or (ii) the Market Price of such Shares on
the date the Trust, or its designee, accepts such offer. The Trust shall have
the right to accept such offer for a period of ninety (90) days after the later
of (i) the date of the purported Transfer or Event which resulted in an exchange
of Shares for such Excess Shares and (ii) the date the Board of Trustees
determines that a purported Transfer or other event resulting in an exchange of
Shares for such Excess Shares has occurred, if the Trust does not receive a
notice of any such Transfer pursuant to Section 6.6(e).
ARTICLE 6 SECTION .9. Severability; Agent for Trust. If any
provision of Section 6.6, 6.7 or 6.8 or any application of any such provision is
determined to be invalid by any federal or state court having jurisdiction over
the issues, the validity of the remaining provisions shall not be affected and
other applications of such provision shall be affected only to the extent
necessary to comply with the determination of such court. In any event, to the
extent such court holds the Purported Record Transferee to be the record and
beneficial owner of Shares which, had the provisions of Sections 6.6, 6.7 and
6.8 been enforced, would have been exchanged for Excess Shares, such Purported
Record Transferee shall be deemed, at the option of the Trust, to have acted as
agent on behalf of the Trust in acquiring such transferred Shares and to hold
such Shares on behalf of the Trust.
ARTICLE 7
SHAREHOLDERS
ARTICLE 7 SECTION .1. Meetings of Shareholders. There shall be an
annual meeting of the Shareholders, to be held at such time and place as shall
be determined by or in the manner prescribed in the Bylaws at which the Trustees
shall be elected and any other proper business may be conducted. Except as
otherwise provided in this Declaration of Trust, special meetings of
Shareholders may be called in the manner provided in the Bylaws. Special
meetings of Shareholders may be called upon the written request of Shareholders
holding an aggregate of not less than ten percent (10%) of the Common Shares.
Special meetings of shareholders may also be called by holders of Preferred
Shares to the extent, if any, determined by the Board of Trustees in connection
with the establishment of a class or series of Preferred Shares. If there are no
Trustees, the officers of the Trust shall promptly call a special meeting of the
Shareholders entitled to vote for the election of successor Trustees. Any
meeting may be adjourned and reconvened as the Trustees determine or as provided
in the Bylaws.
ARTICLE 7 SECTION .2. Voting Rights of Shareholders. Subject to the
provisions of any class or series of Preferred Shares then outstanding and
-25-
<PAGE>
the mandatory provisions of any applicable laws or regulations, the Shareholders
shall be entitled to vote only on the following matters: (a) election or removal
of Trustees as provided in Sections 7.1 and 2.3 and Section 8-202 of Title 8 and
the Bylaws; (b) amendment of this Declaration of Trust as provided in Section
9.1; (c) a matter specified in Section 3.3; and (d) a merger of the Trust with
or into another entity as and to the extent required by Section 8-501.1 of Title
8. Except with respect to the foregoing matters, no action taken by the
Shareholders at any meeting shall in any way bind the Trustees.
ARTICLE 7 SECTION .3. Shareholder Action to be Taken by Meeting. Any
action required or permitted to be taken by the Shareholders of the Trust must
be effected at a duly called annual or special meeting of Shareholders of the
Trust and may not be effected by any consent in writing of such Shareholders.
Notwithstanding anything contained in this Declaration of Trust to the contrary,
the affirmative vote of at least a majority of the then outstanding Shares
entitled to vote in the election of Trustees, voting together as a single class,
shall be required to amend, repeal, or adopt any provision inconsistent with
this Section 7.3 and the affirmative vote of such number or percentage of the
then outstanding Shares as is specified in this Declaration of Trust or, if not
so specified, in the Bylaws shall be required to take any other action required
or permitted to be taken by the Shareholders.
ARTICLE 8
LIABILITY OF SHAREHOLDERS, TRUSTEES, OFFICERS,
EMPLOYEES AND AGENTS
AND TRANSACTIONS BETWEEN AFFILIATES AND THE TRUST
ARTICLE 8 SECTION .1. Limitation of Shareholder Liability. No
Shareholder shall be liable for any debt, claim, demand, judgment or obligation
of any kind of, against or with respect to the Trust by reason of his being a
Shareholder, nor shall any Shareholder be subject to any personal liability
whatsoever, in tort, contract or otherwise, to any Person in connection with the
Trust Property or the affairs of the Trust. All written contracts to which the
Trust is a party shall include a provision to the effect that the Shareholders
shall not be personally liable thereon.
-26-
<PAGE>
ARTICLE 8 SECTION .2. Limitation of Trustee and Officer Liability. To
the maximum extent that Maryland law in effect from time to time permits
limitation of the liability of trustees and officers of a real estate investment
trust, no Trustee or officer of the Trust shall be liable to the Trust or to any
Shareholder for money damages. Neither the amendment nor repeal of this Section,
nor the adoption or amendment of any other provision of this Declaration of
Trust inconsistent with this Section, shall apply to or affect in any respect
the applicability of the preceding sentence with respect to any act or failure
to act which occurred prior to such amendment, repeal or adoption. In the
absence of any Maryland statute limiting the liability of trustees and officers
of a Maryland real estate investment trust for money damages in a suit by or on
behalf of the Trust or by any Shareholder, no Trustee or officer of the Trust
shall be liable to the Trust or to any Shareholder for money damages except to
the extent that (i) the Trustee or officer actually received an improper benefit
or profit in money, property, or services, for the amount of the benefit or
profit in money, property, or services actually received; or (ii) a judgment or
other final adjudication adverse to the Trustee or officer is entered in a
proceeding based on a finding in the proceeding that the Trustee's or officer's
action or failure to act was the result of active and deliberate dishonesty and
was material to the cause of action adjudicated in the proceeding.
ARTICLE 8 SECTION .3. Express Exculpatory Clauses in Instruments.
Neither the Shareholders nor the Trustees, officers, employees or agents of the
Trust shall be liable under any written instrument creating an obligation of the
Trust, and all Persons shall look solely to the Trust Property for the payment
of any claim under or for the performance of that instrument. The omission of
the foregoing exculpatory language from any instrument shall not affect the
validity or enforceability of such instrument and shall not render any
Shareholder, Trustee, officer, employee or agent liable thereunder to any third
party, nor shall the Trustees or any officer, employee or agent of the Trust be
liable to anyone for such omission. No amendment of this Declaration of Trust or
repeal of any of its provisions shall limit or eliminate the limitation of
liability provided to Trustees and officers hereunder with respect to any act or
omission occurring prior to such amendment or repeal.
ARTICLE 8 SECTION .4. Indemnification. The Trust shall indemnify
(i) its Trustees and officers, whether serving the Trust or at its request any
other entity, to the full extent required or permitted by the general laws of
the State of Maryland applicable to ordinary business corporations now or
hereafter in force, including the advance of expenses under the procedures and
to the full extent permitted by such laws, and (ii) the Shareholders and other
employees and agents of the Trust to such extent as shall be authorized by the
Trustees or the Bylaws and as permitted by law. Nothing contained herein shall
be construed to protect any Person against any liability to the extent such
protection would violate Maryland statutory or decisional law applicable to real
estate investment trusts organized under Title 8 or any successor provision. The
foregoing rights of indemnification shall not be exclusive of any other rights
to which those seeking indemnification may be entitled. The Trustees may take
such action as is necessary to carry out these indemnification provisions and
are expressly empowered to adopt, approve and amend from time to time such
bylaws, resolutions or contracts implementing
-27-
<PAGE>
such provisions or such further indemnification arrangements as may be permitted
by law. No amendment of this Declaration of Trust or repeal of any of its
provisions shall limit or eliminate the right of indemnification provided
hereunder with respect to acts or omissions occurring prior to such amendment or
repeal.
ARTICLE 8 SECTION .5. Transactions Between the Trust and its
Trustees, Officers, Employees and Agents. Subject to any express restrictions in
this Declaration of Trust or adopted by the Trustees in the Bylaws or by
resolution, the Trust (which, for purposes of this Section 8.5, shall include
the Trust and any of its subsidiaries) may enter into any contract or
transaction of any kind (including without limitation for the purchase or sale
of property or for any type of services, including those in connection with
underwriting or the offer or sale of Securities of the Trust) with any Person,
including any Trustee, officer, employee or agent of the Trust or any Person
Affiliated with the Trust or a Trustee, officer, employee or agent of the Trust,
whether or not any of them has a financial interest in such transaction;
provided, however, that the following contracts and transactions may not be
consummated by the Trust unless first approved by the affirmative vote of a
majority of the Trustees who have no interest in the contract or transaction:
any contract or transaction between the Trust and any Trustee, officer, employee
or agent of the Trust or any person Affiliated with the Trust or a Trustee,
officer, employee or agent of the Trust.
ARTICLE 9
AMENDMENT; REORGANIZATION; MERGER, ETC.
ARTICLE 9 SECTION .1. Amendment.
(a) This Declaration of Trust may be amended by the
affirmative vote of the holders of not less than a majority of the Shares then
outstanding and entitled to vote thereon, except that Section 11.5 shall not be
amended or repealed, nor shall provisions inconsistent therewith be adopted,
except by the affirmative vote of the holders of not less than 80% of the Shares
then outstanding and entitled to vote. Notwithstanding the foregoing, no vote or
other action of Shareholders shall be required in order for the Board of
Trustees to amend this Declaration of Trust pursuant to Section 6.1.
(b) An amendment to this Declaration of Trust shall become
effective as provided in Section 11.6.
(c) This Declaration of Trust may not be amended except as
provided in this Section 9.1.
-28-
<PAGE>
ARTICLE 9 SECTION .2. Merger, Consolidation or Sale of Trust
Property. Subject to the provisions of any class or series of Preferred Shares
at the time outstanding and subject to Section 8-501.1 of Title 8, as and to the
extent applicable, the Trustees shall have the power to (i) merge the Trust with
or into another entity, (ii) consolidate the Trust with one or more other
entities into a new entity or (iii) sell or otherwise dispose of all or
substantially all of the Trust Property.
ARTICLE 10
DURATION AND TERMINATION OF TRUST
ARTICLE 10 SECTION .1. Duration of Trust. The Trust shall continue
perpetually unless terminated pursuant to Section 10.2 or pursuant to any
applicable provision of Title 8.
ARTICLE 10 SECTION .2. Termination of Trust.
(a) Subject to the provisions of any class or series of
Preferred Shares at the time outstanding and subject to Section 8-501.1 of Title
8, as and to the extent applicable, the Trustees shall have the power to
terminate the Trust. Upon the termination of the Trust:
(i) The Trustees shall proceed to wind up the affairs
of the Trust and all of the powers of the Trustees under this Declaration of
Trust shall continue, including the powers to fulfill or discharge the Trust's
contracts, collect its assets, sell, convey, assign, exchange, transfer or
otherwise dispose of all or any part of the remaining Trust Property to one or
more Persons at public or private sale for consideration which may consist in
whole or in part of cash, Securities or other property of any kind, discharge or
pay its liabilities and do all other acts appropriate to liquidate its business.
(ii) After paying or adequately providing for the
payment of all liabilities, and upon receipt of such releases, indemnities and
agreements as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property, in cash or in kind or partly in each,
among the Shareholders according to their respective rights, so that after
payment in full or the setting apart for payment of such preferential amounts,
if any, to which the holders of any Shares (other than Common Shares) at the
time outstanding shall be entitled, the remaining Trust Property available for
payment and distribution to Shareholders shall, subject to any participating or
similar rights of Shares (other than Common Shares) at the time outstanding, be
distributed ratably among the holders of Common Shares at the time outstanding.
-29-
<PAGE>
(b) After termination of the Trust, the liquidation of its
business, and the distribution to the Shareholders as herein provided, a
majority of the Trustees shall execute and file with the Trust's records a
document certifying that the Trust has been duly terminated, and the Trustees
shall be discharged from all liabilities and duties hereunder, and the rights
and interests of all Shareholders shall cease.
ARTICLE 11
MISCELLANEOUS
ARTICLE 11 SECTION .1. Governing Law. This Declaration of Trust is
executed by the undersigned Trustees and delivered in the State of Maryland with
reference to the laws thereof, and the rights of all parties and the validity,
construction and effect of every provision hereof shall be subject to and
construed according to the laws of the State of Maryland without regard to
conflicts of laws provisions thereof.
ARTICLE 11 SECTION .2. Reliance by Third Parties. Any certificate
shall be final and conclusive as to any Persons dealing with the Trust if
executed by an individual who, according to the records of the Trust or of any
recording office in which this Declaration of Trust may be recorded, appears to
be the Secretary or an Assistant Secretary of the Trust or a Trustee, and if
certifying to: (i) the number or identity of Trustees, officers of the Trust or
Shareholders; (ii) the due authorization of the execution of any document; (iii)
the action or vote taken, and the existence of a quorum, at a meeting of
Trustees or Shareholders; (iv) a copy of this Declaration or of the Bylaws as a
true and complete copy as then in force; (v) an amendment to this Declaration;
(vi) the termination of the Trust; or (vii) the existence of any fact or facts
which relate to the affairs of the Trust. No purchaser, lender, transfer agent
or other Person shall be bound to make any inquiry concerning the validity of
any transaction purporting to be made on behalf of the Trust by the Trustees or
by any officer, employee or agent of the Trust.
ARTICLE 11 SECTION .3. Provisions in Conflict with Law or Regulations.
(a) The provisions of this Declaration of Trust are
severable, and if the Trustees shall determine, with the advice of counsel, that
any one or more of such provisions (the "Conflicting Provisions") are in
conflict with the REIT Provisions of the Code, Title 8 or other applicable
federal or state laws, the Conflicting Provisions shall be deemed never to have
constituted a part of this Declaration of Trust, even without any amendment of
this Declaration pursuant to Section 9.1; provided, however, that such
determination by the Trustees shall not affect or impair any of the remaining
provisions of this Declaration of Trust or render invalid or improper any action
taken or omitted prior to such determination. No Trustee shall be liable for
making or failing to make such a determination.
-30-
<PAGE>
(b) If any provision of this Declaration of Trust shall be
held invalid or unenforceable in any jurisdiction, such holding shall not in any
manner affect or render invalid or unenforceable such provision in any other
jurisdiction or any other provision of this Declaration of Trust in any
jurisdiction.
ARTICLE 11 SECTION .4. Construction. In this Declaration of Trust,
unless the context otherwise requires, words used in the singular or in the
plural include both the plural and singular and words denoting any gender
include all genders. The title and headings of different parts are inserted for
convenience and shall not affect the meaning, construction or effect of this
Declaration. In defining or interpreting the powers and duties of the Trust and
its Trustees and officers, reference may be made, to the extent appropriate and
not inconsistent with the Code or Title 8, to Titles 1 through 3 of the
Corporations and Associations Article of the Annotated Code of Maryland. In
furtherance and not in limitation of the foregoing, in accordance with the
provisions of Title 3, Subtitles 6 and 7, of the Corporations and Associations
Article of the Annotated Code of Maryland, the Trust shall be included within
the definition of "corporation" for purposes of such provisions.
ARTICLE 11 SECTION .5. Business Combinations. The provisions of
Subtitle 6 of Title 3 of the Corporations and Associations Article of the
Annotated Code of Maryland, as such provisions exist as of June 4, 1986, are by
this reference incorporated herein as if here set forth in their entirety. Such
provisions shall be interpreted in a manner consistent with that in which they
would be interpreted pursuant to the above referenced statute as such statute
exists as of June 4, 1986, assuming the validity of such statute and its
applicability to the Trust.
ARTICLE 11 SECTION .6. Recordation. This Declaration of Trust and any
amendment hereto shall be filed for record with the State Department of
Assessments and Taxation of Maryland and may also be filed or recorded in such
other places as the Trustees deem appropriate, but failure to file for record
this Declaration or any amendment hereto in any office other than in the State
of Maryland shall not affect or impair the validity or effectiveness of this
Declaration or any amendment hereto. A restated Declaration shall, upon filing,
be conclusive evidence of all amendments contained therein and may thereafter be
referred to in lieu of the original Declaration and the various amendments
thereto.
IN WITNESS WHEREOF, this Amended and Restated Declaration of Trust has
been signed on this 12th day of May, 1997 by the undersigned Trustees, each of
whom acknowledges, under penalty of perjury, that this document is his free act
and
-31-
<PAGE>
deed, and that to the best of his knowledge, information, and belief, the
matters and facts set forth herein are true in all material respects.
/s/ Anthony A. Nichols, Sr.
----------------------------------
Anthony A. Nichols, Sr.
/s/ Joseph L. Carboni
----------------------------------
Joseph L. Carboni
/s/ Richard M. Osborne
----------------------------------
Richard M. Osborne
/s/ Gerard H. Sweeney
----------------------------------
Gerard H. Sweeney
/s/ Warren V. Musser
----------------------------------
Warren V. Musser
/s/ Walter D'Alessio
----------------------------------
Walter D'Alessio
/s/ Charles P. Pizzi
----------------------------------
Charles P. Pizzi
-32-
<PAGE>
AGREEMENT OF PURCHASE AND SALE
BY AND BETWEEN
ADVENT REALTY LIMITED PARTNERSHIP AND
ADVENT REALTY LIMITED PARTNERSHIP II (COLLECTIVELY "SELLER")
AND
BRANDYWINE REALTY TRUST
("PURCHASER")
APRIL 7, 1997
Re: Oxford Corporate Center, Bucks County, PA;
Springhouse Corporate Center, Lower Gwynedd, Montgomery County, PA;
Greentree Commons, Evesham Township, Burlington County, NJ; and
Highlands Business Center, Westhampton, Burlington County, NJ
<PAGE>
TABLE OF CONTENTS
ARTICLE I......................................................................1
Sale of Property...............................................................1
1.1. Sale of Property................................................1
1.1.1. Land and Improvements................................1
1.1.2. Leases...............................................2
1.1.3. Real Property........................................2
1.1.4. Personal Property....................................2
1.1.5. Intangible Property..................................2
ARTICLE II.....................................................................2
Purchase Price.................................................................3
2.1. Purchase Price..................................................3
ARTICLE III....................................................................3
Deposit........................................................................3
3.1. Initial Deposit.................................................3
3.2. Additional Deposit..............................................3
3.3. Application Upon Default........................................3
3.4. Interest Bearing................................................3
3.5. Escrow Agent....................................................4
ARTICLE IV.....................................................................4
Closing, Prorations and Closing Costs..........................................4
4.1. Closing.........................................................4
4.2. Prorations......................................................4
4.2.1. Taxes................................................4
4.2.2. Insurance............................................5
4.2.3. Utilities............................................5
4.2.4. Rents................................................5
4.2.5. Calculations.........................................6
4.3. Closing Costs...................................................6
4.4. Commissions and Leasing Costs...................................6
4.5. Costs Under Bisys Lease.........................................7
ARTICLE V......................................................................7
Purchaser's Right of Inspection; Feasibility Period............................7
5.1. Right to Evaluate...............................................7
5.2. Inspection Obligations and Indemnity............................8
5.3. Seller Deliveries...............................................9
5.4. Independent Examination........................................10
5.5. Termination Right..............................................10
5.6. Copies of Reports..............................................10
ARTICLE VI....................................................................11
Title and Survey Matters......................................................11
6.1. Title..........................................................11
6.2. Survey.........................................................12
<PAGE>
ARTICLE VII...................................................................12
Representations and Warranties of the Seller..................................12
7.1. Seller's Representations.......................................12
7.1.1. Authority..........................................12
7.1.2. Bankruptcy or Debt of Seller.......................13
7.1.3. Environmental Reports..............................13
7.1.4. Foreign Person.....................................13
7.1.5. Employment.........................................13
7.1.6. Service Contracts..................................13
7.1.7. Leases.............................................13
7.1.8. Compliance With Law................................14
7.1.9. Insurance..........................................14
7.1.10. Operating Statement................................14
7.1.11. Rights to Purchase.................................14
7.1.12. No Litigation......................................14
7.1.13. Condemnation.......................................14
7.1.14. No Brokers.........................................14
7.1.15. Completion of Tenant Improvement Obligations.......14
7.1.16. Seller's Knowledge.................................15
7.2. Change in Representation/Waiver................................15
7.3. Survival.......................................................15
ARTICLE VIII..................................................................16
Representations, Warranties and Covenants of Purchaser........................16
8.1. Representations and Warranties.................................16
8.1.1. Authority...........................................16
8.1.2. Bankruptcy or Debt of Purchaser.....................16
8.1.3. ERISA Compliance....................................16
8.2. No Financing Contingency.......................................17
8.3. Purchaser's Acknowledgment.....................................17
8.4. Purchaser's Release............................................18
8.5. Survival.......................................................18
ARTICLE IX....................................................................19
Seller's Interim Operating Covenants..........................................19
9.1. Operations....................................................19
9.2. Maintain Insurance............................................19
9.3. Personal Property.............................................19
9.4. No Sales......................................................19
9.5. Tenant Leases.................................................19
9.6. Alterations...................................................20
9.7. Bill Tenants..................................................20
9.8. Notice to Purchaser...........................................20
9.9. Comply with Leases............................................20
9.10. No New Agreements.............................................20
9.11. Tax Disputes..................................................21
-2-
<PAGE>
ARTICLE X.....................................................................21
Closing Conditions............................................................21
10.1. Conditions to Obligations of Seller...........................21
10.1.1. Representations, Warranties and Covenants
of Purchaser.......................................21
10.1.2. No Orders..........................................21
10.2. Conditions to Obligations of Purchaser........................21
10.2.1. Representations, Warranties and Covenants
of Seller..........................................22
10.2.2. No Orders..........................................22
10.2.3. ISRA Non-Applicability Letter......................22
10.2.4. Tenant Estoppels...................................22
10.2.5. Title Policy.......................................23
10.2.6. Possession of the Property.........................23
ARTICLE XI....................................................................23
Closing.......................................................................23
11.1. Purchaser's Closing Obligations...............................23
11.1.1. ...................................................23
11.1.2. ...................................................23
11.1.3. ...................................................23
11.1.4. ...................................................23
11.1.5. ...................................................23
11.1.6. ...................................................23
11.2. Seller's Closing Obligations..................................24
11.2.1. ...................................................24
11.2.2. ...................................................24
11.2.3. ...................................................24
11.2.4. ...................................................24
11.2.5. ...................................................24
11.2.6. ...................................................24
11.2.7. ...................................................24
11.2.8. ...................................................25
11.2.9. ...................................................25
11.2.10. ...................................................25
11.2.11. ...................................................25
11.2.12. ...................................................25
ARTICLE XII...................................................................25
Risk of Loss..................................................................25
12.1. Condemnation and Casualty.....................................25
12.2. Condemnation not Material.....................................26
12.3. Casualty Not Material.........................................26
12.4. Materiality...................................................26
ARTICLE XIII..................................................................26
Default.......................................................................26
13.1. Default by Seller.............................................26
-3-
<PAGE>
13.2. Default by Purchaser..........................................27
ARTICLE XIV...................................................................27
Brokers.......................................................................27
14.1. Brokers.......................................................27
ARTICLE XV....................................................................28
Confidentiality...............................................................28
15.1. Confidentiality...............................................28
15.2. Post Closing Publication......................................29
ARTICLE XVI...................................................................29
Miscellaneous.................................................................29
16.1. Notices......................................................29
16.2. Governing Law................................................30
16.3. Headings.....................................................30
16.4. Effective Date...............................................30
16.5. Business Days................................................30
16.6. Counterpart Copies...........................................30
16.7. Binding Effect...............................................30
16.8. Assignment...................................................30
16.9. Interpretation...............................................31
16.10. Entire Agreement.............................................31
16.11. Severability.................................................31
16.12. Survival.....................................................31
16.13. Exhibits.....................................................31
16.14. Time.........................................................32
16.15. Limitation of Liability......................................32
16.16. Prevailing Party.............................................32
16.17. Escrow Agreement.16.17.1.....................................32
16.17.1. Instructions......................................32
16.17.2. Real Estate Reporting Person......................32
16.18. Liability of Escrow Agent....................................33
16.19. No Recording.................................................33
16.20. Waiver of Trial by Jury......................................34
16.21. [Intentionally Omitted.16.22.................................34
16.22. Several Obligations of Seller................................34
16.23. Portfolio Sale...............................................34
16.24. SEC Reporting Requirements...................................35
-4-
<PAGE>
AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT OF PURCHASE AND SALE (the "Agreement") is made and
entered into as of the 7th day of April, 1997, by and between ADVENT REALTY
LIMITED PARTNERSHIP ("Fund I") and ADVENT REALTY LIMITED PARTNERSHIP II ("Fund
II"), each a Delaware limited partnership (Fund I and Fund II are hereinafter
collectively referred to as "Seller", notwithstanding that their obligations are
several, not joint obligations) and BRANDYWINE REALTY TRUST, a Maryland real
estate investment trust (hereinafter referred to as "Purchaser").
In consideration of the mutual promises, covenants and agreements
hereinafter set forth and of other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Seller and Purchaser agree as
follows:
ARTICLE I.
SALE OF PROPERTY
1.1 SALE OF PROPERTY. Fund I (as to Springhouse, Oxford and Greentree
(as each is hereinafter defined)) and Fund II (as to Highlands (as hereinafter
defined)) hereby agrees to sell, assign and convey to Purchaser and Purchaser
agrees to purchase from Seller, all of Seller's respective right, title and
interest in and to, the following:
1.1.1. LAND AND IMPROVEMENTS. Those certain parcels of land (the
"Land"), being more particularly described as follows: (a) that certain property
more particularly described on Exhibit A-1 hereto located in Bucks County,
Pennsylvania, known as Oxford Corporate Center, which is improved with three (3)
buildings containing approximately one hundred fifteen thousand three hundred
ninety (115,390) square feet of space ("Oxford"); (b) that certain property more
particularly described on Exhibit A-2 hereto located in Lower Gwynedd,
Montgomery County, Pennsylvania, known as Springhouse Corporate Center, which is
improved with two (2) buildings containing approximately one hundred thirty nine
thousand four hundred sixty seven (139,467) square feet of space
("Springhouse"); (c) that certain property more particularly described on
Exhibit A-3 hereto located in Evesham Township, Burlington County, New Jersey,
known as Greentree Commons, which is improved with four (4) buildings containing
approximately forty three thousand nine hundred seventy six (43,976) square feet
of space ("Greentree"); and (d) that certain property more particularly
described on Exhibit A-4 hereto located in Westhampton, Burlington County, New
Jersey, known as Highlands Business Center totaling approximately seventy acres
of land, which is comprised of (i) eight (8) improved, undeveloped parcels
comprised of approximately 37.0999 acres of
<PAGE>
land, and (ii) four (4) parcels of land improved, in the aggregate with four (4)
buildings containing approximately three hundred eighty eight thousand nine
hundred eighty eight (388,988) square feet of space ("Highlands") in each case,
together with any improvements located thereon (the "Improvements");
1.1.2. LEASES. All leases, subleases, licenses and other occupancy
agreements, together with any and all amendments, modifications or supplements
thereto, are hereafter referred to collectively as the "Leases" being more
particularly described on Exhibits G-1 through G-4 attached hereto, and all
prepaid rent attributable to the period following the Closing, and subject to
Section 4.2.4 below, the security deposits under such Leases (collectively, the
"Leasehold Property");
1.1.3. REAL PROPERTY. All rights, privileges and easements appurtenant
to Seller's interest in the Land and the Improvements, if any, including,
without limitation, all of Seller's right, title and interest, if any, in and to
all mineral and water rights and all easements, licenses, covenants and other
rights-of-way and privileges, and rights to any land lying in the bed of any
street, road or avenue, open or proposed, adjoining thereto, and all other
appurtenances used in connection with the beneficial use and enjoyment of the
Land and the Improvements (the Land, the Improvements and all such easements and
appurtenances are sometimes collectively referred to herein as the "Real
Property").
1.1.4. PERSONAL PROPERTY. All personal property (including furniture,
furnishings, machinery and equipment), if any, owned by Seller and located on
the Real Property as of the date hereof, all inventory located on the Real
Property on the date of Closing (hereinafter defined), and all fixtures (if any)
owned by Seller and located on the Real Property as of the date hereof
including, without limitation: all of Seller's right, title and interest to the
items listed on the Schedule of Inventory attached hereto as Exhibit E;
renderings; awnings; and all architects', engineers', surveyors' and other real
estate professionals' plans and specifications (the "Personal Property"); and
1.1.5. INTANGIBLE PROPERTY. All trademarks, trade names and logos, if
any, used or useful in connection with the Real Property, but only to the extent
that the same are not trademarks or trade names of Seller or any of Seller's
affiliated companies (collectively, the "Trade Names"), together with the
Seller's interest, if any, in and to any service, equipment, supply and
maintenance contracts (the "Contracts"), guarantees, licenses, approvals,
certificates, permits and warranties relating to the property, to the extent
assignable (collectively, the "Intangible Property"). (The Real Property, the
Leasehold Property, the Personal Property, the Trade Names and the Intangible
Property are sometimes collectively hereinafter referred to as the "Property").
<PAGE>
ARTICLE II.
Purchase Price
2.1. PURCHASE PRICE. The purchase price for the Property shall be Forty
One Million Six Hundred Twenty Five Thousand and No/100 Dollars ($41,625,000.00)
(the "Purchase Price"). The Purchase Price, as adjusted by all prorations as
provided for herein, shall be paid to Seller by Purchaser at Closing, as herein
defined, by wire transfer of immediately available federal funds.
ARTICLE III.
Deposit
3.1. INITIAL DEPOSIT. Upon the Effective Date, as defined in Section
16.4 of this Agreement and as a condition precedent to the formation of this
Agreement, Purchaser shall deposit One Hundred Thousand Dollars ($100,000.00)
(the "Initial Deposit") with Commonwealth Land Title Insurance Company (National
Title Service) (the "Escrow Agent") in immediately available federal funds, the
receipt of which is hereby acknowledged by Escrow Agent's execution hereof. If
Purchaser shall fail to deposit the Initial Deposit within the time period
provided for above, Seller may at any time prior to the deposit of the Initial
Deposit, terminate this Agreement, in which case this Agreement shall be null
and void ab initio and in such event Escrow Agent shall immediately deliver to
Seller all copies of this Agreement in its possession and thereafter, neither
party shall have any further rights or obligations to the other hereunder,
except as otherwise set forth in this Agreement.
3.2. ADDITIONAL DEPOSIT. If Purchaser elects not to terminate this
Agreement in accordance with Section 5.5 herein, then on or before the
expiration of the Feasibility Period (as defined herein), time being of the
essence, Purchaser shall make an additional deposit in the amount of Two Hundred
Thousand Dollars ($200,000.00) (the "Additional Deposit") in immediately
available federal funds, with Escrow Agent. The Initial Deposit and the
Additional Deposit (together with any interest thereon, regardless of whether
the payment of interest is herein otherwise specified) are collectively referred
to herein as the "Deposit."
3.3. APPLICATION UPON DEFAULT. If the Closing occurs, the Deposit shall
be paid to Seller and credited against the Purchase Price at Closing. If the
Closing does not occur in accordance with the terms hereof, the Deposit shall be
held and delivered as hereinafter provided.
3.4. INTEREST BEARING. The Deposit shall (i) be held in an
interest-bearing escrow account by Escrow Agent in an institution as directed by
<PAGE>
Purchaser and reasonably acceptable to Seller and (ii) shall include any
interest earned thereon. To allow the interest bearing account to be opened,
Purchaser's and Seller's tax identification or social security numbers are set
forth below their signatures.
3.5. ESCROW AGENT. Escrow Agent is executing this Agreement to
acknowledge Escrow Agent's responsibilities hereunder, which may be modified
only by a written amendment signed by all of the parties. Any amendment to this
Agreement that is not signed by Escrow Agent shall be effective as to the
parties thereto, but shall not be binding on Escrow Agent. Escrow Agent shall
accept the Deposit with the understanding of the parties that Escrow Agent is
not a party to this Agreement except to the extent of its specific
responsibilities hereunder, and does not assume or have any liability of the
performance or non-performance of Purchaser or Seller hereunder to either of
them. Additional provisions with respect to the Escrow Agent are set forth in
Article XVI.
ARTICLE IV.
Closing, Prorations and Closing Costs
4.1. CLOSING. The closing of the purchase and sale of the Property
shall occur on or before 10:00 a.m. local time on a date which is not later than
ten (10) following the expiration of the Feasibility Period (as defined herein),
and shall be conducted pursuant to escrow arrangements with the Title Company
(as hereinafter defined) or at such place agreed to by Seller and Purchaser.
"Closing" shall be deemed to have occurred when the Title Company has been
instructed by both parties to release escrow and to record the Deed. Time is of
the essence. The date of Closing is referred to in this Agreement as the
"Closing Date."
4.2. PRORATIONS. All matters involving prorations or adjustments to be
made in connection with Closing and not specifically provided for in some other
provision of this Agreement shall be adjusted in accordance with this Section
4.2.
Except as otherwise set forth herein, all items to be prorated pursuant
to this Section 4.2 shall be prorated as of midnight of the day immediately
preceding the Closing Date with Purchaser to be treated as the owner of the
Property, for purposes of prorations of income and expenses, on and after the
Closing Date.
4.2.1. TAXES. Real estate and personal property taxes and special
assessments, if any, shall be prorated as of the Closing Date. Seller shall pay
all real estate and personal property taxes and special assessments attributable
to the Property to, but not including, the Closing Date. If the real estate
and/or personal property tax rate and assessments have not been set for
<PAGE>
the year in which the Closing occurs, then the proration of such taxes shall be
based upon the rate and assessments for the preceding tax year and such
proration shall be adjusted in cash between Seller and Purchaser upon
presentation of written evidence that the actual taxes paid for the year in
which the Closing occurs, differ from the amounts used in the Closing in
accordance with the provisions of Section 4.2.5 hereof. All taxes imposed due to
a change of use of the Property after the Closing Date shall be paid by the
Purchaser.
4.2.2. INSURANCE. There shall be no proration of Seller's insurance
premiums or assignment of Seller's insurance policies. Purchaser shall be
obligated (at its own election) to obtain any insurance coverage deemed
necessary or appropriate by Purchaser. Except as otherwise expressly set forth
in Article XII pursuant to an assignment by Seller, Purchaser shall have no
interest in or be deemed a beneficiary under Seller's insurance policies.
4.2.3. UTILITIES. Purchaser and Seller hereby acknowledge and agree
that the amounts of all telephone, electric, sewer, water and other utility
bills, trash removal bills, janitorial and maintenance service bills and all
other operating expenses relating to the Property and allocable to the period
prior to the Closing Date shall be determined and paid by Seller before Closing,
if possible, or shall be paid thereafter by Seller or adjusted between Purchaser
and Seller at Closing based upon the last meter readings, if available, and then
adjusted, as necessary, immediately after the same have been determined. Seller
shall attempt to have all utility meters read as of the Closing Date. Purchaser
shall cause all utility services to be placed in Purchaser's name as of the
Closing Date. All utility deposits in Seller's name shall be assigned to
Purchaser as of the Closing Date and Seller shall receive a credit therefor at
Closing.
4.2.4. RENTS. Rents (including, without limitation, estimated
pass-through payments, payments for 1997 year-end common area maintenance
reconciliations and all additional charges payable by tenants under the Leases,
(collectively, "Rents")) collected by Seller prior to Closing shall be prorated
as of the Closing Date. During the period after Closing, Purchaser shall deliver
to Seller any and all Rents accrued but uncollected as of the Closing Date to
the extent subsequently collected by Purchaser; provided, however, Purchaser
shall apply Rents received after Closing first to payment of current Rent then
due, and thereafter to delinquent Rents (other than "true up" payments received
from tenants attributable to a year-end reconciliation of actual and budgeted
pass-through payments which shall be allocated among Seller and Purchaser pro
rata in accordance with their respective period of ownership as set forth in
Section 4.2.5 below). Seller shall have the right, after Closing, to proceed
against tenants for delinquent Rents allocable to the period of Seller's
ownership of the Property; provided, however, that Seller shall have no right to
seek to evict or dispossess tenants or to terminate their respective leases.
Purchaser agrees
<PAGE>
that it shall use commercially reasonable efforts to collect all pass-through
rents payable by tenants and any delinquent Rents (provided, however, that
Purchaser shall have no obligation to institute legal proceedings, including an
action for unlawful detainer, against a tenant owing delinquent Rents). The
amount of any unapplied security deposits under the Leases held by Seller in
cash shall be credited against the Purchase Price; accordingly, Seller shall
retain the actual cash deposits. If any security deposits are in the form of a
letter of credit, Seller shall assign such letter of credit to Purchaser and
deliver the original letter of credit to Purchaser at Closing.
4.2.5. CALCULATIONS. For purposes of calculating prorations, Purchaser
shall be deemed to be in title to the Property, and, therefore, entitled to the
income therefrom and responsible for the expenses thereof for the entire day
upon which the Closing occurs. All such prorations shall be made on the basis of
the actual number of days of the month which shall have elapsed as of the day of
the Closing and based upon the actual number of days in the month and a three
hundred sixty five (365) day year. The amount of such prorations shall be
initially performed at Closing but shall be subject to adjustment in cash after
the Closing as and when complete and accurate information becomes available, if
such information is not available at the Closing. Seller and Purchaser agree to
cooperate and use their best efforts to make such adjustments no later than
sixty (60) days after the Closing (or as soon thereafter as may be practicable,
with respect to common area maintenance and other additional rent charges
(including pass-throughs for real estate and personal property taxes and special
assessments) payable by tenants under leases). Except as set forth in this
Section 4.2, all items of income and expense which accrue for the period prior
to the Closing will be for the account of Seller and all items of income and
expense which accrue for the period on and after the Closing will be for the
account of Purchaser. The provisions of Section 4.2 shall survive the Closing.
4.3. CLOSING COSTS. All state or county documentary stamps and transfer
and recordation taxes on the deeds with respect to Greentree and Highlands shall
be paid by Seller. With respect to Oxford and Springhouse, Seller and Purchaser
shall each pay one half of any applicable state or county documentary stamps and
transfer and recordation taxes on the deeds. Purchaser shall pay title
examination costs, title insurance premiums, survey costs and all other costs
associated with Purchaser's due diligence. Each party shall be responsible for
its own attorney's fees. Any other closing fees or expenses shall be split
between Seller and Purchaser in accordance with local practices.
4.4. COMMISSIONS AND LEASING COSTS. Subject to the provisions of
Section 4.5 below, Seller shall be responsible for all leasing and brokerage
commissions and other leasing costs (including, without limitation, tenant
<PAGE>
improvement costs, required capital improvements, free rent credits, holdover
rents and eviction costs) arising (i) prior to the Effective Date with respect
to the Leases and (ii) after the Effective Date but prior to Closing to the
extent that such obligations do not relate to Approved New Leases (as
hereinafter defined). Provided that Closing shall occur, Purchaser shall be
responsible for all other leasing and brokerage commissions and other leasing
costs (including, without limitation, tenant improvement costs, required capital
improvements, free rent credits, holdover rents and eviction costs).
4.5. COSTS UNDER BISYS LEASE. Seller agrees to pay all of the tenant
improvement and leasing commission costs currently due and payable in connection
with the Bisys lease at Springhouse, consisting of all costs (tenant
improvements, leasing commissions, required capital improvements and free rent
credits) associated with Bisys' existing 53,849 square feet and 4,737 square
feet of "must take" space currently occupied by the tenant, but excluding all
tenant improvement and leasing commission costs arising pursuant to any renewal
or expansion rights under such lease; provided, however, that with respect to
the unfunded $4.00 per square foot tenant improvement obligation in connection
with the 53,849 square feet of space, Seller shall pay such amount to Purchaser
upon receipt by Seller of notice from Purchaser that Bisys has requested such
payment from Purchaser. At Closing, Seller shall receive a credit on the
settlement sheet equal to one half (1/2) of the leasing commissions paid by
Seller with respect to the "must take" space to the extent that Seller has paid
such amounts prior to Closing as set forth on Exhibit P attached hereto.
Purchaser shall assume and agrees to pay all costs (including, without
limitation, all tenant improvements, leasing commissions, required capital
improvements, free rent credits, holdover rent and eviction costs) associated
with Bisys' 15,920 square feet of "must take" space, as outlined in a letter
from Mr. James Raisides dated February 20, 1997.
ARTICLE V.
Purchaser's Right of Inspection; Feasibility Period
5.1. RIGHT TO EVALUATE. Commencing on the Effective Date and continuing
until 5:00 p.m. local time on that day that is thirty (30) days after the
Effective Date (the "Feasibility Period"), Purchaser and its agents shall have
the right during business hours (with reasonable advance notice to Seller
subject to the rights of the tenants in possession), at Purchaser's sole cost
and expense and at Purchaser's and its agents' sole risk, to perform inspections
and tests of the Property and to perform such other analyses, inquiries and
investigations as Purchaser shall deem necessary or appropriate; provided,
however, that in no event shall (i) such inspections or tests unreasonably
disrupt or disturb the on-going operation of the Property or the rights of the
tenants at the Property, or (ii) Purchaser or its agents or representatives
conduct any
<PAGE>
physical testing, drilling, boring, sampling or removal of, on or through the
surface of the Property (or any part or portion thereof) including, without
limitation, any ground borings or invasive testing of the Improvements
(collectively, "Physical Testing"), without Seller's prior written consent,
which consent may be given or withheld in Seller's sole and absolute discretion.
In the event Purchaser desires to conduct any such Physical Testing of the
Property, then Purchaser shall submit to Seller, for Seller's approval, a
written detailed description of the scope and extent of the proposed Physical
Testing, which approval may be given or withheld in Seller's sole and absolute
discretion. If Seller does not approve the Physical Testing or approves only a
portion thereof, Purchaser may, at its option, by sending written notice to
Seller, elect to, either (i) terminate this Agreement or (ii) conduct during the
Feasibility Period that portion of the Physical Testing approved by Seller, if
any, or if Seller disapproves the entire proposed Physical Testing,
affirmatively agree to forego any Physical Testing of the Property. In the event
Purchaser terminates this Agreement as aforesaid, the Deposit, plus all interest
accrued thereon, shall be immediately refunded to Purchaser and this Agreement
shall terminate and be of no further force and effect other than the Surviving
Termination Obligations (as hereinafter defined). In no event shall Seller be
obligated as a condition of this transaction to perform or pay for any
environmental remediation of the Property recommended by any such Physical
Testing. After making such tests and inspections, Purchaser agrees to promptly
restore the Property to its condition prior to such tests and inspections (which
obligation shall survive the Closing or any termination of this Agreement).
Prior to Purchaser entering the Property to conduct the inspections and tests
described above, Purchaser shall obtain and maintain, at Purchaser's sole cost
and expense, and shall deliver to Seller evidence of, the following insurance
coverage, and shall cause each of its agents and contractors to obtain and
maintain, and, upon request of Seller, shall deliver to Seller evidence of, the
following insurance coverage: general liability insurance, from an insurer
reasonably acceptable to Seller, in the amount of One Million and No/100 Dollars
($1,000,000.00) combined single limit for personal injury and property damage
per occurrence, such policy to name Seller as an additional insured party, which
insurance shall provide coverage against any claim for personal liability or
property damage caused by Purchaser or its agents, employees or contractors in
connection with such inspections and tests. Seller shall have the right, in its
discretion, to accompany Purchaser and/or its agents during any inspection
(including, but not limited to, tenant interviews) provided Seller or its agents
do not unreasonably interfere with Purchaser's inspection.
5.2. INSPECTION OBLIGATIONS AND INDEMNITY. Purchaser and its agents and
representatives shall: (a) not unreasonably disturb the tenants of the
Improvements or interfere with their use of the Real Property pursuant to their
respective Leases; (b) not interfere with the operation and maintenance of the
Real Property; (c) not damage any part of the Property or any personal
<PAGE>
property owned or held by any tenant; (d) not injure or otherwise cause bodily
harm to Seller, its agents, contractors and employees or any tenant; (e)
promptly pay when due the costs of all tests, investigations and examinations
done with regard to the Property; (f) not permit any liens to attach to the
Property by reason of the exercise of its rights hereunder; (g) restore the
Improvements and the surface of the Real Property to the condition in which the
same was found before any such inspection or tests were undertaken; and (h) not
reveal or disclose any information obtained during the Feasibility Period
concerning the Property to anyone outside Purchaser's organization other than
its agents, consultants, representatives, and lenders and its and their legal
counsel, or as otherwise required by applicable law. Purchaser shall, at its
sole cost and expense, comply with all applicable federal, state and local laws,
statutes, rules, regulations, ordinances or policies in conducting its
inspection of the Property and Physical Testing. Purchaser shall, and does
hereby agree to indemnify, defend and hold the Seller, its partners, officers,
directors, employees, agents, attorneys and their respective successors and
assigns, harmless from and against any and all claims, demands, suits,
obligations, payments, damages, losses, penalties, liabilities, costs and
expenses (including but not limited to reasonable attorneys' fees) arising out
of Purchaser's or Purchaser's agents' actions taken in, on or about the Property
in the exercise of the inspection right granted pursuant to Section 5.1,
including, without limitation, (i) claims made by any tenant against Seller for
Purchaser's entry into such tenant's premises or any interference with any
tenant's use or damage to its premises or property in connection with
Purchaser's review of the Property, and (ii) Purchaser's obligations pursuant to
this Section 5.2. This Section 5.2 shall survive the Closing and/or any
termination of this Agreement.
5.3. SELLER DELIVERIES. Seller shall use its reasonable, good faith
efforts to deliver to Purchaser or make available at the Property, at Seller's
option, all of the items specified on Exhibit B, attached hereto (the
"Documents"), within five (5) days after the Effective Date; provided, however,
except as otherwise expressly set forth in Section 7.1 hereof, Seller makes no
representations or warranties of any kind regarding the accuracy, thoroughness
or completeness of or conclusions drawn in the information contained in such
documents, if any, relating to the Property. Purchaser hereby waives any and all
claims against Seller arising out of the accuracy, completeness, conclusions or
statements expressed in materials so furnished and any and all claims arising
out of any duty of Seller to acquire, seek or obtain such materials.
Notwithstanding anything contained in the preceding sentence, Seller shall not
deliver or make available to Purchaser Seller's internal memoranda,
attorney-client privileged materials, internal appraisals and economic
evaluations of the Property, and reports regarding the Property prepared by
Seller or its affiliates solely for internal use or for the information of the
investors in Seller. Purchaser acknowledges that any and all of the Documents
that are not otherwise known by or available to the public are proprietary and
confidential in
<PAGE>
nature and will be delivered to Purchaser solely to assist Purchaser in
determining the feasibility of purchasing the Property. Other than as may be
required by law, Purchaser agrees not to disclose such non-public Documents, or
any of the provisions, terms or conditions thereof, to any party outside of
Purchaser's organization other than its agents, consultants, representatives and
lenders, and its and their legal counsel. Purchaser shall return all of the
Documents, on or before three (3) business days after the first to occur of (a)
such time as Purchaser notifies Seller in writing that it shall not acquire the
Property, or (b) such time as this Agreement is terminated for any reason. This
Section 5.3 shall survive any termination of this Agreement without limitation.
5.4. INDEPENDENT EXAMINATION. Purchaser hereby acknowledges that it has
been, or will have been given, prior to the termination of the Feasibility
Period, a full, complete and adequate opportunity to make such legal, factual
and other determinations, analyses, inquiries and investigations as Purchaser
deems necessary or appropriate in connection with the acquisition of the
Property. Purchaser is relying upon its own independent examination of the
Property and all matters relating thereto and not upon any statements of Seller
(excluding the limited matters expressly represented by Seller in Article VII
hereof, or as otherwise expressly set forth herein) or of any officer, director,
employee, agent or attorney of Seller with respect to acquiring the Property.
Seller shall not be deemed to have represented or warranted the completeness or
accuracy of any studies, investigations and reports heretofore or hereafter
furnished to Purchaser. The provisions of this Section 5.4 shall survive Closing
and/or termination of this Agreement.
5.5. TERMINATION RIGHT. In the event that Purchaser determines that it
does not desire to acquire the Property as a result of its analyses, inquiries,
tests, investigations or inspections under Section 5.1, Purchaser shall provide
written notice to Seller upon or before the end of the Feasibility Period, and
subject to the Surviving Termination Obligations (as defined in Section 16.12
herein) this Agreement shall terminate, the Deposit shall be delivered to
Purchaser and thereupon neither party shall have any further rights or
obligations to the other hereunder. If Purchaser shall fail to timely notify
Seller in writing of its election to terminate this Agreement on or before the
expiration of the Feasibility Period, time being of the essence, the termination
right described in this Section 5.5 shall be immediately null and void and of no
further force or effect. Purchaser's failure to provide such notice on or before
the end of the Feasibility Period shall constitute Purchaser's waiver of the
herein-described termination right.
5.6. COPIES OF REPORTS. As additional consideration for the transaction
contemplated herein, Purchaser agrees that it will provide to Seller, within
five (5) days following a written request therefore, copies of any and all final
reports, tests or studies relating to the Property, including but not limited
<PAGE>
to those involving environmental matters. Purchaser shall provide Seller with a
list of the reports, tests and studies to be undertaken on Purchaser's behalf
and the additional cost, if any, of having each such report addressed to both
Seller and Purchaser, and Seller may elect to pay such additional cost, in which
event Purchaser shall cause such report(s) to be addressed to both parties.
Notwithstanding any provision of this Agreement, no termination of this
Agreement shall terminate Purchaser's obligations pursuant to the foregoing
sentence.
ARTICLE VI.
Title and Survey Matters
6.1. TITLE. Purchaser hereby acknowledges receipt of copies of Seller's
most recent title insurance commitment and/or policy covering the Property.
Within three (3) days from the Effective Date, Purchaser shall apply for a title
insurance commitment (the "Commitment") for an Owner's Policy of Title
Insurance, issued by Commonwealth Land Title Insurance Company (National
Business Unit) (the "Title Company"), covering the Real Property, together with
a copy of all exceptions set forth therein. Purchaser shall notify Seller no
later than twenty five (25) days after the Effective Date in writing of any
title exceptions identified in the Commitment which Purchaser disapproves. Any
exception not disapproved in writing within such time period shall be deemed
approved by Purchaser and shall constitute a "Permitted Exception" hereunder.
Purchaser and Seller hereby agree that (i) all non-delinquent property taxes and
assessments, (ii) the rights of the tenants under the Leases and Approved New
Leases, and (iii) all matters created by or on behalf or Purchaser, including,
without limitation, any documents or instruments to be recorded as part of any
financing for the acquisition of the Property by Purchaser shall constitute
"Permitted Exceptions" (subject to appropriate prorations for taxes and
assessments as hereinabove provided). Without Seller's prior written consent,
Purchaser shall not make any application to any governmental agency for any
permit, approval, license or other entitlement for the Property or the use or
development thereof other than a township or municipal officer's zoning
certificate, for which Purchaser may apply, provided that (i) such application
or certificate does not by its terms require an inspection of the Property and
(ii) Purchaser does not receive prior notice from the zoning authority that a
request for such certificate will cause an inspection of the Property. It is
acknowledged that the matters on Exhibit D attached hereto are exceptions to
title as shown on Seller's title policy. Seller shall have no obligation in
connection with this Agreement to modify such matters, and Purchaser shall have
no obligation to accept such matters unless Purchaser shall fail to object
thereto in accordance with this Agreement. Not later than five (5) business days
after receipt of notice of disapproval from Purchaser, Seller shall notify
Purchaser in writing of any disapproved title exceptions
<PAGE>
which Seller is unable or unwilling to cause to be removed or insured against
prior to or at Closing and, with respect to such exceptions, Purchaser then
shall elect, by giving written notice to Seller within three (3) days
thereafter, (x) to terminate this Agreement, or (y) to waive its disapproval of
such exceptions, in which case such exceptions shall then be deemed to be
Permitted Exceptions. Purchaser's failure to give such notice shall be deemed an
election to waive the disapproval of any such exception. In the event Purchaser
elects to terminate this Agreement in accordance with clause (x) above, the
Deposit, plus all interest accrued thereon, shall be immediately refunded to
Purchaser; provided, however, that Purchaser shall be responsible for any title
fees. Seller shall be obligated to cause to be discharged, insured against or
bonded over any monetary liens encumbering the Property prior to Closing;
provided, however, Seller may only bond over or insure over liens in an amount
less than or equal to $1 million for each of Oxford, Springhouse, Greentree and
Highlands (other than liens which are insured over by the title company pursuant
to a pay-off letter from an institutional mortgage lender which shall not be
subject to the $1 million limitation). Notwithstanding the foregoing, in the
event such title encumbrance results from a matter willfully caused by Seller
from and after the Effective Date, Seller shall take affirmative action to cure
such title defect. In addition, Seller shall cause the discharge of the existing
mortgage encumbering Highlands in order to effect Closing hereunder, subject to
an extension of the Closing Date with respect to Highlands only as set forth in
Section 16.22.
6.2. SURVEY. Purchaser hereby acknowledges receipt of copies of surveys
covering the Property. Purchaser shall, at its sole cost and expense, within
three (3) days from the Effective Date, order a survey of the Real Property (the
"Survey"). If the Survey discloses any matters which are unacceptable to
Purchaser, Purchaser shall notify Seller in writing within twenty five (25) days
after the Effective Date. Purchaser shall furnish a copy of the Survey to Seller
and the Title Company of any matters identified on the Survey which Purchaser
disapproves. Any survey matter not disapproved in writing within said time
period shall be deemed approved by Purchaser and shall constitute a "Permitted
Exception" hereunder. Seller may, not later than ten (10) days after receipt of
notice of disapproval from Purchaser, have the matters to which Purchaser has
objected removed; provided, however, in no event will Seller be obligated to
incur costs to do so.
ARTICLE VII.
Representations and Warranties of the Seller
7.1. SELLER'S REPRESENTATIONS. Seller represents and warrants that the
following matters are true and correct as of the Effective Date with respect to
the Property to the current actual knowledge of Seller.
<PAGE>
7.1.1. AUTHORITY. Seller is a limited partnership, duly organized,
validly existing and in good standing under the laws of the State of Delaware.
This Agreement has been duly authorized, executed and delivered by Seller, is
the legal, valid and binding obligation of Seller, and does not violate any
provision of any agreement or judicial order to which Seller is a party or to
which Seller is subject. All documents to be executed by Seller which are to be
delivered at Closing (i) will be duly authorized, executed and delivered by
Seller, (ii) will be legal, valid and binding obligations of Seller, and (iii)
will not violate any provision of any agreement or judicial order to which
Seller is a party or to which Seller is subject.
7.1.2. BANKRUPTCY OR DEBT OF SELLER. Seller has not made a general
assignment for the benefit of creditors, filed any voluntary petition in
bankruptcy, admitted in writing its inability to pay its debts as they come due
or made an offer of settlement, extension or composition to its creditors
generally. Seller has received no written notice of (a) the filing of an
involuntary petition by Seller's creditors, (b) the appointment of a receiver to
take possession of all, or substantially all, of Seller's assets, or (c) the
attachment or other judicial seizure of all, or substantially all, of Seller's
assets.
7.1.3. ENVIRONMENTAL REPORTS. The reports listed on Exhibit F attached
hereto constitute all of the reports prepared by third party environmental
consultants within the last four (4) years in Seller's possession. Seller has
received no written notice from any governmental authority that the Property is
in violation of any federal, state and local laws, ordinances and regulations
applicable to the Property with respect to hazardous or toxic substances
(collectively, "Environmental Laws"), which violation has not been corrected.
Notwithstanding the foregoing representations and warranties, the acts, if any,
of Seller's past or current tenants shall not be imputed to Seller unless Seller
shall have actual knowledge thereof.
7.1.4. FOREIGN PERSON. Seller is not a foreign person within the
meaning of Section 1445(f) of the Internal Revenue Code, and Seller agrees to
execute any and all documents necessary or required by the Internal Revenue
Service or Purchaser in connection with such declaration(s).
7.1.5. EMPLOYMENT. Seller has no employees at the Property. Purchaser
shall assume no liability or responsibility for Seller's employees.
7.1.6. SERVICE CONTRACTS. Attached hereto as Exhibit O is a list
prepared by The Flynn Company (the "Property Manager") of all Contracts. Unless
otherwise directed by Purchaser on or before the end of the Feasibility Period,
and except as hereinafter expressly provided, the Contracts shall not be
terminated by Seller as of Closing but shall be assigned to and assumed by
Purchaser at Closing. Anything in this Section 7.1.6 to the contrary
<PAGE>
notwithstanding, Seller represents and warrants that the management agreement
with the Property Manager and all leasing agreements entered into by Seller or
the Property Manager relating to the Property shall be terminated as of Closing.
7.1.7. LEASES. Seller has received no notice of any oral or written
leases affecting the Property other than the leases ("Leases") listed on the
rent rolls attached hereto as Exhibits G-1 through G-4. Seller has not assigned,
pledged, hypothecated or otherwise encumbered the Leases except as collateral
for an existing mortgage upon the Property, if any, which shall be released of
record at or before Closing. In reliance upon a certificate from the Property
Manager and without any independent verification by Seller, Exhibits G-1 through
G-4 set forth and the current balance of unapplied and unreturned security
deposits from tenants being held by Seller and the amount of any prepaid rents
under any of the Leases.
7.1.8. COMPLIANCE WITH LAW. Seller has received no written notice of
any violations issued by a Governmental Authority having jurisdiction over the
Property which violation has not been corrected. Notwithstanding the foregoing
representation and warranty, the knowledge, if any, of Seller's past or current
tenants shall not be imputed to Seller unless Seller shall have actual knowledge
thereof.
7.1.9. INSURANCE. Attached hereto as Exhibit M are copies of insurance
certificates summarizing Seller's insurance coverage with respect to the
Property.
7.1.10. OPERATING STATEMENT. Seller has previously delivered to
Purchaser copies of Seller's unaudited annual operating statements with respect
to the Property for the prior three (3) fiscal years.
7.1.11. RIGHTS TO PURCHASE. Seller has not entered into any outstanding
written agreements, options, rights of first refusal, conditional sales
agreements or other agreements or arrangements regarding the purchase and sale
of the Property, other than the Leases and such matters of record.
7.1.12. NO LITIGATION. Seller has received no written notice of any
lawsuits pending or threatened against or relating to the Property other than
actions, if any, taken by Seller in connection with Seller's enforcement of
lease obligations relating to tenant defaults set forth on Exhibits G-1 through
G-4.
7.1.13. CONDEMNATION. Seller has received no written notice of any
condemnation or eminent domain proceeding pending or threatened with regard to
any part of the Property.
<PAGE>
7.1.14. NO BROKERS. Seller has received no written notice of any unpaid
brokerage commissions which will be due and payable to any person, firm,
corporation or other entity with respect to or on account of any Leases except
as indicated on Exhibits G-1 through G-4.
7.1.15. COMPLETION OF TENANT IMPROVEMENT OBLIGAITONS. In reliance
solely upon a certificate from the Property Manager and without independent
verification by Seller, the Seller has completed the tenant improvements
required to be completed as of the date hereof under the Leases, except as set
forth on Exhibits G-1 through G-4.
7.1.16. SELLER'S KNOWLEDGE. For purposes of this Agreement and any
document delivered at Closing, whenever the phrases "to the best of Seller's
knowledge", "to the current, actual knowledge of Seller" or the "knowledge" of
Seller or words of similar import are used, they shall be deemed to refer to the
actual knowledge only, and not any implied, imputed or constructive knowledge,
without any independent investigation having been made or any implied duty to
investigate, of Henry Brauer with respect to Springhouse, Oxford and Greentree
and Pamela Deery with respect to Highlands.
7.2. CHANGE IN REPRESENTATION/WAIVER. Notwithstanding anything to the
contrary contained herein, Purchaser acknowledges that Purchaser shall not be
entitled to rely on any representation made by Seller in this Article VII to the
extent, prior to Closing, Purchaser shall have or obtain actual knowledge of any
information that was contradictory to such representation or warranty; provided,
however, if Purchaser determines prior to Closing that there is a breach of any
of the representations and warranties made by Seller above or learns of any
pending legal proceedings or administrative actions or any violations of
existing laws, ordinances, regulations and building, codes affecting the
Property, then Purchaser may, at its option, by sending to Seller written notice
of its election either (i) terminate this Agreement or (ii) waive such breach
and/or conditions and proceed to Closing with no adjustment in the Purchase
Price and Seller shall have no further liability as to such matter thereafter.
In the event Purchaser terminates this Agreement for the reasons set forth
above, the Deposit, plus all interest accrued thereon, shall be immediately
refunded to Purchaser and neither Purchaser nor Seller shall thereafter have any
other rights or remedies hereunder other than under Section 16.12 hereof. In
furtherance thereof, Seller shall have no liability with respect to any of the
foregoing representations and warranties to the extent that, prior to the
Closing, Purchaser discovers or learns of information (from whatever source,
including, without limitation, the property manager , the tenant estoppel
certificates delivered pursuant to Section 10.2.4 below, as a result of
Purchaser's due diligence tests, investigations and inspections of the Property,
or disclosure by Seller or Seller's agents and employees) that
<PAGE>
contradicts any of the foregoing representations and warranties, or renders any
of the foregoing representations and warranties untrue or incorrect, and
Purchaser nevertheless consummates the transaction contemplated by this
Agreement.
7.3. SURVIVAL. The express representations and warranties made in this
Agreement shall not merge into any instrument or conveyance delivered at the
Closing; provided, however, that (i) any alleged claim with respect to the
truth, accuracy or completeness of such representations and warranties shall be
brought to the attention of Seller in writing, if at all, on or before the date
which is nine (9) months after the date of the Closing and, if not brought to
the attention of Seller in writing on or before such date, thereafter shall be
void and of no force or effect; provided further that in the event Purchaser
notifies Seller of an alleged claim within said nine (9) month period pursuant
to this Section 7.3, Purchaser may commence an action with respect to such
claim, if at all, on or before that date which is twelve (12) months after the
date of the Closing and, if not commenced on or before such date, thereafter
shall be void and of no force or effect.
ARTICLE VIII.
Representations, Warranties and Covenants of Purchaser
8.1. REPRESENTATIONS AND WARRANTIES. Purchaser represents and warrants
to Seller that the following matters are true and correct as of the Effective
Date.
8.1.1. AUTHORITY. Purchaser is a real estate investment trust duly
organized and validly existing under the laws of the State of Maryland. This
Agreement has been duly authorized, executed and delivered by Purchaser, is the
legal, valid and binding obligation of Purchaser, and does not violate any
provision of any agreement or judicial order to which Purchaser is a party or to
which Purchaser is subject. All documents to be executed by Purchaser which are
to be delivered at Closing, at the time of Closing will be duly authorized,
executed and delivered by Purchaser, at the time of Closing will be legal, valid
and binding obligations of Purchaser, and at the time of Closing will not
violate any provision of any agreement or judicial order to which Purchaser is a
party or to which Purchaser is subject.
8.1.2. BANKRUPTCY OR DEBT OF PURCHASER. Purchaser represents and
warrants to Seller that Purchaser has not made a general assignment for the
benefit of creditors, filed any voluntary petition in bankruptcy or suffered the
filing of an involuntary petition by Purchaser's creditors, suffered the
appointment of a receiver to take possession of all, or substantially all, of
Purchaser's assets, suffered the attachment or other judicial seizure of all, or
<PAGE>
substantially all, of Purchaser's assets, admitted in writing its inability to
pay its debts as they come due or made an offer of settlement, extension or
composition to its creditors generally.
8.1.3. ERISA COMPLIANCE. Purchaser represents and warrants to Seller
that (i) Purchaser is not a "plan" nor an entity holding or deemed to hold "plan
assets" (as those terms are defined under the Employee Retirement Income
Security Act of 1974, as amended, and the applicable regulations issued
thereunder, collectively, "ERISA") and that upon the Closing under this
Agreement, the Property shall not constitute such "plan assets" and (ii)
Purchaser shall not assign the right to acquire the Property pursuant to this
Agreement unless such assignee is not a "plan" nor an entity holding or deemed
to hold "plan assets" (in each case, as defined above), nor a "fiduciary" (as
defined in section 3(21) of ERISA) of any "employee benefit plan" (as defined in
section 3(3) of ERISA), other than for a plan maintained for the benefit of such
assignee's employees, former employees or beneficiaries, or the employees,
former employees or beneficiaries of a member of the "controlled group" that
includes such assignee (as defined in section 412(n)(6)(B) of the Internal
Revenue Code of 1986, as amended). Seller shall not have any obligation to close
the transaction contemplated by this Agreement if the transaction for any reason
constitutes a prohibited transaction under ERISA or if Purchaser's
representation is found to be false or misleading in any respect or if Purchaser
breaches the foregoing covenant relating to assignment. The foregoing
representation, warranty and covenant shall survive the Closing.
8.2. NO FINANCING CONTINGENCY. It is expressly acknowledged by
Purchaser that this transaction is not subject to any financing contingency, and
no financing for this transaction shall be provided by Seller. Purchaser has
heretofore delivered to Seller true and correct copies of its most recent annual
financial statements.
8.3. PURCHASER'S ACKNOWLEDGMENT. Purchaser acknowledges and agrees
that, except as expressly provided in this Agreement, Seller has not made, does
not make and specifically disclaims any representations, warranties, promises,
covenants, agreements or guaranties of any kind or character whatsoever, whether
express or implied, oral or written, past, present or future, of, as to,
concerning or with respect to (a) the nature, quality or condition of the
Property, including, without limitation, the water, soil and geology, (b) the
income to be derived from the Property, (c) the suitability of the Property for
any and all activities and uses which purchaser may conduct thereon, (d) the
compliance of or by the Property or its operation with any laws, rules,
ordinances or regulations of any applicable governmental authority or body,
including, without limitation, the Americans with Disabilities Act and any rules
and regulations promulgated thereunder or in connection therewith, (e) the
habitability, merchantability or fitness for a particular purpose of the
Property,
<PAGE>
or (f) any other matter with respect to the Property, and specifically that
Seller has not made, does not make and specifically disclaims any
representations regarding solid waste, as defined by the U.S. Environmental
Protection Agency regulations at 40 C.F.R., Part 261, or the disposal or
existence, in or on the Property, of any hazardous substance, as defined by the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended, and applicable state laws, and regulations promulgated thereunder.
Purchaser further acknowledges and agrees that, except as expressly provided in
this Agreement, having been given the opportunity to inspect the Property,
Purchaser will be relying solely on its own investigation of the Property and
not on any information provided or to be provided by Seller other than as
expressly set forth herein. Purchaser further acknowledges and agrees that any
information provided or to be provided with respect to the Property was obtained
from a variety of sources and that Seller has not made any independent
investigation or verification of such information. Purchaser further
acknowledges and agrees that, except as expressly provided in this Agreement,
and as a material inducement to the execution and delivery of this Agreement by
Seller, the sale of the Property as provided for herein is made on an "AS IS,
WHERE IS" CONDITION AND BASIS "WITH ALL FAULTS." Purchaser acknowledges,
represents and warrants that Purchaser is not in a significantly disparate
bargaining position with respect to Seller in connection with the transaction
contemplated by this Agreement; that Purchaser freely and fairly agreed to this
acknowledgment as part of the negotiations for the transaction contemplated by
this Agreement; that Purchaser is represented by legal counsel in connection
with this transaction and Purchaser has conferred with such legal counsel
concerning this waiver.
8.4. PURCHASER'S RELEASE. Effective as of the date of Closing,
Purchaser on behalf of itself and its successors and assigns waives its right to
recover from, and forever releases and discharges, Seller, Seller's affiliates,
Seller's investment manager, property manager, the partners, trustees,
shareholders, beneficiaries, directors, officers, employees, attorneys and
agents of each of them, and their respective heirs, successors, personal
representatives and assigns from any and all demands, claims, legal or
administrative proceedings, losses, liabilities, damages, penalties, fines,
liens, judgments, costs or expenses known or unknown, foreseen or unforeseen,
that may arise on account of or in any way be connected with (i) the physical
condition of the Property, (ii) the condition of title to the Property, (iii)
the presence on, under or about the Property of any Hazardous Substance, or (iv)
the Property's compliance with any applicable federal, state or local law, rule
or regulation, except such as arises out of breach of any of the representations
and warranties of Seller set forth in Article VII or elsewhere in this
Agreement, or Seller's fraud or intentional tortious wrongdoing. The terms and
provisions of this Section 8.4 shall survive Closing and/or termination of this
Agreement.
<PAGE>
8.5. SURVIVAL. The express representations and warranties made in this
Agreement by Purchaser shall not merge into any instrument of conveyance
delivered at the Closing; provided, however, that any alleged claim with respect
to the truth, accuracy or completeness of such representations and warranties
(except for the representation and warranty set forth in Section 8.1.3) shall be
brought to the attention of Purchaser in writing, if at all, on or before the
date which is nine (9) months after the date of the Closing and, if not brought
to the attention of Purchaser in writing on or before such date, thereafter
shall be void and of no force or effect; provided further that in the event
Seller notifies Purchaser of an alleged claim within said nine (9) month period
pursuant to this Section 8.5, Seller may commence an action with respect to such
claim, if at all, on or before that date which is twelve (12) months after the
date of the Closing and, if not commenced on or before such date, thereafter
shall be void and of no force or effect. The representation and warranty set
forth in Section 8.1.3 hereof shall survive Closing and/or termination of this
Agreement.
ARTICLE IX.
Seller's Interim Operating Covenants.
9.1. OPERATIONS. Seller agrees to continue to operate, manage and
maintain the Improvements through the Closing Date in the ordinary course of
Seller's business and substantially in accordance with Seller's present
practice, subject to ordinary wear and tear and further subject to Article XII
of this Agreement.
9.2. MAINTAIN INSURANCE. Seller agrees to maintain until the Closing
Date fire and extended coverage insurance and rent loss insurance on the
Property which is at least equivalent in all material respects to the insurance
policies covering the Real Property and the Improvements as of the Effective
Date. Subject to the provisions of Article IV and Article VI hereof, Seller
shall pay, in the ordinary course of business, prior to Closing, all sums due
for work, materials or services furnished to the Property.
9.3. PERSONAL PROPERTY. Seller agrees not to transfer or remove any
Personal Property from the Improvements after the Effective Date except for
repair or replacement thereof. Any items of Personal Property replaced after the
Effective Date shall be promptly installed prior to Closing and shall be of
substantially similar quality (and of at least comparable condition) to the item
of Personal Property being replaced.
9.4. NO SALES. Except for the execution of Leases pursuant to Section
9.5, Seller agrees that it shall not convey any interest in the Property to any
third party.
<PAGE>
9.5. TENANT LEASES. Seller shall not, from and after the Effective
Date, (i) grant any consent or waive any material rights under the Leases, (ii)
terminate any Lease, or (iii) enter into a new lease, modify an existing Lease
or renew, extend or expand an existing Lease, in each case without the prior
written approval of Purchaser (an "Approved New Lease"), which in each case
shall not be unreasonably withheld, conditioned or delayed, and which shall be
deemed granted if the effective annual rent under such lease or lease
modification or renewal conforms to the effective annual rent set forth on the
Leasing Guidelines attached hereto as Exhibit N or if Purchaser fails to respond
to a request for approval within five (5) business days after receipt of the
request therefor together with a summary of lease terms and credit information
of the proposed tenant. In the event that Seller shall enter into, modify,
renew, grant concessions or terminate a Lease prior to the expiration of the
Feasibility Period, it shall promptly notify Purchaser in writing thereof.
Notwithstanding the foregoing, Seller may enter into tenant leases so long as
such leases are within the Leasing Guidelines.
9.6. ALTERATIONS. Seller shall not make or permit to be made any
alteration, improvement or addition with a value in excess of Fifty Thousand
Dollars ($50,000.00) to any of Oxford, Springhouse, Greentree or Highlands,
without the prior written consent of Purchaser, except those made by Seller
pursuant to the express requirements of this Agreement, 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 or Approved New
Lease.
9.7. BILL TENANTS. Seller shall bill all tenants for all rent due and
payable under Leases, and shall use commercially reasonable efforts to collect
any rent in arrears.
9.8. NOTICE TO PURCHASER. Seller shall instruct the Property Manager to
notify Purchaser 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 written notice of eminent domain proceedings
or condemnation of or affecting the Property, or any portion thereof;
(iii) receipt of written notice from any Governmental
Authority of a violation of law;
(iv) receipt of written notice of any actual or threatened
litigation which would affect the Property or any portion thereof after Closing;
or
<PAGE>
(v) termination of any lease prior to the expiration of its
term.
9.9. COMPLY WITH LEASES. Seller shall timely perform all obligations of
landlord as required by the Leases or by any order or direction of any
governmental authority having jurisdiction thereof, subject to the provisions of
Article IV and Article VI hereof.
9.10. NO NEW AGREEMENTS. Except for (i) agreements which can be
terminated upon not more than thirty (30) days' notice and (ii) tenant leases
(to the extent permitted under the terms of this Agreement), Seller shall not
enter into any other agreements which affect the Property or the transactions
contemplated by this Agreement, without the prior written consent of Purchaser.
9.11. TAX DISPUTES. Seller shall notify Purchaser of any tax assessment
disputes (pending or threatened) prior to Closing, and shall not consent 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
Purchaser's prior written consent. If any proceedings (either prior to or after
Closing) 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.
ARTICLE X.
Closing Conditions
10.1. CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of Seller
under this Agreement to sell the Property and consummate the other transactions
contemplated hereby shall be subject to the satisfaction of the following
conditions on or before the Closing Date except to the extent that any of such
conditions may be waived by Seller in writing at Closing.
10.1.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER. All
representations and warranties of Purchaser in this Agreement shall be true and
correct in all material respects as of the Closing Date, with the same force and
effect as if such representations and warranties were made anew as of the
Closing Date. Any changes to such representations disclosed by Purchaser
pursuant to Section 11.1.5 shall be acceptable to Seller in its sole discretion,
and Purchaser shall have performed and complied with all covenants and
agreements required by this Agreement to be performed or complied with by
Purchaser prior to the Closing Date.
<PAGE>
10.1.2. NO ORDERS. No order, writ, injunction or decree shall have been
entered and be in effect by any court of competent jurisdiction or any
Authority, and no statute, rule, regulation or other requirement shall have been
promulgated or enacted and be in effect, that restrains, enjoins or invalidates
the transactions contemplated hereby.
10.2. CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of
Purchaser under this Agreement to purchase the Property and consummate the other
transactions contemplated hereby shall be subject to the satisfaction of the
following conditions on or before the Closing Date, except to the extent that
any of such conditions may be waived by Purchaser in writing at Closing.
10.2.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER. All
representations and warranties of Seller in this Agreement shall be true and
correct in all material respects as of the Closing Date, with the same force and
effect as if such representations and warranties were made anew as of the
Closing Date. Any changes to such representations disclosed by Seller pursuant
to Section 11.2.5 shall be acceptable to Purchaser in its sole discretion, and
Seller shall have performed and complied in all material respects with all
covenants and agreement required by this Agreement to be performed or complied
with by Seller prior to the Closing Date.
10.2.2. NO ORDERS. No order, writ, injunction or decree shall have been
entered and be in effect by any court of competent jurisdiction or any
Governmental Authority, and no statute, rule, regulation or other requirement
shall have been promulgated or enacted and be in effect, that restrains, enjoins
or invalidates the transactions contemplated hereby.
10.2.3. ISRA NON-APPLICABILITY LETTER. Purchaser shall have received
from Seller a written non-applicability letter with respect to ISRA issued
within forty (40) days after the Effective Date by the New Jersey Department of
Environmental Protection in connection with the contemplated sale and purchase
of Greentree and Highlands.
10.2.4. TENANT ESTOPPELS. Purchaser shall have received estoppel
certificates substantially in the form attached hereto as Exhibit C (reporting
information consistent with Seller's representations herein, if any, the rent
rolls attached hereto, and the Leases heretofore delivered), from tenants
occupying at least eighty percent (80%) of the leased rentable space in each
Property specifically including the following tenants (the "Specified Tenants"):
(i) at Greentree: Counseling Program; (ii) at Oxford: Ecogen, Computer Hardware
Maintenance, DiMark, Inc.; (iii) at Springhouse: Bisys, Ecta Corp. and Siemens
Energy and (iv) at Highlands: U.S. Postal Service, Walpole, Inc., MBO Binder and
Pepsico. Notwithstanding the foregoing, at Seller's sole option, Seller may
provide its own estoppel ("Seller's Estoppel") in
<PAGE>
the form attached as Exhibit L to Purchaser with respect to any or all tenants
other than the Specified Tenants in satisfaction of the foregoing requirements.
In the event that, after the Closing, Seller delivers to Purchaser a tenant
estoppel certificate from a tenant for whom Seller executed a Seller's Estoppel
at the Closing, and such tenant estoppel certificate contains no information
which is contradictory to or inconsistent with the information contained in the
Seller's Estoppel, then Seller thereafter shall be released from all liability
relating to Seller's Estoppel with respect to such tenant's Lease.
10.2.5. TITLE POLICY. Upon recordation of the Deed and payment of the
title insurance premiums, the Title Company shall be prepared to issue to
Purchaser an Owner's Policy of Title Insurance insuring Purchaser good and
marketable fee simple title to the Property subject only to the Permitted
Exceptions.
10.2.6. POSSESSION OF THE PROPERTY. Delivery by Seller of possession of
the Property, subject to the Permitted Exceptions and the rights of tenants
under the Leases.
ARTICLE XI.
Closing
11.1. PURCHASER'S CLOSING OBLIGATIONS. Purchaser, at its sole cost and
expense, shall deliver or cause to be delivered to Seller at Closing the
following:
11.1.1. The Purchase Price, after all adjustments are made at the
Closing as herein provided, by wire transfer or other immediately available
federal funds, which amount shall be received in escrow by the Title Company on
or before 11:00 a.m. local time.
11.1.2. A blanket conveyance and bill of sale, substantially in the
form attached hereto as Exhibit I (the "General Assignment"), duly executed by
Purchaser (with reciprocal indemnities by Purchaser and Seller), conveying and
assigning to Purchaser the Personal Property, the Leases, the Contracts, the
records and plans, and the Intangible Property.
11.1.3. Evidence reasonably satisfactory to Seller and the Title
Company that the person executing the Closing documents on behalf of Purchaser
has full right, power and authority to do so.
11.1.4. Written notice executed by Purchaser and addressed to the
tenants, (i) acknowledging the sale of the Property to Purchaser, (ii)
acknowledging that Purchaser has received and is responsible for any security
<PAGE>
deposits identified in the rent roll, and (iii) indicating that rent should
thereafter be paid to Purchaser and giving instructions therefor.
11.1.5. A certificate indicating that the representations and
warranties set forth in Article VIII are true and correct on the Closing Date,
or, if there have been changes, describing such changes.
11.1.6. Such other documents as may be reasonably necessary or
appropriate to effect the consummation of the transactions which are the subject
of this Agreement.
11.2. SELLER'S CLOSING OBLIGATIONS. Seller, at its sole cost and
expense, shall deliver or cause to be delivered to Purchaser the following:
11.2.1. A deed (the "Deed") in recordable form properly executed by
Seller conveying to Purchaser the Land and Improvements in fee simple subject
only to the Permitted Exceptions, substantially in the forms attached hereto as
Exhibit H-1 and H-2, as appropriate.
11.2.2. The General Assignment, duly executed by Seller, conveying and
assigning to Purchaser the Personal Property, the Leases, the Contracts, the
records and plans and the Intangible Property.
11.2.3. Written notice executed by Seller and addressed to the tenants,
(i) acknowledging the sale of the Property to Purchaser, (ii) acknowledging that
Purchaser has received and is responsible for any security deposits identified
in the rent roll, and (iii) indicating that rent should thereafter be paid to
Purchaser. substantially in the form attached hereto as Exhibit J.
11.2.4. Evidence reasonably satisfactory to Purchaser and the Title
Company that the person executing the Closing documents on behalf of Seller has
full right, power and authority to do so.
11.2.5. A certificate indicating that the representations and
warranties set forth in Article VII are true and correct on the Closing Date,
or, if there have been changes, describing such changes.
11.2.6. A certificate substantially in the form attached hereto as
Exhibit K ("Non-foreign Entity Certification") certifying that Seller is not a
"foreign person" as defined in Section 1445 of the Internal Revenue Code of
1986, as amended.
11.2.7. The following items, to the extent in Seller's possession: (i)
all keys, combinations and security codes for all locks and security devices on
the Property which are in Seller's possession; (ii) all tenant
<PAGE>
files, operating reports, plans and specifications and other materials
reasonably necessary to the continuity of operation of the Property; (iii) the
originals (or copies where originals are not available) of the Leases, the
service contracts and the licenses and permits; and (iv) certificates of
insurance from the tenants in Seller's possession. Seller shall certify that a
copy of a Lease is true, correct and complete to its knowledge with respect to
those Leases for which Purchaser has not received an original Lease, a tenant
estoppel certificate so certifying as to such Lease, or a Seller's Estoppel.
11.2.8. Such affidavits of title as shall be required by the Title
Company to insure Purchaser's title to the Property as set forth in Section
10.2.5, and to provide affirmative endorsements against mechanic's liens.
11.2.9. A rent roll updated as of not more than three (3) business days
prior to the Closing Date, certified by Seller as true and correct.
11.2.10. Evidence as required by the title company of the good standing
and existence of Seller and the due authority of those executing for Seller.
11.2.11. Current tax bills and, if available, tax bills for each of the
past two (2) years of Seller's ownership of the Property.
11.2.12. Such other documents as are specified in this Agreement, or as
may be reasonably necessary or appropriate to effect the consummation of the
transactions which are the subject of this Agreement.
ARTICLE XII.
Risk of Loss
12.1. CONDEMNATION AND CASUALTY. If, prior to the Closing Date, all or
any portion of the Property is taken by condemnation or eminent domain, or is
the subject of a pending taking which has not been consummated, or is destroyed
or damaged by fire or other casualty, Seller shall notify Purchaser of such fact
promptly after Seller obtains knowledge thereof. If such condemnation or
casualty is "Material" (as hereinafter defined), Purchaser shall have the option
to terminate this Agreement upon notice to Seller given not later than fifteen
(15) days after receipt of Seller's notice, or the Closing Date, whichever is
earlier. If this Agreement is terminated, the Deposit shall be returned to
Purchaser and thereafter neither Seller nor Purchaser shall have any further
rights or obligations to the other hereunder except with respect to the
Surviving Termination Obligations. If this Agreement is not terminated, Seller
shall not be obligated to repair any damage or destruction but (x) Seller shall
assign and turn over to Purchaser all of the insurance proceeds (and shall
credit Purchaser with the full amount of Seller's insurance deductible, if any,
as set forth below)
<PAGE>
or condemnation proceeds, as applicable, net of any costs of repairs and net of
reasonable collection costs other than attorneys' fees (or, if such have not
been awarded, all of its right, title and interest therein) payable with respect
to such fire or other casualty or condemnation including any rent abatement
insurance for such casualty or condemnation and (y) the parties shall proceed to
Closing pursuant to the terms hereof without abatement of the Purchase Price
except for a credit in the amount of the applicable insurance deductible. Seller
hereby covenants and agrees that after the end of the Feasibility Period if
Purchaser has elected to proceed to Closing and has waived its right to
terminate this Agreement pursuant to Section 5.5, Seller shall be required to
obtain Purchaser's prior approval of the settlement of any insurance or
condemnation proceeds and repairs to the Property resulting from a casualty or
condemnation, such approval not to be unreasonably withheld, conditioned or
delayed and which shall be deemed granted if Purchaser fails to respond to a
request for approval within five (5) business days after receipt of the request
therefor.
12.2. CONDEMNATION NOT MATERIAL. If the condemnation is not Material,
then the Closing shall occur without abatement of the Purchase Price and, after
deducting Seller's reasonable costs and expenses incurred in collecting any
award, Seller shall assign all remaining awards or any rights to collect awards
to Purchaser on the Closing Date.
12.3. CASUALTY NOT MATERIAL. If the Casualty is not Material, then the
Closing shall occur without abatement of the Purchase Price except for a credit
in the amount of the applicable deductible and Seller shall not be obligated to
repair such damage or destruction and Seller shall assign and turn over to
Purchaser all of the insurance proceeds net of any costs of repairs and net of
reasonable collection costs (or, if such have not been awarded, all of its
right, title and interest therein) payable with respect to such fire or such
casualty including any rent abatement insurance for such casualty.
12.4. MATERIALITY. For purposes of this Article XII (i) with respect to
a taking by condemnation or eminent domain, the term "Material" shall mean any
taking whatsoever, regardless of the amount of the award or the amount of the
Property taken, excluding, however, any taking solely of (x) subsurface rights
or takings for utility easements or right of way easements, if the surface of
the Property, after such taking, may be used in substantially the same manner as
though such rights had not been taken, or (y) a lease of less than 25,000
rentable square feet for a term of less than five years, and (ii) with respect
to a casualty, the term "Material" shall mean any casualty such that the cost of
repair, as reasonably estimated by Seller's engineer, is in excess of One
Million Dollars ($1,000,000.00).
<PAGE>
ARTICLE XIII.
Default
13.1. DAFAULT BY SELLER. In the event the Closing and the transactions
contemplated hereby do not occur as provided herein by reason of the default of
Seller, Purchaser may elect, as the sole and exclusive remedy of Purchaser, to
(i) terminate this Agreement and receive the Deposit from the Escrow Agent, and
in such event Seller shall not have any liability whatsoever to Purchaser
hereunder other than with respect to the Surviving Termination Obligations or
(ii) enforce specific performance of this Agreement. If specific performance is
not available as a remedy hereunder due solely to Seller's willful or
intentional breach hereunder, then, upon termination of this Agreement by
Purchaser, in addition to receiving the immediate return of the Deposit,
anything in the Agreement contained to the contrary notwithstanding, Purchaser
shall also receive from Seller, upon demand, Purchaser's actual, documented
out-of-pocket costs and expenses associated with conducting its due diligence
relating to the Property (but expressly excluding legal fees incurred in
connection with negotiating this Agreement). Seller's maximum reimbursement
liability under this Section 13.1 shall not exceed Seventy Five Thousand Dollars
($75,000.00).
13.2. DEFAULT BY PURCHASER. In the event the Closing and the
transactions contemplated hereby do not occur as provided herein by reason of
any default of Purchaser, Purchaser and Seller agree it would be impractical and
extremely difficult to fix the damages which Seller may suffer. Therefore,
Purchaser and Seller hereby agree a reasonable estimate of the total net
detriment Seller would suffer in the event Purchaser defaults and fails to
complete the purchase of the Property is and shall be, as Seller's sole and
exclusive remedy (whether at law or in equity), a sum equal to the Deposit. Upon
such default by Purchaser, Seller shall have the right to receive the Deposit
from the Escrow Agent as its sole and exclusive remedy and thereupon this
Agreement shall be terminated and neither Seller nor Purchaser shall have any
further rights or obligations hereunder except with respect to the Surviving
Termination Obligations. The amount of the Deposit shall be the full, agreed and
liquidated damages for Purchaser's default and failure to complete the purchase
of the Property, all other claims to damages or other remedies being hereby
expressly waived by Seller. Notwithstanding the foregoing, nothing contained
herein shall limit Seller's remedies at law or in equity as to the Surviving
Termination Obligations.
ARTICLE XIV.
Brokers
14.1. BROKERS. Purchaser and Seller each represents and warrants to the
other that it has not dealt with any person or entity entitled to a
<PAGE>
brokerage commission, finder's fee or other compensation with respect to the
transaction contemplated hereby other than The Flynn Company whose compensation
shall be the sole responsibility of Purchaser, and who shall be paid only upon
the Closing of the purchase and sale contemplated hereby pursuant to a separate
agreement. Purchaser hereby agrees to indemnify, defend, and hold Seller
harmless from and against any losses, damages, costs and expenses (including,
but not limited to, reasonable attorneys' fees and costs) incurred by Seller by
reason of any breach or inaccuracy of the Purchaser's (or its nominee's)
representations and warranties contained in this Article XIV. Seller hereby
agrees to indemnify, defend, and hold Purchaser harmless from and against any
losses, damages, costs and expenses (including, but not limited to, reasonable
attorneys' fees and costs) incurred by Purchaser by reason of any breach or
inaccuracy of Seller's representations and warranties contained in this Article
XIV. Seller and Purchaser agree that it is their specific intent that no broker
shall be a party to or a third party beneficiary of this Agreement or the
Deposit, that no broker shall have any rights or cause of action hereunder, and
further that the consent of a broker shall not be necessary to any agreement,
amendment, or document with respect to the transaction contemplated by this
Agreement. The provisions of this Article XIV shall survive the Closing and/or
termination of this Agreement.
ARTICLE XV.
Confidentiality
15.1. CONFIDENTIALITY. Seller and Purchaser each expressly acknowledges
and agrees that the transactions contemplated by this Agreement, the Documents
that are not otherwise known by or readily available to the public and the
terms, conditions and negotiations concerning the same shall be held in the
strictest confidence by each of them and shall not be disclosed by either party
except to its respective legal counsel, surveyor, title company, broker,
accountants, consultants, lenders and their counsel, officers, partners,
directors, trustees and shareholders, (the "Authorized Representatives") and
except and only to the extent that such disclosure may be necessary for such
party's performance hereunder. Purchaser agrees that it shall instruct in
writing each of its Authorized Representatives to maintain the confidentiality
of such information and that it shall promptly inform Seller of the identity of
each such Authorized Representative. Purchaser further acknowledges and agrees
that, unless and until the Closing occurs, all information and materials
obtained by Purchaser in connection with the Property that are not otherwise
known by or readily available to the public will not be disclosed by Purchaser
to any third persons (other than to its Authorized Representatives) without the
prior written consent of Seller. If the transaction contemplated by this
Agreement does not occur for any reason whatsoever, Purchaser shall promptly
return to Seller, and shall instruct its Authorized Representatives to return to
Seller, all copies and
<PAGE>
originals of all documents and information provided to Purchaser. Nothing
contained in this Section 15.1 or elsewhere in this Agreement shall preclude or
limit either party from disclosing or accessing any information otherwise deemed
confidential under this Section 15.1 in connection with the party's enforcement
of its rights following a disagreement hereunder or in response to lawful
process or subpoena or other valid or enforceable order of a court of competent
jurisdiction or any filings with Authorities required by reason of the
transactions provided for herein. The provisions of this Section 15.1 shall
survive any termination of this Agreement.
15.2. POST CLOSING PUBLICATIONS. Notwithstanding the foregoing,
following Closing, Purchaser shall have the right to announce the acquisition of
the Property in newspapers and real estate trade publications (including
"tombstones") publicizing the purchase provided that Purchaser shall consult
with Seller with respect to any such notice or publication, and shall reasonably
consider any comments or objections of Seller. The provisions of this Section
15.2 shall survive Closing and/or any termination of this Agreement.
ARTICLE XVI.
Miscellaneous
16.1. NOTICES. Any and all notices, requests, demands or other
communications hereunder shall be deemed to have been duly given if in writing
and if transmitted by hand delivery with receipt therefor, by facsimile delivery
(with confirmation by hard copy), by overnight courier, or by registered or
certified mail, return receipt requested, first class postage prepaid addressed
as follows (or to such new address as the addressee of such a communication may
have notified the sender thereof) (the date of such notice shall be the date of
actual delivery to the recipient thereof):
To Purchaser: Brandywine Realty Trust
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
Attn: Mr. Gerard H. Sweeney,
President and CEO
Fax No.: (610) 325-5622
With a copy to: Pepper, Hamilton & Scheetz LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 10103
Attn: Eric L. Stern, Esquire
Fax No.: (215) 981-4750
<PAGE>
To Seller: Advent Realty Limited Partnership and
Advent Realty Limited Partnership II
c/o TA Associates Realty
45 Milk Street
6th Floor
Boston, MA 02109
Attn: Mr. Andrew M. Neher
Fax No.: (617) 338-5054
With a copy to: Bingham, Dana & Gould LLP
1200 Nineteenth Street, N.W.
Suite 400
Washington, D.C. 20036
Attn: Barry P. Rosenthal, Esq.
Fax No.: (202) 778-6155
To Escrow Agent: Commonwealth Land Title Insurance Company
1700 Market Street - 22nd Floor
Philadelphia, PA 19103
Attn: M. Gordon Daniels, VP
Fax No.: (215) 241-1641
16.2. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New Jersey.
16.3. HEADINGS. The captions and headings herein are for convenience
and reference only and in no way define or limit the scope or content of this
Agreement or in any way affect its provisions.
16.4. EFFECTIVE DATE. This Agreement shall be effective upon delivery
of this Agreement fully executed by the Seller and Purchaser, which date shall
be deemed the Effective Date hereof. Either party may request that the other
party promptly execute a memorandum specifying the Effective Date.
16.5. BUSINESS DAYS. If any date herein set forth for the performance
of any obligations of Seller or Purchaser or for the delivery of any instrument
or notice as herein provided should be on a Saturday, Sunday or legal holiday,
the compliance with such obligations or delivery shall be deemed acceptable on
the next business day following such Saturday, Sunday or legal holiday. As used
herein, the term "legal holiday" means any state or Federal holiday for which
financial institutions or post offices are generally closed in the state where
the Property is located.
16.6. COUNTERPART COPIES. This Agreement may be executed in two or more
counterpart copies, all of which counterparts shall have the same
<PAGE>
force and effect as if all parties hereto had executed a single copy of this
Agreement.
16.7. BINDING EFFECT. This Agreement shall be binding upon, and inure
to the benefit of, the parties hereto and their respective successors and
assigns.
16.8. ASSIGNMENT. Purchaser may assign this Agreement to a subsidiary
or affiliate entity, including without limitation, Brandywine Operating
Partnership, L.P., but otherwise shall not have the right to assign the
Agreement without Seller's prior written consent, which consent may be given or
withheld in Seller's sole and absolute discretion; provided that Purchaser shall
in no event be released from any of its obligations or liabilities hereunder as
a result of any such approved or deemed-approved assignment. Whenever reference
is made in this Agreement to Seller or Purchaser, such reference shall include
the successors and assigns of such party under this Agreement.
16.9. INTERPRETATION. This Agreement shall not be construed more
strictly against one party than against the other merely by virtue of the fact
that it may have been prepared by counsel for one of the parties, it being
recognized that both Seller and Purchaser have contributed substantially and
materially to the preparation of this Agreement.
16.10. ENTIRE AGREEMENT. This Agreement and the Exhibits attached
hereto contain the final and entire agreement between the parties hereto with
respect to the sale and purchase of the Property and are intended to be an
integration of all prior negotiations and understandings. Purchaser, Seller and
their agents shall not be bound by any terms, conditions, statements, warranties
or representations, oral or written, not contained herein. No change or
modifications to this Agreement shall be valid unless the same is in writing and
signed by the parties hereto. Each party reserves the right to waive any of the
terms or conditions of this Agreement which are for their respective benefit and
to consummate the transaction contemplated by this Agreement in accordance with
the terms and conditions of this Agreement which have not been so waived. Any
such waiver must be in writing signed by the party for whose benefit the
provision is being waived.
16.11. SEVERABILITY. If any one or more of the provisions hereof shall
for any reason be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein.
16.12. SURVIVAL. Except as otherwise specifically provided for in
Sections 5.1, 5.2, 5.3, 5.4, 7.3, 8.3, 8.7, 12.1, 14, 15.1, 15.2 and 16.16
(collectively, the "Surviving Termination Obligations"), the provisions of this
<PAGE>
Agreement and the representations and warranties herein shall not survive after
the conveyance of title and payment of the Purchase Price but be merged therein.
16.13. EXHIBITS. Exhibits A through O attached hereto are incorporated
herein by reference.
16.14. TIME. Time is of the essence in the performance of each of the
parties' respective obligations contained herein.
16.15. LIMITATION OF LIABILITY. The obligations of Seller are binding
only on Seller and Seller's assets and shall not be personally binding upon, nor
shall any resort be had to, the private properties of any of the partners,
officers, directors, shareholders or beneficiaries of Seller, or of any
partners, officers, directors, shareholders or beneficiaries of any partners of
Seller, or of any of Seller's employees or agents. All documents to be executed
by Seller shall also contain the foregoing exculpation. The obligations of
Purchaser are binding only on Purchaser and Purchaser's assets and shall not be
personally binding upon, nor shall any resort be had to, the private properties
of any of the trustees, partners, officers, directors, shareholders or
beneficiaries of Purchaser, or of any trustees, partners, officers, directors,
shareholders or beneficiaries of any partners of Purchaser, or of any of
Purchaser's employees or agents. All documents to be executed by Purchaser shall
also contain the foregoing exculpation.
16.16. PREVAILING PARTY. Should either party employ an attorney to
enforce any of the provisions hereof, (whether before or after Closing, and
including any claims or actions involving amounts held in escrow), the
non-prevailing party in any final judgment agrees to pay the other party's
reasonable expenses, including reasonable attorneys' fees and expenses in or out
of litigation and, if in litigation, trial, appellate, bankruptcy or other
proceedings, expended or incurred in connection therewith, as determined by a
court of competent jurisdiction. The provisions of this Section 16.16 shall
survive Closing and/or any termination of this Agreement.
16.17. ESCROW AGREEMENT. 16.17.1 INSTRUCTIONS. Within two (2) days
after execution of this Agreement, Purchaser and Seller each shall deposit a
copy of this Agreement executed by such party (or either of them shall deposit a
copy executed by both Purchaser and Seller) with Escrow Agent, and upon receipt
of the Initial Deposit from Purchaser, Escrow Agent shall immediately execute
this Agreement where provided below. This Agreement, together with such further
instructions, if any, as the parties shall provide to Escrow Agent by written
agreement, shall constitute the escrow instructions. If any requirements
relating to the duties or obligations of Escrow Agent hereunder are not
acceptable to Escrow Agent, or if Escrow Agent requires additional
<PAGE>
instructions, the parties hereto agree to make such deletions, substitutions and
additions hereto as counsel for Purchaser and Seller shall mutually approve,
which additional instructions shall not substantially alter the terms of this
Agreement unless otherwise expressly agreed to by Seller and Purchaser.
16.17.2. REAL ESTATE REPORTING PERSON. Escrow Agent is hereby
designated the "real estate reporting person" for purposes of Section 6045 of
Title 26 of the United States Code and Treasury Regulation 1.6045-4 and any
instructions or settlement statement prepared by Escrow Agent shall so provide.
Upon the consummation of the transaction contemplated by this Agreement, Escrow
Agent shall file Form 1099 information return and send the statement to Seller
as required under the aforementioned statute and regulation. Seller and
Purchaser shall promptly furnish their federal tax identification numbers to
Escrow Agent and shall otherwise reasonably cooperate with Escrow Agent in
connection with Escrow Agent's duties as real estate reporting person.
16.18. LIABILITY OF ESCROW AGENT. The parties acknowledge that the
Escrow Agent shall be conclusively entitled to rely, except as hereinafter set
forth, upon a certificate from Purchaser or Seller as to how the Deposit (which,
for purposes of this Section shall be deemed to also include any other escrowed
funds held by the Escrow Agent pursuant to this Agreement) should be disbursed.
Any notice sent by Seller or Purchaser (the "Notifying Party") to the Escrow
Agent shall be sent simultaneously to the other noticed parties pursuant to
Section 16.1 herein (the "Notice Parties"). If the Notice Parties do not object
to the Notifying Party's notice to the Escrow Agent within ten (10) days after
the Notice Parties' receipt of the Notifying Party's certificate to the Escrow
Agent, the Escrow Agent shall be able to rely on the same. If the Notice Parties
send, within such ten (10) days, written notice to the Escrow Agent disputing
the Notifying Party's certificate, a dispute shall exist and the Escrow Agent
shall hold the Deposit as hereinafter provided. The parties hereto hereby
acknowledge that Escrow Agent shall have no liability to any party on account of
Escrow Agent's failure to disburse the Deposit if a dispute shall have arisen
with respect to the propriety of such disbursement and, in the event of any
dispute as to who is entitled to receive the Deposit, disburse them in
accordance with the final order of a court of competent jurisdiction, or to
deposit or interplead such funds into a court of competent jurisdiction pending
a final decision of such controversy. The parties hereto further agree that
Escrow Agent shall not be liable for failure to any depository and shall not be
otherwise liable except in the event of Escrow Agent's gross negligence or
willful misconduct. The Escrow Agent shall be reimbursed on an equal basis by
Purchaser and Seller for any reasonable expenses incurred by the Escrow Agent
arising from a dispute with respect to the Deposit. The obligations of Seller
and Purchaser with respect to the Escrow Agent are intended to be binding only
on such parties and their respective assets and shall not be personally binding
upon, nor shall any resort be had to, the private properties of any of the
partners, officers,
<PAGE>
trustees, directors, shareholders or beneficiaries of Seller or Purchaser, or of
any partners, officers, trustees, directors, shareholders or beneficiaries of
any partners of Seller or Purchaser, or of any of Seller's or Purchaser's
employees or agents.
16.19. NO RECORDING. Neither this Agreement nor any memorandum or short
form hereof shall be recorded or filed in any public land or other public
records of any jurisdiction, by either party and any attempt to do so may be
treated by the other party as a breach of this Agreement.
16.20. WAIVER OF TRIAL BY JURY. The respective parties hereto shall and
hereby do waive trial by jury in any action, proceeding or counterclaim brought
by either of the parties hereto against the other on any matters whatsoever
arising out of or in any way connected with this Agreement, or for the
enforcement of any remedy under any statute, emergency or otherwise.
16.21. [INTENTIONALLY OMITTED.]
16.22. SEVERAL OBLIGATIONS OF SELLER. Purchaser hereby acknowledges and
agrees that Fund I and Fund II are referred to collectively in this Agreement as
Seller merely for the sake of convenience. Notwithstanding any provision to the
contrary in this Agreement, the parties agree and acknowledge that the
obligations of Fund I and Fund II under this Agreement are several obligations
only and not joint obligations. Fund I makes the representations and warranties
contained herein, including, without limitation, the representations and
warranties contained in Article VII of this Agreement, and undertakes the
covenants and obligations contained herein, including, without limitation, the
covenants set forth in Articles V, IX, XI and XIV of this Agreement, on its own
behalf and solely with respect to Springhouse, Oxford and Greentree. Fund II
makes the representations and warranties contained herein, including, without
limitation, the representations and warranties contained in Article VII of this
Agreement, and undertakes the covenants and obligations contained herein,
including, without limitation, the covenants set forth in Articles V, IX, XI and
XIV of this Agreement, on its own behalf and solely with respect to Highlands.
Nothing contained in this Agreement shall make Fund I and Fund II obligated for
the representations, warranties, covenants, obligations or liabilities of the
other. Notwithstanding the foregoing, the parties hereby acknowledge that
Purchaser need not seek the approval, consent or waiver of both Fund I and Fund
II with respect to any approval, consent or waiver required hereunder; rather it
shall be adequate if Purchaser obtains the approval, consent or waiver of the
entity which owns the Property so affected.
16.23. PORTFOLIO SALE. Seller and Purchaser hereby acknowledge that the
Property is to be purchased in its entirety. In furtherance thereof, in the
event that any condition precedent is not satisfied with respect to less than
all of the Property, or any other condition arises with respect to less than all
<PAGE>
of the Property which entitles Purchaser to exercise its remedies under this
Agreement, Purchaser shall have no right to purchase less than all of the
Property. Notwithstanding the foregoing, the parties acknowledge that Seller
must obtain the release from Seller's lender on or before Closing of the
mortgage currently encumbering Highlands. In the event that Seller has not
obtained such release prior to Closing, Seller shall have the right, to be
exercised by delivering written notice to Purchaser not less than three (3) days
prior to Closing, to extend the Closing Date, with respect to Highlands only,
for a period not to exceed thirty (30) days in order to enable Seller to obtain
said release. Said extension of time shall not apply to the Closing with respect
to Oxford, Springhouse or Greentree, which shall take place in the time period
and the manner and on such other terms as are set forth in this Agreement. If
Seller has not obtained the release within said additional thirty (30) day
period, then, Purchaser shall have the right, to be exercised by delivering
written notice to Seller not less than three (3) days prior to the end of said
thirty (30) day period, to extend the Closing Date, with respect to Highlands
only, for a period not to exceed an additional thirty (30) days in order to
enable Seller to obtain said release. In the event that Purchaser elects not to
extend the Closing Date as set forth in the preceding sentence then this
Agreement shall be deemed terminated and of no further force and effect with
respect to Highlands.
16.24. SEC REPORTING REQUIREMENTS. For the period of time commencing on
the date hereof and continuing through the first anniversary of the Closing
Date, Seller shall, from time to time, upon reasonable advance written notice
from Purchaser, provide Purchaser 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 necessary, in
the opinion of Purchaser's outside third party accountants (the "Accountants")
to enable Purchaser 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 the Purchaser; and (c) any
registration statement, report or disclosure statement filed with the Commission
by, or on behalf of Purchaser; and (ii) a representation letter, in form
specified by, or otherwise reasonably satisfactory to the Accountants, 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. Purchaser shall indemnify
Seller upon demand for all liabilities, obligations, costs and expenses actually
incurred by Seller in connection with (i) Seller's compliance with its
obligations under this Section 16.24, (ii) any claims made under this Section
16.24 and (iii) any claims made with respect to the representation letter.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal on the date or dates set forth below.
WITNESS: SELLER:
ADVENT REALTY LIMITED
PARTNERSHIP, a Delaware limited
partnership
By: Advent Realty G.P. Limited
Partnership, a Delaware limited
partnership, general partner
By: TA Associates Realty Group
Limited Partnership, a
Delaware limited partnership,
its sole general partner
/s/ Erica H. Weiss By: /s/ Michael Ruane
- --------------------------- ------------------
Michael Ruane
General Partner
DATE: April 7, 1997
Tax I.D. No. 51-0305555
ADVENT REALTY LIMITED
PARTNERSHIP II, a Delaware limited
partnership
By: Advent Realty G.P. II Limited
Partnership, a Delaware limited
partnership, general partner
By: Advent Realty, Inc., a
Massachusetts corporation, its
sole general partner
/s/ Erica H. Weiss By: /s/ Andrew M. Neher
- --------------------------- --------------------
Andrew M. Neher
Senior Vice President
<PAGE>
By: Advent Real Estate Investment
Texas Corporation, a Texas
corporation, general partner
/s/ Erica H. Weiss By: /s/ Andrew M. Neher
- --------------------------- --------------------
Andrew M. Neher
Senior Vice President
DATE: April 7, 1997
Tax I.D. No. 04-3092357
(SIGNATURES CONTINUED ON FOLLOWING PAGE)
<PAGE>
PURCHASER:
WITNESS:
BRANDYWINE REALTY TRUST,
a Maryland real estate investment trust
/s/ Brian A. Belcher By: /s/ Gerard H. Sweeney
- --------------------------- -----------------------
Gerard H. Sweeney
President and CEO
DATE: April 7, 1997
Tax I.D. #23-2862640
<PAGE>
The Escrow Agent hereby executes this Agreement for the sole purpose of
acknowledging receipt of the Deposit and its responsibilities hereunder and to
evidence its consent to serve as Escrow Agent in accordance with the terms of
this Agreement.
ESCROW AGENT:
COMMONWEALTH LAND TITLE
INSURANCE COMPANY
By: /s/ M. Gordon Daniels
-----------------------
Title: Vice President
-----------------------
Date: 4/7/97
-----------------------
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT OF SALE is made and entered into as of the 15th
day of April, 1997 by and between EDB PROPERTY PARTNERS, L.P. I, a Delaware
limited partnership, having an address in care of Emmes & Company, LLC, 420
Lexington Avenue, New York, New York 10170 (hereinafter referred to as the
"Seller") and BRANDYWINE REALTY TRUST, a Maryland real estate investment trust,
having an address at Suite 150, 16 Campus Boulevard, Newtown Square,
Pennsylvania 19073 (hereinafter referred to as the "Buyer").
RECITALS
A. Seller is the owner of all of the Land (as hereinafter
defined) upon which are constructed the Improvements (as hereinafter defined)
commonly known as (i) 7000 Geerdes Boulevard, located in King of Prussia,
Pennsylvania and (ii) 2000/4000 Midlantic Drive, 9000 Midlantic Drive, 10000
Midlantic Drive and 15000 Midlantic Drive, located in Mount Laurel, New Jersey.
B. Seller desires and hereby agrees to sell, and Buyer desires
and hereby agrees to acquire, all of Seller's right, title and interest in and
to the Properties (as hereinafter defined), subject to and on the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual promises and
agreements hereinafter set forth and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
1. Definitions Of Certain Terms. For all purposes of this
Agreement, the following terms shall have the respective meanings set forth
below:
"Agreement" shall mean this document entitled
"Agreement of Sale", all exhibits and schedules attached hereto or made a part
hereof and all amendments to this Agreement which are agreed to in writing and
signed by all of the parties hereto.
"Assignments" shall have the meaning ascribed to that
term in Paragraph 5(f) hereof.
<PAGE>
"Closing Date" shall have the meaning ascribed to
that term in Paragraph 4 hereof. The date upon which the Closing (as defined in
Paragraph 4 below) actually occurs shall be the Closing Date.
"Contracts" shall mean all contracts and agreements
with respect to the management (excluding property management agreements),
operation, supply, maintenance, repair or construction affecting any of the
Properties, to the extent assignable by Seller, all as described in Exhibit "B"
attached hereto and made a part hereof.
"Deposit" shall mean the Deposit delivered by Buyer
to Escrow Agent pursuant to Paragraph 3(a) hereof, together with all interest
earned thereon, if any.
"Due Diligence Termination Date" shall mean 5:00 p.m.
E.S.T. on May 15, 1997.
"Effective Date" shall mean the date on which this
Agreement has been fully executed and delivered by both parties hereto.
"Escrow Agent" shall mean Baer Marks & Upham LLP,
having an address of 805 Third Avenue, New York, New York 10022.
"Escrow Terms" shall mean the escrow terms attached
hereto as Exhibit "J" and made a part hereof by this reference, as if fully set
forth within the body of this Agreement.
"Geerdes Improvements" shall mean those certain
buildings and other improvements constructed and located on the Geerdes Land.
"Geerdes Land" shall mean that certain parcel of real
property located at 7000 Geerdes Boulevard, Upper Merion Township, Montgomery
County, Pennsylvania, all as more particularly described by metes and bounds on
Exhibit "A-1" attached hereto and made a part hereof.
"Geerdes Property" shall mean the Geerdes Real
Property and such of the Contracts, Leases, Licenses, Personal Property and
other rights, titles, interests and obligations which pertain to the Geerdes
Real Property and are intended to be conveyed, sold or otherwise transferred to
Buyer by Seller pursuant to this Agreement.
"Geerdes Real Property" shall mean the Geerdes Land
and the Geerdes Improvements.
-2-
<PAGE>
"Improvements" shall mean, collectively, the Geerdes
Improvements, the 2000/4000 Improvements, the 9000 Improvements, the 10000
Improvements and the 15000 Improvements.
"Land" shall mean, collectively, the Geerdes Land,
the 2000/4000 Land, the 9000 Land, the 10000 Land, and the 15000 Land.
"Leases" shall mean those certain leases (and
guarantees thereof, if any) listed on Exhibit "K" attached hereto and made a
part hereof, or hereafter entered into by Seller, as landlord, in accordance
with the terms of this Agreement, for any space within any of the Improvements
located on any of the Land.
"Licenses" shall mean the licenses, permits,
approvals and agreements affecting any of the Real Properties.
"New Jersey Real Properties" shall mean,
collectively, the 2000/4000 Real Property, 9000 Real Property, 10000 Real
Property, and 15000 Real Property.
"Partnership" shall mean Brandywine Operating
Partnership, L.P., a Delaware limited partnership whose sole general partner is
Buyer.
"Permitted Exceptions" shall mean with respect to any
of the Real Properties (i) the lien of real estate taxes, water rent and sewer
charges that are not due and payable on the Closing Date, (ii) the printed
exclusions, conditions and stipulations contained in the Commitment (as
hereinafter defined), (iii) additional exceptions to title set forth in Exhibit
"C" to this Agreement, (iv) special assessments which become a lien on any of
the Real Properties on or after the Closing Date, (v) matters set forth on the
surveys of the Real Properties listed on Exhibit "L" attached hereto and made a
part hereof, and any further state of facts which current and accurate surveys
for the Real Properties would reveal, provided, that the same would not
materially interfere with the use of the Real Properties for their current use
as office space and accessory parking; (vi) such other title matters existing on
the Closing Date which are accepted or deemed accepted by Buyer pursuant to
Paragraph 5 hereof; and (vii) the rights of Tenants of any of the Real
Properties pursuant to the Leases for all or any portion of any of the Real
Properties.
"Personal Property" shall (except as specifically
excluded on Exhibit "D" hereto) mean all of Seller's right, title and interest
in and to the tangible personal property including, without limitation,
furniture, furnishings, equipment, machinery and fixed and movable fixtures,
together with all component and replacement parts, owned by Seller, situated on
any of the Real Properties on the Closing Date, and all artwork, renderings,
flags, awnings and trade dress; all architects', engineers', surveyors' and
other real estate
-3-
<PAGE>
professionals' plans, specifications, certifications, reports, data or other
technical descriptions (including, without limitation, all environmental,
structural and mechanical inspection reports) to the extent the same are in
Sellers' possession and are not proprietary in nature, and all building names
and Seller's rights, if any, in and to the name "Laurel Corporate Center."
"Properties" shall mean, collectively, the Geerdes
Property, the 2000/4000 Property, the 9000 Property, the 10000 Property, and the
15000 Property.
"Real Properties" shall mean, collectively, the
Geerdes Real Property and the New Jersey Real Properties.
"Tenants" shall mean the tenants under the Leases.
"2000/4000 Improvements" shall mean those certain
buildings and other improvements constructed and located on the 2000/4000 Land.
"2000/4000 Land" shall mean that certain parcel of
real property located at 2000/4000 Midlantic Drive, Mount Laurel, Burlington
County, New Jersey all as more particularly described by metes and bounds on
Exhibit "A-2" attached hereto and made a part hereof.
"2000/4000 Property" shall mean the 2000/4000 Real
Property and such of the Contracts, Leases, Licenses, Personal Property and
other rights, titles, interests and obligations which pertain to the 2000/4000
Real Property which are intended to be conveyed, sold or otherwise transferred
to Buyer by Seller pursuant to this Agreement.
"2000/4000 Real Property" shall mean the 2000/4000
Land and the 2000/4000 Improvements.
"9000 Improvements" shall mean those certain
buildings and other improvements constructed and located on the 9000 Land.
"9000 Land" shall mean that certain parcel of real
property located at 9000 Midlantic Drive, Mount Laurel, Burlington County, New
Jersey all as more particularly described by metes and bounds on Exhibit "A-3"
attached hereto made a part hereof.
"9000 Property" shall mean the 9000 Real Property and
such of the Contracts, Leases, Licenses, Personal Property and other rights,
titles, interests and obligations which pertain to the 9000 Real Property and
are intended to be conveyed, sold or otherwise transferred to Buyer by Seller
pursuant to this Agreement.
-4-
<PAGE>
"9000 Real Property" shall mean the 9000 Land and the
9000 Improvements.
"10000 Improvements" shall mean those certain
buildings and other improvements constructed and located on the 10000 Land.
"10000 Land" shall mean that certain parcel of real
property located at 10000 Midlantic Drive, Mount Laurel, Burlington County, New
Jersey all as more particularly described by metes and bounds on Exhibit "A-4"
attached hereto and made a part hereof.
"10000 Property" shall mean the 10000 Real Property
and such of the Contracts, Leases, Licenses, Personal Property and other rights,
titles, interests and obligations which pertain to the 10000 Real Property and
are intended to be conveyed, sold or otherwise transferred to Buyer by Seller
pursuant to this Agreement.
"10000 Real Property" shall mean the 10000 Land and
the 10000 Improvements.
"15000 Improvements" shall mean those certain
buildings and other improvements constructed and located on the 15000 Land.
"15000 Land" shall mean that parcel of real property
located at 15000 Midlantic Drive, Mount Laurel, Burlington County, New Jersey
all as more particularly described by metes and bounds on Exhibit "A-5" attached
hereto made a part hereof.
"15000 Property" shall mean the 15000 Real Property
and such of the Contracts, Leases, Licenses, Personal Property and other rights,
titles, interests and obligations which pertain to the 15000 Real Property and
are intended to be conveyed, sold or otherwise transferred to Buyer by Seller
pursuant to this Agreement.
"15000 Real Property" shall mean the 15000 Land and
the 15000 Improvements.
2. Acquisition Of The Properties. On the Closing Date, and
subject to the terms and conditions set forth in this Agreement, Seller shall
sell, assign, transfer and convey to Buyer and Buyer shall purchase from Seller
the following:
(a) All right, title and interest of Seller
in and to all of the Real Properties;
-5-
<PAGE>
(b) All right, title and interest of Seller,
if any, in any land lying in the bed of any street, road, avenue or alley, open
or closed, in front of or adjoining any of the Land, to the center line thereof;
(c) All right, title and interest of Seller,
if any, in any easements, covenants, rights of way, privileges, hereditaments
and other rights appurtenant to any of the Real Properties;
(d) to the extent assignable to Buyer and
not canceled by Seller, all right, title and interest of Seller in and to the
Contracts and the Licenses relating to any of the Real Properties;
(e) all right, title and interest of Seller
in and to the Leases; and
(f) all right, title and interest of Seller
in and to the Personal Property.
3. Purchase Price And Time Of Payment. The Purchase Price (the
"Purchase Price") to be paid by Buyer to Seller for the Properties shall be
Sixty-Six Million Two Hundred Thousand ($66,200,000.00) Dollars, as adjusted
pursuant to Paragraph 7 of this Agreement, which shall be paid to Seller in the
following manner:
(a) Four Hundred Fifty Thousand ($450,000.00) Dollars
(the "Deposit") by check, subject to collection, payable to the order of the
Escrow Agent, which shall be held and disbursed pursuant to the Escrow Terms.
(b) The balance of the Purchase Price shall be paid
to Seller at the Closing by wire transfer of immediately available funds to an
account designated by Seller.
(c) The transaction contemplated by this Agreement is
for the sale of all of the Properties as a single transaction so that no one or
more of the Properties may be sold without all of the Properties being sold
unless expressly provided for in this Agreement to the contrary or agreed to in
writing by the parties hereto and in any event the Deposit shall be
-6-
<PAGE>
deemed a single deposit for the entire transaction which shall not be allocated
or prorated to any of the Properties regardless of whether all or less than all
of the Properties are to be conveyed to Buyer on the Closing Date pursuant to
this Agreement or as otherwise agreed by the parties hereto in writing.
4. Closing. The closing of the transaction contemplated by
this Agreement (the "Closing") shall be held on May 30, 1997 (the "Closing
Date") at the offices of Seller's attorneys, Baer Marks & Upham LLP, 805 Third
Avenue, New York, New York 10022, with TIME BEING OF THE ESSENCE AS TO THE
PERFORMANCE BY BUYER OF ITS OBLIGATIONS UNDER THIS AGREEMENT ON SAID CLOSING
DATE OF MAY 30, 1997. By written notice (the "Acceleration Notice") given to
Seller, Buyer may elect to accelerate the Closing to a date earlier than May 30,
1997, which accelerated date shall in no event be less than fifteen (15) days
after receipt by Seller of the Acceleration Notice.
5. Title And Conveyance Of The Property.
(a) At Closing, title to each of the Real Properties
shall be insurable at regular rates by Chicago Title Insurance Company (the
"Title Insurer"), free and clear of all liens, encumbrances and restrictions
other than the Permitted Exceptions; provided, however, that if title to any of
the Real Properties is not insurable as aforesaid, Buyer's sole right and remedy
shall be as set forth in paragraph 5(b) below. If Purchaser elects to purchase
fee title insurance, the Title Insurer shall be co-insurer for at least
one-third of the principal sum of insurance coverage purchased by Purchaser.
(b) (i) Promptly after execution of this Agreement,
Seller shall apply for a title insurance commitment (1992 ALTA Form with
Creditor's Rights Exclusion Deleted) to be issued by the Title Insurer
("Commitment"), agreeing to issue to Buyer, upon recording of the Deeds (as
hereinafter defined) for each of the Real Properties, an owner's policy of title
insurance as above specified ("Title Policy"). Said Commitments shall agree to
insure the proposed title of the Buyer to each of the Real Properties subject
only to the Permitted Exceptions and such other title exceptions as Buyer has
agreed to accept or is deemed to have accepted pursuant to this Paragraph. If
any of the Commitments disclose any title exceptions in addition to the
Permitted Exceptions and Buyer objects to such additional title exceptions (the
"Title Defects"), Buyer shall notify Seller of such Title Defects with
sufficient specificity to enable Seller to respond. Buyer's notice of any Title
Defects shall be given in writing to Seller no later than the date which is five
(5) business after Buyer's receipt of the Commitments and copies of all matters
of record raised therein as exceptions thereto, after which Buyer shall be
deemed to have waived any and all Title Defects not so raised, except for Title
Defects which are disclosed to Buyer in continuations of title issued
-7-
<PAGE>
subsequent to the issuance of the Commitments, unless Buyer fails to object to
same in writing within three (3) business days after Buyer's receipt of the
continuation of title in which the same is disclosed, in which case Buyer will
be deemed to have waived such additional Title Defects. Seller shall have the
right, but not the obligation (except as otherwise specifically provided), to
cure such Title Defects and, if Seller elects to attempt to cure the Title
Defects but has not cured same on or before the Closing Date, then the Closing
Date may be extended by Seller at its sole option for up to sixty (60) days to
enable Seller to effect such cure.
i) In the event that either (a) Seller is unable to
convey title in accordance with the terms of this Agreement, (b) Seller elects
not to cure or cause the removal of any exception to title, except as required
in (iii), below, or (c) if Seller is unable to satisfy any other conditions to
Buyer's obligations under this Agreement, then (except as otherwise specifically
provided in (iii), below) the sole liability of Seller shall be to (A) direct
the Escrow Agent to return to Buyer the Deposit and (B) reimburse Buyer for the
reasonable charges imposed by the Title Company for preparation of the
Commitments (without the issuance of a policy) and for the reasonable fees paid
by Buyer to update the existing surveys (collectively "Buyer's Reasonable
Costs"), and upon such payments being made, this Agreement shall be deemed
cancelled and the parties hereto shall be released of all obligations and
liabilities hereunder, except as to any provisions which expressly survive a
termination of this Agreement; and Buyer shall have no rights of action against
Seller in law or in equity, for damages or, except for the purpose of enforcing
Seller's contractual obligations under (iii), below, for specific performance.
Notwithstanding the foregoing, Buyer shall have the right to waive any
conditions to Buyer's obligations hereunder, in which event Seller shall make
the deliveries provided for herein to Buyer to the extent that Seller is able so
to do, and there shall be no reduction in the Purchase Price in such event.
ii) Notwithstanding the provisions of the foregoing
paragraph, if the condition of title to the Real Properties at the Closing is
other than that which Buyer is required or agrees to accept hereunder solely by
reason of any mortgages or other liens (hereinafter referred to as "Liens")
which (a) can be satisfied or remedied by the payment of a liquidated amount of
money, and (b) will not in the aggregate require a payment in excess of
$1,000,000 to discharge the same, (except that as to (x) mortgages which are of
record as of the date hereof, and (y) Liens filed or recorded after the date
hereof, there shall be no monetary limit with respect to Seller's obligations
hereunder), Seller shall not have the right to cancel this Agreement and Seller
shall either (aa) discharge, satisfy, or bond the same or (bb) deliver such
funds to be held in escrow required by the Title Company, in either event so
that the Title Company shall affirmatively insure the full and complete
discharge of the foregoing and shall agree to omit the same as an exception to
its title insurance policy.
iii) Notwithstanding anything to the contrary
contained in this Agreement, Seller shall have no duty nor be required to take
any action, to institute any proceedings or to incur any expense (other than as
may be expressly required in paragraph
-8-
<PAGE>
(iii), above) in order to remedy or remove any objections to title or otherwise
to render title in accordance with the terms called for in this Agreement.
(c) Buyer expressly understands, acknowledges and
agrees that any failure by Buyer to notify Seller in writing of any Title
Defects on or before either the fifth (5th) or third (3rd) business day
following the Buyer's receipt of the Commitments or any continuation thereof,
respectively, shall for all purposes be deemed to be an acceptance by Buyer of
such Title Defects as if they were one or more of the Permitted Exceptions.
(d) At Closing, Seller will convey fee simple title
to the New Jersey Real Properties by a Bargain and Sale Deed with covenant
against grantor's acts, and will convey fee simple title to the Geerdes Real
Property by a Special Warranty Deed (collectively, the "Deeds"), subject in all
cases to the Permitted Exceptions, in the forms attached hereto and made a part
hereof as Exhibit "F".
(e) At Closing, Seller will transfer all of its
right, title and interest in and to the Personal Property to Buyer by executing
a Bill of Sale ("Bill of Sale") in the form attached hereto and made a part
hereof as Exhibit "G".
(f) At Closing, Seller will assign all of Seller's
right, title, and interest, and Buyer shall assume all of the obligations from
and after the Closing Date, in, to and under the Leases, Licenses and the
Contracts for each of the Real Properties, by executing an Assignment and
Assumption Agreement in the form attached hereto and made a part hereof as
Exhibit "M" (the "Assignments").
6. Closing Documents.
(a) At the Closing, as a condition of Buyer's
obligation to close hereunder, Seller shall deliver or cause to be delivered the
following:
i) The Deeds, executed by Seller, covering
the New Jersey Real Properties and the Deed covering the Geerdes Real Property
(and separate quitclaim deeds to each conveying the Real Properties utilizing
new ALTA survey descriptions, if requested);
ii) The Bills of Sale executed by Seller
covering the Personal Property;
iii) The Assignments, executed by Seller;
-9-
<PAGE>
iv) As many signed originals (or true and
correct copies of same) of the Contracts, Leases, Licenses, and other items
covered by the Assignments as are in the possession or control of Seller;
v) All machinery and/or equipment operating
manuals, technical data and other documentation relating to the building systems
and equipment, and all machinery, equipment and other building warranties and
guarantees, if any, but only to the extent that any of the same are in the
possession or control of Seller;
vi) All master and duplicate keys,
combinations and codes to all locks and security devices for the Improvements
which are in the possession or control of Seller;
vii) Written notice from Seller or Seller's
managing agent to each Tenant in form reasonably satisfactory to Buyer stating
that the Real Properties have been sold to Buyer and that tenant security
deposits (if any) in Seller's possession have been transferred to Buyer and
directing the Tenants to make future rental payments to Buyer at the address
designated by Buyer;
viii) Non-foreign person certification in
the form attached hereto as Exhibit "H";
ix) All building records and Tenant lease
files with respect to the Real Properties which are in the possession of Seller;
x) Each bill of current real estate taxes,
sewer charges and assessments, water charges and other utilities and to the
extent in Seller's possession or control, bills for each of the same for the
three (3) years, together with proof of payment thereof (to the extent same have
been paid);
xi) All plans, specifications, as-built
drawings, surveys, site plans, and final, written reports of architects,
engineers and surveyors, and any other Personal Property forming part of the
Property or any portion thereof, but only to the extent that the same exist and
are in the possession of Seller or any property manager controlled by Seller;
xii) An affidavit or affidavits of title in
favor of the Title Insurer on the form used by such Title Insurer, in form
reasonably acceptable to Seller to enable the Title Insurer to issue the
Commitments described in Paragraph 5(b)(i). Buyer shall require affirmative
endorsements against mechanic's liens, consistent with Seller's obligations
under Paragraph 5(b)(iii), above.
-10-
<PAGE>
xiii) A letter, from the New Jersey
Department of Environmental Protection and Energy or its successor stating that
the provisions of the Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et seq.,
the regulations promulgated thereunder and any successor legislation and
regulations are inapplicable to the New Jersey Properties (the
"Non-Applicability Letter");
xiv) Subject to the provisions of Paragraph
11(d), below, Estoppel Letters, if any, received from Tenants;
xv) Updated rent rolls, which shall be
certified by Seller to be correct and complete as of Closing Date; and
xvi) Proof as to the due authorization and
execution by Seller of the documents executed and delivered by Seller.
(b) At the Closing, as a condition of Seller's
obligation to close hereunder, Buyer shall deliver or cause to be delivered the
following:
i) The balance of the Purchase Price;
ii) The Assignments, executed by Buyer; and
iii) The documents and instruments required
pursuant to Exhibit "S" hereto.
-11-
<PAGE>
7. Prorations And Closing Costs. All matters involving
prorations or adjustments to be made in connection with the Closing and not
specifically provided for in any other provision of this Agreement shall be
adjusted as provided below. Except as otherwise set forth herein, all items to
be prorated pursuant to this Paragraph shall be prorated as of the Closing Date,
with Buyer to be treated as the owner of the Properties, for purposes of
prorations of income and expenses, on and after the Closing Date.
(a) Real estate taxes and all other ad valorem taxes,
if any, with respect to the Real Properties for the applicable fiscal or
calendar year in which the Closing occurs shall be prorated on a per diem basis.
If the amount of such taxes is not known on the Closing Date, taxes will be
prorated on the basis of the most recently ascertainable tax bill. There shall
be no proration of Seller's insurance premiums or assignment of Seller's
insurance policies and Seller shall be entitled to cancel all of its existing
policies as of the Closing Date. Buyer shall be obligated (at its own election)
to obtain any replacement policies. The amounts of all telephone, electric,
sewer, water and other utility bills, trash removal bills, janitorial and
maintenance service bills relating to each of the Real Properties and allocable
to the period prior to the Closing Date shall be determined and paid by Seller
before Closing, if possible, or shall be paid promptly thereafter by Seller or
adjusted between Buyer and Seller immediately after the same have been
determined. Buyer and Seller shall to the extent necessary enter into an
agreement to such effect at Closing. Seller shall attempt to have all utility
meters read as of the Closing Date. Seller shall further attempt to obtain from
the provider of same, all other service statements and bills of account adjusted
as of the Closing Date. Seller shall be entitled to refunds of all deposits, if
any, paid by Seller or Seller's predecessor-in-interest prior to Closing and
held by entities providing such service, or, at Seller's option, Seller shall
transfer all of Seller's right, title and interest in and to such deposits to
Buyer at Closing and shall receive a full credit for the amount of such
deposits. All Contracts and other obligations in connection with the Properties,
to the extent the same are intended to be assumed hereunder, shall be prorated
as of the Closing Date.
(b) Special assessments which have been filed as a
lien against any of the Real Properties on or before the Closing Date and are
not payable in installments shall be paid by Seller. Special assessments which
have been filed as a lien against any of the Real Properties but which are
payable in installments shall be adjusted based upon the installment payment for
the fiscal or calendar year in which Closing takes place and the remaining
unpaid assessments shall be assumed by Buyer. Special assessments which are or
may be pending, but which have not become a lien on the Real Properties as of
the Closing Date, and special assessments which are filed as a lien after the
Closing Date, shall be assumed and paid by Buyer.
(c) Seller shall pay the cost of State and County
transfer taxes or
-12-
<PAGE>
stamps imposed in connection with the recordation of the Deeds for the New
Jersey Real Properties and Buyer and Seller will share equally in the cost of
state and county transfer taxes or stamps imposed in connection with the
recordation of the Deed to the Geerdes Real Property. Buyer shall pay the
expense of the title searches, title premiums and any other title insurance
costs on the owner's title insurance policies and the cost of obtaining any
surveys, if desired by Buyer. Buyer agrees to pay the expense of the legal fees
of its own counsel. The cost of all of Buyer's Due Diligence Activities (as
defined below) shall be borne solely by Buyer.
(d) Any base, minimum or similar rents under the
Leases collected by Seller for a rental period or portion thereof from or after
the Closing Date shall be credited to Buyer at Closing on a per diem basis. In
addition, any security deposits held by Seller for any Lease, together with the
interest due thereon, if any and if required under the terms of the Lease or as
required by applicable law, shall either be credited or transferred to Buyer at
Closing at Seller's option. Any base, minimum or similar rents collected by
Buyer after Closing from a Tenant owing same at the time of Closing for a period
or portion thereof prior to the Closing Date shall be applied in the following
order: (A) first, on account of any amount then due Seller from such Tenant for
the two-month period prior to Closing, as reflected on the rent roll delivered
by Seller at Closing; (B) next, on account of any amount then due Buyer from
such Tenant for the period from and after the Closing; and (C) next, to Seller,
on account of any other pre-Closing arrearages, as reflected on the rent roll
delivered by Seller at Closing and (D) any balance then remaining to Buyer. Any
and all additional rents escalation or reimbursement payments for taxes,
operating or other expenses and other charges received from Tenants or other
occupants of any of the Real Properties whether or not due or payable on or
before the Closing Date but which relate in whole or in part to a period or
periods preceding the Closing Date shall be apportioned, if and when received,
as of the Closing Date and Buyer, to the extent any such sums are received after
the Closing Date, shall promptly pay to Seller its pro rata share of such
payments. Seller retains the right to pursue its remedies against Tenants after
Closing for any delinquent rents or other amounts owed to Seller (other than
proceedings to evict Tenant or terminate its lease). Buyer shall not enter into
any agreement pursuant to which any sums owed to Seller in respect of any Lease
for periods prior to the Closing are reduced, modified or waived. Buyer's
obligations to collect rent arrearages shall be limited to commercially
reasonable efforts, and Buyer shall under no circumstance be required to
commence litigation against any Tenant to collect the same.
(e) All leasing commissions due or to become due
prior to the Closing Date for any Leases entered into before the date hereof and
all amendments, renewals and modifications thereof entered into before the date
hereof, shall be paid by Seller without contribution by, or reimbursement from,
Buyer. At Closing, Buyer shall pay or reimburse Seller for any leasing
commissions due or to become due prior to Closing for any Leases and for any
amendments, modifications or renewals of any Leases entered into after the date
hereof which are entered into in accordance with the provisions of Paragraph
15(e) hereof. Buyer
-13-
<PAGE>
shall expressly assume and be solely obligated to pay all leasing commissions
payable under all Leases entered into prior to the date hereof (including all
amendments, renewals and modifications thereof) which are first due or payable
on or after the Closing Date, regardless of the date on which such Leases
(including all amendments, renewals and modifications thereof) were executed or
any of the leasing commissions therefor earned, subject only to Buyer's right to
approve any new Leases or amendments, discretionary renewals or modifications of
any Leases which are not otherwise permitted pursuant to Paragraph 15(e), below.
Seller shall be responsible for the costs of, and shall pay or perform prior to
Closing (i) any tenant improvements and allowances for work performed or
required to be performed (or paid, as applicable) prior to the Closing Date by
or on behalf of Seller for all Leases (including all amendments, renewals and
modifications thereof) entered into on or before the date of this Agreement for
any of the Real Properties; and (ii) all base building work ("Base Building
Work") which is to be performed at 4000 Midlantic Drive, Mount Laurel, New
Jersey, as described in Exhibit "E" annexed hereto and made a part hereof. Buyer
shall assume, pay or reimburse (as applicable) Seller on the Closing Date for
(i) the costs of any tenant improvements and allowances for work to first be
performed after the Closing Date pursuant to Leases (including all amendments,
renewals and modifications thereof) entered into prior to the date of this
Agreement; and (ii) except for the Base Building Work referred to above, all
costs of tenant improvements and allowances incurred by or on behalf of Seller
in connection with any Leases (including all amendments, renewals and
modifications thereof) entered into after the date of this Agreement for any of
the Real Properties, provided the same were approved by Buyer or are otherwise
permitted as set forth in Paragraph 15(e) hereof. The obligations of Buyer and
Seller hereunder shall survive the Closing.
(f) Amounts paid or payable as fees or expenses under
any of the Licenses assigned at Closing, shall be prorated as of the Closing
Date but all amounts refundable under unassigned and unassignable Licenses shall
belong to Seller.
(g) Seller shall be solely responsible for the
payment of any "roll back taxes" assessed or imposed upon any of the Real
Properties under the "Farmland Assessment Act of 1964," Chapter 58, Laws of
1964, N.J.S.A. 54:4 23-1 et seq., as amended, or the Pennsylvania Farmland and
Forest Land Assessment Act of 1974, or Act 515, as amended, or otherwise, which
relate to any period prior to the Closing Date, and Seller agrees to indemnify,
defend and save Buyer harmless (including attorneys' fees) from and against any
claim for such taxes. This Paragraph shall survive Closing.
(h) Miscellaneous income including, without
limitation, telephone and vending machine income, if any, shall be prorated as
of the Closing Date.
(i) The provisions of this Paragraph 7 shall survive
Closing hereunder.
-14-
<PAGE>
8. Possession Of Property.
(a) Seller shall deliver possession to the New Jersey
Real Properties and the Geerdes Real Property to Buyer on the Closing Date,
subject only to the Permitted Exceptions.
(b) Buyer shall assume, by execution of the
Assignments, all of Seller's obligations in, to and under the Contracts, the
Licenses and Leases. Notwithstanding the foregoing, Buyer shall not assume
management, leasing or brokerage agreements provided, however, that Buyer shall
remain liable for leasing commissions as set forth in Paragraph 7(e), above.
(c) Buyer acknowledges that certain maintenance
requirements have been imposed by Mount Laurel Township in connection with some
or all of the New Jersey Real Properties pursuant to the approvals and
agreements attached hereto as Exhibit "N" (the "Maintenance Requirements").
Buyer shall, at its sole cost and expense and without contribution or
reimbursement from Seller, comply with all such Maintenance Requirements
required to be performed after the Closing Date. Buyer further acknowledges that
Mount Laurel Township is presently the beneficiary of the maintenance bonds
listed in Exhibit "I-1" attached hereto (the "Maintenance Bonds").
(d) Subject to subparagraph (i) below, on or before
Closing, and as a condition precedent to Seller's obligation to consummate
Closing hereunder, Buyer shall deliver to the Township substitute maintenance
bonds and/or letters of credits (the "Substitute Maintenance Bonds") in form and
substance satisfactory to the Township in order to obtain, on or before Closing,
the consent of the Township to the release of the Maintenance Bonds. At Closing,
Buyer shall also reimburse Seller for all out-of-pocket costs expended by Seller
after the Closing Date in performing all or any of the Maintenance Requirements
and/or for all sums drawn under the Maintenance Bonds by the Township.
(e) Subject to subparagraph (i) below, prior to or at
Closing, and as a condition precedent to Seller's obligation to consummate the
Closing hereunder, Buyer shall deliver to Seller an agreement from the Township
providing for a complete release and termination (the "Releases") of all of
Seller's obligations under all Maintenance Requirements. Buyer agrees promptly
and timely to make all applications and submissions to the Township for approval
of the Substitute Maintenance Bonds, and issuance of the Releases in order to
obtain approval and issuance of same on or before the Closing Date. Seller shall
join in all applications and submissions and otherwise cooperate with Buyer in
seeking approval of the Substitute Maintenance Bonds and issuance of the
Releases. In furtherance of the foregoing, Buyer shall use its diligent efforts,
to have all such applications and other necessary documents
-15-
<PAGE>
prepared and submitted in time to be placed on the next regularly scheduled
meetings of the Township.
(f) At Closing, Buyer shall assume all obligations
arising from and after the Closing Date with respect to the maintenance and
development of the New Jersey Real Properties now existing or hereafter imposed
by the Township, the Board of Freeholders, or any other governmental,
quasi-governmental or utility authority having jurisdiction over the New Jersey
Real Properties and shall indemnify, hold harmless and defend Seller from and
against all damages, losses, liabilities, claims, costs and expenses (including
reasonable attorneys' fees) suffered by Seller by reason of Buyer's failure to
timely and properly comply with the provisions of any maintenance agreements or
any of the Maintenance Requirements imposed in connection with the development
of any of the New Jersey Real Properties. Seller shall indemnify, hold harmless
and defend Buyer from and against all damages, losses, liabilities, claims,
costs and expenses (including reasonable attorney's fees) suffered by Buyer by
reason of or in connection with work previously performed by Seller in
connection with the Maintenance Requirements.
(g) Notwithstanding anything to the contrary
contained in this Paragraph 8, if, despite diligent efforts, Buyer and Seller
have been unable to obtain the release of the Maintenance Bonds and the Releases
on or prior to the Closing Date, then, Buyer shall deposit with Seller at
Closing, letters of credit, cash escrows or other collateral acceptable to
Seller, in Seller's reasonable discretion, in an amount equal to the Maintenance
Bonds until such time as the Maintenance Bonds and the Releases have been
obtained, in which event Buyer shall diligently pursue the release of the
Maintenance Bonds and the Releases and indemnify, defend and hold harmless
Seller from and against all damages, losses, liabilities, claims, costs and
expenses (including reasonable attorneys' fees) suffered by Seller by reason of
Buyer's failure to timely and properly complete the Maintenance Requirements
arising after the Closing Date or comply with the provisions of any maintenance
agreements arising after the Closing Date or any draw down or demand for payment
upon the Maintenance Bonds.
(h) All of the provisions of this Paragraph 8 shall
survive Closing.
9. Representations Of Seller And Buyer.
(a) Seller hereby represents and warrants, as
follows, all of which shall be true and correct at and as of the date hereof:
(1) Seller is a limited partnership duly
organized and validly existing under the laws of the State of Delaware, and is
in good standing in such state.
-16-
<PAGE>
(2) Seller has all necessary power and
authority to enter into this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby, without the consent or
authorization of, or notice to, any third party, except those third parties to
whom such consents or authorizations have been or will be obtained, or to whom
notices have been or will be given, prior to the Closing. This Agreement
constitutes, and the other documents and instruments to be delivered by Seller
pursuant hereto when delivered will constitute, the legal, valid and binding
obligations of Seller, enforceable against Seller in accordance with their
respective terms.
(3) Except as set forth in Exhibit "O"
attached hereto and made a part hereof, there is no litigation, proceeding or
action pending or, to the best of Seller's knowledge, threatened against or
relating to Seller or its Property which might materially and adversely affect
Seller or its Property or which questions the validity of this Agreement or any
action taken or to be taken by Seller pursuant hereto. Seller shall remain
responsible to defend, and shall indemnify and hold Buyer harmless from and
against all liability, cost and expense relating to the litigation identified in
Paragraph 1 of Exhibit "O", which obligation shall survive the Closing.
(4) Neither the execution of this Agreement
nor the consummation of the transactions contemplated hereby will constitute a
violation or be in conflict with or constitute a default under any term or
provision of the Seller's partnership agreement or any other material agreement,
instrument or lease to which Seller is a party, subject to any required consents
or authorizations of, or notices to, third parties from whom such consents or
authorizations will be obtained or to whom notices will be given prior to
Closing.
(5) True, correct and complete copies of all
of the following, together with any modifications or amendments thereof, but
only if and to the extent the same are in Seller's possession or control, have
been or will be delivered, or made available, to Buyer within five (5) days
following the execution of this Agreement: (i) Leases and rent rolls; (ii)
Contracts; (iii) leases of equipment, vehicles and other tangible personal
property used by Seller in connection with the ownership and operation of the
Properties (the "Personal Property Leases"); (iv) Licenses; (v) Maintenance
Bonds; (vi) surveys; (vii) title reports; (viii) engineering reports; and (ix)
environmental reports.
(6) To the best of Seller's knowledge, (i)
all of the Leases, Contracts and Personal Property Leases, Licenses and
Maintenance Bonds, are in full force and effect, (ii) there has been no action
or failure to act by Seller or any other party to any Lease, Contract or
Personal Property Lease which, with the giving of notice or the passage of time
or both, would constitute a default in any material respect or otherwise entitle
either party to damages or a right to terminate; and (iii) Seller has not
received from any other party written notice with respect to the condition of
the Properties or the use or repair of the
-17-
<PAGE>
same or of any alleged default by Seller under any such Lease, or Personal
Property Lease, License or Maintenance Bond. Each of the Contracts is terminable
at will without penalty or cancellation fee upon no more than thirty (30) days
prior written notice but, except as hereinafter expressly provided, unless
otherwise directed by Buyer, the Contracts shall not be terminated by Seller as
of Closing. Anything in this Agreement to the contrary notwithstanding, any and
all existing management agreements and brokerage or leasing agreements shall be
terminated as of Closing. Buyer shall assume all Contracts not terminated at
Closing pursuant to the Assignment.
(7) Seller does not employ any persons at
any of the Real Properties. Seller shall indemnify and hold Buyer harmless of,
from and against any and all claims and liabilities arising out of the
employment of any individuals by Seller and its affiliates, whether as employees
or independent contractors. As of the Closing, there are and shall be no liens
against the Real Properties arising under the Employee Retirement Income
Security Act of 1974, as amended, nor any other compensation or employment
related lien or liability that could become the responsibility of Buyer after
the Closing. This Paragraph shall survive Closing.
(8) To Seller's actual knowledge, 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 Seller's actual knowledge, there are no special or general
assessments currently affecting or pending against the Real Properties or any
portion thereof.
(9) Seller has not been served with written
notice that it has been named as a party in any litigation, administrative
proceeding or investigation naming Seller 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.
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 (including, in New Jersey, the New Jersey
Industrial Site Recovery Act (ISRA); 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 written communication, from any
governmental or quasi-governmental authority concerning any intentional or
unintentional action or omission on Seller's part which either (a) resulted in
the releasing, spilling, leaking, pumping, pouring, emitting, emptying or
dumping of Hazardous Substances or Hazardous Wastes, or (b) related
-18-
<PAGE>
in any way to the generation, storage, transport, treatment or disposal of
Hazardous Substances or Hazardous Wastes.
(10) True and correct copies of the income
and expense statements for the Properties, and a current rent roll certified by
Seller, will be delivered to Buyer upon execution of this Agreement.
(11) Seller has received no written notice
of any violation of any of the licenses, permits, consents, authorizations,
approvals, and certificates of any regulatory, administrative or other
governmental agency or body, if any, issued to or held by the Seller and related
to the ownership or operation of the Properties (collectively, the "Permits"),
and there is no pending or, to the actual knowledge or Seller, threatened
proceeding which could result in the revocation or cancellation of, or inability
of Seller to renew, any Permit.
(12) To the best of Seller's knowledge,
except as set forth in Exhibit "P" attached hereto and made a part hereof, all
management fees are fully paid, there are no brokerage commissions owing by
Seller with respect to any of the Leases or otherwise related to the Properties
which have not been paid, and there are no ongoing commission or leasing fee
obligations.
(13) Seller has received no written notice
from any insurance company which has issued a policy with respect to the
Properties or by any board of fire underwriters (or other body exercising
similar functions) claiming any defects or deficiencies or requesting the
performance of any repairs, alterations or other work, and Seller will promptly
notify Buyer of any such notice or requirement if such notice is received prior
to the Closing.
(14) Seller is not a "foreign person" and
will deliver to Buyer, at the Closing, a statement certifying that it is not a
"foreign person" within the meaning of the Internal Revenue Code of 1986, as
amended.
(15) Seller has not received written notice
from any governmental agency or authority of outstanding material violations
issued by governmental authorities having jurisdiction over the Real Properties.
(16) Except as may be set forth in a Lease,
there are no options, rights of first refusal or conditional sales agreements
regarding the purchase and sale of the Real Properties.
It is agreed and understood that Buyer intends to perform its
own due diligence, investigation and analysis in connection with the transaction
contemplated by this Agreement.
-19-
<PAGE>
If and to the extent that Buyer determines prior to the Due Diligence
Termination Date that any or all of the representations and warranties made in
this Agreement by Seller shall be untrue as a result of such due diligence,
investigation or analysis, Buyer shall not be entitled to rely on such
representation(s) and warranty(ies) contained in this Agreement and the same
shall be deemed to have been deleted from this Agreement as to such matters.
Accordingly, in the event that the Buyer has now or hereafter acquires prior to
the Due Diligence Termination Date actual knowledge that one or more of the
representations and warranties of Seller are not true, no such fact or
circumstance known to Buyer shall be made the basis of a claim by the Buyer of a
breach of representation or warranty by Seller.
Notwithstanding anything to the contrary contained in this
Agreement, in the event any representation, agreement or undertaking made by
Seller in this Agreement shall prove to be false and the cost or expense
incurred or likely to be incurred by Buyer as a result thereof shall not exceed
$250,000 in the aggregate, such misrepresentation, agreement or undertaking
shall be deemed "immaterial" and shall not give rise to any right of Buyer to
terminate or refuse to close title under this Agreement or give rise to any
right of action for money damages or specific performance and Buyer hereby
waives all its rights, claims and remedies relating thereto. Buyer's sole remedy
in the event any representation, agreement or undertaking of Seller which is
discovered by Buyer at or prior to the Closing herein shall prove to be false
and the cost or expense incurred or likely to be incurred by Buyer as a result
thereof exceeds $250,000 shall be to terminate this Agreement by written notice
given at or prior to Closing, which notice shall specify in detail the nature of
the misrepresentation and identify in detail the costs incurred or likely to be
incurred by Buyer, and thereupon Buyer shall receive a refund of the Deposit,
and Seller shall reimburse Buyer for Buyer's Reasonable Costs and Due Diligence
Costs. To the extent Buyer has knowledge that any representation, agreement or
undertaking is false at or prior to the Closing, and does not or is not
permitted to terminate this Agreement, Buyer hereby waives all of its rights,
claims and remedies relating thereto.
As to any representation or warranty made in this Agreement
which is qualified as being to the best knowledge of Buyer or Seller, it is
agreed and understood that such party shall be under no obligation to conduct
any independent investigation or inquiry regarding the matters covered by such
representation and warranty. Buyer or Seller will be deemed to have knowledge of
a particular matter only if the facts and circumstances thereof are actually
known to such party making such representation or warranty.
(b) Buyer hereby represents and warrants as follows,
all of which shall be true and correct at, and as of, the date hereof:
-20-
<PAGE>
(17) Buyer is a real estate investment trust
duly formed and validly existing under the laws of the State of Maryland, and is
in good standing with the State Department of Assessments and Taxation of
Maryland.
(18) Subject to Paragraph 9(b)5, below,
Buyer has all necessary power and authority to enter into this Agreement, to
perform its obligations hereunder, and to consummate the transactions
contemplated hereby, without the consent or authorization of, or notice to, any
third party, except those third parties to whom such consents or authorizations
have been or will be obtained, or to whom notices have been or will be given,
prior to the Closing. This Agreement constitutes, and the other documents and
instruments to be delivered by Buyer pursuant hereto when delivered will
constitute, the legal, valid and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms.
(19) Neither the execution of this Agreement
nor the consummation of the transactions contemplated hereby will (a) violate
any provision of any organizational document of Buyer, or (b) constitute a
violation of or be in conflict with or constitute a default under any term or
provision of any material agreement, instrument or lease to which Buyer is a
party.
(20) There is no litigation, proceeding or
action pending, or, to the best of Buyer's knowledge, threatened against or
relating to Buyer which might materially and adversely affect the ability of
Buyer to consummate the transactions contemplated hereby or which questions the
validity of this Agreement or any action taken or to be taken by Buyer pursuant
hereto.
(21) The execution and delivery of this
Agreement shall have been approved by the trustees of Buyer on or prior to the
Due Diligence Termination Date and no further action shall thereupon be required
on the part of Buyer to consummate the transaction contemplated hereby. The
signatories for Buyer are authorized and empowered to bind Buyer to this
Agreement and all transactions contemplated herein.
(22) Except as otherwise set forth in
Paragraph 9(b)5, above, no consent, approval or authorization of, or
declaration, filing or registration with, any governmental agency is required in
connection with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereunder by the Buyer or the
Partnership.
(23) Buyer has sufficient funds available to
consummate the transaction contemplated by this Agreement, without the necessity
of third-party financing other than other than Buyer's existing revolving credit
facility administered by Nationsbank,
-21-
<PAGE>
N.A. Buyer acknowledges that its obligations hereunder are not conditioned upon
any third party financing or capital infusion by another party.
(24) The information contained in Buyer's
Form 10-K for the year ended December 31, 1996, was prepared in all material
respects in accordance with and complied in all material respects with the
requirements of the rules of the Securities and Exchange Commission, and did not
at the time that it was filed contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
All of the representations and warranties set forth in this
Section 9 shall be deemed renewed by Seller and Buyer on the Closing Date and
shall, as a condition to each party's obligation to close hereunder, be
recertified by each party as being true and correct in all material respects as
of the Closing Date as if made at such time (it being understood that specific,
numbered representations and warranties that speak of a specified date shall
only continue to speak as of the date so specified), but shall not survive the
Closing.
-22-
<PAGE>
10. Access To The Property.
(a) Buyer and/or its agents and representatives, during normal
business hours and after reasonable advance notice to Seller, may enter upon any
of the Real Properties from time to time prior to the Closing Date, accompanied
by an agent of Seller, for purposes of conducting such inspections,
investigations and/or studies as Buyer deems necessary, including, without
limitation, financial reviews, physical inspections, lease reviews and
environmental reviews and testing, which activities may include test borings and
soil samplings ("Buyer's Due Diligence Activities"). Buyer's access to the Real
Properties shall be subject to the rights of the Tenants of any of the Real
Properties, who shall not be unreasonably disturbed during any such inspection
by Buyer. Buyer shall not engage in any activity in or about the Real Properties
which directly or indirectly violates the terms of any governmental or
quasi-governmental statute, rule, regulation, order or practice. Buyer shall not
make any physical changes to any of the Real Properties, except for test borings
and soil samplings which shall be performed only by licensed engineers
reasonably acceptable to Seller and only after three (3) business days' prior
notice to Seller. Buyer may contact any governmental or quasi-governmental
authorities concerning the Property without the prior written approval of
Seller. Seller shall have the opportunity to observe any and all action taken by
Buyer or its representatives, consultants, agents, etc. pursuant to this
paragraph 10. All information set forth in any document which Seller has granted
to Buyer the express right to review, if any, shall be held in strict confidence
until Closing and thereafter in the event Closing does not occur. If Buyer
violates its obligations under this Paragraph 10(a) or in the event of any
physical damage to any of the Real Properties or any Personal Property
resulting, directly or indirectly, from the exercise by Buyer of its rights
under this Paragraph 10(a), Buyer hereby agrees to restore the Real Properties
and Personal Property to their respective conditions prior to incurring such
damage. Buyer hereby agrees to indemnify, defend and hold harmless Seller from
and against all physical damage to any of the Real Properties and Personal
Property, personal injury and/or any other claims or liability which may occur
as a result of Buyer's (or Buyer's agents, employees, invitees or licensees)
entry or activities upon any of the Real Properties. The provisions of this
Paragraph 10(a) shall survive Closing or other termination of this Agreement.
(b) Buyer, or any of Buyer's consultants performing physical
tests on the Real Properties shall maintain public liability insurance policies
(naming Seller as an additional named insured with respect to any liability
occurring on the Real Properties), with combined single limit coverage of at
least $1,000,000, insuring against claims arising as a result of the inspections
of Buyer, its agents, employees or such contractors at any of the Real
Properties. A certificate of insurance evidencing the foregoing coverage shall
be delivered to Seller prior to Buyer's or any of Buyer's consultants' entry on
to any of the Real Properties.
(c) In the event Closing does not occur or this Agreement is
terminated, Buyer shall promptly return to Seller any documents obtained from
Seller or
-23-
<PAGE>
Seller's agents and deliver, to Seller without charge, copies of all written
test results, studies, reports and similar materials obtained by or on behalf of
Buyer relating to any of the Real Properties.
11 Due Diligence Period; Additional Provisions.
(a) During the period commencing on the Effective
Date and ending at 5:00 p.m. E.S.T. on the Due Diligence Termination Date, Buyer
may, subject to the provisions set forth in Paragraph 10 above, review all plans
and specifications, condition of title, agreements relating to and the
availability of utilities, environmental conditions, the physical condition of
the existing improvements, compliance by each of the Real Properties with
zoning, licensing and all other governmental requirements, Leases for any of the
Real Properties, operating statements pertaining to each of the Real Properties
and all other aspects and conditions of each of the Real Properties which Buyer
may decide to review (collectively, "Buyer's Due Diligence Activities"), all as
Buyer shall deem appropriate). In connection with Buyer's Due Diligence
Activities, Seller has delivered or will deliver to Buyer various documents,
reports and materials (collectively, the "Seller Due Diligence Materials").
BUYER UNDERSTANDS AND HEREBY ACKNOWLEDGES AND AGREES THAT THE SELLER DUE
DILIGENCE MATERIALS ARE BEING DELIVERED TO BUYER WITHOUT ANY REPRESENTATION OR
WARRANTY WHATSOEVER BY SELLER OR BY THE PREPARER OF SUCH SELLER DUE DILIGENCE
MATERIALS, WITH THE SOLE EXCEPTION OF ANY REPRESENTATION OR WARRANTY AS TO THE
CORRECTNESS, ACCURACY OR COMPLETENESS THEREOF WHICH IS EXPRESSLY SET FORTH IN
THIS AGREEMENT.
(b) If, as a result of Buyer's Due Diligence
Activities or otherwise, Buyer shall conclude, for any reason or for no reason,
that it does not wish to proceed with the transaction contemplated by this
Agreement, it may terminate this Agreement by written notice delivered to and
received by Seller on or before 5:00 P.M. E.S.T. on the Due Diligence
Termination Date (as to which date time shall be of the essence), with a
simultaneous copy thereof to the Escrow Agent. In the event of such timely
termination of this Agreement by the Buyer, the Escrow Agent shall make the
delivery of funds contemplated under Paragraph 1 of the Escrow Terms, and this
Agreement shall thereupon be null and void and of no further force or effect,
except as to those matters which expressly survive such termination.
(c) Seller agrees to use all reasonable and diligent
efforts to obtain, prior to the Closing, with respect to the New Jersey
Properties, (the Non-Applicability Letter) from the New Jersey Department of
Environmental Protection and Energy or its successor. In furtherance of the
foregoing, Seller shall apply for the Non-Applicability Letter promptly after
the Effective Date, and shall pursue the same diligently and in good faith.
-24-
<PAGE>
(d) Buyer agrees to prepare and forward to Seller, at
Buyer's sole cost and expense, certificates (the "Estoppel Certificates") for
execution by the Tenants which shall at Buyer's election, either (i) be in such
form or contain such information as the Tenant from whom request is made is
obligated under its Lease to execute and deliver for execution by the Tenants
(the "Required Form"), or (ii) in the form annexed hereto as Exhibit "Q". Seller
agrees to deliver the Estoppel Certificates to the Tenants promptly after
Buyer's written election as to the form to be used (which election shall be made
not later than five (5) days after the date hereof), and to use all reasonable
and diligent efforts to obtain executed copies of same from such Tenants prior
to the Closing. It shall be a condition to Buyer's obligations hereunder that,
at or prior to Closing, Estoppel Certificates shall have been obtained from the
Tenants identified on Exhibit "T" annexed hereto and made a part hereof (the
"Identified Tenants"), BUT ONLY IF THE INITIAL REQUEST MADE OF SUCH TENANT WAS
FOR AN ESTOPPEL CERTIFICATE IN THE REQUIRED FORM, provided, however, that at
Seller's option, if an estoppel in the Required Form is not obtained from an
Identified Tenant, Seller may, in lieu thereof, deliver its certificate
containing the information set forth on the Required Form, which certificate
shall serve as Seller's representation as to the facts stated therein, which
representation shall survive for a period of six (6) months following the
Closing. In no event shall Buyer's obligations under this Agreement be
conditioned, in whole or in part, upon the delivery of Estoppel Certificates
from any Tenant in other than the Required Form.
-25-
<PAGE>
12. Condemnation. Seller covenants and warrants that Seller
has not received any written notice of any condemnation proceeding or other
proceeding in the nature of eminent domain in connection with the Real
Properties, and has no actual knowledge of any threatened condemnation. As used
herein, a "material taking" shall mean a taking of either an entire Real
Property, more than twenty percent (20%) of a Building or more than 10% of the
parking area of a Real Property. If, prior to the Closing, any such proceeding
affecting a material portion of any of the Real Properties is commenced, Seller
agrees promptly to notify Buyer thereof. In the event of a material taking of
one or more Real Properties or commencement of proceedings in connection with
such a taking, Buyer may, at its sole option exercised by delivery of written
notice thereof within ten (10) days after receipt of such written notice
thereof, (x) proceed to Closing as provided in this Paragraph 12 without an
abatement of the Purchase Price and at Closing Seller shall assign to Buyer,
without recourse, all condemnation proceeds paid or payable with respect
thereto; or (y) terminate this Agreement with respect to each of the Real
Properties as to which a material taking has occurred, whereupon this Agreement
shall terminate with respect to such Real Property and this Agreement shall
continue in full force and effect with respect to all of the remaining Real
Properties, and at Closing, Buyer shall pay to Seller the aggregate of the
Allocated Prices for the remaining Real Properties. Provided Buyer shall have
waived its right to terminate this Agreement with respect to the Real Property
so taken, as provided above, Seller shall not, from and after the Due Diligence
Termination Date, settle or adjust any claims relating to a condemnation without
Buyer's prior approval, which shall not be unreasonably withheld or delayed.
13. Damage By Fire Or Other Casualty.
(a) Seller shall promptly notify Buyer of damage to
the Improvements occurring by reason of casualty during the period between the
Effective Date and the Closing Date. Seller shall timely notify any insurance
companies with respect to any damage and shall promptly submit claims for such
damage. Provided Buyer shall have waived its right to terminate this Agreement
with respect to the Real Property so damaged, as provided below, Seller shall
not, from and after the Due Diligence Termination Date, settle or adjust any
claims relating to a casualty without Buyer's prior approval, which shall not be
unreasonably withheld or delayed.
(b) If (i) any portion of the Improvements is damaged
by fire or casualty after the Execution Date and the Improvements so damaged are
not repaired or restored on or before Closing to substantially the condition
existing prior to the damage, and (ii) at the time of Closing, the estimated
cost of repairs by reason of such fire or casualty to the Improvements, as
determined by an independent adjuster is, with respect to any of the Real
Properties so damaged, an amount equal to or less than ten percent (10%) of the
Allocated Price for such Real Property, there shall be no abatement or
adjustment in the Purchase Price
-26-
<PAGE>
and, provided the loss or damage is a covered loss under Seller's insurance
policy, Buyer shall be required to purchase all of the Real Properties in
accordance with the terms of this Agreement and, at Closing, Seller shall assign
to Buyer, without recourse, all insurance claims and proceeds with respect
thereto (less sums theretofore expended, if any, by Seller for emergency repairs
or barricades) and Seller shall credit Buyer at Closing with the amount of any
applicable deductible. Seller shall have no liability or obligation with respect
to the condition of any of the Real Properties as a result of any such fire or
casualty. If the repair to, or the restoration of, the Improvements so damaged
has not been completed as aforesaid and, at the time of Closing, the estimated
cost of such repair or restoration, as determined by such independent adjuster,
for any of the Real Properties is an amount which is greater than ten percent
(10%) of the Allocated Price for the applicable Real Property, Buyer may, at its
sole option, (x) proceed to Closing as provided in this Paragraph 13(b) without
an abatement of the Purchase Price and at Closing Seller shall assign to Buyer,
without recourse, all insurance claims and proceeds with respect thereto (less
sums theretofore expended, if any, by Seller for emergency repairs or
barricades) and Seller shall credit Buyer at Closing with the amount of any
applicable deductible; or (y) terminate this Agreement with respect to each of
the Real Properties which have suffered damage to the Improvements by fire or
other casualty in an amount which exceeds ten percent (10%) of the Allocated
Price for such Real Property(s) whereupon this Agreement shall terminate with
respect to such damaged Real Property(s) and this Agreement shall continue in
full force and effect with respect to all of the remaining Real Properties, and
at Closing, Buyer shall pay to Seller the aggregate of the Allocated Prices for
the remaining Real Properties. Buyer shall assign all of its right, title and
interest in and to any and all insurance policies and insurance proceeds
relating to such of the Real Properties for which this Agreement has been
terminated.
14. Default.
(a) If Buyer shall default in its obligations to pay
the Purchase Price and complete Closing in accordance with the terms of this
Agreement, then, as Seller's sole and exclusive remedy therefor, Seller shall be
entitled to retain the Deposit as liquidated and agreed upon damages for the
losses and injuries which Seller shall have sustained and suffered as a result
of Buyer's default, and thereupon this Agreement and Buyer's obligations
hereunder shall be terminated except as expressly provided in this Agreement. It
is agreed that the provisions of this Paragraph 14(a) for liquidated and agreed
upon damages are a bona fide provision for such and are not a penalty, the
parties understanding that by reason of the withdrawal of the Real Properties
from sale to the general public at a time when other parties would be interested
in purchasing such Real Properties, that Seller shall have sustained damages
which will be substantial, but will not be capable of determination with
mathematical precision. Therefore, this provision for liquidated and agreed upon
damages has been incorporated as part of this Agreement as a provision
beneficial to both parties.
-27-
<PAGE>
(b) If Seller shall default in its obligation to
deliver any of the Deeds or other items described in Paragraph 5 hereof, upon
Buyer's (i) tender of the full Purchase Price and (ii) compliance with all of
the material terms and conditions of this Agreement, Buyer shall have the sole
option of terminating this Agreement and receiving the return of the Deposit,
together with payment by Seller of (A) Buyer's Reasonable Costs, and (B) Buyer's
actual, documented out-of-pocket costs and expenses incurred in connection with
its Due Diligence Activity, not to exceed Seventy-Five Thousand Dollars
($75,000) ("Due Diligence Costs") or (Y) to seek specific performance of
Seller's obligation to convey the Real Properties in accordance with this
Agreement. If Purchaser elects to terminate this Agreement, upon payment of the
sums described above, Seller shall be released and relieved of any further
liability and this Agreement shall thereupon be null and void. Except as
expressly set forth above, Buyer hereby waives any right which Buyer may have to
any lis pendens or other lien or encumbrance against any of the Real Properties,
equitable relief, consequential or punitive damages, loss of profits, costs
related to in-house or other overhead allocations, and damages. The remedies set
forth herein shall be Buyer's sole remedies pursuant to this Agreement, or
otherwise at law or in equity shall become null and void if Closing occurs
(except as to obligations hereunder which by their terms expressly survive
Closing), and shall not apply to a defect in title, the remedies for which are
set forth in Paragraph 5(b) hereof, or to any inability on the part of Seller to
perform its obligations under this Agreement.
15. Operations Prior To Closing.
(a) Seller agrees to operate each of the Real
Properties between the Execution Date and the Closing Date in the same general
manner as Seller has operated each of the Real Properties during the immediately
preceding six (6) month period, paying all costs and expenses as they come due,
and in any event prior to Closing, and maintaining all insurance coverage
currently in force.
(b) Seller shall comply with all of the material
obligations of landlord under the Leases and all other agreements and
contractual arrangements affecting the Real Properties by which Seller is bound
or to which the Real Properties, or any of them, are subject, and which will be
binding upon Buyer or a lien upon such Real Property, after the Closing.
(c) Seller shall notify Buyer promptly of Seller's
receipt of any notice from any party alleging that Seller is in default of its
obligations under any of the Leases or any Permit or material agreement
affecting the Real Properties, or any portion or portions thereof.
-28-
<PAGE>
(d) No contract for or on behalf of or affecting the
Real Properties shall be negotiated or entered into which cannot be terminated
by Seller upon the Closing without the payment of a specific charge, cost,
penalty or premium for such termination.
(e) Except with the prior written consent of Buyer,
which Buyer agrees it shall not unreasonably withhold, condition or delay,
Seller shall not enter into any new leases for any portion of the Real
Properties, other than leases or amendments of existing Leases which comply with
the leasing parameters set forth in Exhibit "R" annexed hereto and made a part
hereof, as to which Buyer shall be given prior written notice, but as to which
Buyer's consent shall not be required. Any new lease shall be on Seller's
customary form (which may vary to reflect customary negotiated revisions
thereto), or such other form which is reasonably acceptable to Buyer. Further,
except with the prior written consent of Buyer, which Buyer agrees it shall not
unreasonably withhold, condition or delay, or as set forth above, Seller shall
not amend, extend (except where required under the terms of the Lease in
question), terminate (except by reason of a tenant's default), accept surrender
of, or permit any assignments or subleases of, any of the Leases (except as may
be required under such Lease), nor accept any rental more than one (1) month in
advance (exclusive of any security deposit).
(f) Seller shall not make or permit to be made any
capital improvements or additions to the Real Properties, or any portion
thereof, without the prior written consent of Purchaser, except those made by
Seller pursuant to the express requirements of this Agreement, 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.
(g) Seller shall timely bill all tenants for all rent
billable under Leases, and use commercially reasonable efforts to collect any
rent in arrears.
(h) Seller shall notify Buyer of any tax assessment
disputes (pending or threatened) prior to Closing, and from and after the Due
Diligence Expiration Date, Seller not agree to any changes in the real estate
tax assessment, nor settle, withdraw or otherwise compromise any pending claims
with respect to tax assessments relating to the current or any subsequent year,
without Buyer's prior written consent, which shall not be unreasonably withheld,
delayed or conditioned. 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. All refunds relating to any tax year prior to the Closing shall be
the sole property of Seller, and all refunds relating to any year subsequent to
the year in which Closing occurs shall be the sole property of Buyer. Each party
agrees to promptly remit to the other any refund received by it which is the
property of the other.
-29-
<PAGE>
(i) Seller shall notify Buyer promptly of the
occurrence of any of the following:
i) Receipt of notice from any governmental
or quasi-governmental agency or authority or insurance underwriter relating to
the condition, use or occupancy of the Real Properties, or any portion thereof;
ii) Receipt of any notice of default from
any tenant or from the holder of any lien or security interest in or encumbering
the Real Properties, or any portion thereof;
iii) Notice of any actual or threatened
litigation against Seller or affecting or relating to the Real Properties, or
any portion thereof which may materially and adversely affect the Real
Properties or Seller's ability to consummate the transactions contemplated by
this Agreement; and
iv) Vacancy of any demised premises by a
tenant, other than in accordance with a scheduled lease termination.
-30-
<PAGE>
16. Property Conveyed "AS-IS, WHERE IS". IT IS UNDERSTOOD AND
AGREED THAT, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT, SELLER
IS NOT MAKING AND SPECIFICALLY DISCLAIMS ANY WARRANTIES OR REPRESENTATIONS OF
ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO THE ECONOMICAL,
FUNCTIONAL, ENVIRONMENTAL OR PHYSICAL CONDITION OF ALL OF THE PROPERTIES,
INCLUDING, BUT NOT LIMITED TO, WARRANTIES OR REPRESENTATIONS AS TO MATTERS OF
TITLE, ZONING, TAX CONSEQUENCES, PHYSICAL OR ENVIRONMENTAL CONDITIONS,
AVAILABILITY OF ACCESS, INGRESS OR EGRESS, OPERATING HISTORY OR PROJECTIONS,
VALUATION, GOVERNMENTAL APPROVALS, GOVERNMENTAL REGULATIONS OR ANY OTHER MATTER
OR THING RELATING TO OR AFFECTING THE ECONOMICAL, FUNCTIONAL, ENVIRONMENTAL OR
PHYSICAL CONDITION OF THE PROPERTIES INCLUDING, WITHOUT LIMITATION: (i) THE
VALUE, CONDITION, MERCHANTABILITY, MARKETABILITY, PROFITABILITY, SUITABILITY OR
FITNESS FOR A PARTICULAR USE OR PURPOSE OF ANY OF THE PROPERTIES, (ii) THE
MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS INCORPORATED INTO ANY OF THE
PROPERTIES AND (iii) THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF
ANY OF THE PROPERTIES. BUYER AGREES THAT WITH RESPECT TO EACH OF THE PROPERTIES,
BUYER HAS NOT RELIED UPON AND WILL NOT RELY UPON, EITHER DIRECTLY OR INDIRECTLY,
ANY REPRESENTATION OR WARRANTY OF SELLER OR ANY AGENT OF SELLER NOT EXPRESSLY
SET FORTH IN THIS AGREEMENT. BUYER REPRESENTS THAT IT IS A KNOWLEDGEABLE
PURCHASER OF REAL ESTATE AND THAT IT IS RELYING SOLELY ON ITS OWN EXPERTISE AND
THAT OF BUYER'S CONSULTANTS, AND THE REPRESENTATIONS AND WARRANTIES OF SELLER
CONTAINED IN THIS AGREEMENT, SUBJECT, HOWEVER, TO THE LIMITATIONS CONTAINED
HEREIN UPON SUCH REPRESENTATIONS AND WARRANTIES, AND THAT SELLER HAS OR SHALL
HAVE AFFORDED BUYER WITH A FULL AND COMPLETE OPPORTUNITY TO MAKE ITS OWN
INDEPENDENT INVESTIGATION OF EACH OF THE PROPERTIES AND ALL MATTERS PERTAINING
THERETO INCLUDING, BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS
THEREOF AND, UPON CLOSING, SHALL ASSUME THE RISK THAT ADVERSE MATTERS,
INCLUDING, BUT NOT LIMITED TO, ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS,
MAY NOT HAVE BEEN REVEALED BY BUYER'S INSPECTIONS AND INVESTIGATIONS. BUYER
ACKNOWLEDGES AND AGREES THAT, UPON CLOSING, SELLER SHALL SELL AND CONVEY TO
BUYER AND BUYER SHALL ACCEPT EACH OF THE PROPERTIES "AS IS, WHERE IS," WITH ALL
FAULTS, AND THERE ARE NO ORAL AGREEMENTS, WARRANTIES OR REPRESENTATIONS (EXCEPT
AS HEREIN SPECIFICALLY PROVIDED), COLLATERAL TO OR AFFECTING ANY OF THE
PROPERTIES BY SELLER, ANY AGENT OF SELLER OR ANY THIRD PARTY. BUYER EXPRESSLY
AGREES THAT THE TERMS AND
-31-
<PAGE>
CONDITIONS OF THIS PARAGRAPH 16 SHALL EXPRESSLY SURVIVE THE CLOSING AND NOT
MERGE THEREIN AND SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY VERBAL OR
WRITTEN STATEMENTS, REPRESENTATIONS, OR INFORMATION PERTAINING TO ANY OF THE
PROPERTIES FURNISHED BY ANY REAL ESTATE BROKER, AGENT, EMPLOYEE, SERVANT OR
OTHER PERSON, UNLESS THE SAME ARE SPECIFICALLY SET FORTH OR REFERRED TO IN THIS
AGREEMENT.
17. Brokers.
(a) Seller and Buyer each represent to the other that
except for CB Commercial Real Estate Group, Inc., who represents Seller and is
Seller's real estate broker, and whose commission shall be paid by Seller,
neither Seller nor Buyer has dealt with any real estate broker, dealer or
salesman in connection with the subject transaction.
(b) Seller and Buyer shall and hereby each agree to
indemnify, defend, and hold harmless the other from and against any loss,
damage, or claim resulting from a breach of the representations of Seller and
Buyer set forth in Paragraph 17(a) hereof.
(c) The provisions of this Paragraph 17 shall survive
Closing hereunder, or any other termination of this Agreement.
(d) The Commonwealth of Pennsylvania has established
a Real Estate Recovery Fund, the purpose of which is to compensate persons who
obtain a final civil judgment against a Pennsylvania real estate licensee owing
to fraud, misrepresentation or deceit in a real estate transaction and who has
been unable to collect the judgment after exhausting all legal and equitable
remedies. For complete details, call: (717) 783-3658.
-32-
<PAGE>
18. Notices. All notices, requests and other communications
required or permitted to be given under this Agreement shall be in writing and
shall be delivered (i) in person, or (ii) by certified mail, return receipt
requested, or (iii) by recognized overnight delivery service providing positive
tracking of items (for example, Federal Express), or (iv) by confirmed
telecopier, in each case addressed as follows (or at such other address of which
Seller or Buyer shall have given notice as herein provided):
If Intended For Seller: EDB Property Partners, L.P. I
c/o Emmes & Company LLC
420 Lexington Avenue
New York, New York 10170
Attention: Mr. Andrew Davidoff
Telecopier Number: (212) 293-8801
With A Copy To: Howard R. Shapiro, Esq.
Baer Marks & Upham LLP
805 Third Avenue
New York, New York 10022
Telecopier Number: (212) 702-5941
If Intended For Buyer: Brandywine Realty Trust
16 Campus Boulevard
Suite 150
Newtown Square, Pennsylvania 19073
Attention: Mr. Gerard H. Sweeney
Telecopier Number: (610) 325-5622
With A Copy To: Eric L. Stern, Esq.
Pepper Hamilton & Scheetz LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, Pennsylvania 19103
Telecopier Number: (215) 981-4750
All such notices, requests and other communications shall be
deemed to have been sufficiently given for all purposes hereof only if given
pursuant to the foregoing requirements as to both manner and address, and only
upon receipt (or refusal to accept
-33-
<PAGE>
delivery) by the party to whom such notice is sent. Notices by the parties may
be given on their behalf by their respective attorneys.
19. Successors And Assigns. Buyer may not assign this
Agreement or any rights herein or any portion hereof without the prior written
consent of Seller, which may be withheld for any reason or for no reason, except
that no such consent shall be required to an assignment of this Agreement by
Buyer to the Partnership. This Agreement shall apply to, inure to the benefit of
and be binding upon and enforceable against the parties hereto and their
respective permitted successors and assigns, to the same extent as if specified
at length throughout this Agreement.
-34-
<PAGE>
20. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which
counterparts together shall constitute one and the same Agreement.
21. Time Of The Essence. Time is of the essence of each and
every provision in this Agreement. If any time period or date ends on a day or
time which is a weekend, legal holiday or bank holiday, such period shall be
extended to the same time on the next business day.
22. Judicial Interpretation. Should any provision of this
Agreement require judicial interpretation, it is agreed that the court
interpreting or construing the same shall not apply a presumption that the terms
hereof shall be more strictly construed against one party by reason of the rule
of construction that a document is to be construed more strictly against the
party who itself or through its agent prepared the same, it being agreed that
the agents of all parties have participated in the preparation of this
Agreement.
23. Captions And Recitals. The captions contained herein are
not a part of this Agreement and are included solely for the convenience of the
parties.
24. Entire Agreement. This Agreement contains the entire
agreement between the parties relating to the acquisition of the Property, all
prior negotiations between the parties are merged by this Agreement and there
are no promises, agreements, conditions, undertakings, warranties or
representations, oral or written, express or implied, between them other than as
herein set forth. No change or modification of this Agreement shall be valid
unless the same is in writing and signed by the parties hereto. No waiver of any
of the provisions of this Agreement, or any other agreement referred to herein,
shall be valid unless in writing and signed by the party against whom it is
sought to be enforced.
25. Governing Law; Venue.
(a) This Agreement and the rights and duties of the
parties hereto and the validity, construction, enforcement and interpretation of
this Agreement shall be governed by the laws of the State of New Jersey, except
that the laws of the Commonwealth of Pennsylvania shall govern with respect to
title issues concerning the Geerdes Real Property.
-35-
<PAGE>
(b) With regard to any litigation arising out of or
involving this Agreement, each party hereto: (i) irrevocably submits to the
jurisdiction of the state and federal courts of the State of New Jersey and
agrees and consents to service of process being made upon it in any legal
proceeding arising out of or in connection herewith by service of process
provided by the law of the State of New Jersey; (ii) irrevocably waives, to the
fullest extent permitted by law, any objection which it now or hereafter may
have to the laying of venue of any litigation arising out of or in connection
with this Agreement brought in the State Courts of New Jersey or the United
States District Court for the District of New Jersey; (iii) irrevocably waives
any claims that any litigation brought in any such court has been brought in an
inconvenient forum; and (iv) irrevocably agrees that any legal proceeding
against any party hereto arising out of or in connection with this Agreement
shall be brought in either the State Courts of New Jersey or the United States
District Court for the District of New Jersey, except insofar as the laws of New
Jersey lack jurisdiction in connection with an action relating to the Geerdes
Property.
26. Confidentiality. Each of the parties to this Agreement
covenants that it shall not communicate the terms or any aspect of this
transaction prior to the Closing with any person or entity other than the other
parties to this Agreement, except for Seller's agents, consultants, counsel and
representatives of Buyer for Buyer's Due Diligence Activities and financing
purposes, unless Buyer is advised by its counsel that applicable securities laws
and regulations require. In addition, Buyer covenants that if it undertakes any
investigation of the Properties, it shall conduct such investigation of the
Properties as described herein and with the degree of confidentiality as Buyer
would apply with respect to its own proprietary information. Notwithstanding the
foregoing, at any time after expiration of the Due Diligence Period, Buyer may
issue one or more press releases (which shall not disclose financial terms), if
necessary or appropriate to comply with applicable securities laws and
regulations.
-36-
<PAGE>
27. Limitation Of Liability.
(a) Each of the entities which comprise the Seller is
a limited partnership. In no event shall any individual partner of Seller or any
partner, officer, director, shareholder or employee of any corporate or
partnership partner of Seller be liable for any liabilities or obligations under
this Agreement or otherwise.
(b) 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.
28. Like-Kind Exchange. Seller shall have the right, but not
the obligation, prior to the Closing and without notice to or the consent of
Buyer, to effect the liquidation of any or all of the limited partnerships
comprising Seller and, in connection therewith, to transfer title to any or all
of the Properties to the partners of each Seller as tenants-in-common (the "TIC
Sellers"). In the event of such liquidation and transfer, the TIC Sellers shall
expressly assume by written instrument the obligations of the Seller hereunder
to convey the Properties to Buyer; provided, however, that the Seller shall
remain a party to this Agreement for the purposes of the representations and
warranties made by Seller hereunder (which representations and warranties shall
not be made by the TIC Sellers, except as to those matters which are specific to
the status of the TIC Sellers and their authority to conclude the transaction).
In addition, Seller or, if the liquidation and transfer is effected, the TIC
Sellers shall have the right, at their sole option, to transfer, assign and
convey their interest in and to the Properties as part of a tax-free exchange
for other real property of like kind pursuant to Section 1031 of the Internal
Revenue Code of 1986. Buyer agrees to cooperate fully with Seller and the TIC
Sellers to accomplish such an exchange provided that Buyer shall incur no costs
(other than its own counsel fees in connection therewith) or be subject to any
liability as a result thereof. [In the event Seller or the TIC Sellers elect to
proceed with such exchange, Seller may assign its rights hereunder, but not its
obligations, to a Qualified Intermediary as provided in IRC Reg. 1.1031(k)-1
(g)(4) on or before the Closing.
-37-
<PAGE>
29. 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, Seller shall, from time to time, upon reasonable advance
written notice from Buyer, provide Buyer and its representatives, with access to
all financial and other information then in Seller's possession pertaining to
the period of Seller's ownership and operation of the Real Properties, 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. Seller
shall deliver to Buyer's accountants a representation letter (the "Letter"), in
the form annexed hereto as Exhibit "U", provided that Buyer (and any assignee or
designee acquiring title to the Real Properties) shall indemnify and hold Seller
harmless from and against any claim, damage, loss or liability including,
without limitation, legal fees incurred by Seller in investigating, defending
against or settling any such matter and the amount of any such settlement to
which Seller is at any time subjected, bonafide or not, by any person who is not
a party to this Agreement as a result of its delivery of the information
described in this Paragraph, or delivery of the Letter. The Buyer acknowledges
that the Seller is not making any representation or warranty regarding such
information as is delivered in accordance with the terms of this Paragraph
except to the extent set forth in the Letter or otherwise expressly set forth in
this Agreement.
30. Partial Invalidity. If any term, covenant or condition of
this Agreement, or the application thereof, to any person or circumstance shall
be invalid or unenforceable at any time or to any extent, then the remainder of
this Agreement, or the application of such term, covenant or condition to
persons or circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby. Each term, covenant and condition
of this Agreement shall be valid and enforced to the fullest extent permitted by
law.
-38-
<PAGE>
31. No Recordation. Buyer shall not be entitled to record
this Agreement or a memorandum or other notice of this Agreement in any public
office. This Paragraph shall be deemed to be a specific directive to the
officials of such public office NOT to accept this Agreement or a memorandum or
other notice of this Agreement for recordation in any form whatsoever. Any
violation of the provisions of this Paragraph 31 shall constitute an immediate
default by Buyer under this Agreement.
32. Tender. With respect to the Geerdes Real Property, formal
tender of an executed deed and purchase money is hereby waived by Buyer.
33. Further Assurances. After the Closing, at Buyer's sole
cost and expense, Seller shall execute, acknowledge and deliver, for no further
consideration, all assignments, transfers, deeds and other documents as Buyer
may reasonably request to vest in Buyer and perfect Buyer's right, title and
interest in and to the Property.
34. Jury Trial Waiver. BUYER AND SELLER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE (TO THE EXTENT PERMITTED BY APPLICABLE LAW)
ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR
RELATING TO THIS AGREEMENT AND AGREE THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE
A JUDGE SITTING WITHOUT A JURY.
35. No Offer. THE DELIVERY OF THIS AGREEMENT DOES NOT
CONSTITUTE AN OFFER AND THIS AGREEMENT SHALL NOT BE BINDING AND SHALL HAVE NO
FORCE AND EFFECT UNLESS AND UNTIL A FULLY EXECUTED COUNTERPART HEREOF HAS BEEN
DELIVERED TO EACH OF THE PARTIES. IT IS EXPRESSLY UNDERSTOOD THAT SELLER HAS NO
OBLIGATION TO EXECUTE THIS AGREEMENT.
-39-
<PAGE>
36. Delivery of Documents. Promptly upon execution hereof by
the parties hereto, Seller shall deliver to Buyer one copy of this Agreement,
complete with all Exhibits or Schedules prepared or delivered by Seller, and a
copy of this Agreement (and said Exhibits and Schedules, if available) on disk,
compatible with WordPerfect 5.1.
37. Counterparts. This Agreement may be executed in one or
more counterparts, each of which, for all purposes, shall be deemed an original
and all of which, when taken together, shall constitute one and the same
Agreement.
IN WITNESS WHEREOF, intending to be legally bound hereby, the
parties have duly executed this Agreement as of the day and year first above
stated.
SELLER:
EDB PROPERTY PARTNERS, L.P. I,
a Delaware limited partnership
By: Emmes Laurel Property Corp.,
a Delaware corporation,
a general partner
By: /s/ Andrew Davidoff
------------------------------
Name: Andrew Davidoff
Title: Vice President
BUYER:
BRANDYWINE REALTY TRUST, a
Maryland Real Estate Investment Trust
By: /s/ Gerard H. Sweeney
------------------------
Name: Gerard H. Sweeney
Title: President & CEO
The Undersigned Hereby Acknowledges
Receipt Of The Deposit And Agrees To
Hold And Apply The Same In Accordance
With The Provisions Of The Escrow Terms
Baer Marks & Upham LLP
By: /s/ Howard R. Shapiro, Esquire
----------------------------------
Partner
-40-
<PAGE>
EXHIBIT C
Additional Exceptions To Title
"Geerdes Land"
38. Grant of right-of-way to Philadelphia Suburban Water Company as in Deed
Book 4794 page 669.
39. Rights granted to Philadelphia Suburban Water Company as in Deed Book 4766
page 1698, Deed Book 4766 page 1183 and Deed Book 3476 page 77.
40. Rights granted to Philadelphia Electric Company as in Deed Book 3230 page
324, Deed Book 3481 page 121 and Deed Book 4839 page 2336.
41. Rights granted to The Bell Telephone Company of Pennsylvania as in Deed
Book 4912 page 1257, Deed Book 4773 page 861, Deed Book 4763 page 865 and
Misc. Deed Book 71 page 252.
42. Deed of Dedication between Whitesell Enterprises, Ltd. and Upper Merion
Township Authority dated August 5, 1967 recorded in Deed Book 4917 page
1875.
43. Deed of Dedication between Whitesell Enterprises Ltd. (A New Jersey Limited
Partnership) and Manor Health Care Corp. (a Delaware Corporation) dated
December 14, 1987 recorded in Deed Book 4860 page 2040.
44. Deed of Sanitary Sewer Easement between Whitesell Construction Inc., and
Upper Merion Municipal Utility Authority dated September 24, 1987 recorded
in Deed Book 4854, page 100.
45. Storm Sewer Easement between Whitesell Enterprises Ltd., (a New Jersey
Limited Partnership) and Manor Healthcare Corp., (a Delaware Corporation)
dated December 14, 1987 recorded in Deed Book 4860 page 2033.
46. Land Development Agreement between Township of Upper Merion and Whitesell
Construction Co., Inc., dated November 1, 1988 recorded in Deed Book 4892
page 542.
C-1
<PAGE>
EXHIBIT C (Continued)
47. Memorandum of Lease between Whitesell Enterprises Ltd., (a New Jersey
Limited Partnership) (Landlord) and General Electric Company (a New York
Corporation) (Tenant) dated February 25, 1985 recorded in Deed Book 4762
page 303.
48. Subject to a 10 feet wide Philadelphia Electric Easement.
49. Subject to the free and common use, right, liberty and privilege of a
certain roadway, passageway and watersource laid out, opened and as
described in Deed Book 4731 page 1728.
50. Subject to the proportionate share of the cost of maintaining the said
roadway and passageway referenced in number 13 above in good order and
repair, including removal of snow, ice and debris.
51. Subject to notes, conditions, set back lines, easements etc. as recorded in
Plan Book A-49 page 240, Plan Book A-49 page 138, 139 and 140, Plan Book
A-46 page 113 and Plan Book A-47 page 64.
52. Taxes or special assessments which are not shown as existing liens by the
public records.
"2000/4000 Land"
- ----------------
53. Easement in Deed Book 1874 Page 893.
54. Easement in Deed Book 3787 Page 111.
55. Slope and Drainage Rights in Deed Book 779 Page 223.
56. Slope and Drainage Rights in Deed Book 835 Page 98.
57. Slope and Drainage Rights in Deed Book 1642 Page 1100.
58. Liability for additional assessments for taxes in connection with new
Construction pursuant to N.J.S.A. 54:4-63.1 and the following sections.
C-2
<PAGE>
EXHIBIT C (Continued)
"9000 Land"
- -----------
59. Slope and Drainage Rights in Deed Book 774 Page 184.
60. Slope and Drainage Rights in Deed Book 899 Page 155.
61. Slope and Drainage Rights in Deed Book 1338 Page 486.
62. Slope and Drainage Rights in Deed Book 1459 Page 671.
63. Slope and Drainage Rights in Deed Book 1579 Page 408.
64. Slope and Drainage Rights in Deed Book 1222 Page 135.
65. 20 foot wide sanitary sewer easement crossing said premises, as shown on
survey prepared by Lippincott Engineering Associates dated August 24, 1995,
last revised August 29, 1995.
66. Declaration of Access and Parking Easement as contained in Deed Book 4058
Page 190.
67. Liability for additional assessments for taxes in connection with new
Construction pursuant to N.J.S.A. 54:4-63.1 and the following sections.
"1000 Land"
- -----------
68. Easement in Deed Book 1222 Page 135.
69. 75 Foot Set Back Line and Utility and Access Easement.
70. Slope and Drainage Rights in Deed Book 774, Page 184.
71. Slope and Drainage Rights in Deed Book 899, Page 155.
72. Slope and Drainage Rights in Deed Book 1338, Page 486.
C-3
<PAGE>
EXHIBIT C (Continued)
73. Slope and Drainage Rights in Deed Book 1459, Page 671.
74. Slope and Drainage Rights in Deed Book 1579 Page 408.
75. Liability for additional assessments for taxes in connection with new
Construction pursuant to N.J.S.A. 54:4-63.1 and the following sections.
"15000 Land"
- ------------
76. Easement in Deed Book 4041 Page 182.
77. Easement in Deed Book 4050 Page 155.
78. Access Easement as contained in Deed Book 4041 Page 188.
79. 75 foot set back line shown on map filed in the Burlington County Recording
Office
80. Memorandum of Lease by and between 15000 Midlantic Drive Associates,
Limited Partnership and New Jersey Bell Telephone Company dated June 14,
1990 and recorded July 20, 1990 in Deed Book 4072 Page 38.
81. Liability for additional assessments for taxes in connection with new
Construction pursuant to N.J.S.A. 54:4-63.1 and the following sections.
The Following Additional Exception To Title
Applies To Each Of The Above Mentioned Properties
- -------------------------------------------------
82. Rights or claims of parties in possession reflected as Tenants on Exhibit K
herein.
C-4
<PAGE>
EXHIBIT F
---------
Special Warranty Deed
---------------------
THIS SPECIAL WARRANTY DEED is made the ____ day of 1997,
between EDB Property Partners, L.P. I, a Delaware limited partnership, having an
office c/o Emmes & Company, LLC, 420 Lexington Avenue, New York, New York 10170
(hereinafter called the Grantor) of the one part, and Brandywine Realty Trust, a
Real Estate Investment Trust organized under the laws of Maryland, having an
address at 16 Campus Boulevard, Suite 150, Newton Square, Pennsylvania 19073
(hereinafter called the Grantee) of the other part,
WITNESSETH, that the said Grantor for and in consideration of
the sum of ONE DOLLAR ($1.00) lawful money of the United States of America, paid
to the Grantor by the said Grantee, at or before the sealing and delivery
hereof, the receipt whereof is hereby acknowledged, has granted, bargained and
sold, alienated, enfeoffed, released and confirmed, and by these presents does
grant, bargain and sell, alien, enfeoff, release and confirm unto the said
Grantee, its successors and assigns, the land as more fully described in
Schedule "A" attached hereto and made a part hereof.
TOGETHER with all and singular the buildings, improvements,
ways, streets, alleys, passages, waters, water-courses, rights, liberties,
privileges, hereditaments and appurtenances, whatsoever thereunto belonging, or
in any wise appertaining, and the reversions and remainders, rents, issues and
profits thereof; and all the estate, right, title, interest, property, claim and
demand whatsoever of it, the said Grantor in law as in equity, or otherwise
howsoever of, in, and to the same and every part thereof.
TO HAVE AND TO HOLD the property described herein, with the
buildings and improvements thereon erected, hereditaments and premises hereby
granted, or mentioned and intended so to be, with the appurtenances, unto the
said Grantee
F-1
<PAGE>
EXHIBIT F (Continued)
and its successors and assigns, to and for the only proper use and behoof of the
said Grantee and its successors and assigns, forever.
AND the said Grantor, for itself and its successors and
assigns does by these presents, covenant, grant and agree, to and with the said
Grantee and its assigns, that it, the said Grantor and its successors and
assigns, all and singular the hereditaments and premises herein described and
granted, or mentioned and intended so to be, with the appurtenances, unto the
said Grantee and its successors and assigns, against it, the said Grantor and
its successors and against all and every person or persons whomsoever lawfully
claiming or to claim the same or any part thereof, by, from or under it, them or
any of them, shall and will WARRANT and forever DEFEND.
IN WITNESS WHEREOF, the said Grantor has caused this Special
Warranty Deed to be executed as of the day and year first above written.
EDB Property Partners, L.P. I,
a Delaware limited partnership
By: Emmes Laurel Property Corp.
a Delaware Corporation,
a general partner
By: _____________________________
Name:
Title:
RECORD AND RETURN TO:
Eric L. Stern, Esq.
Pepper, Hamilton & Scheetz LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, Pennsylvania 19103-2799
F-2
<PAGE>
EXHIBIT F (Continued)
STATE OF NEW YORK )
)ss.:
COUNTY OF )
On this ____ day of _________, 1997, before me personally came
__________________________ to me known and known by me to be the person who
executed the foregoing instrument, and who being by me duly sworn, did depose
and say that he resides at _______________________________; that he is the
________ President of Emmes Laurel Property Corp., a corporation duly organized
under the laws of the State of Delaware, having its principal place of business
at c/o Emmes & Company LLC, 420 Lexington Avenue, New York, New York 10170 that
said corporation is a general partner of EDB Property Partners, L.P.I a Delaware
limited partnership, the partnership described in and which executed the
foregoing instrument; that he signed his name thereto by like authority of the
board of directors of said corporation; and he acknowledged to me that the said
instrument was executed by said corporation for and on behalf of said
partnership for the use and purposes therein mentioned.
_______________________________
NOTARY PUBLIC
F-3
<PAGE>
EXHIBIT F
---------
Bargain And Sale Deed
---------------------
PREPARED BY:
_______________________________
Howard R. Shapiro, Esq.
Baer Marks & Upham LLP
805 Third Avenue
New York, New York 10022
THIS DEED is made on _______________, 1997, between EDB
Property Partners, L.P. I, a Delaware limited partnership, having an address c/o
Emmes & Company LLC, 420 Lexington Avenue, Suite 2702, New York, New York 10170,
referred to in this Deed as the Grantor,
AND Brandywine Realty Trust, a Real Estate Investment Trust
organized under the laws of Maryland, having an address at 16 Campus Boulevard,
Suite 150, Newtown Square, Pennsylvania 19073, referred to in this Deed as the
Grantee.
Transfer Of Ownership. The Grantor grants and conveys
(transfers ownership of) the property described below to the Grantee. This
transfer is made for the sum of _______________________________. The Grantor
acknowledges receipt of this money.
Tax Map Reference. (N.J.S.A. 46:15-2.1) Township of Mount
Laurel Block No. ____ Lot No. ____ Account No. ____.
Property. The property consists of the land and all the
buildings and structures on the land in the Township of Mount Laurel, County of
Burlington and State of
F-4
<PAGE>
EXHIBIT F (Continued)
New Jersey. The legal description is set forth on Schedule "A" attached hereto
and made a part hereof.
The Grantor promises that the Grantor has done no act to
encumber the property. This promise is called a "Covenant as to Grantor's Acts"
(N.J.S.A. 46:4-6). This promise means that the Grantor has not allowed anyone
else to obtain any legal rights which affect the Property (such as by making a
mortgage or allowing a judgment to be entered against the Grantor).
Signatures. The Grantor signs this Deed as of the date at the
top of the first page.
WITNESSED BY: EDB Property Partners, L.P. I
a Delaware limited partnership
By: Emmes Laurel Property Corp.
Name: _______________________ a Delaware Corporation,
a general partner
Title: _________________________ By: ________________________ (Seal)
Name:
Title:
F-5
<PAGE>
EXHIBIT F (Continued)
STATE OF )
)ss.:
COUNTY OF )
I certify that on __________, 1997, ___________________
personally came before me and this person acknowledged under oath, to my
satisfaction, that:
(a) This person is the _____________ of Emmes Laurel Property
Corp., a Delaware corporation and a general partner of EDB Property Partners,
L.P. I, a Delaware limited partnership;
(b) This person is the attesting witness to the signing of
this Deed by the proper corporate officer who is _____________, the _____
President of said corporation;
(c) This Deed was signed by the corporation, as its voluntary
act duly authorized by a proper resolution of its sole Director and the Deed was
delivered by the limited partnership;
(d) This person knows the proper seal of the corporation which
was affixed to this Deed;
(e) This person signed this proof to attest to the truth of
these facts; and
F-6
<PAGE>
EXHIBIT F (Continued)
(f) The full and actual consideration paid or to be paid for
the transfer of title is ___________________.
Sworn and subscribed before
this ____ day of________, 1997
_______________________________________
____________________________________
(Print Name of Attesting Witness)
F-7
<PAGE>
EXHIBIT G
---------
Bill Of Sale
------------
KNOW ALL MEN BY THESE PRESENTS, That EDB Property Partners,
L.P. I, a Delaware limited partnership, having an address c/o Emmes & Company,
LLC, 420 Lexington Avenue, New York, New York 10170 (hereinafter called the
"Transferor"), for and in consideration of the sum of Ten Dollars ($10.00) and
other good and valuable consideration paid to Transferor by Brandywine Realty
Trust, a Real Estate Investment Trust organized under the laws of Maryland,
having an address at Suite 150, 16 Campus Boulevard, Newtown Square,
Pennsylvania 19073 (hereinafter called the "Transferee"), the receipt whereof is
hereby acknowledged has bargained, sold, assigned, transferred and set over and
by these presents does hereby bargain, sell, assign, transfer and set over,
without recourse, warranty or representation of any kind or nature, all of
Transferor's interest in and to those items of personal property as enumerated
in the Agreement of Sale owned by Transferor, which are located on, in or under
certain land and improvements being conveyed to Transferee by Transferor
concurrently herewith (the "Property") used solely in connection with the
Property.
TO HAVE AND TO HOLD the said personal property unto the said
Transferee, its successors and assigns, forever.
IN WITNESS WHEREOF, the Transferor has hereunto set its hand
or caused these presents to be signed by its proper corporate officer on the
____ day of ___________, 1997.
Signed Sealed And Delivered EDB Property Partners, L.P. I
in the Presence of By: Emmes Laurel Property Corp., a
Delaware corporation,
a General Partner
______________________________ By: _____________________________
Andrew Davidoff
Vice President
G-1
<PAGE>
EXHIBIT G (Continued)
STATE OF NEW YORK )
)ss.:
COUNTY OF )
On this ____ day of _________, 1997, before me personally came
__________________________ to me known and known by me to be the person who
executed the foregoing instrument, and who being by me duly sworn, did depose
and say that he resides at _______________________________; that he is the _____
President of Emmes Laurel Property Corp., a corporation duly organized under the
laws of the State of Delaware, having its principal place of business at
_________________ that said corporation is a general partner of EDB Property
Partners, L.P. I, a Delaware limited partnership, the partnership described in
and which executed the foregoing instrument; that he signed his name thereto by
authority of the board of directors of said corporation; and he acknowledged to
me that the said instrument was executed by said corporation for and on behalf
of said partnership for the use and purposes therein mentioned.
____________________________________
NOTARY PUBLIC
G-2
<PAGE>
EXHIBIT H
---------
Form Of Non-Foreign Person Certification
----------------------------------------
CERTIFICATION OF NONFOREIGN STATUS
----------------------------------
(Corporation, Partnership, Trust or Estate)
Section 1445 of the Internal Revenue Code provides that a
transferee of a U.S. real property interest must withhold tax if the transferor
is a foreign person. To inform the transferee that withholding of tax is not
required upon the disposition of a U.S. real property interest by EDB Property
Partners, L.P., I the undersigned hereby certifies the following on behalf of
EDB Property Partners, L.P. I.
83. EDB Property Partners, L.P. I is not a foreign
corporation, foreign partnership, foreign trust, or foreign estate (as those
terms are defined in the Internal Revenue Code and Income Tax Regulations);
84. EDB Property Partners, L.P. I's U.S. employer.
Identification number is ____________________, and
85. EDB Property Partners, L.P. I's office address is c/o
Emmes & Company, LLC, 420 Lexington Avenue, New York, New York 10170 understands
that this certification may be disclosed to the Internal Revenue Service by
transferee and that any false statement contained herein could be punished by
fine, imprisonment, or both.
Under penalties of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete, and I further declare that I have authority to sign this document on
behalf of EDB Property Partners, L.P. I.
Dated: , 1997
__________________________________
(Signature)
H-1
<PAGE>
EXHIBIT I-1
-----------
Maintenance Bonds
-----------------
Maintenance And Performance Bonds For
Subdivision #244 For Laurel Corporate Center
--------------------------------------------
1. $27,600 Performance Bond in favor of Mount Laurel Township
to cover the cost of tree plantings along the Midlantic Drive Extension required
under subdivision approval.
2. $43,800 Performance Bond with Mt. Laurel Township for
completion of top paving of Walt Whitman Drive required under subdivision
approval.
3. $7,000 escrow posted with Mr. Laurel Twp.
H-2
<PAGE>
EXHIBIT J
---------
"Escrow Terms"
--------------
86. The Deposit shall be held in escrow by Baer Marks & Upham
LLP, attorneys for Seller ["Escrowee"] under and subject to the provisions
hereof. Escrowee shall deposit the Deposit in an interest bearing account at a
Federally insured bank selected by Escrowee, in its sole discretion,
notwithstanding that another institution or investment may pay more interest
than the one selected, or at the option of Seller used to purchase United States
Government securities or deposited in a money market fund designated by Seller
and reasonably satisfactory to Buyer and Escrowee. Interest or other income if
any (collectively "interest") earned on the Deposit shall be paid to Seller (i)
if Buyer defaults under this Agreement, or (ii) on the Closing of title. In any
case any earned interest shall be credited to Buyer or applied on account of the
Purchase Price. In the event the Buyer exercises its right to terminate this
Agreement pursuant to Paragraph 11(b), the Deposit and any earned interest will
be returned to Buyer. The tax identification numbers of the parties shall be
furnished to the Escrowee upon request and the party receiving the interest
shall pay all income taxes thereon. If for any reason this Agreement is
cancelled or terminated and the Closing does not occur and if either party
and/or any other person asserting a claim against the Deposit makes a demand
upon Escrowee for payment of the Deposit, Escrowee shall give written notice to
the other party or parties of such demand except in the event the Buyer
exercises its right to terminate this Agreement pursuant to Paragraph 11(b),
whereupon such written notice shall not be required. If Escrowee does not
receive a written objection from the other party or parties to the proposed
payment within ten (10) business days after the giving of such notice, Escrowee
is hereby irrevocably authorized to make such payment. If Escrowee does receive
such written objection within such ten (10) day period or if for any other
reason Escrowee in good faith elects not to make such payment, Escrowee, in its
sole discretion and without liability to Seller or Buyer or any other person,
may do any of the following specified in (a) (b) or (c) below;
(a) Refuse to comply with any demands on it and continue to
hold the Deposit until it receives either (i) a written notice signed by Seller
and Buyer directing the disbursement of the Deposit, or (ii) a final order of a
court of competent jurisdiction thereover, directing the disbursement of the
Deposit, or
(b) On notice to Seller and Buyer, take such affirmative
action as it may deem appropriate to determine its duties as Escrowee including,
but not limited to, the deposit of the Deposit with a court of competent
jurisdiction and the commencement of an action for interpleader, or
J-1
<PAGE>
EXHIBIT J (Continued)
(c) If Seller or Buyer, or any other person, shall have
commenced litigation relating to the Deposit, to deposit it with the clerk of
the court in which said litigation is pending or a substitute escrow agent.
Upon disbursing or depositing the Deposit under the provisions
of (a) (b) or (c) above, the Escrowee shall be released from all liability with
respect to the Deposit. Escrowee has endorsed this Agreement to acknowledge
receipt of the Deposit and to confirm its agreement to adhere to the provisions
hereof.
The parties acknowledge that Escrowee is acting solely as a
stakeholder at their request and for their convenience; that Escrowee shall not
be deemed to be the agent of either of the parties, and that Escrowee shall not
be liable to either of the parties for any mistake of fact or of law or error of
judgment or any acts or omissions of any kind unless they constitute gross
negligence on the part of Escrowee or they are taken or suffered in willful
disregard of this Agreement. Escrowee shall be entitled to rely on any
instrument or signature believed by it to be genuine and may assume that any
person purporting to give any written notice or instruction in connection
herewith is fully authorized to do so by the party on whose behalf such written
notice or instruction is given. Escrowee shall have no duties or
responsibilities except those set forth herein. Escrowee shall not be bound by
any modification of this Agreement, unless the same is in writing and signed by
Seller and Buyer, and if Escrowee's duties are affected, unless Escrowee shall
have given prior written consent thereto. Seller and Buyer, jointly and
severally, indemnify and hold Escrowee harmless from and against all costs,
claims, losses, liabilities and expenses, including reasonable attorneys' fees,
incurred in connection with or arising from the performance of Escrowee's duties
hereunder, except for Escrowee's gross negligence or acts or omissions taken or
suffered by Escrowee in willful disregard of this Agreement. Such indemnity
shall survive the delivery of the Deeds. Buyer acknowledges that Escrowee is
acting as counsel to Seller and in the event of any dispute arising under this
Agreement, Escrowee may continue to represent Seller; provided that Escrowee
shall either transfer the Deposit to another escrow agent mutually acceptable to
Seller and Buyer, or deposits it into court.
J-2
<PAGE>
EXHIBIT L
---------
Permitted Survey Exceptions
---------------------------
Geerdes Land
- ------------
Conditions as shown on Plan of Survey Lot 2-A-1 situated in
Upper Merion Township, Montgomery County, Pennsylvania prepared for Baer Marks &
Upham (Job Number 7758.04) dated August 18, 1995 prepared by Vincent Schulte, a
registered land surveyor of Lippincott Engineering Associates, Consulting
Engineers (hereinafter the "Survey") and any additional state of facts disclosed
by a redated version of the Survey (redated after the date hereof), provided
such additional state of facts do not materially interfere with the use of the
Real Property as an office building.
2000/4000 Land
- --------------
Conditions as shown on Plan of Survey Lot 2, Block 503
situated in Mount Laurel Township, Burlington County, New Jersey prepared for
Baer Marks & Upham (Job Number 7758.04) dated August 24, 1995 prepared by
Vincent Schulte, a registered land surveyor of Lippincott Engineering
Associates, Consulting Engineer (hereinafter the "Survey") and any additional
state of facts disclosed by a redated version of the Survey (redated after the
date hereof), provided such additional state of facts do not materially
interfere with use of the Real Property as an office building.
9000 Land
- ---------
Conditions as shown on Plan of Survey Lot 3 and 4, Block 516
situated in Mount Laurel Township, Burlington County, New Jersey prepared for
Baer Marks & Upham (Job Number 7758.04) dated August 24, 1995 prepared by
Vincent Schulte, a registered land surveyor of Lippincott Engineering
Associates, Consulting Engineer (hereinafter the "Survey") and any additional
state of facts disclosed by a redated version of the Survey (redated after the
date hereof), provided such additional state of facts do not materially
interfere with use of the Real Property as an office building.
L-1
<PAGE>
EXHIBIT L (Continued)
15000 Land
- ----------
Conditions as shown on Plan of Survey Lot 6, Block 516
situated in Mount Laurel Township, Burlington County, New Jersey dated August
23, 1995 prepared for Baer Marks & Upham (Job Number 7758.04) prepared by
Vincent Schulte, a registered land surveyor of Lippincott Engineering
Associates, Consulting Engineer (hereinafter the "Survey") and any additional
state of facts disclosed by a redated version of the Survey (redated after the
date hereof), provided such additional state of facts do not materially
interfere with use of the Real Property as an office building.
10000 Land
- ----------
Conditions as shown on Plan of Survey Lot 6, Block 501
situated in Mount Laurel Township, Burlington County, New Jersey dated August
22, 1995 prepared for Baer Marks & Upham (Job Number 7758.04) prepared by
Vincent Schulte, a registered land surveyor of Lippincott Engineering
Associates, Consulting Engineer (hereinafter the "Survey") and any additional
state of facts disclosed by a redated version of the Survey (redated after the
date hereof), provided such additional state of facts do not materially
interfere with use of the Real Property as an office building.
L-2
<PAGE>
EXHIBIT M
---------
ASSIGNMENT AND ASSUMPTION OF LEASES AND SECURITY DEPOSITS
---------------------------------------------------------
KNOW ALL ME BY THESE PRESENTS, EDB Property Partners, L.P. I,
a Delaware limited partnership having an address c/o Emmes & Company LLC, 420
Lexington Avenue, New York, New York 10170 ("Assignor"), for and in
consideration of the sum of Ten ($10.00) Dollars lawful money of the United
States to it in hand paid by Brandywine Realty Trust, a Maryland real estate
investment trust having an address at 16 Campus Boulevard, Suite 150, Newtown
Square, Pennsylvania 19073 ("Assignee"), hereby assigns to Assignee without
warranty or representation of any kind or nature all of its right, title and
interest as landlord, in and to those tenant leases (the "Leases") affecting
those certain parcels of real property more fully described on Schedule A
annexed hereto and made a part hereof and to those lease security deposits (the
"Security Deposits") given by the tenants to Assignor pursuant to the Leases
described on Schedule B annexed hereto and made a part hereof. Nothing contained
herein is intended to modify any of the obligations arising under that certain
Agreement of Sale between the parties hereto which are expressly stated therein
to survive Closing.
TO HAVE AND TO HOLD the same unto Assignee, its successors and
assigns from the date hereof.
Assignee, by the acceptance of this Assignment and the
execution of this Assignment at the foot hereof, hereby assumes from and after
the date hereof, all of the obligations of Assignor as landlord hereafter
arising, under the Leases and with respect to such Security Deposits and hereby
agrees to indemnify, defend and hold the Assignor harmless from and against any
and all loss, liability, cost or expense, including reasonable attorneys' fees
imposed upon, incurred or claimed against Assignor by reason of Assignee's
failure to observe or perform (or claims of failure to observe or perform) any
of the obligations of the owner of those certain parcels of real property more
fully described on Schedule A under the aforesaid Leases or with respect to such
Security Deposits accruing or arising subsequent to the date hereof. Assignor,
by the delivery of this Assignment and the execution of this Assignment at the
foot hereof, hereby agrees to indemnify, defend and hold the Assignee, its
successors and assigns, harmless from and against any and all loss, liability,
cost or expense, including reasonable attorneys' fees, imposed upon, incurred or
claimed against Assignee by reason of Assignor's failure to observe or perform
(or claims of failure to observe or perform) any of the obligations of the owner
of those certain parcels of real
M-1
<PAGE>
EXHIBIT M (Continued)
property more fully described on Schedule A under the aforesaid Leases or with
respect to such Security Deposits accruing or arising prior to the date hereof.
IN WITNESS WHEREOF, the parties hereto have set their hands
the ____ of _______________, 1997.
[SEAL] ASSIGNOR:
ATTEST:
EDB Property Partners, L.P. I
By: Emmes Laurel Property Corp., a
Delaware Corporation,
By: _____________________________ a General Partner
Name: ___________________________
Title: __________________________
By: _____________________________
By: _____________________________ Andrew Davidoff
Name: ____________________________ Vice President
Title: __________________________
[SEAL]
ATTEST: ASSIGNEE:
Brandywine Realty Trust
By: _____________________________
Name: ___________________________
Title: __________________________ By: _____________________________
Gerald H. Sweeney
President and CEO
By: _____________________________
Name: ___________________________
Title: __________________________
M-2
<PAGE>
EXHIBIT M (Continued)
STATE OF NEW YORK )
)ss.:
COUNTY OF )
On this ____ day of _________, 1997, before me personally came
__________________________ to me known and known by me to be the person who
executed the foregoing instrument, and who being by me duly sworn, did depose
and say that he resides at _______________________________; that he is the
________ President of Emmes Laurel Property Corp., a corporation duly organized
under the laws of the State of Delaware, having its principal place of business
at _________________ that said corporation is a general partner of EDB Property
Partners, L.P.I a Delaware limited partnership, the partnership described in and
which executed the foregoing instrument; that he signed his name thereto by like
authority of the board of directors of said corporation; and he acknowledged to
me that the said instrument was executed by said corporation for and on behalf
of said partnership for the use and purposes therein mentioned.
____________________________________
NOTARY PUBLIC
STATE OF NEW YORK )
)ss.:
COUNTY OF )
On the ____ day of ____________, 1997, before me personally
came ___________________________ to be known who, being by me duly sworn did
depose and say that he resides at
________________________________________________, that he is the
_________________ of Brandywine Realty Trust, the Maryland real estate
investment trust described in and which executed the foregoing instrument; and
that he signed his name thereto by authority of the board of directors of said
real estate investment trust.
____________________________________
NOTARY PUBLIC
M-3
<PAGE>
EXHIBIT M
---------
ASSIGNMENT AND ASSUMPTION OF SELLER'S INTEREST IN CONTRACTS
-----------------------------------------------------------
KNOW ALL ME BY THESE PRESENTS, EDB Property Partners, L.P. I,
a Delaware limited partnership having an address c/o Emmes & Company LLC, 420
Lexington Avenue, New York, New York 10170 ("Assignor"), for and in
consideration of the sum of Ten ($10.00) Dollars lawful money of the United
States to it in hand paid by Brandywine Realty Trust, a Maryland real estate
investment trust having an address at 16 Campus Boulevard, Suite 150, Newtown
Square, Pennsylvania 19073 ("Assignee"), hereby assigns to Assignee without
warranty or representation of any kind or nature all of its right, title and
interest in and to those certain contracts described on Schedule B annexed
hereto and made a part hereof (the "Contracts") affecting those certain parcels
of real property more fully described on Schedule A annexed hereto and made a
part hereof. Nothing contained herein is intended to modify any of the
obligations arising under that certain Agreement of Sale between the parties
hereto which are expressly stated therein to survive Closing.
TO HAVE AND TO HOLD the same unto Assignee, its successors and
assigns from the date hereof.
Assignee, by the acceptance of this Assignment and the
execution of this Assignment at the foot hereof, hereby assumes from and after
the date hereof, all of the obligations of Assignor hereafter arising, under the
Contracts and hereby agrees to indemnify, defend and hold the Assignor harmless
from and against any and all loss, liability, cost or expense, including
reasonable attorneys' fees imposed upon, incurred or claimed against Assignor by
reason of Assignee's failure to observe or perform (or claims of failure to
observe or perform) any of the obligations under the aforesaid Contracts
accruing or arising subsequent to the date hereof. Assignor, by the delivery of
this Assignment and the execution of this Assignment at the foot hereof, hereby
agrees to indemnify, defend and hold the Assignee, its successors and assigns,
harmless from and against any and all loss, liability, cost or expense,
including reasonable attorneys' fees, imposed upon, incurred or claimed against
Assignee by reason of Assignor's failure to observe or perform (or claims of
failure to observe or perform) any of the obligations under the aforesaid
Contracts accruing or arising prior to the date hereof.
M-4
<PAGE>
EXHIBIT M (Continued)
IN WITNESS WHEREOF, the parties hereto have set their hands
the ____ of _______________, 1997.
[SEAL] ASSIGNOR:
ATTEST:
EDB Property Partners, L.P. I
By: Emmes Laurel Property Corp., a
Delaware Corporation,
By: _____________________________ a General Partner
Name: ___________________________
Title: __________________________
By: _____________________________
By: _____________________________ Andrew Davidoff
Name: ____________________________ Vice President
Title: __________________________
[SEAL]
ATTEST: ASSIGNEE:
Brandywine Realty Trust
By: _____________________________
Name: ___________________________
Title: __________________________ By: _____________________________
Gerald H. Sweeney
President and CEO
By: _____________________________
Name: ___________________________
Title: __________________________
M-5
<PAGE>
EXHIBIT M (Continued)
STATE OF NEW YORK )
)ss.:
COUNTY OF )
On this ____ day of _________, 1997, before me personally came
__________________________ to me known and known by me to be the person who
executed the foregoing instrument, and who being by me duly sworn, did depose
and say that he resides at _______________________________; that he is the
________ President of Emmes Laurel Property Corp., a corporation duly organized
under the laws of the State of Delaware, having its principal place of business
at _________________ that said corporation is a general partner of EDB Property
Partners, L.P.I a Delaware limited partnership, the partnership described in and
which executed the foregoing instrument; that he signed his name thereto by like
authority of the board of directors of said corporation; and he acknowledged to
me that the said instrument was executed by said corporation for and on behalf
of said partnership for the use and purposes therein mentioned.
____________________________________
NOTARY PUBLIC
STATE OF NEW YORK )
)ss.:
COUNTY OF )
On the ____ day of ____________, 1997, before me personally
came ___________________________ to be known who, being by me duly sworn did
depose and say that he resides at
________________________________________________, that he is the
_________________ of Brandywine Realty Trust, the Maryland real estate
investment trust described in and which executed the foregoing instrument; and
that he signed his name thereto by authority of the board of directors of said
real estate investment trust.
____________________________________
NOTARY PUBLIC
M-6
<PAGE>
AGREEMENT OF SALE
Between
EDB PROPERTY PARTNERS, L.P. I
and
BRANDYWINE REALTY TRUST
Dated as of April 15, 1997
<PAGE>
TABLE OF CONTENTS
Page
----
AGREEMENT OF SALE.........................................................-1-
RECITALS..................................................................-1-
1. Definitions Of Certain Terms............................-1-
2. Acquisition Of The Properties...........................-5-
3. Purchase Price And Time Of Payment......................-6-
4. Closing.................................................-6-
5. Title And Conveyance Of The Property....................-7-
6. Closing Documents.......................................-9-
7. Prorations And Closing Costs...........................-11-
8. Possession Of Property.................................-14-
9. Representations Of Seller And Buyer....................-15-
10. Access To The Property.................................-21-
11. Due Diligence Period; Additional Provisions............-22-
12. Condemnation...........................................-23-
13. Damage By Fire Or Other Casualty.......................-24-
14. Default................................................-25-
15. Operations Prior To Closing............................-26-
16. Property Conveyed "AS-IS, WHERE IS"....................-28-
17. Brokers................................................-29-
18. Notices................................................-29-
19. Successors And Assigns.................................-30-
20. Counterparts...........................................-31-
21. Time Of The Essence....................................-31-
22. Judicial Interpretation................................-31-
23. Captions And Recitals..................................-31-
24. Entire Agreement.......................................-31-
25. Governing Law; Venue...................................-31-
26. Confidentiality........................................-32-
27. Limitation Of Liability................................-32-
28. Like-Kind Exchange.....................................-33-
29. SEC Reporting (8-K) Requirements.......................-33-
30. Partial Invalidity.....................................-34-
31. No Recordation.........................................-34-
32. Tender.................................................-34-
33. Further Assurances.....................................-34-
34. Jury Trial Waiver......................................-34-
35. No Offer...............................................-34-
36. Delivery of Documents..................................-35-
37. Counterparts...........................................-35-
-i-
<PAGE>
LIST OF EXHIBITS
Exhibit A-1 Description of "Geerdes Land"
Exhibit A-2 Description of "2000/4000 Land"
Exhibit A-3 Description of "9000 Land"
Exhibit A-4 Description of "10000 Land"
Exhibit A-5 Description of "15000 Land"
Exhibit B List of "Contracts"
Exhibit C Additional Exceptions to Title
Exhibit D Personal Property Not Included in Sale
Exhibit E Base Building Work
Exhibit F Form of "Deeds"
Exhibit G "Bill of Sale"
Exhibit H Form of Non-Foreign Person Certification
Exhibit I-1 Maintenance Bonds (Mount Laurel Township)
Exhibit "J" "Escrow Terms"
Exhibit "K" List of "Leases"
Exhibit "L" Permitted Survey Exceptions
Exhibit "M" Form of Assignment(s)
Exhibit "N" Maintenance Requirements of Mount Laurel Township
Exhibit "O" Pending Litigation
Exhibit "P" Outstanding Brokerage Commissions
Exhibit "Q" Intentionally Omitted
Exhibit "R" Leasing Parameters
Exhibit "S" Intentionally Omitted
Exhibit "T" Identified Tenants
Exhibit "U" Representation Letter
<PAGE>
AMENDMENT NO. 3 TO
AGREEMENT OF LIMITED PARTNERSHIP
OF
BRANDYWINE OPERATING PARTNERSHIP, L.P.
This Amendment No. 3 dated May 23, 1997 to Agreement of
Limited Partnership dated August 22, 1996, as amended by Amendment No. 1 dated
November 6, 1996 and Amendment No. 2 dated December 18, 1996, by and among
BRANDYWINE REALTY TRUST, a Maryland real estate investment trust as general
partner (the "General Partner"), and the PERSONS NAMED IN EXHIBIT "A" attached
hereto, as limited partners (the "Limited Partners"). The General Partner and
the Limited Partners are sometimes referred to individually as a "Partner" and
collectively as the "Partners".
BACKGROUND
A. The General Partner and the Limited Partners have entered
into an Agreement of Limited Partnership of Brandywine Operating Partnership,
L.P. dated August 22, 1996, as amended by Amendment No. 1 dated November 6, 1996
and Amendment No. 2 dated December 18, 1996, (the "Partnership Agreement").
Capitalized terms not defined herein shall have the meanings given to such terms
in the Partnership Agreement.
B. The General Partner and the Limited Partners desire to
amend the Partnership Agreement as provided in this Amendment No. 3 to the
Partnership Agreement.
Accordingly, intending to be legally bound, the parties hereto
agree as follows:
1. The last sentence of Section 3.2(a), which reads
"Otherwise, no additional Class A Units may be issued" is hereby deleted.
2. No Other Amendments. This Amendment does not amend the
Partnership Agreement in any respect except as expressly provided herein, and
the Partnership Agreement, as amended by this Amendment No. 3, shall continue in
full force and effect after the date hereof in accordance with its terms.
<PAGE>
3. Effective Time of Amendment. This Amendment No. 3 shall
become effective as of May 23, 1997 upon the execution and delivery of this
Amendment No. 3 by the General Partner, and the holders of 75% or more of the
outstanding Class A Units (as of the date of this Amendment).
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement or caused this Agreement to be executed as of the date and year first
above written.
GENERAL PARTNER:
BRANDYWINE REALTY TRUST
By: /s/ Gerard H. Sweeney
- --------------- --------------------------------------
Name: Gerard H. Sweeney
President
CLASS A LIMITED PARTNERS:
Safeguard Scientifics (Delaware), Inc.
By: /s/ Gerald Wilk
- --------------- --------------------------------------
Name: Gerald Wilk
Title: Vice President
THE NICHOLS COMPANY
By: /s/ Anthony A. Nichols
- --------------- --------------------------------------
Anthony A. Nichols, President
/s/ Brian Belcher
- --------------- -----------------------------------------
Brian Belcher
<PAGE>
NOTE
(Credit Facility)
$35,000,000.00 New York, New York
As of May 30, 1997
FOR VALUE RECEIVED, Brandywine Realty Trust, a Maryland real
estate investment trust, and Brandywine Operating Partnership, L.P., a Delaware
limited partnership, both having an office at Newtown Square Corporate Campus,
16 Campus Boulevard, Suite 150, Newtown Square, Pennsylvania (hereinafter
collectively referred to as "Maker"), promise to pay NationsBank, N.A., a
national banking association having an office at 8300 Greensboro Drive, McLean,
Virginia (hereinafter referred to as "Payee") or order, at such place as may be
designated from time to time in writing by Payee, the principal sum of Thirty
Five Million and 00/100 Dollars ($35,000,000.00) in lawful money of the United
States of America, or so much thereof as may be advanced by Payee to Maker and
be outstanding from time to time in accordance with the provisions of the Credit
Agreement, with interest thereon from and including the date of this Note to,
but not including, the date this Note is paid in full, calculated in the manner
hereinafter set forth, as follows:
(i) interest on the Principal Balance calculated in the manner set
forth in the Credit Agreement shall be due and payable in Federal funds or
other immediately available funds on each Interest Payment Date during the
term of this Note and otherwise in accordance with the provisions of the
Credit Agreement; and
(ii) the entire Principal Balance, together with all interest
accrued and unpaid thereon calculated in the manner set forth in the Credit
Agreement and all other sums due under this Note, shall be due and payable
on the Maturity Date and otherwise in accordance with the provisions of the
Credit Agreement.
1. The term "Credit Agreement" as used in this Note means a
certain Credit Agreement dated as of the date hereof entered into among Smith
Barney Mortgage Capital Group, Inc., NationsBank, N.A., in its individual
capacity, Maker and NationsBank, N.A., acting in its capacity as administrative
and documentation agent for the Credit Facility, and pursuant to the provisions
of which the Credit Facility is being extended by Co-Lenders to Maker. This Note
constitutes one of the Credit Facility Notes which have been executed and
delivered by Maker to Co-Lenders in accordance with the Credit Agreement and
which together evidence the Credit Facility. All other capitalized terms used in
this Note shall, unless otherwise defined in this Note, have the meaning given
to such term in the Credit Agreement.
2. It is hereby expressly agreed that the entire Debt shall become
immediately due and payable at the option of Co-Lenders on the happening of any
Event of Default.
3. All of the terms, covenants and provisions contained in the
Credit Agreement and the other Credit Facility Documents which are to be kept
and performed by Maker are hereby made part of this Note to the same extent and
with the same force and effect as if they were fully set forth herein.
<PAGE>
Maker agrees to perform and comply with each of the terms, covenants and
provisions contained in this Note, the Credit Agreement and the other Credit
Facility Documents on the part of Maker to be observed and performed.
4. If any installment of interest payable under this Note is not
paid when due, Maker shall pay to Administrative Agent upon demand an amount
equal to four percent (4%) of such unpaid installment as a late payment charge.
5. In addition to any late payment charge which may be due under
this Note, if the Debt is declared immediately due and payable pursuant to the
provisions of the Credit Facility Documents, or if the Debt is not paid in full
on the Maturity Date, Maker shall thereafter pay interest on the then entire
outstanding Principal Balance from the date of such declaration or the Maturity
Date, as the case may be, until the date the Principal Balance is paid in full,
at the Default Rate. In addition, if an Event of Default shall occur, the
Principal Balance shall, from and including the date upon which such Event of
Default has occurred and for so long as such Event of Default continues and
without further act or instrument and without the necessity of any further or
prior notice by Payee or Agent to Maker, bear interest at the Default Rate
irrespective of whether the Debt shall have been declared to be immediately due
and payable as the result of the occurrence of such Event of Default.
6. Maker hereby waives presentment and demand for payment, notice
of dishonor, protest and notice of protest of this Note. If any payment under
this Note is not made when due, Maker agrees to pay all costs of collection when
incurred, including reasonable attorneys' fees (which costs shall be added to
the amount due under this Note and shall be receivable therewith). No release of
any security for the payment of this Note or extension of time for payment of
this Note, or any installment hereof, and no alteration, amendment or waiver of
any provision of this Note or any of the other Credit Facility Documents made by
agreement between or among Co-Lenders, Agent and/or Payee and any other person
or party shall release, discharge, modify, change or affect the liability of
Maker under this Note or any of the other Credit Facility Documents.
7. This Note is subject to the express condition that at no time
shall Maker be obligated or required to pay interest on the Principal Balance at
a rate which could subject Payee to either civil or criminal liability as a
result of being in excess of the maximum rate which Maker is permitted by law to
contract or agree to pay. If by the terms of this Note Maker is at any time
required or obligated to pay interest on the Principal Balance at a rate in
excess of such maximum rate, the rate of interest under this Note shall be
deemed to be immediately reduced to such maximum rate and interest payable
hereunder shall be computed at such maximum rate and the portion of all prior
interest payments in excess of such maximum rate shall be applied and shall be
deemed to have been payments in reduction of the Principal Balance.
8. If Maker consists of more than one person or party, the
obligations and liabilities of each such person or party hereunder shall be
joint and several.
9. Except as otherwise specifically provided to the contrary in
the Credit Facility Documents, this Note is secured on a pari passu basis with
the other Credit Facility Notes by the Mortgages and the other Credit Facility
Documents.
-2-
<PAGE>
10. The terms of this Note shall be governed by and construed
under the laws of the State of New York.
11. This Note may only be modified, amended, changed or terminated
by an agreement in writing signed by Payee, Agent and Maker. No waiver of any
term, covenant or provision of this Note shall be effective unless given in
writing by Payee and Agent and if so given by Payee and Agent shall only be
effective in the specific instance in which given.
12. Maker acknowledges that this Note and Maker's obligations
under this Note are and shall at all times continue to be absolute and
unconditional in all respects, and shall at all times be valid and enforceable
irrespective of any other agreements or circumstances of any nature whatsoever
which might otherwise constitute a defense (other than a defense of payment) to
this Note and the obligations of Maker under this Note or the obligations of any
other person or party relating to this Note or the obligations of Maker
hereunder or otherwise with respect to the Credit Facility. Maker absolutely,
unconditionally and irrevocably waives any and all right to assert any defense,
setoff, counterclaim (other than a compulsory counterclaim in a court of
competent jurisdiction) or crossclaim of any nature whatsoever with respect to
this Note or the obligations of Maker under this Note or the obligations of any
other person or party relating to this Note or the obligations of Maker
hereunder or otherwise with respect to the Credit Facility in any action, case
or proceeding brought by Payee or Agent to collect the Debt, or any portion
thereof, or to enforce, foreclose and realize upon the liens and security
interests created by the Mortgages and the other Credit Facility Documents
(provided, however, that the foregoing provisions of this sentence shall not be
deemed a waiver of the right of Maker to assert any compulsory counterclaim in
any such action, case or proceeding brought by Payee or Agent in any state court
if such counterclaim is compelled under local law or rule or procedure, or in
any such action, case or proceeding brought by Payee or Agent in a court of the
United States, nor shall the foregoing provisions of this sentence be deemed a
waiver of the right of Maker to assert any claim which would otherwise
constitute a defense, setoff, counterclaim or crossclaim of any nature
whatsoever against Payee or Agent in any separate action, case or proceeding
brought by Maker against Payee or Agent). MAKER ACKNOWLEDGES THAT NO ORAL OR
OTHER AGREEMENTS, UNDERSTANDINGS, REPRESENTATIONS OR WARRANTIES EXIST WITH
RESPECT TO THIS NOTE OR WITH RESPECT TO THE OBLIGATIONS OF MAKER UNDER THIS
NOTE, EXCEPT THOSE SPECIFICALLY SET FORTH IN THIS NOTE AND THE OTHER CREDIT
FACILITY DOCUMENTS, AND THAT THIS NOTE AND THE OTHER CREDIT FACILITY DOCUMENTS
SET FORTH THE ENTIRE AGREEMENT AND UNDERSTANDING OF PAYEE, AGENT, CO-LENDERS AND
MAKER.
13. No delay on the part of Payee, Agent or Co-Lenders in
exercising any right or remedy under this Note or the other Credit Facility
Documents or failure to exercise the same shall operate as a waiver in whole or
in part of any such right or remedy. No notice to or demand on Maker shall be
deemed to be a waiver of the obligation of Maker or of the right of Payee, Agent
or Co-Lender to take further action without further notice or demand as provided
in this Note and the other Credit Facility Documents.
14. Maker agrees to submit to personal jurisdiction in the State
of New York in any action, case or proceeding arising out of this Note and, in
furtherance of such agreement, Maker hereby agrees and consents that without
limiting other methods of obtaining jurisdiction, personal jurisdiction over
Maker in any such action, case or proceeding may be obtained within or without
the jurisdiction of any court located in New York and that any process or notice
of motion or other application to any such court in connection with any
-3-
<PAGE>
such action, case or proceeding may be served upon Maker by registered or
certified mail to or by personal service at the last known address of Maker,
whether such address be within or without the jurisdiction of any such court.
Maker also agrees that the venue of any litigation arising in connection with
the Debt or in respect of any of the obligations of Maker under this Note shall,
to the extent permitted by law, be in New York County.
15. Maker (and the undersigned representative of Maker, if any)
represents that Maker has full power, authority and legal right to execute and
deliver this Note and that this Note constitutes a valid and binding obligation
of Maker.
16. MAKER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, AND PAYEE
BY ITS ACCEPTANCE OF THIS NOTE IRREVOCABLY AND UNCONDITIONALLY WAIVES, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, CASE, PROCEEDING, SUIT OR COUNTERCLAIM
ARISING IN CONNECTION WITH, OUT OF OR OTHERWISE RELATING TO THE CREDIT FACILITY,
THIS NOTE, OR THE OTHER CREDIT FACILITY DOCUMENTS.
17. Whenever used, the singular number shall include the plural,
the plural the singular, and the words "Payee", "Agent", "Co-Lenders", and
"Maker" shall include their respective successors and assigns, provided,
however, that Maker shall in no event or under any circumstance have the right
without obtaining the prior written consent of Co-Lenders to assign or transfer
its obligations under this Note or the other Credit Facility Documents, in whole
or in part, to any other person, party or entity.
18. No recourse shall be had for any obligation of BRT under this
Note or any of the other Credit Facility Documents or for any claim based
thereon or otherwise in respect thereof, against any past, present or future
trustee, shareholder, officer or employee of BRT, 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 Payee and
each other party to this Note and the other Credit Facility Documents.
IN WITNESS WHEREOF, Maker has duly executed this Note the day and
year first above written.
BRANDYWINE REALTY TRUST
By: /s/ Gerard H. Sweeney
------------------------------------------
Name: Gerard H. Sweeney
Title: President and Chief
Executive Officer
BRANDYWINE OPERATING PARTNERSHIP, L.P.
By: Brandywine Realty Trust, a Maryland
real estate investment trust, its
general partner
By: /s/ Gerard H. Sweeney
--------------------------------------
Name: Gerard H. Sweeney
Title: President and Chief
Executive Officer
-4-
<PAGE>
NOTE
(Credit Facility)
$35,000,000.00 New York, New York
As of May 30, 1997
FOR VALUE RECEIVED, Brandywine Realty Trust, a Maryland real
estate investment trust, and Brandywine Operating Partnership, L.P., a Delaware
limited partnership, both having an office at Newtown Square Corporate Campus,
16 Campus Boulevard, Suite 150, Newtown Square, Pennsylvania (hereinafter
collectively referred to as "Maker"), promise to pay Smith Barney Mortgage
Capital Group, Inc., a Delaware corporation having an office at 390 Greenwich
Street, New York, New York (hereinafter referred to as "Payee") or order, at
such place as may be designated from time to time in writing by Payee, the
principal sum of Thirty-Five Million and 00/100 Dollars ($35,000,000.00) in
lawful money of the United States of America, or so much thereof as may be
advanced by Payee to Maker and be outstanding from time to time in accordance
with the provisions of the Credit Agreement, with interest thereon from and
including the date of this Note to, but not including, the date this Note is
paid in full, calculated in the manner hereinafter set forth, as follows:
(i) interest on the Principal Balance calculated in the manner set
forth in the Credit Agreement shall be due and payable in Federal funds or other
immediately available funds on each Interest Payment Date during the term of
this Note and otherwise in accordance with the provisions of the Credit
Agreement; and
(ii) the entire Principal Balance, together with all interest
accrued and unpaid thereon calculated in the manner set forth in the Credit
Agreement and all other sums due under this Note, shall be due and payable on
the Maturity Date and otherwise in accordance with the provisions of the Credit
Agreement.
1. The term "Credit Agreement" as used in this Note means a
certain Credit Agreement dated as of the date hereof entered into among Smith
Barney Mortgage Capital Group, Inc., NationsBank, N.A., in its individual
capacity, Maker and NationsBank, N.A., acting in its capacity as administrative
and documentation agent for the Credit Facility, and pursuant to the provisions
of which the Credit Facility is being extended by Co-Lenders to Maker. This Note
constitutes one of the Credit Facility Notes which have been executed and
delivered by Maker to Co-Lenders in accordance with the Credit Agreement and
which together evidence the Credit Facility. All other capitalized terms used in
this Note shall, unless otherwise defined in this Note, have the meaning given
to such term in the Credit Agreement.
2. It is hereby expressly agreed that the entire Debt shall become
immediately due and payable at the option of Co-Lenders on the happening of any
Event of Default.
3. All of the terms, covenants and provisions contained in the
Credit Agreement and the other Credit Facility Documents which are to be kept
and performed by Maker are hereby made part of this Note to the same extent
<PAGE>
and with the same force and effect as if they were fully set forth herein. Maker
agrees to perform and comply with each of the terms, covenants and provisions
contained in this Note, the Credit Agreement and the other Credit Facility
Documents on the part of Maker to be observed and performed.
4. If any installment of interest payable under this Note is not
paid when due, Maker shall pay to Administrative Agent upon demand an amount
equal to four percent (4%) of such unpaid installment as a late payment charge.
5. In addition to any late payment charge which may be due under
this Note, if the Debt is declared immediately due and payable pursuant to the
provisions of the Credit Facility Documents, or if the Debt is not paid in full
on the Maturity Date, Maker shall thereafter pay interest on the then entire
outstanding Principal Balance from the date of such declaration or the Maturity
Date, as the case may be, until the date the Principal Balance is paid in full,
at the Default Rate. In addition, if an Event of Default shall occur, the
Principal Balance shall, from and including the date upon which such Event of
Default has occurred and for so long as such Event of Default continues and
without further act or instrument and without the necessity of any further or
prior notice by Payee or Agent to Maker, bear interest at the Default Rate
irrespective of whether the Debt shall have been declared to be immediately due
and payable as the result of the occurrence of such Event of Default.
6. Maker hereby waives presentment and demand for payment, notice
of dishonor, protest and notice of protest of this Note. If any payment under
this Note is not made when due, Maker agrees to pay all costs of collection when
incurred, including reasonable attorneys' fees (which costs shall be added to
the amount due under this Note and shall be receivable therewith). No release of
any security for the payment of this Note or extension of time for payment of
this Note, or any installment hereof, and no alteration, amendment or waiver of
any provision of this Note or any of the other Credit Facility Documents made by
agreement between or among Co-Lenders, Agent and/or Payee and any other person
or party shall release, discharge, modify, change or affect the liability of
Maker under this Note or any of the other Credit Facility Documents.
7. This Note is subject to the express condition that at no time
shall Maker be obligated or required to pay interest on the Principal Balance at
a rate which could subject Payee to either civil or criminal liability as a
result of being in excess of the maximum rate which Maker is permitted by law to
contract or agree to pay. If by the terms of this Note Maker is at any time
required or obligated to pay interest on the Principal Balance at a rate in
excess of such maximum rate, the rate of interest under this Note shall be
deemed to be immediately reduced to such maximum rate and interest payable
hereunder shall be computed at such maximum rate and the portion of all prior
interest payments in excess of such maximum rate shall be applied and shall be
deemed to have been payments in reduction of the Principal Balance.
8. If Maker consists of more than one person or party, the
obligations and liabilities of each such person or party hereunder shall be
joint and several.
9. Except as otherwise specifically provided to the contrary in
the Credit Facility Documents, this Note is secured on a pari passu basis with
the other Credit Facility Notes by the Mortgages and the other Credit Facility
Documents.
-2-
<PAGE>
10. The terms of this Note shall be governed by and construed
under the laws of the State of New York.
11. This Note may only be modified, amended, changed or terminated
by an agreement in writing signed by Payee, Agent and Maker. No waiver of any
term, covenant or provision of this Note shall be effective unless given in
writing by Payee and Agent and if so given by Payee and Agent shall only be
effective in the specific instance in which given.
12. Maker acknowledges that this Note and Maker's obligations
under this Note are and shall at all times continue to be absolute and
unconditional in all respects, and shall at all times be valid and enforceable
irrespective of any other agreements or circumstances of any nature whatsoever
which might otherwise constitute a defense (other than a defense of payment) to
this Note and the obligations of Maker under this Note or the obligations of any
other person or party relating to this Note or the obligations of Maker
hereunder or otherwise with respect to the Credit Facility. Maker absolutely,
unconditionally and irrevocably waives any and all right to assert any defense,
setoff, counterclaim (other than a compulsory counterclaim in a court of
competent jurisdiction) or crossclaim of any nature whatsoever with respect to
this Note or the obligations of Maker under this Note or the obligations of any
other person or party relating to this Note or the obligations of Maker
hereunder or otherwise with respect to the Credit Facility in any action, case
or proceeding brought by Payee or Agent to collect the Debt, or any portion
thereof, or to enforce, foreclose and realize upon the liens and security
interests created by the Mortgages and the other Credit Facility Documents
(provided, however, that the foregoing provisions of this sentence shall not be
deemed a waiver of the right of Maker to assert any compulsory counterclaim in
any such action, case or proceeding brought by Payee or Agent in any state court
if such counterclaim is compelled under local law or rule or procedure, or in
any such action, case or proceeding brought by Payee or Agent in a court of the
United States, nor shall the foregoing provisions of this sentence be deemed a
waiver of the right of Maker to assert any claim which would otherwise
constitute a defense, setoff, counterclaim or crossclaim of any nature
whatsoever against Payee or Agent in any separate action, case or proceeding
brought by Maker against Payee or Agent). MAKER ACKNOWLEDGES THAT NO ORAL OR
OTHER AGREEMENTS, UNDERSTANDINGS, REPRESENTATIONS OR WARRANTIES EXIST WITH
RESPECT TO THIS NOTE OR WITH RESPECT TO THE OBLIGATIONS OF MAKER UNDER THIS
NOTE, EXCEPT THOSE SPECIFICALLY SET FORTH IN THIS NOTE AND THE OTHER CREDIT
FACILITY DOCUMENTS, AND THAT THIS NOTE AND THE OTHER CREDIT FACILITY DOCUMENTS
SET FORTH THE ENTIRE AGREEMENT AND UNDERSTANDING OF PAYEE, AGENT, CO-LENDERS AND
MAKER.
13. No delay on the part of Payee, Agent or Co-Lenders in
exercising any right or remedy under this Note or the other Credit Facility
Documents or failure to exercise the same shall operate as a waiver in whole or
in part of any such right or remedy. No notice to or demand on Maker shall be
deemed to be a waiver of the obligation of Maker or of the right of Payee, Agent
or Co-Lender to take further action without further notice or demand as provided
in this Note and the other Credit Facility Documents.
14. Maker agrees to submit to personal jurisdiction in the State
of New York in any action, case or proceeding arising out of this Note and, in
furtherance of such agreement, Maker hereby agrees and consents that without
limiting other methods of obtaining jurisdiction, personal jurisdiction over
Maker in any such action, case or proceeding may be obtained within or without
the jurisdiction of any court located in New York and that any process or notice
of motion or other application to any such court in connection with any
-3-
<PAGE>
such action, case or proceeding may be served upon Maker by registered or
certified mail to or by personal service at the last known address of Maker,
whether such address be within or without the jurisdiction of any such court.
Maker also agrees that the venue of any litigation arising in connection with
the Debt or in respect of any of the obligations of Maker under this Note shall,
to the extent permitted by law, be in New York County.
15. Maker (and the undersigned representative of Maker, if any)
represents that Maker has full power, authority and legal right to execute and
deliver this Note and that this Note constitutes a valid and binding obligation
of Maker.
16. MAKER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, AND PAYEE
BY ITS ACCEPTANCE OF THIS NOTE IRREVOCABLY AND UNCONDITIONALLY WAIVES, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, CASE, PROCEEDING, SUIT OR COUNTERCLAIM
ARISING IN CONNECTION WITH, OUT OF OR OTHERWISE RELATING TO THE CREDIT FACILITY,
THIS NOTE, OR THE OTHER CREDIT FACILITY DOCUMENTS.
17. Whenever used, the singular number shall include the plural,
the plural the singular, and the words "Payee", "Agent", "Co-Lenders", and
"Maker" shall include their respective successors and assigns, provided,
however, that Maker shall in no event or under any circumstance have the right
without obtaining the prior written consent of Co-Lenders to assign or transfer
its obligations under this Note or the other Credit Facility Documents, in whole
or in part, to any other person, party or entity.
18. No recourse shall be had for any obligation of BRT under this
Note or any of the other Credit Facility Documents or for any claim based
thereon or otherwise in respect thereof, against any past, present or future
trustee, shareholder, officer or employee of BRT, 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 Payee and
each other party to this Note and the other Credit Facility Documents.
IN WITNESS WHEREOF, Maker has duly executed this Note the day and
year first above written.
BRANDYWINE REALTY TRUST
By: /s/ Gerard H. Sweeney
------------------------
Name: Gerard H. Sweeney
Title: President and Chief
Executive Officer
BRANDYWINE OPERATING PARTNERSHIP, L.P.
By: Brandywine Realty Trust, a Maryland
real estate investment trust, its
general partner
By: /s/ Gerard H. Sweeney
-------------------------------
Name: Gerard H. Sweeney
Title: President and Chief
Executive Officer
-4-
<PAGE>
================================================================================
CREDIT AGREEMENT
Dated: As of May 30, 1997
================================================================================
This Instrument Prepared by:
Dean A. Stiffle, Esq.
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
<PAGE>
TABLE OF CONTENTS
Page
------
1. Definitions........................................................... 1
2. Credit Facility....................................................... 1
3. Maturity Date......................................................... 2
4. Use of Proceeds and Maximum Amount Available.......................... 3
5. Advance of the Credit Facility........................................ 3
6. Condition to Advances................................................. 3
7. Collateral............................................................ 4
8. New Debt or Equity Offering........................................... 4
9. Restrictions on Transfer and Further Encumbrance...................... 4
10. Commitment Fee........................................................ 5
11. Loan to Value Requirement............................................. 5
12. Representations and Warranties........................................ 5
13. Covenants.............................................................12
14. Recourse Obligations..................................................18
15. Right of Entry........................................................18
16. Books and Records.....................................................18
17. Taxes.................................................................19
18. Insurance Coverage....................................................19
19. Condemnation..........................................................21
20. Environmental Provisions..............................................21
21. Estoppel Certificates.................................................24
22. Non-Waiver............................................................24
23. Sole Discretion.......................................................25
24. Absolute and Unconditional Obligation.................................25
25. Relationship..........................................................26
26. Anti-Forfeiture.......................................................26
27. Deposits..............................................................26
-i-
<PAGE>
28. Submission to Jurisdiction............................................27
29. Retention of Counsel and Consultants..................................27
30. Waiver of Notice......................................................27
31. Events of Default.....................................................27
32. Application of Moneys.................................................30
33. Right to Cure Defaults................................................31
34. Further Assurances....................................................31
35. Costs and Expenses....................................................31
36. Indemnification of Agent and Co-Lenders...............................31
37. Construction of Agreement.............................................31
38. Parties Bound, etc....................................................32
39. Complete Agreement....................................................32
40. Governing Law.........................................................32
41. Severability..........................................................32
42. Notices...............................................................32
43. Modification..........................................................33
44. Waivers...............................................................33
45. WAIVER OF TRIAL BY JURY...............................................33
46. Borrowers' Reliance on Agent's Authority..............................33
47. Authorized Representatives of BRT.....................................34
48. Exculpation...........................................................34
Exhibit A Definition if Certain Terms
Exhibit B Credit Facility Payment Provisions
Exhibits C-1
and C-2 Form of Credit Facility Notes
Exhibit D Form of Request for Advance under Credit Facility
Exhibit D-1 Conditions for Inclusion of Additional Properties
Exhibit E Properties
Exhibit F Form of Pennsylvania Mortgage
Exhibit G Form of New Jersey Mortgage
Exhibit H Form of Assignment of Leases and Rents
-ii-
<PAGE>
Exhibit I Form of Guaranty of Payment
Exhibit J Form of Hazardous Material Guaranty and Indemnification
Agreement
Exhibit K Insurance Requirements
Schedule 1 Litigation
Schedule 2 Space Leases
Schedule 3 Other Leases
Schedule 4 Environmental Reports for Properties
-iii-
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT made as of the 30th day of May,
1997, among Smith Barney Mortgage Capital Group, Inc. ("Smith Barney"), a
Delaware corporation having an office at 390 Greenwich Street, New York, New
York; NationsBank, N.A. ("NationsBank"), a national banking corporation having
an office at 8300 Greensboro Drive, McLean, Virginia, acting in its individual
capacity (Smith Barney and NationsBank are hereinafter collectively referred to
as "Co-Lenders"); Brandywine Realty Trust ("BRT"), a Maryland real estate
investment trust having an office at Newtown Square Corporate Campus, 16 Campus
Boulevard, Suite 150, Newtown Square, Pennsylvania; Brandywine Operating
Partnership, L.P. ("BOP"), a Delaware limited partnership having an office at
Newtown Square Corporate Campus, 16 Campus Boulevard, Suite 150, Newtown Square,
Pennsylvania (BRT and BOP are hereinafter collectively referred to as
"Borrowers"); and NationsBank, N.A., a national banking association having an
office at 8300 Greensboro Drive, McLean, Virginia, acting in its capacity as
administrative and documentation agent (NationsBank, N.A., acting in its
capacity as administrative and documentation agent, or any successor
administrative and documentation agent being so designated being hereinafter
referred to as "Agent").
PRELIMINARY STATEMENT
Co-Lenders have agreed on the terms, covenants and
provisions of this Agreement hereinafter set forth to extend to Borrowers a
credit facility in the principal sum of up to, but not in excess of, $70,000,000
(the "Credit Facility").
NOW, THEREFORE, in consideration of Ten Dollars
($10.00) and other good and valuable consideration, the receipt of which is
hereby acknowledged, and to induce Co-Lenders to extend the Credit Facility,
Borrowers hereby represent and warrant to and covenant and agree with Co-Lenders
as follows:
1. Definitions. All capitalized terms as used in this
Agreement shall, unless otherwise defined in this Agreement, have the meanings
given to such terms in Exhibit A attached hereto.
2. Credit Facility. The Credit Facility shall be
advanced by Co-Lenders to Borrowers in accordance with the provisions of this
Agreement hereinafter set forth, and shall be evidenced by, and payable,
together with interest thereon, in accordance with the provisions of the Credit
Facility Notes and Exhibit B attached hereto. Except as specifically provided
for to
-1-
<PAGE>
the contrary in the Co-Lenders Agreement from time to time, the Credit Facility
Notes (the forms of which are attached hereto as Exhibits C-1 and C- 2) shall be
secured on a pari passu basis with each other inter alia by the Mortgages and
the Assignments of Leases and Rents. Payments under the Credit Facility must be
received by Agent prior to 12:00 noon, Charlotte, North Carolina time, for
Borrowers to receive credit for such payment that day. The respective undivided
percentage interests (the "Credit Facility Percentage Interests") held by
Co-Lenders in the Credit Facility on the date of this Agreement are as follows:
Percentage
Amount Interest
--------- ----------
Smith Barney $35,000,000 50%
NationsBank $35,000,000 50%
Each Co-Lender shall be obligated to fund a portion of each advance made under
the Credit Facility in accordance with the provisions of this Agreement which is
equal to the amount of each such advance multiplied by such Co-Lender's
undivided Credit Facility Percentage Interest. Borrowers expressly acknowledge
and agree that (i) each Co-Lender directly assumes the obligation to fund, and
shall have the sole obligation to fund, its Credit Facility Percentage Interest
in each advance of the Credit Facility which is made, or required to be made, by
Co-Lenders in accordance with the provisions of this Agreement, (ii) the
obligations and liabilities of Co-Lenders in respect of the Credit Facility are
several obligations and liabilities and not joint and several obligations and
liabilities of Co-Lenders, (iii) Borrowers shall not have the right under any
fact or circumstance to look to any other party, including, without limitation,
any other Co-Lender, for the funding of the portion of the Credit Facility which
is required to be funded by a particular Co-Lender in accordance with the
provisions of this Agreement if such Co-Lender shall default in doing so, all
risk of such default being assumed in all respects by Borrowers, (iv) the
respective rights and obligations of Co-Lenders vis-a-vis one another
(including, without limitation, voting and approval rights), shall be as set
forth in the Co-Lenders Agreement, and (v) Borrowers shall not have the right to
examine or receive a copy of the Co-Lenders Agreement. Subject to the terms and
provisions contained therein, the Co-Lenders Agreement provides, among other
things, that without the unanimous consent of Co-Lenders, (i) no Collateral may
be released other than in accordance with the express provisions of the Credit
Facility Documents, (ii) neither Borrowers nor any Guarantor may be released
from liability under the Credit Facility Documents, (iii) neither the interest
rate nor any other fees or charges payable under the Credit Facility Documents
may be changed or modified. Borrowers acknowledge and agree that (i) the voting
and approval rights of Co-Lenders are for illustrative purposes only and do not
constitute a complete or exhaustive list of decisions upon which Co-Lenders may
exercise voting and approval rights, or of the authority of Agent, in respect of
the
-2-
<PAGE>
Credit Facility; provided, however, that Borrowers shall have the right to rely
on the advice of Agent as to any action taken or not taken by Co-Lenders or as
to any approval given or not given by Co-Lenders or as to the authority of
Agent, all as more particularly set forth in paragraph 46 of this Agreement,
(ii) the aforesaid voting and approval rights of Co-Lenders and authority of
Agent may at any time subsequent to the closing of the Credit Facility (and
without prior notice to or approval by Borrowers) be modified by Co-Lenders
either (x) in accordance with the provisions of the Co-Lenders Agreement, or (y)
otherwise in the sole and absolute discretion of Co-Lenders, and to the extent
pertaining to Agent, with the approval of Agent, and (iii) Borrowers shall in no
event or under any circumstances have any right to review, approve or consent to
any modification or amendment to the Co-Lenders Agreement, all of which may be
made without any notice to or approval by Borrowers, in the sole and absolute
discretion of Co-Lenders. Agent shall promptly inform Borrowers of any such
change in the voting and approval rights of Co-Lenders or in the authority of
Agent, it being agreed that (i) any failure by Agent to so notify Borrowers
shall not prevent any such change in voting and approval rights of Co-Lenders or
in the authority of Agent from becoming effective, and (ii) neither Agent nor
Co-Lenders shall in any event have any liability of any nature whatsoever to
Borrowers for any failure by Agent to so notify Borrowers.
3. Maturity Date. The Credit Facility shall mature and
shall be payable in full on July 30, 1997 (the "Maturity Date"). Co-Lenders
shall have no obligation to make any advance under the Credit Facility
subsequent to July 30, 1997.
4. Use of Proceeds and Maximum Amount Available. The
Credit Facility shall be available solely to finance the acquisition by
Borrowers of the Pending Properties and Additional Properties. The inclusion of
Additional Properties in the collateral pool for the Credit Facility shall be at
the option of Borrowers, and the acceptance of the same for inclusion in the
Credit Facility shall be subject to satisfaction of the conditions set forth in
paragraph 6A of this Agreement. Each time there is a change in the maximum
amount available under the Credit Facility as a result of the acceptance and
inclusion of a Pending Property or an Additional Property as part of the
collateral pool for the Credit Facility in accordance with the provisions of
paragraph 6A of this Agreement, a reduction in the outstanding Principal Balance
of the Credit Facility in order to restore compliance with one or more of the
financial covenants set forth in paragraph 11 and paragraph 13 of this
Agreement, or as a result of any other fact or circumstance or the application
of any other provisions set forth in this Agreement or the other Credit Facility
Documents, Agent shall prepare (on behalf of Co-Lenders) and shall deliver to
Co-Lenders and Borrowers a statement setting forth the change in the maximum
amount available under the Credit Facility and the manner in which such change
and such adjusted maximum amount available under the Credit Facility were
calculated, which statement shall be promptly acknowledged and confirmed by
Borrowers and Co-Lenders, shall be conclusive and binding upon Borrowers absent
manifest error, and shall remain in effect until the next such statement is
prepared and circulated by Agent.
5. Advance of the Credit Facility. Co-Lenders shall not
be obligated to make an advance under the Credit Facility unless Co-Lenders are
satisfied that the conditions precedent for the making of such advance under the
Credit Facility as set forth in this Agreement and the other Credit
-3-
<PAGE>
Facility Documents have been satisfied. Borrowers shall not have the right
(other than as provided in the next sentence) to obtain more than one advance
per month under the Credit Facility. Notwithstanding the foregoing, Borrowers
shall have the right to obtain more than one advance under the Credit Facility
per month if such additional advance is being made solely in connection with the
acquisition of a Pending Property or an Additional Property. Each request by
Borrowers for an advance under the Credit Facility shall be in writing to Agent,
shall be for an amount not less than $3,000,000 (except with respect to the last
remaining available advance under the Credit Facility), shall specify the
purposes for which such advance is requested (which purposes shall be limited to
the permitted purposes set forth in paragraph 4 of this Agreement), shall in
each case be signed by a duly authorized representative of Borrowers and shall
be in the form attached hereto as Exhibit D (a "Request for Advance"). Each
Request for Advance shall be delivered to Agent not less than five (5) business
days prior to the date upon which such advance is requested. Co-Lenders shall
not be obligated to make an advance under the Credit Facility unless Borrowers
have delivered, or caused to be delivered, to Agent a Request for Advance at
least five (5) business days prior to the date upon which such advance is
requested. Co-Lenders shall not readvance any portion of the Credit Facility
which is paid.
6. Condition to Advances. Co-Lenders' obligation to
make each advance under the Credit Facility shall be subject to satisfaction of
each of the following additional conditions:
(i) No default shall have occurred and shall be
continuing under the Credit Facility Documents.
(ii) All affirmative and negative covenants and
representations and warranties contained in this
Agreement and the other Credit Facility Documents and
all of the other terms, covenants and conditions
contained in the Credit Facility Documents shall
continue to be complied with both before and after the
making of each advance under the Credit Facility.
(iii) Agent shall be satisfied that each of the title
insurance policies insuring the respective liens of the
Mortgages will subsequent to the making of each advance
under the Credit Facility continue to insure the
respective liens of the Mortgages as first liens
(subject only to the Permitted Title Exceptions) on
each of the Properties constituting part of the
collateral pool for the Credit Facility for an amount
equal to the Credit Facility Outstanding after the
making of each such advance under the Credit Facility,
it being the intent that the respective liens of the
Mortgages will at all times be insured as first liens
on the Properties from time to time constituting part
of the collateral pool for the Credit Facility for an
amount which is at all times at least equal to the
Credit Facility Outstanding from time to time and
subject only to the Permitted Title Exceptions. In this
regard, Borrowers shall be obligated as a condition
precedent to each advance under the Credit Facility to
deliver to Agent such continuations of title and
endorsement to the title insurance policies insuring
the respective liens of the Mortgages as may be
-4-
<PAGE>
reasonably required by Co-Lenders to evidence
compliance with the provisions of this subparagraph.
(iv) All of the other terms and conditions set forth in
this Agreement and the other Credit Facility Documents
pertaining to advances of the Credit Facility shall
have been satisfied.
6A. Additional Properties. From time to time after the
date hereof, Borrowers shall have the right to request that one or more
Additional Properties be included in the collateral pool for the Credit
Facility. If Borrowers wish to submit an Additional Property for inclusion in
the collateral pool for the Credit Facility, Borrowers shall notify Agent in
writing of their desire to do so at least forty five (45) days prior to the date
upon which Borrowers wish to include such Additional Property in the collateral
pool for the Credit Facility, and shall at Borrowers' sole cost and expense
cause all of the terms and conditions more particularly set forth in Exhibit D-1
attached hereto to be satisfied with respect to the Additional Property, all
with the same force and effect as if the Additional Property had constituted
part of the original collateral pool for the Credit Facility. An Additional
Property shall not be included in the collateral pool for the Credit Facility
unless (i) all of the aforesaid terms and conditions are met to the satisfaction
of Co-Lenders, (ii) the Additional Property shall in the opinion of Co-Lenders
be at least comparable in quality to the Initial Properties, (iii) all of the
affirmative and negative covenants and all of the representations and warranties
contained in this Agreement and the other Credit Facility Documents and all of
the other terms, covenants and provisions of the Credit Facility Documents shall
continue to be complied with after the inclusion of the Additional Property in
the collateral pool for the Credit Facility, and (iv) the inclusion of the
Additional Property in the collateral pool for the Credit Facility is otherwise
unanimously approved by Co-Lenders, it being agreed that Co-Lenders shall in no
event or under any circumstance have any liability to Borrowers or any other
person, party or entity as the result of their decision not to accept an
Additional Property for inclusion in the collateral pool for the Credit
Facility. Agent shall inform Borrowers within fifteen (15) days after submission
by Borrowers of all of the Required Due Diligence Materials for an Additional
Property as to whether the Additional Property has been approved for inclusion
in the collateral pool for the Credit Facility by Co-Lenders.
7. Collateral. The Credit Facility Notes shall be
secured on a pari passu basis with each other inter alia by the Mortgages and
the Assignments of Leases and Rents. The Owned Properties which will constitute
the initial collateral pool for the Credit Facility and the Pending Properties
which will be added to the collateral pool for the Credit Facility simultaneous
with BOP's acquisition thereof are described in Exhibit E attached hereto. Each
Mortgage covering a Property located in Pennsylvania shall be substantially in
the form of the mortgage attached hereto as Exhibit F, each mortgage covering
Property located in New Jersey shall be substantially in the form of the
mortgage attached hereto as Exhibit G, and each Assignment of Leases and Rents
shall be substantially in the form attached hereto as Exhibit H, with such
changes therein as may be necessary (i) to reflect the interests in the Property
or other Collateral to be encumbered thereby and the ownership thereof, and (ii)
to reflect the specific terms and conditions which are applicable thereto,
including, without limitation, any necessary changes as may be reasonably
required by Co-Lenders. In addition to the foregoing, and as a condition
precedent to the closing of
-5-
<PAGE>
the Credit Facility, (i) Guarantors shall execute and deliver the Guaranty of
Payment in the form of Exhibit I attached hereto, and (ii) Borrowers and
Guarantors shall execute and deliver the Hazardous Material Guaranty and
Indemnification Agreement in the form of Exhibit J attached hereto.
8. New Debt or Equity Offering. The net cash proceeds
of any new debt or equity offering by Borrowers or their respective subsidiaries
or Affiliates shall (unless otherwise agreed to by Co-Lenders in the exercise of
their sole and absolute discretion) be applied first to the reduction of the
outstanding Principal Balance of the Credit Facility, and next to the reduction
of the outstanding principal balance of the Existing Credit Facility in
accordance with the provisions of the Existing Credit Agreement. The net
proceeds of any new debt or equity offering by BRT may first be contributed by
BRT to BOP so long as the full amount of such net proceeds shall immediately
upon receipt by BOP be applied in accordance with the preceding sentence.
9. Restrictions on Transfer and Further Encumbrance.
Except as otherwise expressly provided to the contrary in the Credit Facility
Documents, no part of the Properties nor any interest of any nature whatsoever
therein (whether legal or beneficial or whether held directly or indirectly),
nor any interest of any nature whatsoever in Borrowers (whether partnership,
stock, equity, beneficial, profit, loss or otherwise or whether held directly or
indirectly, other than stock of BRT and limited partnership interests in BOP
issued to transferring persons, parties or entities as partial or total
consideration for the transfer of properties to BOP and irrespective of whether
constituting part of the collateral pool for the Credit Facility), shall in any
manner be further encumbered, sold, transferred, assigned or conveyed, or
permitted to be further encumbered, sold, transferred, assigned or conveyed
without the prior consent of Co-Lenders, which consent in any and all
circumstances may be withheld in the sole and absolute discretion of Co-Lenders.
The provisions of the foregoing sentence of this paragraph shall apply to each
and every such further encumbrance, sale, transfer, assignment or conveyance,
regardless of whether or not Co-Lenders have consented to, or waived by their
action or inaction their rights hereunder with respect to, any such previous
further encumbrance, sale, transfer, assignment or conveyance, and irrespective
of whether such further encumbrance, sale, transfer, assignment or conveyance is
voluntary, by reason of operation of law or is otherwise made. Until the Debt
has been paid in full, and unless otherwise consented to the contrary by
Co-Lenders in the exercise of their sole and absolute discretion, (i) not less
than a 75% interest in BOP shall at all times be owned and controlled by BRT,
and which interest shall at all times remain unencumbered other than by the
Credit Facility Documents and the Existing Credit Facility Documents, (ii) the
sole general partner of BOP shall at all times be BRT and BRT shall not
encumber, sell, transfer, assign or convey its general partner interest in the
BOP, other than by the Credit Facility Documents, and (iii) the management and
day to day operations of BRT and BOP shall at all times be under the active
control of BRSC, or another management company of comparable experience and
credentials and which is otherwise reasonably acceptable to Co-Lenders. Nothing
contained in this paragraph or elsewhere in this Agreement or the other Credit
Facility Documents shall be deemed or construed to restrict in any manner
whatsoever BRT's ability to issue any common stock or beneficial shares of
beneficial interests in BRT, or the transferability of shares in BRT or limited
partnership units in BOP, or BOP's ability to issue additional limited
partnership units in accordance with the provisions of its agreement of limited
partnership, it being agreed that additional partnership units in BOP
-6-
<PAGE>
will only be issued as consideration in whole or in part for properties being
acquired by Borrowers in compliance with the provisions of the Existing Credit
Agreement. In addition, and upon prior notice to Co-Lenders, WOP and the
ownership of its assets may be consolidated into BOP pursuant to documents and
procedures which are in form and substance reasonably satisfactory to
Co-Lenders.
10. Commitment Fee. In consideration of Co-Lenders
extending to Borrowers the Credit Facility in accordance with the provisions of
the Credit Facility Documents, Borrowers shall pay to Co-Lenders on the date of
execution and delivery of this Agreement, and as a condition precedent to the
first advance of the Credit Facility, a commitment fee (the "Commitment Fee") of
$87,500, which Commitment Fee shall be divided pro rata between Co-Lenders,
shall be deemed earned in full by Co-Lenders upon payment by Borrowers, and
shall in no event be refundable in whole or in part.
11. Loan to Value Requirement. In no event will the
aggregate Credit Facility Outstanding at any given time during the term of the
Credit Facility exceed sixty percent (60%) of the aggregate Approved Value of
the Properties from time to time constituting part of the collateral for the
Credit Facility (the "Loan to Value Requirement"). If at any time the Loan to
Value Requirement shall cease to be satisfied, Borrowers shall within ten (10)
business days after demand by Agent either (i) pay the outstanding Principal
Balance of the Credit Facility down by an amount sufficient to restore
compliance with the Loan to Value Requirement, or (ii) deliver to Agent
additional collateral for the Credit Facility consisting of unencumbered
improved property which is satisfactory in all respects to Co-Lenders and
sufficient in the opinion of Co-Lenders to restore compliance with the Loan to
Value Requirement.
12. Representations and Warranties. Borrowers hereby
represent and warrant to Co-Lenders as follows:
(a) BOP is and will continue to be a limited
partnership duly organized, validly existing and in
good standing under the laws of the State of Delaware;
BRT is and will continue to be a real estate investment
trust duly organized, validly existing and in good
standing under the laws of the State of Maryland and is
and will at all times continue to maintain its tax
status as a REIT under Section 856 of the Internal
Revenue Code; WOP is and will continue to be a limited
partnership duly formed, validly existing and in good
standing under the laws of the State of Delaware; BRP
is and will continue to be a general partnership duly
formed, validly existing and in good standing under the
laws of the Commonwealth of Pennsylvania; BRSC and BHI
are and will continue to be corporations duly
organized, validly existing and in good standing under
the laws of the Commonwealth of Pennsylvania; each
Borrower and each Guarantor is and will continue to be
duly licensed and qualified as a foreign partnership,
corporation or otherwise in each jurisdiction in which
a Property is located or failure to be qualified or
licensed would have a materially adverse effect on any
Borrower, any Guarantor, any Property or other
Collateral or
-7-
<PAGE>
on the business, assets, operations, property or
financial or other condition of any Borrower or
Guarantor; each Borrower has and will continue to have
all requisite power and authority to borrow under the
Credit Facility and to execute and deliver, and to
observe and perform all of its obligations under, this
Agreement and the other Credit Facility Documents; each
Guarantor has and will continue to have all requisite
power and authority to execute and deliver, and to
observe and perform all of its obligations under the
Credit Facility Documents; BRT has and will continue to
have all requisite power and authority to be the sole
general partner of BOP and a general partner of BRP
(unless and until such general partnership interest is
transferred by BRT to BOP) and to execute and deliver
on behalf of BOP, as its sole general partner, and on
behalf of BRP, as one of its general partners, all of
the Credit Facility Documents, and to observe and
perform all of its obligations, as the sole general
partner of BOP and as one of the general partners of
BRP (unless and until such general partnership interest
is transferred by BRT to BOP), under the Credit
Facility Documents; BHI has and will continue to have
all requisite power and authority to be the sole
general partner of WOP and to execute and deliver on
behalf of WOP, as its sole general partner, all of the
Credit Facility Documents, and to observe all of its
obligations, as the sole general partner of WOP under
the Credit Facility Documents; and each Borrower and
each Guarantor has and will continue to have all
requisite power and authority to own their respective
assets and property and to carry on the business in
which they are engaged.
(b) The execution, delivery and performance by
Borrowers of this Agreement and the other Credit
Facility Document, the borrowings by the Borrowers
under the Agreement and the other Credit Facility
Documents, and the execution, delivery and performance
by Borrowers, and by BRT, individually and as the sole
general partner of BOP and as a general partner of BRP,
and by BHI, as the sole general partner of WOP, and by
BOP, individually, and by WOP individually, and by
Guarantors of all other agreements and instruments (not
mentioned above) to be executed and delivered by them
pursuant hereto or thereto or in connection herewith or
therewith, have been or will be duly authorized by all
necessary corporate action (including any necessary
stockholder action), partnership action or other action
on the part of each of them, and do not and will not
(i) violate (A) any provision of any law, rule,
regulation, order, writ, judgment, decree,
determination or award presently in effect having
applicability to any Borrower or Guarantor of any of
the organizational documents of any Borrower or
Guarantor, or (B) any indenture, agreement or other
instrument to which any Borrower or Guarantor is a
party, or by which any Borrower or Guarantor or any of
their respective property or assets is bound, except in
cases where such violation will not have a materially
adverse effect on any Property, any other Collateral or
on the business, assets, operations, property or
financial or other condition of any Borrowers or
Guarantor, or (ii) be in conflict with, result in a
breach of or constitute (with due notice or lapse
-8-
<PAGE>
of time or both) a default under any such indenture,
agreement or other instrument, except in cases where
such conflict, breach or default will not have a
materially adverse effect on any Property, any other
Collateral or on the business, assets, operations,
property or financial or other condition of any
Borrower or Guarantor, or (iii) result in or require
(except as specifically contemplated by this Agreement)
the creation or imposition of any lien of any nature
upon any of the assets or property of any Borrower or
Guarantor. This Agreement has been duly executed and
constitutes, and (when executed and delivered by
Borrowers and/or Guarantors, as applicable) each other
Credit Facility Document now or hereafter executed and
delivered by Borrowers and/or the Guarantors pursuant
hereto or thereto or in connection herewith, or
therewith, will each constitute the legal, valid and
binding obligation of Borrowers and/or Guarantors
respectively, enforceable against them in accordance
with their terms, except as enforcement may be limited
by bankruptcy, insolvency and other similar laws
affecting the enforcement of creditors' rights
generally and by moratorium laws from time to time in
effect. No authorization, consent, approval, license or
formal exemption from, nor any filing, declaration or
registration with, any court, governmental agency or
regulatory authority (Federal, state, local or
foreign), including, without limitation, the Securities
and Exchange Commission, or with any securities
exchange, is required by Borrowers or Guarantor in
connection with the making and performance by Borrowers
of this Agreement or the Credit Facility Notes or with
respect to the borrowings hereunder or for the
execution, delivery and performance by Borrowers and
Guarantors of the other Credit Facility Documents,
except for those already obtained or completed.
(c) When duly recorded or filed in the appropriate
public records, the Mortgages and the Financing
Statements shall each create in the Co-Lenders, valid
and perfected first liens upon the property subject
thereto and no further action will be required to
perfect such liens. The representations in this
subparagraph are limited to Borrowers' review of the
title policies insuring the respective liens of the
Mortgages and their own actual knowledge.
(d) The December 31, 1996, audited consolidated
financial statements and the December 31, 1996 annual
unaudited consolidating financial statements of
Borrowers previously delivered by Borrowers to
Co-Lenders are correct in all material respects and
fairly set forth the financial condition of Borrowers,
respectively, as of December 31, 1996, and the results
of Borrowers' respective operations and changes in
respective financial position for the period then
ended, all in accordance with GAAP. Since December 31,
1996, there has not occurred any material adverse
change in the business, assets, operations, property or
financial or other condition of Borrowers.
(e) All quarterly consolidated and consolidating
unaudited financial statements for the calendar quarter
ending
-9-
<PAGE>
March 31, 1997 of Borrowers previously delivered by
Borrowers to Co-Lenders are correct in all material
respects and fairly set forth the financial condition
of Borrowers, as of the dates set forth therein, and
the results of Borrowers' operations and changes in
Borrowers' respective financial position for the period
then ended, all in accordance with GAAP. Since the date
of such statements delivered by Borrowers, there has
not occurred any material adverse change in the
business, assets, operations, property or financial or
other condition of Borrowers.
(f) All quarterly unaudited individual and consolidated
operating statements and all annual individual and
consolidated operating statements previously delivered
by Borrowers to Co-Lenders with respect to the Initial
Properties are correct in all material respects and
fairly set forth the operating results of the Initial
Properties as of the dates set forth therein, and the
results of each Initial Property's respective
operations and changes in each Initial Property's
operating activities for the period then ended. Since
the date of such statements, there has not occurred any
material adverse change in the operations of any
Initial Property.
(g) Except as set forth on Schedule 1 attached to this
Agreement, there are no actions, suits or proceedings
pending or, to the best knowledge of Borrowers,
threatened against any Borrower, any Guarantor or any
of their respective properties or assets by or before
any court or any Federal, state, local, foreign or
other governmental agency or regulatory authority
which, in the reasonable judgment of Borrowers, after
consultation with counsel, would have or could
reasonably be expected to have a materially adverse
effect on any Property or any other Collateral or on
the business, assets, operations, property or financial
or other condition of any Borrower or Guarantor or
would or could reasonably be expected to materially
impair the ability of any Borrower or Guarantor to
perform their respective obligations under this
Agreement, the Credit Facility Notes and the other
Credit Facility Documents, or would otherwise be
required to be reported under applicable Federal or
state securities laws.
(h) Borrowers own fee title to, or a leasehold estate
in, or other title or ownership interest in all their
respective properties and assets including, without
limitation, the properties and assets reflected on the
audited consolidated financial statements referred to
in subparagraph (d) above and assets and properties
acquired since December 31, 1996.
(i) BOP owns fee title to all of the Owned Properties
and will, upon the acquisition of title thereto, own
fee title to the Pending Properties. Subject to the
preceding sentence, fee title to the Properties is and
will continue to be owned and held by BOP free and
clear of all liens and monetary encumbrances of any
nature whatsoever (except for the Permitted Title
Exceptions). All non-monetary encumbrances affecting
the Properties either benefit the Properties or
-10-
<PAGE>
enhance the integrated use, operation and management of
the Properties or do not otherwise have a materially
adverse effect on the title, ownership, value, use or
operation of any of the Properties.
(j) Each Borrower and Guarantor has filed or caused to
be filed all United States and state income tax returns
which are required to be filed and has paid or caused
to be paid all taxes shown on such returns or on any
assessment made against it, except in cases where such
a failure to file or to pay would not have a materially
adverse effect on any Property, any other Collateral or
on the business, assets, operations, property or
financial or other condition of any Borrower or
Guarantor. Each Borrower and Guarantor has filed or
caused to be filed all United States, state, local and
foreign tax returns (other than income tax returns)
which are required to be filed and has paid or caused
to be paid all taxes shown on such returns or on any
assessment made against it and all other taxes, fees or
other charges imposed on it by any governmental
authority, agency or instrumentality which have become
due and payable (other than taxes, assessments, fees
and other charges the validity or amount of which is
being contested in good faith by appropriate proceeding
[and otherwise in compliance with the general
requirements for contesting Taxes, as more specifically
set forth in paragraph 17 of this Agreement] or the
failure to pay which would not have a materially
adverse effect on any Property, any other Collateral or
on the business, assets, operations, property or
financial or other condition of any Borrower or
Guarantor). No tax liens have been filed against any
Borrower or Guarantor or against their respective
assets and property (other than those the validity or
amount of which is being contested in good faith by
appropriate proceedings [and otherwise in compliance
with the general requirements for contesting Taxes, as
more specifically set forth in paragraph 17 of this
Agreement] or the foreclosure of which would not have a
materially adverse effect on any Property, any other
Collateral or on the business, assets, operations,
property or financial or other condition of any
Borrower or Guarantor), and no material claims are
being asserted in respect of any taxes (other than
those being contested as aforesaid or those that are
not material as aforesaid).
(k) Neither any Borrower, nor any Guarantor is in
default in any respect under or in respect of any
contract, agreement or other instrument to which it is
a party or by which it or its property or assets may be
bound, except in cases where such default has no
materially adverse effect on any Property, any other
Collateral or on the business, assets, operations,
property or financial or other condition of any
Borrower or Guarantor. No Event of Default described in
paragraph 31 hereof has occurred and is continuing and
no event has occurred which but for notice, lapse of
time, or both, would constitute an Event of Default.
Neither any Borrower, nor any Guarantor is in default
under any order, judgment, award or decree of any
court, arbitrator or other governmental authority
binding upon or affecting it or by which any of its
-11-
<PAGE>
property or assets may be bound or affected, except in
cases where such default has no materially adverse
effect on any Property, any other Collateral or on the
business, assets, operations, property or financial or
other condition of any Borrower or Guarantor, and no
such order, judgment, award or decree materially
adversely affects the ability of any Borrower or
Guarantor to carry on its business as now conducted or
the ability of any Borrower or Guarantor to perform
their respective obligations under this Agreement, the
Credit Facility Notes and the other Credit Facility
Documents.
(l) Each Borrower and Guarantor maintains with
financially sound and reputable insurance companies,
with premiums at all times currently paid, property and
casualty insurance upon fixed assets and inventories,
public liability insurance, fidelity bond coverage,
business interruption insurance, and all insurance
required by law, all in form and amounts required by
law and customary to the respective natures of their
businesses and properties, and including, without
limitation, the Insurance Policies required pursuant to
paragraph 18 of this Agreement, except in cases where
failure to maintain such insurance will not have or
potentially have a materially adverse effect on any
Property, any other Collateral or on the business,
assets, operations, property or financial or other
condition of any Borrower or Guarantor.
(m) Neither this Agreement, any other Credit Facility
Document nor any document, financial statement, report,
notice, schedule, certificate, statement or other
writing furnished to or to be furnished to Co-Lender by
any Borrower or Guarantor in connection with the Credit
Facility or otherwise in connection with the
transaction contemplated hereby, contains or will
contain any untrue or misleading statement of, or
omission of, any material fact as of the date upon
which the same is so furnished.
(n) All of the Properties and their use comply and will
continue to comply in all material respects with all
applicable zoning resolutions, building codes, fire
safety, subdivision and other applicable laws, rules
and regulations including, without limitation, and to
the best knowledge of Borrowers (which knowledge is
based solely upon reports of the inspecting engineers
who have prepared structural and engineering reports
with respect to Properties) the Americans with
Disabilities Act.
(o) No portion of any Property nor any improvements
located on any Premises which are material to the
operation, use or value of a Property are damaged or
injured in any material respect as a result of any
fire, explosion, accident, flood or other casualty.
(p) Except for the Leases described on Schedule 2
attached to this Agreement and the other leases
described on Schedule 3 attached to this Agreement,
there are no other leases, management and/or leasing
agreements for, concerning or with
-12-
<PAGE>
respect to any of the Properties or any portions
thereof, including any personal property located
thereon.
(q) No condemnation or eminent domain proceeding has
been commenced or to the knowledge of Borrowers is
threatened against any Property.
(r) Borrowers have no knowledge of any notices of any
violation of Federal law or municipal ordinances or
orders or requirements of the States in which the
Properties are located or any municipal department or
other governmental authority which remain uncured.
(s) There exists no default by any Borrower under any
deed of trust, mortgage, pledge or other security
agreement affecting any Property or any other
Collateral, or any portion thereof, or under any
Material Agreement pertaining to any Property, or by
which any portion of any of the Properties or the other
Collateral may be bound, except where such default does
not and will not have a material adverse effect on any
Property, or any other Collateral or on the business,
assets, operations, property or financial or other
condition of any Borrower or Guarantor.
(t) Neither any Borrower nor any Guarantor is engaged
in the business of extending credit for the purpose of
purchasing or carrying any margin stock (within the
meaning of Regulation G or U of the Board of Governors
of the Federal Reserve System of the United States). No
part of the proceeds of any advance made under the
Credit Facility will be used to purchase or carry any
such margin stock or to extend credit to others for the
purpose of purchasing or carrying any such margin stock
or for the purpose of repaying any loan the pro ceeds
of which were used for such purpose. If requested by
Agent, Borrowers will furnish to Agent a statement in
conformity with the requirements of Federal Reserve
Form U-1 referred to in said Regulation U. No part of
the proceeds of any advance made under the Credit
Facility will be used for any purpose that violates, or
which is inconsistent with, the provisions of
Regulation G, T, U or X or any other regulation of the
Board of Governors of the Federal Reserve System of the
United States.
(u) Neither any Borrower nor any Guarantor has taken
any action which would cause it to become an "employee
benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as
amended from time to time ("ERISA"), or a "governmental
plan" as defined in Section 3(32) of ERISA, or a "plan"
as defined in Section 4975(e)(1) of the Internal
Revenue Code, or which would cause its assets to become
"plan assets" as defined in 29 C.F.R. Section
2510.3-101.
(v) The proceeds of any and all advances under the
Credit Facility shall be used for the purposes set
forth in paragraph 4 of this Agreement and for no other
purposes.
-13-
<PAGE>
(w) BRT and BOP taken as a whole are each, and after
giving effect to all of the transactions contemplated
by this Agreement and the other Credit Facility
Documents, will each continue to be, in a solvent
condition. As used herein, "solvent" means, when used
with respect to any Person, that (i) the present fair
saleable value of such Person's assets is in excess of
the total amount of its liabilities (including
contingent liabilities); (ii) such Person is able to
pay its debts as they become due; and (iii) such Person
does not have unreasonably small capital to carry on
such Person's business as theretofore operated and all
businesses in which such Person is about to engage.
(x) Each Borrower is not, and will by such acts as may
be necessary, continue not to be, an investment company
within the meaning of the Investment Company Act of
1940.
(y) No Borrower is a "holding company" or a "subsidiary
company" of a "holding company," or an "affiliate" of a
"holding company," or of a "subsidiary company" of a
"holding company," within the definitions of the Public
Utility Holding Company Act of 1935, as amended.
(z) Borrowers have dealt with no brokers in connection
with the Credit Facility, and no brokerage fees or
commissions are payable by or to any Person in
connection with this Agreement or the Credit Facility.
Co-Lenders shall not be responsible for the payment of
any fees or commissions to any broker and Borrowers
shall indemnify, defend and hold Co-Lenders harmless
from and against any claims, liabilities, obligations,
damages, costs and expenses (including reasonable
attorneys' fees and disbursements) made against or
incurred by Co-Lenders as a result of claims made or
actions instituted by any broker or Person claiming by,
through or under Borrowers in connection with the
Credit Facility.
(aa) No aspect of any of the transactions contemplated
herein violate or will violate any usury laws or laws
regarding the validity of agreements to pay interest in
effect on the date hereof.
(bb) No Borrower is a "foreign person" within the
meaning of Section 1445 or 7701 of the Internal Revenue
Code.
(cc) No Borrower uses a trade name and no Borrower has
conducted or presently conducts business under any name
other than its actual name set forth herein. The
principal place of business of each Borrower is as
stated in the recitals hereto.
The representations and warranties of Borrowers under this paragraph shall be
deemed to be continuing representations and warranties which may at all times
during the term of the Credit Facility be relied upon by Co-Lenders (and each
Participant) unless Agent shall have been informed by Borrowers of any change in
fact or circumstance which would affect the continuing accuracy of the
representations and warranties set forth in this paragraph. Borrowers shall
promptly inform Agent (but in no event later than five (5) business days after
Borrowers shall have actual knowledge thereof) of the occurrence of any fact,
-14-
<PAGE>
circumstance or event which would change or materially affect in any way the
continuing accuracy of the representations and warranties set forth in this
paragraph or which would render any such representation or warranty inaccurate
or false in any material respect.
13. Covenants. Borrowers shall observe and perform and
shall cause Guarantors to observe and perform, as applicable, at all times
during the term of the Credit Facility the following covenants:
(a) BRT and BOP shall at all times during the term of
the Credit Facility maintain a net worth (i.e. value of
total assets less total liabilities, as determined on
the basis of generally accepted accounting principles
consistently applied) of at least the aggregate of
$100,000,000 plus ninety (90%) percent of the net
proceeds (i.e., after the expenses incurred in
connection with such offerings) of all equity offerings
by BRT or BOP after the date of this Agreement. In
determining the aforesaid net worth, Co-Lenders shall
give credit to the issued and outstanding Series A
Convertible Preferred Stock held by the Voting Trust
dated November 6, 1996 for the benefit of the
Commonwealth of Pennsylvania State Employees Retirement
System.
(b) In the case of BRT, do or cause to be done all
things necessary to preserve, renew and keep in full
force and effect its existence as a real estate
investment trust and its tax status as a REIT under
Section 856 of the Internal Revenue Code.
(c) Comply in all material respects with, and do or
cause to be done all things necessary to preserve,
renew and keep in full force and effect, its material
rights, licenses, permits and franchises and the rights
and franchises, pertaining to or comprising part of the
Properties or the other Collateral unless the failure
to do so does not have a material adverse effect on any
Property or any other Collateral or on the business,
assets, operations, property or financial or other
condition of any Borrower or Guarantor; comply with all
laws, rules and regulations applicable to it except
where the failure to do so does not have a material
adverse effect on any Property or any other Collateral
or on the business, assets, operations, property or
financial or other condition of any Borrower or
Guarantor; at all times maintain and preserve all
property used or useful in the conduct of its business
and keep the same in good repair, working order and
condition, and from time to time make, or cause to be
made, all repairs, renewals and replacements thereto,
so that the business carried on in connection therewith
may be properly conducted at all times except where the
failure to do so does not have a material adverse
effect on any Property or any other Collateral or on
the business, assets, operations, property or financial
or other condition of any Borrower or Guarantor;
(d) Keep its insurable properties adequately insured at
all times; maintain such other insurance, to such
extent and against such risks, including fire and other
risks insured
-15-
<PAGE>
against by extended coverage, as is customary with
companies in the same or similar businesses; maintain
in full force and effect public liability insurance
against claims for personal injury or death or property
damage occurring upon, in, about or in connection with
the use of any properties owned, occupied or controlled
by it in such amount as it shall reasonably deem
necessary; and maintain such other insurance as may be
required by law.
(e) Borrowers (i) shall comply in all material respects
with the requirements of, and to the extent within
Borrowers' control, maintain, preserve, enforce and
renew rights of way, easements, grants, privileges,
licenses and restrictive covenants which from time to
time affect or pertain to the whole or any portion of a
Property, (ii) shall not modify, amend or terminate any
rights of way, easements, grants, privileges, licenses
or restrictive covenants which from time to time affect
or pertain to the whole or any portion of a Property,
and (iii) shall not without obtaining the prior consent
of Co-Lenders (which consent shall not be unreasonably
withheld or delayed) modify, amend or terminate, or
surrender any of its rights under, any of such rights
of way, easements, grants, privileges, licenses or
restrictive covenants, unless, with respect to a
modification or amendment referred to in clauses (ii)
and (iii) only, such modification or amendment would
not have an adverse effect on any Property, any other
Collateral or on the business, assets, operations,
property or financial or other condition of any
Borrower or Guarantor.
(f) Borrowers shall at all times comply with and shall
cause the Properties to continue to comply with all
existing and future governmental laws, orders,
ordinances, rules and regulations affecting the
Properties, or any portion thereof or the use thereof,
except where the failure to do so does not have a
material adverse effect on any Property or any other
Collateral or on the business assets, operations,
property, financial or other condition of any Borrower
or Guarantor.
(g) Promptly repair, replace or rebuild any part of a
Property which may be damaged or destroyed by fire or
other property hazard or casualty (including any fire
or other property hazard or casualty for which
insurance was not obtained or obtainable) or which may
be affected by any taking by any public or quasi-public
authority through eminent domain or otherwise, and
shall complete and pay for, within a reasonable time,
any portion of any Property which is at any time in the
process of renovation or repair.
(h) Observe and perform each and every term to be
observed or performed by Borrowers pursuant to the
terms of any agreement or recorded instrument affecting
or pertaining to the Properties, except where the
failure to do so does not have a material adverse
effect on any Property or any other Collateral or on
the business, assets, operations, property or financial
or other condition of any Borrower or any Guarantor.
-16-
<PAGE>
(i) Observe and perform, and cause to be observed and
performed, all of the terms, covenants and provisions
contained in the Credit Facility Documents and in the
Existing Credit Facility Documents.
(j) Borrowers will not, without obtaining the prior
consent of Co-Lenders, initiate, join in or consent to
any private restrictive covenant, zoning ordinance, or
other public or private restrictions, limiting or
adversely affecting the uses which may be made of the
Properties or any part thereof.
(k) Pay all of its indebtedness and obligations
promptly and in accordance with their terms (other than
such indebtedness and obligations, the validity or
amount of which is being contested in good faith by
appropriate proceeding [and otherwise in compliance
with the general requirements for contesting Taxes, as
more specifically set forth in paragraph 17 of this
Agreement] or where the failure to pay would not have a
materially adverse effect on any Property, any other
Collateral or on the business, assets, operations,
property or financial or other condition of any
Borrower or Guarantor) and pay and discharge promptly
all taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits or
in respect of its property, before the same shall
become in default, as well as all lawful claims for
labor, materials and supplies or otherwise which, if
unpaid, might become a lien upon such properties or any
part thereof (except for such taxes, assessments,
governmental charges or levies, or such claims, the
validity or amount of which is being contested in good
faith by appropriate proceeding [and otherwise in
compliance with the general requirements for contesting
Taxes, as more specifically set forth in paragraph 17
of this Agreement] or where the failure to pay would
not have a materially adverse effect on any Property,
any other Collateral or on the business, assets,
operations, property or financial or other condition of
any Borrower or Guarantor).
(l) Furnish to Co-Lenders all financial statements and
information required pursuant to the provisions of this
Agreement and the other Credit Facility Documents, it
being understood that such financial information shall
be delivered by Borrowers to Agent for distribution by
Agent to Co-Lenders.
(m) Give Agent prompt written notice of (i) the
occurrence and nature of any Event of Default; (ii) the
occurrence and nature of any event which has resulted
in, or which Borrowers believes will result in, a
materially adverse change in any Property or any other
Collateral or in the condition or operations of any
Property or in the financial condition or operations of
any Borrower or Guarantor; or (iii) any matter (other
than those specified above as to which Co-Lenders have
received due notice) which has resulted in, or which
Borrowers reasonably believe will result in, a
materially adverse change in any Property or any
Collateral or in the condition or operations of any
Property or in the financial condition or operations of
any Borrower or Guarantor.
-17-
<PAGE>
(n) Unless Co-Lenders shall have previously consented
in writing, neither any Borrower nor any Guarantor (i)
will take any action which would cause it to become an
"employee benefit plan" as defined in Section 3(3) of
ERISA, or a "governmental plan" as defined in Section
3(32) of ERISA, or a "plan" as defined in Section
4975(e)(1) of the Internal Revenue Code, or its assets
to become "plan assets" as defined in 29 C.F.R. Section
2510.3-101, or (ii) will sell, assign or transfer its
respective property, or any portion thereof or interest
therein (other than a lease entered into in conformity
with the provisions of this Agreement), to any
transferee which does not execute and deliver to
Co-Lenders its written assumption of the obligations of
this covenant. Each Borrower further covenants and
agrees to protect, defend, indemnify and hold
Co-Lenders harmless from and against all loss, cost,
damage and expense (including without limitation, all
excise taxes, costs of correcting any prohibited
transaction or obtaining an appropriate exemption and
reasonable attorneys' fees) which Co-Lenders may incur
as a result of breach of this covenant by any Borrowers
or Guarantor. This indemnity shall survive the
repayment or retirement of the Credit Facility.
(o) Borrowers shall not without the prior consent and
approval of Co-Lenders enter into, modify, amend or
terminate (in whole or in part) any Lease covering
20,000 square feet or more of space located in any
Property from time to time constituting part of the
collateral pool for the Credit Facility. Borrowers
shall not enter into any Lease covering less than
20,000 square feet of space located in the Improvements
unless such Lease is in a form approved by Co-Lenders
(with such changes therein as may be consistent with
normal and prudent business practices pertaining to
comparable leases of space in properties which are
similar to the Property in question and otherwise
consistent with Borrowers' usual business practices),
and at rents and otherwise on terms which are
consistent with prevailing market conditions, as
reasonably determined by Borrowers, and Borrowers shall
not terminate any such Leases other than in accordance
with normal and prudent business practices. Co-Lenders
shall within ten (10) business days after delivery by
Borrowers to Agent of a term sheet setting forth in
detail the proposed terms for any Lease in excess of
20,000 square feet indicate to Borrowers whether such
terms have been approved (subject to review and
approval of the final draft of such Lease by
Co-Lenders). Co-Lenders shall indicate to Borrowers
within ten (10) business days after delivery by
Borrowers to Agent of the final draft of any Lease
covering in excess of 10,000 square feet (and
irrespective of whether a term sheet has first been
submitted to Co-Lenders for approval with respect
thereto) whether Co-Lenders have approved such Lease,
such approval not to be unreasonably withheld or
delayed. If Co-Lenders do not indicate to Borrowers
within ten (10) business days after receipt by Agent of
any such term sheet or any such Lease pursuant to the
provisions of this subparagraph, as the case may be,
either their approval or disapproval of the same, such
approval shall be deemed to have been granted so long
as the
-18-
<PAGE>
request for such approval indicates in bold type that
failure to approve or disapprove such term sheet or
Lease, as the case may be, within ten (10) business
days after receipt shall be deemed to constitute the
approval of Co-Lenders. Borrowers shall enforce the
obligation of the tenants under the Leases and shall
observe and perform the terms, covenants and provisions
of the Leases on Borrowers' respective parts to be
observed and performed.
(p) Cause all taxes, assessments, water rates, sewer
rates and other charges with respect to the Properties
to be paid prior to the date upon which any fine,
penalty, interest or cost may be added thereto or
imposed by law for the non-payment thereof (other than
those the validity or amount of which is being
contested in good faith by appropriate proceedings [and
otherwise in compliance with the general requirements
for contesting Taxes, as more specifically set forth in
paragraph 17 of this Agreement] or the non-payment of
which would not have a materially adverse effect on any
Property, any other Collateral or on the business,
assets, operations, property or financial or other
condition of any Borrower or Guarantor).
(q) Cause all income taxes, corporate franchise taxes
and other fees payable by each Borrower and Guarantor
or otherwise pertaining to the Properties or the
Collateral to be paid as and when the same become due
and payable (other than those the validity or amount of
which is being contested in good faith by appropriate
proceedings [and otherwise in compliance with the
general requirements for contesting Taxes, as more
specifically set forth in paragraph 17 of this
Agreement] or the non-payment of which would not have a
materially adverse effect on any Property, any other
Collat eral or on the business, assets, operations,
property or financial or other condition of any
Borrower or Guarantor).
(r) Cause to be observed and performed each and every
term, covenant and provision of any partnership
agreement, joint venture agreement, tenancy-in-common
agreement, condominium agreement, Lease and property
agreement relating to any Property or any other
Collateral on the part of a Borrower, a Guarantor or
any Person under their control to be observed and
performed and cause to be taken all steps (short of the
termination of any Lease) necessary to enforce their
respective rights thereunder. No such partnership
agreement, joint venture or tenancy-in-common
agreement, condominium agreement or property agreement
shall be in any manner modified, amended or terminated
without the prior consent of Co-Lenders unless such
agreement would not have a materially adverse effect on
any Property, any other Collateral or on the business
assets, operations, property or financial or other
condition of any Borrower or any Guarantor.
Notwithstanding the provisions of the foregoing
sentence, no such partnership agreement pertaining to
BOP, BRP or WOP shall be modified, amended or
terminated in any respect without the prior consent of
Co-Lenders in each and every case.
-19-
<PAGE>
(s) Each request for an advance under the Credit
Facility without further act or instrument shall
constitute a reaffirmation by Borrowers, of each of the
representations and warranties set forth in this
Agreement and in each of the other Credit Facility
Documents, which reaffirmation shall be a condition
precedent to Co-Lenders' obligation to make advances
under the Credit Facility.
(t) Take all necessary action to maintain the
Properties and the other Collateral in good condition
and repair and will not commit or suffer to be
committed any waste with respect thereto. The failure
of Borrowers to pay any Taxes or any installment
thereof (other than those the validity or amount of
which is being contested in good faith by appropriate
proceedings [and otherwise in compliance with the
general requirements for contesting Taxes, as more
specifically set forth in paragraph 17 of this
Agreement] or the non-payment of which would not have a
materially adverse effect on any Property, any other
Collateral or on the business, assets, operations,
property or financial or other condition of any
Borrower or Guarantor), or any Insurance Premiums
payable with respect to any of the Insurance Policies
covering the Properties or any portion thereof, or to
use and apply the Rents strictly in accordance with the
provisions of the Credit Facility Documents, shall be
deemed for all purposes to constitute waste, regardless
of whether the same would, in the absence of this
provision, otherwise constitute waste under applicable
law.
(u) Except as expressly permitted in accordance with
the provisions of this Agreement or the other Credit
Facility Documents, neither the Properties nor the
other Collateral nor any portion thereof nor any
interest therein or in any Borrower shall in any manner
be further encumbered, sold, transferred or conveyed or
permitted to be further encumbered, sold, transferred
or conveyed without the prior consent of Co-Lenders,
which consent may be withheld in the sole and absolute
discretion of Co-Lenders; provided, however, that
nothing contained herein shall prohibit the issuance of
partnership interests in BOP or equity shares in BRT
(subject to the provisions of paragraph 9 of this
Agreement) to an entity which conveys a Property to
Borrowers as partial or total consideration for the
conveyance of such Property.
(v) Cause the Debt to be paid in accordance with the
provisions of this Agreement and the other Credit
Facility Documents.
(w) At all times continue to satisfy the Financial
Covenants.
(x) Neither any Borrowers nor any Guarantor nor any of
their respective Affiliates or subsidiaries shall
engage in any business or activity which is not
directly related to the ownership, operation or
management of the Properties constituting part of the
Collateral for the Credit Facility or other properties
not constituting part of the Collateral
-20-
<PAGE>
for the Credit Facility which are otherwise generally
comparable in nature to the Properties constituting
part of the Collateral for the Credit Facility.
(y) Neither Borrowers nor any of the respective
Affiliates or subsidiaries of Borrowers will incur
either directly or as a guarantor any liability
(whether recourse or non-recourse) for the payment of
any indebtedness other than the Debt and the
indebtedness evidenced and secured by the Existing
Credit Facility Documents. The incurrence of any other
debt (other than the retention of currently existing
debt) shall constitute an immediate "Event of Default"
under this Agreement.
(z) BRT will at all times maintain (i) its REIT status
under the Internal Revenue Code, and (ii) its status as
a public company whose stock is listed on a
nationally-recognized exchange or is a NASDAQ security.
(aa) The dividend payout ratio of BRT (dividends paid
divided by funds from operations, as defined by
NAREIT), and as determined on a trailing twelve month
basis, shall at all times be less than 90%.
Notwithstanding the foregoing, the actual dividend
payout may exceed the foregoing dividend payout ratio
restriction if required in order to maintain BRT's
status as a REIT under the Internal Revenue Code.
(bb) Borrowers will not without the prior consent of
Co-Lenders assume, guaranty, endorse or otherwise
become directly or contingently liable for the debts or
obligations of any other person, party or entity,
except by reason of endorsement of negotiable
instruments for deposit or collection in the ordinary
course of business.
(cc) Borrowers shall pay all fees, commissions, costs,
charges, taxes and other expenses incurred by
Co-Lenders in the extension of the Credit Facility and
in connection with the preparation, execution and
delivery of this Agreement and the other Credit
Facility Documents, including, without limitation,
reasonable attorneys' fees, appraisal fees, fees and
expenses incurred in accounting review and fees and
expenses relating to examination of title, title
insurance premiums, surveys, hazard insurance and
mortgage recording, documentary, intangible, transfer
or other similar taxes, revenue stamps and all
recording fees and charges. Co-Lenders shall cooperate
with Borrowers in an attempt to minimize the
aforementioned costs and expenses, provided, however,
that nothing contained herein shall require Co-Lenders
to compromise their respective underwriting standards
and requirements.
(dd) Co-Lenders shall not be required to pay any
brokerage fees or commissions or other remuneration of
any nature whatsoever arising from the extension of the
Credit Facility or the funding of the Credit Facility
and Borrowers agree to defend, indemnify and hold
Co-Lenders harmless, from and against any and all such
claims in connection therewith which
-21-
<PAGE>
are asserted by any broker with whom Borrowers have or
are alleged to have dealt in connection with the Credit
Facility.
(ee) Borrowers shall not assign this Agreement by
agreement, operation of law or otherwise, or the moneys
to be advanced and disbursed hereunder without the
prior written consent of Co-Lenders, which consent may
be withheld by Co-Lenders in the exercise of their sole
and absolute discretion.
(ff) The aggregate Approved Value of all Properties
from time to time constituting part of the collateral
pool for the Credit Facility shall at all times be
equal to or in excess of $100,000,000.
14. Recourse Obligations. Borrowers' obligations in
respect of the Credit Facility shall constitute the full joint and several
recourse obligations of Borrowers.
15. Right of Entry. Agent, Co-Lenders and their
respective employees and agents shall have the right, upon reasonable prior
notice to Borrowers and subject to the rights of lessee and tenants to enter and
inspect the Properties at all reasonable times.
16. Books and Records. Borrowers will keep and maintain
or will cause to be kept and maintained on a fiscal year basis in accordance
with generally accepted accounting practices consistently applied proper and
accurate books, records and accounts reflecting all of the financial affairs of
Borrowers, and all items of income and expense in connection with the operation
of the Properties or in connection with any services, equipment or furnishings
provided in connection with the operation of the Properties, whether such income
or expense be realized by Borrowers or any other Person excepting lessees
unrelated to and unaffiliated with Borrowers who have leased from Borrowers
portions of any Properties for the purpose of occupying the same. Co-Lenders and
their respective employees and agents shall have the right from time to time
upon not less than one (1) business day's prior notice and at all times during
normal business hours to examine such books, records and accounts at the offices
of Borrowers or other Person maintaining such books, records and accounts and to
make copies or extracts thereof as Co-Lenders, or their respective employees or
agents shall desire. Co-Lenders shall also have the right upon reasonable notice
and during normal business hours to conduct an audit of the books and records of
Borrowers, which audit may be performed by an independent certified public
accountant selected and retained by Co-Lenders.
17. Taxes. Borrowers shall pay, or cause to be paid,
all taxes, assessments, water rates, sewer rents and other charges, including
vault charges and license fees for the use of vaults, chutes and similar areas
adjoining the Premises, now or hereafter levied or assessed against the
Properties (the "Taxes") prior to the date upon which any fine, penalty,
interest or cost may be added thereto or imposed by law for non-payment thereof.
Borrowers shall deliver to Co-Lenders, upon request, receipted bills, cancelled
checks, and other evidence satisfactory to Co-Lenders evidencing the payment of
the Taxes prior to the date upon which any fine,
-22-
<PAGE>
penalty, interest or cost may be added thereto or imposed by law for the
non-payment thereof. Co-Lenders shall have the right in their discretion to
maintain a tax services contract with respect to the Properties with a tax
reporting agency satisfactory to Co-Lenders. Borrowers shall reimburse
Co-Lenders upon demand for the cost of maintaining such tax service contract
during the term of the Credit Facility. After prior notice to Co-Lenders, in the
case of any material item, Borrowers, at their own expense, may contest by
appropriate legal proceeding, promptly initiated and conducted in good faith and
with due diligence, the amount or validity or application in whole or in part of
any of the Taxes, provided that (i) no default shall have occurred and shall be
continuing under the Credit Facility Notes, the Mortgages, this Agreement or any
of the other Credit Facility Documents, (ii) Borrowers are permitted to do so
under the provisions of any mortgage or deed of trust superior in lien to the
Mortgages, if any, (iii) such proceeding shall suspend the collection of the
contested Taxes from Borrowers and from the Properties, (iv) such proceeding
shall be permitted under and be conducted in accordance with the provisions of
any other instrument to which Borrowers is, or the Properties are, subject and
shall not constitute a default thereunder, (v) neither the Properties nor any
part thereof nor any interest therein will in the opinion of Co-Lenders be in
danger of being sold, forfeited, terminated, cancelled or lost, and (vi)
Borrowers shall have set aside in a manner satisfactory to Co-Lenders adequate
cash reserves for the payment of the contested Taxes, together with all interest
and penalties thereon, or in the alternative Borrowers shall have furnished such
security as may be required in the proceeding, or as may otherwise be requested
or required by Co-Lenders to insure the payment of the contested Taxes, together
with all interest and penalties thereon.
18. Insurance Coverage. Borrowers will insure the
Properties and other Collateral against such perils and hazards, and in such
amounts and with such limits, as Co-Lenders may from time to time reasonably
require, and in any event will continuously maintain with respect to each of the
Properties and the other Collateral, without cost to Co-Lenders, the insurance
described in Exhibit K of this Agreement (collectively, the "Insurance
Policies"). All Insurance Policies shall be in form, issued by companies, in
amounts and with deductibles satisfactory to Co-Lenders from time to time and
shall be maintained throughout the term of the Credit Facility without cost to
Co-Lenders. An insurance company shall not be satisfactory unless such insurance
company (a) has Best's general policyholder rating of "A-" or better and a
financial rating of "Class VIII" or better; (b) is licensed in the State in
which the insured Property is located; (c) has actively been in business for at
least five (5) years; (d) if it is a mutual company, is a nonassessable company;
and (e) does not provide insurance on any one building in excess of ten (10%)
percent of its policyholders' surplus (including capital). All Insurance
Policies insuring against casualty and business interruption and other
appropriate policies shall include non-contributing mortgagee endorsements in
favor of Co-Lenders with loss payable to Co-Lenders, as well as standard waiver
of subrogation endorsements, and shall provide that the coverage shall not be
terminated or modified, nor a risk changed without thirty (30) days' advance
written notice to Co-Lenders. A verified copy of each Insurance Policy shall be
delivered to Agent. If a blanket policy is issued, a certified copy of said
policy shall be furnished, together with an endorsement indicating that
Co-Lenders, and their respective affiliates, subsidiaries, successors and
assigns are additional insureds under such policy in the designated amount. If
any portion of the insured risks are reinsured, the reinsurance policies shall
contain "cut-through" endorsements in form
-23-
<PAGE>
satisfactory to Co-Lenders. Commencing with the calendar quarter which commences
on July 1, 1997, Borrowers will deliver to Co-Lenders, not later than July 1,
1997, and thereafter not later than ten (10) days after the commencement of each
subsequent calendar quarter until the Debt has been paid in full, evidence
satisfactory to Co-Lenders confirming that Borrowers have prepaid all insurance
premiums for the Insurance Policies (the "Insurance Premiums") allocable to the
calendar quarter in question. Borrowers will deliver all Insurance Policies to
Agent and, in case of Insurance Policies about to expire, Borrowers will deliver
renewal or replacement policies to Agent not less than thirty (30) days prior to
the date of expiration. The foregoing requirements of this paragraph shall apply
to any separate policies of insurance taken out by Borrowers concurrent in form
or contributing in the event of loss with the Insurance Policies. If any
Insurance Policy or part thereof shall expire or be withdrawn or become void by
reason of the failure or impairment of the capital of any company in which the
insurance shall be carried, or if at any time Co-Lenders are not in receipt of
written evidence that all insurance required hereunder is in force and effect or
if for any reason whatsoever the insurance shall be unsatisfactory to
Co-Lenders, Co-Lenders shall have the absolute and unconditional right without
prior notice to Borrowers to take such action as Co-Lenders deem necessary to
protect the interest of Co-Lenders in the Properties and other Collateral,
including without limitation, the obtaining of such insurance coverage as
Co-Lenders deem appropriate, and all expenses incurred by Co-Lenders in
connection with such action or by Co-Lenders in obtaining such insurance and
keeping it in effect shall be paid by Borrowers to Co-Lenders upon demand
together with interest thereon at the Default Rate. Co-Lenders will promptly
inform Borrowers of any such action so taken by Co-Lenders. Borrowers shall at
all times comply with and shall cause the Properties, the other Collateral and
the use, occupancy, operation, maintenance, alteration, repair and restoration
thereof to comply with the terms, conditions, stipulations and requirements of
the Insurance Policies. If a Property, or any portion thereof, is located in a
Federally designated "special flood hazard area", in addition to the other
Insurance Policies required under this paragraph, a flood insurance policy shall
be delivered by Borrowers to Agent with respect thereto. If no portion of a
Property is located in a Federally designated "special flood hazard area" such
fact shall be substantiated by a certificate in form satisfactory to Agent from
a licensed surveyor, appraiser or professional engineer or other qualified
individual. If any Property shall be damaged or destroyed, in whole or in part,
by fire or other property hazard or casualty, Borrowers shall give prompt notice
thereof to Co-Lenders and one hundred (100%) percent of the net amount of all
insurance proceeds received by Co-Lenders or Borrowers as a result of such
damage or destruction after deduction of reasonable costs and expenses, if any,
in collecting the same, shall be applied to the payment of the Debt whether or
not then due and payable in such order, priority and proportions as Co-Lenders
in their sole and absolute discretion shall deem proper or, at the sole and
absolute discretion of Co-Lenders, the same may be paid, either in whole or in
part, to Borrowers for such purposes as Co-Lenders shall designate, in their
sole and absolute discretion. If Co-Lenders shall receive and retain insurance
proceeds, the lien of the Mortgages shall be reduced only by the amount thereof
received and retained by Co-Lenders and actually applied by Co-Lenders in
reduction of the Debt.
19. Condemnation. Notwithstanding any taking by any
public or quasi-public authority through eminent domain or otherwise, Borrowers
shall continue to pay the Debt at the time and in the manner provided for its
-24-
<PAGE>
payment in the Credit Facility Notes, this Agreement and the Mortgages and the
Debt shall not be reduced until any award or payment therefor shall have been
actually received and applied by Agent to the discharge of the Debt. If all or
any portion of a Property is taken by any public or quasi-public authority
through eminent domain or otherwise, one hundred (100%) percent of the aggregate
award or payment received by Co-Lenders or Borrowers as a result of such taking
after deduction of reasonable costs and expenses, if any, in collecting the same
shall be applied in reduction of outstanding Principal Balance under the Credit
Facility. If any Property is sold, through foreclosure or otherwise, prior to
the receipt by Co-Lenders of such award or payment, Co-Lenders shall have the
right, whether or not a deficiency judgment on the Credit Facility Notes shall
have been sought, recovered or denied, to receive such award or payment, or a
portion thereof sufficient to pay the Debt, whichever is less. Borrowers shall
file and prosecute its claim or claims for any such award or payment in good
faith and with due diligence and cause the same to be collected and paid over to
Co-Lenders. Borrowers hereby irrevocably authorize and empower Co-Lenders, in
the name of Borrowers or otherwise, to collect and receipt for any such award or
payment and, subsequent to the occurrence of a default beyond the expiration of
applicable notice and cure periods, if any under any of the Credit Facility
Documents and during the continuance thereof, to file and prosecute such claim
or claims. Although it is hereby expressly agreed that the same shall not be
necessary in any event, Borrowers shall, upon demand of Co-Lenders, make,
execute and deliver any and all assignments and other instruments sufficient for
the purpose of assigning any such award or payment to Co-Lenders, free and clear
of any encumbrances of any kind or nature whatsoever.
20. Environmental Provisions. For the purposes of this
paragraph the following terms shall have the following meanings: (i) the term
"Hazardous Material" shall mean any material or substance that, whether by its
nature or use, is now or hereafter defined as a hazardous waste, hazardous
substance, pollutant or contaminant under any Environmental Requirement, or
which is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous and which is now or hereafter
regulated under any Environmental Requirement, or which is or contains
petroleum, gasoline, diesel fuel or another petroleum hydrocarbon product, (ii)
the term "Environmental Requirements" shall collectively mean all present and
future laws, statutes, ordinances, rules, regulations, orders, codes, licenses,
permits, decrees, judgments, directives or the equivalent of or by any
Governmental Authority and relating to or addressing the protection of the
environment or human health, and (iii) the term "Governmental Authority" shall
mean the Federal government, or any state or other political subdivision
thereof, or any agency, court or body of the Federal government, any state or
other political subdivision thereof, exercising executive, legislative,
judicial, regulatory or administrative functions. Borrowers hereby represents
and warrants to Co-Lenders that to the best of Borrowers's knowledge (i) no
Hazardous Material is currently located at, on, in, under or about any Property,
except as specifically set forth in the Environmental Reports, (ii) no Hazardous
Material is currently located at, in, on, under or about any Property in a
manner which violates any Environmental Requirement, or which requires cleanup
or corrective action of any kind under any Environmental Requirement, (iii) no
releasing, emitting, discharging, leaching, dumping or disposing of any
Hazardous Material from any Property onto or into any other property or from any
other property onto or into any Property has occurred or is occurring in
violation of any Environmental Requirement, (iv) no notice of violation, lien,
complaint, suit, order or other notice with respect to any
-25-
<PAGE>
Property is presently outstanding under any Environmental Requirement, and (v)
each Property and the operation thereof are in compliance with all Environmental
Requirements. Borrowers shall comply, and shall cause all tenants or other
occupants of the Properties to comply, in all respects with all Environmental
Requirements, and will not generate, store, handle, process, dispose of or
otherwise use, and will not permit any tenant or other occupant of any Property
to generate, store, handle, process, dispose of or otherwise use, Hazardous
Materials at, in, on, under or about any Property in a manner that could lead or
potentially lead to the imposition on Borrowers, any Co-Lender or any Property
of any liability or lien of any nature whatsoever under any Environmental
Requirement. Borrowers shall notify Co-Lenders promptly in the event of any
spill or other release of any Hazardous Material at, in, on, under or about any
Property which is required to be reported to a Governmental Authority under any
Environmental Requirement, will promptly forward Agent copies of any notices
received by Borrowers relating to alleged violations of any Environmental
Requirement and will promptly pay when due any fine or assessment against any
Co-Lender, any Borrowers or any Property relating to any Environmental
Requirement. If at any time it is determined that the operation or use of any
Property violates any applicable Environmental Requirement or that there are
Hazardous Materials located at, in, on, under or about any Property which, under
any Environmental Requirement, require special handling in collection, storage,
treatment or disposal, or any other form of cleanup or corrective action,
Borrowers shall, within thirty (30) days after receipt of notice thereof from
any Governmental Authority or from Agent, take, at its sole cost and expense,
such actions as may be necessary to fully comply in all respects with all
Environmental Requirements, provided, however, that if such compliance cannot
reasonably be completed within such thirty (30) day period, Borrowers shall
commence such necessary action within such thirty (30) day period and shall
thereafter diligently and expeditiously proceed to fully comply in all respects
and in a timely fashion with all Environmental Requirements. If Borrowers fail
to timely take, or to diligently and expeditiously proceed to complete in a
timely fashion, any such action, Co-Lenders may, in their sole and absolute
discretion, make advances or payments towards the performance or satisfaction of
the same, but shall in no event be under any obligation to do so. All sums so
advanced or paid by Co-Lenders (including, without limitation, consultant fees
and expenses, investigation and laboratory fees and expenses, and fines or other
penalty payments and reasonable legal fees) and all sums advanced or paid in
connection with any judicial or administrative investigation or proceeding
relating thereto, will immediately, upon demand, become due and payable from
Borrowers and shall bear interest at the Default Rate from the date any such
sums are so advanced or paid by Co-Lenders until the date any such sums are
repaid by Borrowers to Co-Lenders. Borrowers will execute and deliver, promptly
upon request, such instruments as Co-Lenders may deem useful or necessary to
permit Co-Lenders to take any such action, and such additional notes, as
Co-Lenders may require to secure all sums so advanced or paid by Co-Lenders. If
a lien is filed against any Property by any Governmental Authority resulting
from the need to expend or the actual expending of monies arising from an action
or omission, whether intentional or unintentional, of Borrowers or for which
Borrowers are responsible, resulting in the releasing, spilling, leaking,
leaching, pumping, emitting, pouring, emptying or dumping of any Hazardous
Material into the waters or onto land located within or without the State in
which any Property is located, then Borrowers will, within thirty (30) days from
the date that Borrowers are first given notice that such lien has been placed
against such Property (or within such shorter period of time as may be specified
by Co-Lenders if such Governmental Authority has commenced steps to cause such
Property to be sold pursuant to such lien) either (a) pay the claim and remove
the lien, or (b) furnish a cash
-26-
<PAGE>
deposit, bond, or such other security with respect thereto as is satisfactory in
all respects to Co-Lenders and is sufficient to effect a complete discharge of
such lien on such Property. Notwithstanding the foregoing, after prior notice to
Agent, in the case of any material item, Borrowers, at their own expense, may
contest by appropriate legal proceedings, promptly initiated and conducted in
good faith and with due diligence, the validity or enforceability, in whole or
in part, of any Environmental Requirement, provided that (i) no default shall
have occurred and be continuing under the Credit Facility Notes, the Mortgages,
this Agreement or any of the other Credit Facility Documents, (ii) such
proceeding shall suspend the obligation of Borrowers to comply with any such
Environmental Requirement, (iii) such proceeding shall be permitted under and be
conducted in accordance with the provisions of any other instrument to which
Borrowers are, or the Properties are, subject and shall not constitute a default
thereunder, (iv) failure to immediately comply with any such law, order,
ordinance, rule or regulation will not invalidate or vitiate any Insurance
Policies, in whole or in part, and will not in the opinion of Co-Lenders
constitute a present danger to the Properties or any portion thereof, or to the
individuals using and entering upon the Properties, (v) neither the Properties
nor any part thereof nor any interest therein will in the opinion of Co-Lenders
be in danger of being sold, forfeited, confiscated, terminated, cancelled or
lost, (vi) Borrowers shall have furnished such security as may be required in
the proceeding, or as may otherwise be requested or required by Co-Lenders to
insure the payment by Borrowers of all costs of compliance, fines and penalties,
together with interest thereon, as may be incurred by Borrowers in the event of
a determination in such proceeding adverse to Borrowers, and (vii) neither
Borrowers, Agent nor any Co-Lender will in the opinion of Agent and Co-Lenders
be subject to any criminal or civil liability as the result of such contestment
by Borrowers. Co-Lenders may, at their option, at intervals of not less than one
year, or more frequently if Co-Lenders reasonably believe that a Hazardous
Material or other environmental condition violates or threatens to violate any
Environmental Requirement applicable to a Property, cause an environmental audit
of such Property to be conducted to confirm Borrowers's compliance with the
provisions of this paragraph in respect of such Property, and Borrowers shall
cooperate in all reasonable ways with Agent in connection with any such audit.
If such audit discloses that a violation of an Environmental Requirement exists,
Borrowers shall pay all costs and expenses incurred in connection with such
audit, otherwise, the costs and expenses of such audit shall, notwithstanding
anything to the contrary set forth in this paragraph, be paid by Co-Lenders. If
any of the Mortgages is foreclosed, or if any Property is sold pursuant to the
provisions of the Mortgages, or if either Borrower tenders a deed or assignment
in lieu of foreclosure or sale, Borrowers shall deliver such Properties to the
purchaser at foreclosure or sale or to Co-Lenders, their respective nominees, or
wholly owned subsidiaries, as the case may be, in a condition that complies in
all respects with all Environmental Requirements. Borrowers will defend,
indemnify, and hold harmless Agent, Co-Lenders, their respective employees,
agents, officers, and directors, from and against any and all claims, demands,
penalties, causes of action, fines, liabilities, settlements, damages, costs, or
expenses of whatever kind or nature, known or unknown, foreseen or unforeseen,
contingent or otherwise (including, without limitation, consultant fees and
expenses, investigation and laboratory fees and expenses, court costs,
litigation expenses and reasonable attorneys fees) arising out of, or in any way
related to, (i) any breach by Borrowers of any of the provisions of this
paragraph, (ii) the presence, disposal, spillage, discharge, emission, leakage,
release, or threatened release of any Hazardous Material which is at, in, on,
under, about, from or affecting any Property, including, without limitation, any
damage or injury resulting from any such Hazardous Material to
-27-
<PAGE>
or affecting any Property or the soil, water, air, vegetation, buildings,
personal property, individuals or animals located on any Property or on any
other property or otherwise, (iii) any personal injury (including wrongful
death) or property damage (real or personal) arising out of or related to any
such Hazardous Material, (iv) any lawsuit brought or threatened, settlement
reached, or order or directive of or by any Governmental Authority relating to
such Hazardous Material, or (v) any violation of any Environmental Requirement.
The aforesaid indemnification shall in all events and under all circumstances
constitute the personal recourse undertakings, obligations and liabilities of
Borrowers. The indemnification by Borrowers in favor of Agent and Co-Lenders
hereinabove set forth in this paragraph shall not be applicable to any claim,
demand, penalty, cause of action, fine, liability, settlement, damage, cost or
other expense of any type whatsoever pertaining to a particular Property (i)
occasioned, arising and caused solely and directly as the result of the
negligence or willful misconduct of Agent, any Co-Lender, any nominee or any
wholly owned subsidiary of Agent or a Co-Lender or their respective employees or
agents and irrespective of whether occurring prior or subsequent to the date
upon which any Co-Lender or any nominee or any wholly owned subsidiary of any
Co-Lender acquires possession of such Property by foreclosure of the Mortgages,
a sale of such Property pursuant to the provisions of the Mortgages, acceptance
of a deed or assignment in lieu of foreclosure or sale or otherwise, or (ii)
occasioned, arising and caused solely and directly as the result of any act of
any Person (other than (A) an act of Borrowers, its employees or agents or
Persons under the control of Borrowers, or (B) an act of Agent, any Co-Lender,
any nominee or any wholly owned subsidiary of any Co-Lender or their respective
employees or agents which does not constitute negligence or willful misconduct,
or (C) an act of any Governmental Authority, including, without limitation, any
change in any Environmental Requirement) and occurring subsequent to the earlier
to occur of (x) the date of payment to Co-Lenders in cash of the entire Debt,
and (y) the date upon which any Co-Lender, any nominee or any wholly owned
subsidiary of any Co-Lender acquires possession of such Property by foreclosure
of the Mortgages, a sale of such Property pursuant to the provisions of the
Mortgages, acceptance of a deed or assignment in lieu of foreclosure or sale or
otherwise. Except as hereinabove specifically provided to the contrary in this
paragraph, the obligations and liabilities of Borrowers under this paragraph
shall survive and continue in full force and effect and shall not be terminated,
discharged or released, in whole or in part, irrespective of whether the Debt
has been paid in full and irrespective of any foreclosure of any of the
Mortgages, sale of any one or more of the Properties pursuant to the provisions
of the Mortgages or acceptance by Co-Lenders, their nominees or wholly owned
subsidiaries of one or more deeds or assignments in lieu of foreclosure or sale
and irrespective of any other fact or circumstance of any nature whatsoever.
21. Estoppel Certificates. Borrowers, within ten (10)
days after request by Co-Lenders and at its expense, will furnish Co-Lenders
with a statement, duly certified, setting forth the amount of the Debt and the
offsets or defenses thereto, if any. Co-Lenders, within ten (10) days after
request by Borrowers and at Borrowers' expense, and provided that no Event of
Default has occurred and is continuing under the Credit Facility Documents, will
furnish Borrowers with a statement setting forth the then outstanding principal
balance of the Credit Facility Notes and the interest, if any, accrued and
unpaid thereon.
22. Non-Waiver. The failure of Co-Lenders or Agent to
insist upon strict performance of any term of this Agreement shall not be deemed
to be a waiver of any term of this Agreement. Borrowers shall not be relieved of
-28-
<PAGE>
Borrowers' obligation to pay the Debt at the time and in the manner provided for
its payment in the Credit Facility Notes, the Mortgages and this Agreement by
reason of (i) failure of Co-Lenders to comply with any request of Borrowers to
take any action to foreclose any one or more of the Mortgages or otherwise
enforce any of the provisions of this Agreement, the Mortgages, the Credit
Facility Notes or any of the other Credit Facility Documents, and (ii) the
release, regardless of consideration, of the whole or any part of the Properties
or any other Collateral or security for the Debt. Regardless of consideration,
and without the necessity for any notice to or consent by the holder of any
subordinate lien, encumbrance, right, title or interest in or to the Properties,
Co-Lenders may release any Person at any time liable for the payment of the Debt
or any portion thereof or any part of the security held for the Debt and may
extend the time of payment or otherwise modify the terms of the Credit Facility
Notes, the Mortgages, this Agreement or any of the other Credit Facility
Documents, including, without limitation, a modification of the interest rate
payable on the principal balance of the Credit Facility Notes, without in any
manner impairing or affecting the Mortgages or the respective liens thereof or
the priority of the Mortgages, as so extended and modified, as security for the
Debt over any such subordinate lien, encumbrance, right, title or interest.
Co-Lenders may resort for the payment of the Debt to any other security held by
Co-Lenders in such order and manner as Co-Lenders in their discretion, may
elect. Co-Lenders may take action to recover the Debt, or any portion thereof,
or to enforce any covenant hereof without prejudice to the right of Co-Lenders
thereafter to foreclose any one or more of the Mortgages. Co-Lenders shall not
be limited exclusively to the rights and remedies herein stated but shall be
entitled to every additional right and remedy set forth in the Credit Facility
Documents or now or hereafter afforded by law. The rights of Co-Lenders under
this Agreement and the other Credit Facility Documents shall be separate,
distinct and cumulative and none shall be given effect to the exclusion of the
others. No act of Co-Lenders shall be construed as an election to proceed under
any one provision of this Agreement or of the other Credit Facility Documents to
the exclusion of any other provision set forth in this Agreement or the other
Credit Facility Documents.
23. Sole Discretion. Except as may otherwise be
expressly provided to the contrary, wherever pursuant to the Credit Facility
Notes, the Mortgages, this Agreement, or any of the other Credit Facility
Documents, Agent or any Co-Lender exercises any right given to it to consent or
not consent, or to approve or disapprove, or any arrangement or term is to be
satisfactory to Agent or such Co-Lender the decision of Agent or such Co-Lender,
as the case may be, shall be in the sole and absolute discretion of Agent or
such Co-Lender, as the case may be, and shall be final and conclusive.
24. Absolute and Unconditional Obligation. Borrowers
acknowledge that Borrowers' obligation to pay the Debt in accordance with the
provisions of the Credit Facility Notes, the Mortgages and this Agreement is and
shall at all times continue to be absolute and unconditional in all respects,
and shall at all times be valid and enforceable irrespective of any other
agreements or circumstances of any nature whatsoever which might otherwise
constitute a defense to the Credit Facility Notes, the Mortgages or this
Agreement or the obligation of Borrowers thereunder to pay the Debt or the
obligations of any other Person relating to the Credit Facility Notes, the
Mortgages or this Agreement or the obligations of Borrowers under the Credit
Facility Notes, the Mortgages or this Agreement or otherwise with respect to the
Credit Facility, and Borrowers absolutely, unconditionally and irrevocably waive
any and all right to assert any defense, setoff, counterclaim or
-29-
<PAGE>
crossclaim of any nature whatsoever with respect to the obligation of Borrowers
to pay the Debt in accordance with the provisions of the Credit Facility Notes,
the Mortgages and this Agreement or the obligations of any other Person relating
to the Credit Facility Notes, the Mortgages or this Agreement or obligations of
Borrowers under the Credit Facility Notes, the Mortgages or this Agreement or
otherwise with respect to the Credit Facility in any action, case or proceeding
brought by Agent or Co-Lenders to collect the Debt, or any portion thereof, or
to enforce, foreclose and realize upon the lien and security interest created by
the Mortgages or any other document or instrument securing repayment of the
Debt, in whole or in part (provided, however, that the foregoing provisions of
this sentence shall not be deemed a waiver of the right of Borrowers to assert
any compulsory counterclaim in any such action, case or proceeding brought by
Agent or Co-Lenders in any state court if such counterclaim is compelled under
local law or rule or procedure, or in any such action, case or proceeding
brought by Agent or Co-Lenders in a court of the United States, nor shall the
foregoing provisions of this sentence be deemed a waiver of the right of
Borrowers to assert any claim which would otherwise constitute a defense,
setoff, counterclaim or crossclaim of any nature whatsoever against Agent or
Co-Lenders in any separate action, case or proceeding brought by Borrowers
against Agent or Co-Lenders).
25. Relationship. The relationship of Co-Lenders to
Borrowers hereunder is strictly and solely that of lender and borrower and
nothing contained in the Credit Facility Notes, the Mortgages, this Agreement or
any of the other Credit Facility Documents is intended to create, or shall in
any event or under any circumstance be construed as creating, a partnership,
joint venture, tenancy-in-common, joint tenancy or other relationship of any
nature whatsoever between Co-Lenders and Borrowers other than as lender and
borrower.
26. Anti-Forfeiture. Borrowers hereby covenant and
agree not to commit, permit or suffer to exist any act or omission affording the
Federal government or any state or local government the right of forfeiture
under any Federal or state RICO or similar law as against the Properties or any
part thereof or interest therein or any monies paid in performance of Borrowers'
obligations under this Agreement, the Mortgages, the Credit Facility Notes or
any of the other Credit Facility Documents. In furtherance thereof, Borrowers
hereby indemnify Agent and Co-Lenders and agree to defend and hold Agent and
Co-Lenders harmless from and against any loss, damage or injury by reason of the
breach of the covenants and agreements set forth in this paragraph, which
indemnity shall constitute the personal recourse obligation of Borrowers.
Without limiting the generality of the foregoing, the filing of formal charges
or the commencement of proceedings against Borrowers or against the Properties
or any part thereof or interest therein under any Federal or state law for which
forfeiture of the Properties or any part thereof or of any monies paid in
performance of Borrowers' obligations under the Credit Facility Documents is a
potential result, shall, at the election of Co-Lenders, but otherwise subject to
the immediately following sentence, constitute an Event of Default hereunder
without notice or opportunity to cure. Notwithstanding the foregoing, after
prior notice to Co-Lenders, Borrowers, at their own cost and expense, may
contest the validity of or application of any such law affording such
forfeiture, provided that (i) no default shall have occurred and shall be
continuing under the Credit Facility Notes, the Mortgages, this Agreement or any
of the other Credit Facility Documents, (ii) such proceeding shall be permitted
under and be conducted in accordance with the provisions of any other instrument
to which Borrowers are or the Properties are subject and shall not constitute a
default thereunder, (iii) neither the Properties nor any portion thereof nor any
interest therein will in the opinion of Co-Lenders be in danger of being sold,
forfeited, terminated, cancelled or lost, and
-30-
<PAGE>
(iv) Borrowers shall have deposited with Agent cash or other cash equivalent or
letter of credit satisfactory to Co-Lenders in an amount sufficient to discharge
any lien together with interest and penalties thereon arising out of such law.
Notwithstanding the foregoing, Borrowers shall not be required to make any
deposit with Agent pursuant to clause (iii) of the preceding sentence, if
Co-Lenders are reasonably satisfied that (a) the act or omission affording such
forfeiture was committed by a Person other than Borrowers or an Affiliate or
subsidiary of Borrowers, (b) Borrowers are diligently pursuing their rights and
remedies against such Person, (c) neither the Properties nor any portion thereof
or interest therein will be in danger of being sold, forfeited, terminated,
cancelled or lost, and (d) the respective liens and priorities of the Mortgages
will not be in danger of being primed, diminished or forfeited.
27. Deposits. Whenever in this Agreement, Borrowers are
required to deposit monies with Agent or Co-Lenders to secure obligations of
Borrowers under this Agreement or as a condition precedent to Borrowers' right
to contest certain obligations, such monies shall (unless otherwise specifically
provided to the contrary in this Agreement) be held in an interest bearing
account selected by Agent or Co-Lenders, as the case may be. All such accrued
interest shall be held, disbursed and applied in accordance with the provisions
applicable to such deposits. In order to secure the payment of the Debt and the
performance by Borrowers of its obligations under the Credit Facility Documents,
Borrowers hereby grant and assign to Agent and Co-Lenders a security interest in
and to all monies from time to time on deposit in any such account. Upon the
occurrence of an Event of Default and for so long as such Event of Default shall
continue, Co-Lenders shall have the absolute right to apply all or any portion
of the balances held in any such accounts to the payment of the Debt whether or
not due and payable in such order, priority and proportions as Co-Lenders in
their discretion shall deem appropriate.
28. Submission to Jurisdiction. Borrowers agree to
submit to personal jurisdiction in the State of New York in any action, case or
proceeding arising out of the Credit Facility Notes, this Agreement or the other
Credit Facility Documents (other than the Mortgages and the Assignments of
Leases and Rents), and, in furtherance of such agreement, Borrowers hereby agree
and consent that without limiting other methods of obtaining jurisdiction,
personal jurisdiction over Borrowers in any such action, case or proceeding may
be obtained within or without the jurisdiction of any court located in the State
of New York and that any process or notice of motion or other application to any
such court in connection with any such action, case or proceeding may be served
upon Borrowers by registered or certified mail to or by personal service at the
last known address of Borrowers, as the case may be, whether such address be
within or without the jurisdiction of any such court. Borrowers also agree that
the venue of any litigation arising in connection with the Debt or in respect of
any of the obligations of Borrowers under the Credit Facility Notes, this
Agreement or the other Credit Facility Document (other than the Mortgages and
the Assignments of Leases and Rents) shall, to the extent permitted by law, be
in New York County, New York.
29. Retention of Counsel and Consultants. If,
subsequent to the occurrence of a default under any of the Credit Facility
Documents or otherwise in connection with the protection, preservation, addition
or release of Collateral, Agent or Co-Lenders deem it to be in the best interest
of Co-Lenders to retain the assistance of any Person (including, but not limited
to, attorneys, title insurance companies, third party escrow agents, appraisers,
accountants engineers and surveyors) with respect to any request for consent or
approval by Agent or Co-Lenders under the Credit Facility
-31-
<PAGE>
Documents, Borrowers shall reimburse Co-Lenders within ten (10) days of demand
by Agent for all reasonable costs incurred by Co-Lenders in connection with the
employment of such Persons.
30. Waiver of Notice. Borrowers shall not be entitled
to any notices of any nature whatsoever from Agent or any Co-Lender except with
respect to matters for which this Agreement specifically and expressly provides
for the giving of notice by Agent or a Co-Lender to Borrowers, and Borrowers
hereby expressly waive (to the full extent Borrowers may lawfully do so) the
right to receive any notice from Agent or any Co-Lender with respect to any
matter for which this Agreement does not specifically and expressly provide for
the giving of notice by Agent or a Co-Lender to Borrowers.
31. Events of Default. The Debt shall become due at the
option of Co-Lenders upon the occurrence of any one or more of the following
events (collectively, "Events of Default"):
(a) if any portion of the Debt is not paid
when due;
(b) if any of the covenants contained in
paragraph 9 of this Agreement shall be breached;
(c) if any fact, circumstance or event shall
occur which is specifically characterized under any
provision of any Credit Facility Document as an "Event
of Default" within the meaning given to such term
pursuant to the provisions of this Agreement;
(d) if any representation or warranty of any
Borrower or any Guarantor made in this Agreement or any
of the other Credit Facility Documents, or in any
certificate, report, financial statement or other
instrument furnished in connection with the making of
the Credit Facility Notes, the Mortgages, this
Agreement or any other Credit Facility Document or the
extension of the Credit Facility by Co-Lenders to
Borrowers, shall prove false or misleading in any
material respect;
(e) if any Federal tax lien is filed against
Borrowers, or any Property and the same is not
discharged of record within thirty (30) days after the
same is filed (unless the same is being contested in
good faith by appropriate proceeding and otherwise in
compliance with the general requirements for contesting
Taxes, as more specifically set forth in paragraph 17
of this Agreement);
(f) if without the consent of Co-Lenders any
FF&E (except for normal replacement of the FF&E) is
removed, or if without the consent of Co-Lenders any
Property is demolished or materially altered (other
than for tenant improvements being made under Leases
entered into in conformity with the provisions of this
Agreement);
(g) if the Insurance Policies are not kept
in full force and effect, or if the Insurance Policies
are not delivered to Agent upon request;
(h) if without the consent of Co-Lenders any
Lease is made, cancelled or modified (other than in
compliance with the
-32-
<PAGE>
provisions of this Agreement and the other Credit
Facility Documents) or if any portion of the Rents is
paid for a period of more than one (1) month in advance
or if any of the Rents are further assigned;
(i) if any "Event of Default" as defined in
the Existing Credit Agreement shall occur;
(j) if any Borrower or other Person shall be
in default (beyond any applicable grace and cure
period) under any mortgage, deed of trust, pledge or
other security agreement (including, without
limitation, any such agreement now or hereafter held by
Co-Lenders) affecting or relating to any Property, or
any other Collateral or any portion thereof or under
any Material Agreement affecting or relating to any
Property or any other Collateral, or any portion
thereof;
(k) if any Property shall become subject (i)
to any tax lien, other than a lien for local real
estate taxes and assessments not due and payable, or
(ii) to any lis pendens, notice of pendency, stop
order, notice of intention to file mechanic's or
materialman's lien, mechanic's or materialman's lien or
other lien of any nature whatsoever, and the same shall
not either be discharged of record or in the
alternative insured over to the satisfaction of
Co-Lenders by the title company insuring the lien of
the Mortgage pertaining to the Property in question
within a period of forty five (45) days after the date
upon which Borrower shall be notified, or shall
otherwise have actual knowledge, that the same is filed
or recorded, and irrespective of whether the same is
superior or subordinate in lien or other priority to
the lien of the Mortgages and irrespective of whether
the same constitutes a perfected or inchoate lien or
encumbrance on the Properties or any portion thereof or
is only a matter of record or notice;
(l) if for any reason any of the covenants
set forth in paragraph 11 or paragraph 13 of this
Agreement shall at any time during the term of the
Credit Facility cease to be satisfied and complied with
in all respects or if any representation or warranty
set forth in paragraph 12 of this Agreement or
elsewhere in the Credit Facility Documents shall at any
time cease to be true and accurate in all material
respects;
(m) if any Borrower or Guarantor shall make
an assignment for the benefit of creditors;
(n) (1) if a court of competent jurisdiction
enters a decree or order for relief with respect to any
Borrower or Guarantor under Title 11 of the United
States Code as now consti tuted or hereafter amended or
under any other applicable Federal or state bankruptcy,
insolvency or other similar law, rule or regulation; or
(2) if such court enters a decree or order appointing a
receiver, liquidator, assignee, trustee, custodian,
examiner, magistrate, arbitrator, sequestrator (or
similar official) of any Borrowers or Guarantor or of
any substantial part of their respective properties; or
(3) if such court decrees or orders the winding up or
liquidation of the affairs of any Borrower or Guarantor
and such order or decree is not dismissed,
-33-
<PAGE>
discharged or vacated of record within sixty (60) days
after the same has been entered;
(o) if any Borrower or Guarantor files a
petition for relief or answer or consent seeking relief
under Title 11 of the United States Code as now
constituted or hereafter amended, or under any other
applicable Federal or state bankruptcy, insolvency or
other similar law, rule or regulation, or if any
Borrower or Guarantor fails to diligently oppose or
shall otherwise consent to the commencement or
prosecution of an involuntary case under Title 11 of
the United States Code as now constituted or hereafter
amended, or under any other applicable Federal or state
bankruptcy, insolvency or similar law, rule or
regulation, or to the appointment of or taking
possession by a receiver, liquidator, assignee,
trustee, custodian, examiner, magistrate, arbitrator,
sequestrator (or other similar official) of any
Borrower or Guarantor or of any substantial part of
their respective properties, or if any Borrower or
Guarantor fails generally to pay its respective debts
as such debts become due, or if any Borrower or
Guarantor takes any action in furtherance of any action
described in this subparagraph;
(p) if any Borrower, Guarantor or other
Person shall be in default beyond the expiration of any
applicable notice and cure periods under the Credit
Facility Notes, the Mortgages, this Agreement or any
other Credit Facility Document or any other docu ment
or instrument otherwise executed and delivered in
connection therewith or in connection with the
extension of the Credit Facility by Co-Lenders to
Borrowers;
(q) if (except as otherwise specifically
provided to the contrary in paragraph 9 of this
Agreement with respect to WOP) there shall occur a
complete or partial suspension or liquidation of all or
substantially all of any business of any Borrower or
any Guarantor and such occurrence in the opinion of
Co-Lenders has or may have a materially adverse impact
on any Property or any other Collateral or on the
business, assets, operations, property, financial or
other condition of any Borrower or Guarantor;
(r) if Borrowers shall fail to furnish or
cause to be furnished to each Co-Lender, any financial
or other information required to be provided in
accordance with the provisions of this Agreement or the
other Credit Facility Documents or otherwise reasonably
requested by Co-Lenders or shall fail to permit, or to
arrange for, the inspection by Co-Lenders (or their
respective employees and agents) of any books or
records of Borrowers or any Guarantor and such default
shall continue for twenty (20) days after notice by
Agent to Borrowers; or
(s) if Borrowers shall continue to be in
default under any of the other terms, covenants or
conditions of this Agreement for five (5) days after
notice from Agent in the case of any default which can
be cured by the payment of a sum of money, or for
twenty (20) days after notice from Agent in the case of
any other default, provided that if such default cannot
reasonably be cured within such twenty (20) day period
and Borrowers, as the case may be, shall have commenced
to cure such default within such twenty (20) day period
and thereafter diligently and expeditiously
-34-
<PAGE>
proceeds to cure the same, such twenty (20) day period
shall be extended for so long as it shall require
Borrowers, as the case may be, in the exercise of due
diligence to cure such default, it being agreed,
however, that no such extension shall be for a period
in excess of sixty (60) days.
Upon the occurrence of an Event of Default, and for so long as any such Event of
Default continues, Co-Lenders (subject to the terms and provisions of the
Co-Lenders Agreement) (i) shall have no obligation to make any further advances
under the Credit Facility, (ii) shall have the absolute and unconditional right
in their sole and absolute discretion to declare the Debt or any portion thereof
immediately due and payable, (iii) shall have the right to pursue any and all
remedies provided for in this Agreement, the Credit Facility Notes, the
Mortgages, or any of the other Credit Facility Documents or otherwise available
to Co-Lenders, at law or in equity or otherwise, and (iv) shall have the
absolute and unconditional right in their sole and absolute discretion to
terminate the Credit Facility and their obligations with respect thereto under
this Agreement. All remedies afforded to Co-Lenders under this Agreement or
under any of the other Credit Facility Documents are separate and cumulative
remedies and it is agreed that none of such remedies shall be deemed to be in
exclusion of any other remedies available to Co-Lenders and shall not in any
manner limit or prejudice any other legal or equitable remedies which Co-Lenders
may have.
32. Application of Moneys. All moneys received or
collected by Co-Lenders in respect of the Credit Facility after an Event of
Default shall be applied by Co-Lenders first to the payment of all costs
incurred in the collection of such moneys (including reasonable attorneys' fees
and legal expenses) and second, to the payment of the Debt in such order,
priority and proportions as Co-Lenders may in its sole and absolute discretion
determine. The balance, if any, of such moneys remaining after payment in full
of such costs and the Debt shall be remitted to Borrowers or as otherwise
directed by a court of competent jurisdiction.
33. Right to Cure Defaults. If default beyond any
applicable notice and cure period in the performance of any of the covenants of
Borrowers, shall occur, Co-Lenders may, at their discretion, remedy the same and
for such purpose shall have the right to enter upon the Properties or any
portion thereof without thereby being liable to Borrowers (except in connection
with its gross negligence or willful misconduct) or any Person in possession
thereof holding under Borrowers, and to pay all sums as may be necessary to cure
any such default (including, without limitation any default by Borrowers in the
payment of any Insurance Premiums or any Taxes or other liens or encumbrances
covering the Properties or any part thereof). If Co-Lenders shall remedy such a
default (including, without limitation, any default by Borrowers in the payment
of any Insurance Premiums or any Taxes or other liens or encumbrances covering
the Properties or any part thereof) or appear in, defend or bring any action or
proceeding to protect the interest of Co-Lenders in the Properties, or any
portion thereof, or to foreclose any of the Mortgages or collect the Debt, the
costs and expenses thereof (including reasonable attorneys' fees to the extent
permitted by law) with interest as provided in this paragraph, shall be paid by
Borrowers to Agent upon demand, and shall be added to and constitute part of the
Debt secured by the Mortgages. All such costs and expenses incurred by
Co-Lenders in remedying such default or in appearing in, defending or bringing
any such action or proceeding, shall be paid by Borrowers to Agent upon demand,
with interest at a rate per annum equal to the Default Rate.
-35-
<PAGE>
34. Further Assurances. Borrowers agree to do or cause
to be done all such further reasonable acts and things, and to execute and
deliver or cause to be executed and delivered all such additional conveyances,
assignments, agreements and instruments as Co-Lenders may at any time reasonably
request in connection with the administration or enforcement of this Agreement
and the other Credit Facility Documents or in order better to assure, perfect
and confirm unto Co-Lenders their rights, powers and remedies under this
Agreement and under the other Credit Facility Documents. Nothing contained in
this paragraph shall be construed as obligating Borrowers to provide or to cause
to be provided any collateral or security for the Credit Facility other than as
expressly contemplated by the provisions of this Agreement and the other Credit
Facility Documents.
35. Costs and Expenses. Borrowers shall pay, or cause
to be paid, to Co-Lenders all costs, fees, expenses and charges incurred by
Co-Lenders in connection with the enforcement of this Agreement and the other
Credit Facility Documents (including without limitation all reasonable fees and
disbursements of Agent's New York City and local legal counsel).
36. Indemnification of Agent and Co-Lenders. Borrowers
shall indemnify Agent, Co-Lenders, their affiliates, subsidiaries, directors,
officers and employees against all losses, claims, damages, penalties,
judgments, liabilities and reasonable expenses (including, without limitation,
all expenses of litigation or preparation therefor whether or not Agent or
Co-Lenders are a party thereto) which any of them may pay or incur arising out
of or relating to this Agreement, the other Credit Facility Documents, the
transactions contemplated hereby or the direct or indirect application or
proposed application of the proceeds of any advance hereunder, provided,
however, that the aforesaid indemnification shall not apply to any such loss,
claim, damage, penalty, judgment, liability or expense which is incurred by
Agent or a Co-Lender as a result of its gross negligence or willful misconduct.
The obligations of Borrowers under this paragraph shall survive the termination
of this Agreement.
37. Construction of Agreement. The titles and headings
preceding the paragraphs of this Agreement have been inserted for convenience of
reference only and are not intended to summarize or otherwise describe the
subject matter of such paragraphs and shall not be given any consideration in
the construction of this Agreement.
38. Parties Bound, etc. All of the terms, covenants and
provisions of this Agreement shall be binding upon and inure to the benefit of
Borrowers, Co-Lenders and Agent and their respective successors and assigns.
Borrowers shall not have the right without the prior consent of Co-Lenders
(which consent may be withheld in the sole and absolute discretion of
Co-Lenders) to assign or transfer their respective rights under this Agreement
or under any of the other Credit Facility Documents, in whole or in part, by
agreement, operation of law or otherwise to any other Person, it being agreed
that any such assignment or transfer without the prior consent of Co-Lenders
shall be void and of no force and effect and shall constitute an immediate Event
of Default under this Agreement.
39. Complete Agreement. NO STATEMENTS, AGREEMENTS OR
REPRESENTATIONS, ORAL OR WRITTEN, WHICH MAY HAVE BEEN MADE BY ANY CO-LENDER, OR
BY ANY EMPLOYEE, AGENT OR BROKER ACTING ON BEHALF OF ANY CO-LENDER, WITH RESPECT
TO THIS AGREEMENT OR THE CREDIT FACILITY SHALL BE OF ANY FURTHER FORCE OR
EFFECT, EXCEPT TO THE EXTENT SPECIFICALLY SET FORTH IN THIS AGREEMENT OR IN THE
OTHER CREDIT FACILITY DOCUMENTS, AND ALL PRIOR AGREEMENTS AND
-36-
<PAGE>
REPRESENTATIONS IN RESPECT OF THIS AGREEMENT AND THE CREDIT FACILITY ARE MERGED
IN THIS AGREEMENT SO THAT THIS AGREEMENT SHALL CONSTITUTE THE ENTIRE AGREEMENT
BETWEEN CO-LENDERS AND BORROWERS WITH RESPECT TO THE CREDIT FACILITY.
40. Governing Law. This Agreement shall in all respects
be gov erned, construed, applied and enforced in accordance with the laws of the
State of New York.
41. Severability. If any term, covenant, provision or
condition of this Agreement shall be held to be invalid, illegal or
unenforceable in any respect, this Agreement shall be construed without such
term, covenant, provi sion or condition.
42. Notices. Any notice, request, demand, statement,
authoriza tion, direction, approval or consent made under this Agreement or
under the other Credit Facility Documents shall be in writing and shall be sent
by Federal Express or other reputable national courier service, or by postage
prepaid registered or certified mail, return receipt requested, and shall be
deemed given (i) when received at the following addresses if sent by Federal
Express, or other reputable national courier service, and (ii) three (3)
business days after being postmarked and addressed as follows if sent by postage
prepaid registered or certified mail, return receipt requested:
If to Smith Barney:
Smith Barney Mortgage Capital Group, Inc.
390 Greenwich Street, 5th Floor
New York, New York 10013
Attention: Clive Bull
With a copy to:
Battle Fowler LLP
Park Avenue Tower
75 East 55th Street
New York, New York 10022
Attention: Dean A. Stiffle, Esq.
If to NationsBank, in its individual capacity or as
Agent:
NationsBank, N.A.
Real Estate Banking
8300 Greensboro Drive
McLean, Virginia 22102-3604
Attention: Cheryl D. Fitzgerald
Vice President
With a copy to:
Cadwalader, Wickersham & Taft
201 South College Street, Suite 1510
Charlotte, North Carolina 28244
Attention: James P. Carroll, Esq.
-37-
<PAGE>
If to Borrowers:
c/o Brandywine Realty Trust
Newtown Square Corporate Campus
16 Campus Boulevard, Suite 150
Newtown Square, Pennsylvania 19073
Attention: Gerard H. Sweeney
President and Chief Executive Officer
With a copy to:
Pepper, Hamilton & Scheetz
3000 Two Logan Square
Eighteenth and Arch Streets
Philadelphia, Pennsylvania 19103-2799
Attention: Michael H. Friedman, Esq.
Each party may designate a change of address by notice to the other parties,
given at least fifteen (15) days before such change of address is to become
effective.
43. Modification. This Agreement may not be modified,
amended or terminated, in whole or in part, except by an agreement in writing
executed by the parties hereto.
44. Waivers. Co-Lenders may at any time and from time
to time waive any one or more of the terms, covenants, provisions or conditions
contained in this Agreement or in the other Credit Facility Documents, but any
such waiver shall be deemed made in pursuance hereof or thereof and not in
modification thereof, and any such waiver in any particular instance or
circumstance shall in no event or under any circumstance be considered a waiver
of any such term, covenant, provision or condition in any other instance or any
other circumstance.
45. WAIVER OF TRIAL BY JURY. BORROWERS AND CO-LENDERS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY AND ALL RIGHTS TO TRIAL BY JURY
IN ANY ACTION, SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH, OUT OF OR
OTHERWISE RELATING TO THE CREDIT FACILITY NOTES, THE MORTGAGES, THIS AGREEMENT
OR ANY OTHER DOCUMENT OR INSTRUMENT NOW OR HEREAFTER EXECUTED AND DELIVERED IN
CONNECTION THEREWITH OR WITH THE CREDIT FACILITY.
46. Borrowers' Reliance on Agent's Authority. Unless
otherwise notified by Co-Lenders to the contrary, Borrowers shall have the right
to rely upon any advice they receive from Agent as to any action taken or not
taken by Co-Lenders, or as to any consent or approval given or not given by
Co-Lenders, or as to any other action taken or not taken by Co-Lenders, or as to
any decision otherwise made by Co-Lenders, in respect of the Credit Facility or
under or pursuant to the provisions of the Credit Facility Documents, it being
understood that all communication between Borrowers and Co-Lenders in respect of
day to day matters concerning the Credit Facility shall be done through the
offices of Agent.
47. Authorized Representatives of BRT. The Chief
Financial Officer or the Chief Executive Officer of BRT shall from time to time
notify and advise Agent and Co-Lenders in writing of the officers of BRT who are
authorized and designated to act on behalf of BRT in respect of the Credit
Facility and under and pursuant to the provisions of the Credit Facility
-38-
<PAGE>
Documents, which notice and advise may be conclusively relied upon by Agent and
Co-Lenders.
48. Exculpation. No recourse shall be had for any
obligation of BRT under this Agreement or any of the other Credit Facility
Documents or for any claim based thereon or otherwise in respect thereof,
against any past, present or future trustee, shareholder, officer or employee of
BRT, 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 each other party to this Agreement and the other Credit
Facility Documents.
-39-
<PAGE>
IN WITNESS WHEREOF, Co-Lenders, Borrowers and Agent
have duly executed this Agreement as of the day and year first above written.
SMITH BARNEY MORTGAGE CAPITAL GROUP, INC.,
a Delaware corporation
By: /s/ Clive Bull
---------------------------------
Name: Clive Bull
Title: Vice President
NATIONSBANK, N.A., a national banking
association, acting in its individual
capacity
By: /s/ Douglas B. Cochrane
----------------------------------
Name: Douglas B. Cochrane
Title: Senior Vice President
BRANDYWINE REALTY TRUST, a Maryland real
estate investment trust
By: /s/ Gerard H. Sweeney
----------------------------------
Name: Gerard H. Sweeney
Title: President and Chief
Executive Officer
BRANDYWINE OPERATING PARTNERSHIP, L.P.
By: Brandywine Realty Trust, a Maryland
real estate investment trust, its
general partner
By: /s/ Gerard H. Sweeney
----------------------------------
Name: Gerard H. Sweeney
Title: President and Chief
Executive Officer
NATIONSBANK, N.A., a national banking
association, acting in its capacity as
administrative and documentation agent
By: /s/ Douglas B. Cochrane
----------------------------------
Name: Douglas B. Cochrane
Title: Senior Vice President
-40-
<PAGE>
EXHIBIT A
(Definition of Certain Terms)
Additional Property: The term "Additional Property" as used in this Agreement
shall mean any property acquired by Borrowers subsequent to the date of this
Agreement.
Affiliate: The term "Affiliate" as used in this Agreement shall mean any Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with any other Person. A Person shall be deemed to control
another Person if the controlling Person owns fifty-one (51%) percent or more of
any class of voting securities of the controlled Person or possesses, directly
or indirectly, the power to direct or cause the direction of the management or
policies of the controlled Person, whether through ownership of stock by
contract or otherwise.
Agent: The term "Agent" as used in this Agreement shall have the meaning given
to such term in the preamble to this Agreement.
Agreement: The term "Agreement" as used in this Agreement shall mean this
Agreement.
Alternate Credit Rate: The term "Alternate Credit Rate" as used in this
Agreement shall have the meaning given to such term in paragraph 1(ii) of
Exhibit B to this Agreement.
Approved Value: The term "Approved Value" as used in this Agreement shall mean,
with respect to any of the Properties, either (y) the "as is" appraised value of
any such Property, as set forth in the appraisal prepared in connection with its
inclusion in the collateral pool for the Credit Facility, if the fair market
value of such Property, as set forth in such appraisal, is approved without
adjustment by Co-Lenders or (z) the adjusted appraised value of such Property,
if the fair market value of such Property, as set forth in such appraisal, is
approved with adjustment in value by Co-Lenders.
Assignments of Leases and Rents: The term "Assignments of Leases and Rents" as
used in this Agreement shall mean the Assignments of Leases and Rents to be
given by Borrowers to Agent, as security for the payment of the Debt and
constituting a first lien on all of Borrowers's right, title and interest now
owned or hereafter acquired in and to all Leases and Rents pertaining to or
derived from the Properties, the form of which is attached to this Agreement as
Exhibit H.
Base LIBOR Rate: The term "Base LIBOR Rate" as used in this Agreement shall have
the meaning given to such term in paragraph 1(v) of Exhibit B to this Agreement.
Borrowers: The term "Borrowers" as used this Agreement shall have the meaning
given to such term in the preamble to this Agreement.
BOP: The term "BOP" as used in this Agreement shall have the meaning given to
such term in the preamble to the main body of this Agreement.
BRP: The term "BRP" as used in this Agreement shall mean Brandywine Realty
Partners, a Pennsylvania general partnership.
A-1
<PAGE>
BRSC: The term "BRSC" as used in this Agreement shall mean Brandywine Realty
Services Corporation, a Pennsylvania corporation.
BHI: The term "BHI" as used in this Agreement shall mean Brandywine Holdings I,
Inc., a Pennsylvania corporation.
BRT: The term "BRT" as used in this Agreement shall have the meaning given to
such term in the preamble to the main body of this Agreement.
business day: The term "business day" shall have the meaning given to such terms
in paragraph 1(ii) of Exhibit B to this Agreement.
Business Day: The term "Business Day" as used in this Agreement shall have the
meaning given to such term in paragraph 1(i) of Exhibit B to this Agreement.
Co-Lenders: The term "Co-Lenders" as used in this Agreement shall have the
meaning given to such term in the preamble to the main body of this Agreement.
Co-Lenders Agreement: The term "Co-Lenders Agreement" as used in this Agreement
shall mean that certain Co-Lender and Servicing Agreement dated the date hereof
by and among Smith Barney and NationsBank, in its individual capacity and as
Agent, as the same may be amended from time to time.
Collateral: The term "Collateral" as used in this Agreement shall mean all of
the now existing or hereafter acquired right, title and interest of Borrowers in
and to (a) the Initial Properties, (b) the Additional Properties which are
included in the collateral pool for the Credit Facility, (c) all Leases, Rents,
easements, options, personal property and other rights or property related to
the ownership or operation of the Properties which are included from time to
time in the collateral pool for the Credit Facility, (d) any other collateral
now or hereafter delivered to Co-Lenders pursuant to the provisions of this
Agreement or the other Credit Facility Documents as collateral for the Credit
Facility and (e) all proceeds of the foregoing.
Commitment Fee: The term "Commitment" as used in this Agreement shall have the
meaning given to such term in paragraph 10 of the main body of this Agreement.
Credit Facility: The term "Credit Facility" as used in this Agreement shall have
the meaning given to such term in the Preliminary Statement on the first page of
the main body of this Agreement.
Credit Facility Documents: The term "Credit Facility Documents" as used in this
Agreement shall collectively mean this Agreement, the Credit Facility Notes, the
Mortgages, the Assignments of Leases and Rents, the Guaranty of Payment, the
Hazardous Material Guaranty and Indemnification Agreement and all other
documents and instruments of any nature whatsoever now or hereafter executed and
delivered in connection with this Agreement or the Credit Facility, as any of
the same may from time to time be amended, modified, extended, supplemented,
renewed, replaced or restated.
Credit Facility Notes: The term "Credit Facility Notes" as used in this
Agreement shall mean, collectively, the following: (i) that certain Note dated
the date hereof in the original principal amount of $35,000,000.00 given by
Borrowers to Smith Barney, and (ii) that certain Note dated the date hereof in
the original principal amount of $35,000,000.00 given by Borrowers to
A-2
<PAGE>
NationsBank, as such Notes may from time to time be amended, modified, extended,
supplemented, renewed, replaced or restated.
Credit Facility Outstanding: The term "Credit Facility Outstanding" as used in
this Agreement shall mean the outstanding principal balance of the Credit
Facility from time to time.
Credit Facility Percentage Interests: The term "Credit Facility Percentage
Interests" as used in this Agreement shall have the meaning given to such term
in paragraph 2 of the main body of this Agreement.
Debt: The term "Debt" as used in this Agreement shall mean all principal,
interest, additional interest and other sums of any nature whatsoever which may
or shall become due and payable to Co-Lenders in accordance with the provisions
of the Credit Facility Documents.
default: The term "default" as used in this Agreement shall mean the occurrence
of any default by Borrowers or any other Person in the observance or performance
of any of the terms, covenants or provisions of this Agreement, the Credit
Facility Notes, the Mortgages or the other Credit Facility Documents on the part
of Borrowers or such other Person to be observed or performed without regard to
whether such default constitutes or would upon notice or lapse of time, or both,
constitute an Event of Default under this Agreement, the Credit Facility Notes,
the Mortgages or the other Credit Facility Documents.
Default Rate: The term "Default Rate" as used in this Agreement shall, to the
extent necessary, be determined on a daily basis and shall be equal to four (4%)
percent plus the greater on a daily basis of (i) the weighted average of the
LIBOR Rates, if any, from time to time, applicable to the Credit Facility Notes,
and (ii) the Floating Rate, provided, however, that the Default Rate shall in no
event exceed the maximum interest rate permitted by applicable law. The Default
Rate shall be calculated for the actual number of days elapsed on the basis of a
360-day calendar year.
Emmes Properties: The term "Emmes Properties" as used in this Agreement shall
collectively mean (A) the premises located in Mt. Laurel, Burlington County, New
Jersey together with the improvements erected thereon and commonly known as (i)
2000-4000 Midlantic Drive, (ii) 9000 Midlantic Drive, (iii) 10000 Midlantic
Drive, and (iv) 15,000 Midlantic Drive, and (B) the premises located in Upper
Merion Township, Montgomery County, Pennsylvania together with the improvements
erected thereon and commonly known as 7000 Geerdes Boulevard.
Environmental Requirements: The term "Environmental Requirements" as used in
this Agreement shall have the meaning given to such term in paragraph 20 of the
main body of this Agreement.
Environmental Reports: The term "Environmental Reports" as used in this
Agreement shall mean (i) in respect of the Initial Properties, the environmental
reports listed on Schedule 4 attached hereto, and (ii) in respect of any
Additional Property which is added to the collateral pool for the Credit
Facility from time to time, the environmental reports delivered to and approved
by Co-Lenders, in accordance with the provisions of paragraph 1(1) of Exhibit
D-1 attached hereto.
ERISA: The term "ERISA" as used in this Agreement shall have the meaning given
to such term in paragraph 12(u) of the main body of this Agreement.
A-3
<PAGE>
Events of Default: The term "Events of Default" as used in this Agreement shall
have the meaning given to such term in paragraph 31 of the main body of this
Agreement.
Existing Credit Agreement: The term "Existing Credit Agreement" as used in this
Agreement shall mean a certain Revolving Credit Facility dated as of November
25, 1996 among Smith Barney Mortgage Capital Group, Inc.; NationsBank, N.A.,
acting in its individual capacity; Brandywine Realty Trust; Brandywine Operating
Partnership, L.P.; LC/N Horsham Limited Partnership; LC/N Keith Valley Limited
Partnership I; Nichols Lansdale Limited Partnership III; Newtech III Limited
Partnership; Newtech IV Limited Partnership; C/N Oaklands Limited Partnership I;
Fifteen Horsham, L.P.; C/N Leedom Limited Partnership II; C/N Iron Run Limited
Partnership III; and NationsBank, N.A., acting in its capacity as administrative
and documentation agent.
Existing Credit Facility: The term "Existing Credit Facility" as used in this
Agreement shall mean the $80,000,000 revolving credit facility extended to
Borrowers and certain of their Affiliates in accordance with the terms of the
Existing Credit Agreement.
Existing Credit Facility Documents: The term "Existing Credit Facility
Documents" as used in this Agreement shall mean the "Credit Facility Documents"
as defined and described in the Existing Credit Agreement.
Federal Funds Effective Rate: The term "Federal Funds Effective Rate" as used in
this Agreement shall have the meaning given to such term in paragraph 1(ii) of
Exhibit B to this Agreement.
FF&E: The term "FF&E" as used in this Agreement shall mean, collectively, all
goods (as such term is defined in the Uniform Commercial Code), now owned or
hereafter acquired by Borrowers, located at or used in connection with the
Properties and the operation of the Properties, including, without limitation,
(i) all furniture and furnishings and all other items of personal property
(including inventory now owned or hereafter acquired by Borrowers but excluding
inventory and personal property owned by Lessee or any Other Lessee) located on,
or used in connection with the operation of the Properties, together with all
replacements, modifications, alterations and additions thereto; and (ii) all
equipment, machinery, fixtures and other items of property required or
incidental to the use of the Properties, including all components thereof, now
and hereafter permanently affixed to or incorporated into the Properties,
including, without limitation, all furnaces, boilers, heaters, electrical
equipment, heating, plumbing, lighting, ventilating, refrigerating,
incineration, air and water pollution control, waste, disposal, air-cooling and
air conditioning systems and apparatus, sprinkler systems and fire and theft
protection equipment, all of which to the greatest extent permitted by law are
deemed by the parties hereto to constitute real estate, together with all
replacements, modifications, alterations and additions thereto.
Financial Covenants: The term "Financial Covenants" as used in this Agreement
shall mean all of the financial covenants contained in this Agreement and the
Existing Credit Facility Agreement and including, without limitation, the
financial covenant set forth in paragraphs 11 and 13 of this Agreement and the
Debt-to-Tangible Net Worth Requirement, the Fixed Charge Coverage Ratio, the
Loan to Value Requirement, the Minimum Debt Service Coverage Ratio and the
Supplemental Debt Service Coverage Ratio (all as defined and more particularly
described in the Existing Credit Agreement and as in effect on the date of this
Agreement and without regard to any amendment of the Existing Credit
A-4
<PAGE>
Agreement made after the date of this Agreement unless otherwise agreed to by
Co-Lenders in the exercise of their sole and absolute discretion).
Financing Statements: The term "Financing Statements" as used in this Agreement
shall mean Uniform Commercial Code Financing Statements, in form and content
acceptable to Co-Lenders.
FIRREA: The term "FIRREA" as used in this Agreement shall mean the Financial
Institutions Reform, Recovery and Enforcement Act.
Floating Rate: The term "Floating Rate" as used in this Agreement shall have the
meaning given to such term in paragraph 1(ii) of Exhibit B to this Agreement.
GAAP: The term "GAAP" shall mean generally accepted accounting practices
consistently applied.
Governmental Authority: The term "Governmental Authority" as used in this
Agreement shall have the meaning given to such term in paragraph 20 of the main
body of this Agreement.
Guarantor: The term "Guarantor" as used in this Agreement shall collectively
mean WOP, BRP and BRSC.
Guaranty of Payment: The term "Guaranty of Payment" as used in this Agreement
shall mean that certain Guaranty of Payment dated the date hereof given by
Guarantors to Agent, the form of which is attached hereto as Exhibit I.
Hazardous Material: The term "Hazardous Material" as used in this Agreement
shall have the meaning given to such term in paragraph 20 of the main body of
this Agreement.
Hazardous Material Guaranty and Indemnification Agreement: The term "Hazardous
Material Guaranty and Indemnification Agreement" as used in this Agreement shall
mean that certain Hazardous Material Guaranty and Indemnification Agreement
dated the date hereof given by Guarantors to Agent, the form of which is
attached hereto as Exhibit J.
Initial Properties: The term "Initial Properties" as used in this Agreement
shall mean the Owned Properties constituting part of the original collateral
pool for the Credit Facility and, to the extent accepted for inclusion in the
collateral pool, the Pending Properties, all as more particularly described in
Exhibit E attached hereto.
Insurance Policies: The term "Insurance Policies" as used in this Agreement
shall have the meaning given to such term in paragraph 18 of the main body of
this Agreement.
Insurance Premiums: The term "Insurance Premiums" as used in this Agreement
shall have the meaning given to such term in paragraph 18 of the main body of
this Agreement.
Interest Payment Date: The term "Interest Payment Date" as used in this
Agreement shall have the meaning given to such term in paragraph 1(iii) of
Exhibit B to this Agreement.
A-5
<PAGE>
Interest Period: The term "Interest Period" as used in this Agreement shall have
the meaning given to such term in paragraph 1(iv) of Exhibit B to this
Agreement.
Internal Revenue Code: The term "Internal Revenue Code" as used in this
Agreement shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute.
Leases: The term "Leases" as used in this Agreement shall mean collectively mean
all leases, licenses and other agreements now or hereafter entered into and
affecting or relating to the use or occupancy of the Properties from time to
time constituting part of the collateral pool for the Credit Facility.
LIBOR Rate: The term "LIBOR Rate" as used in this Agreement shall have the
meaning given to such term in paragraph 1(v) of Exhibit B to this Agreement.
Material Agreements: The term "Material Agreements" as used in this Agreement
shall mean all REAs, condominium declarations and related documents and all
other agreements which in the judgment of Co-Lenders are material to the value,
use, operation or management of any Property from time to time constituting part
of the collateral pool for the Credit Facility, or the modification, amendment
or termination of which could or would in the judgment of Co-Lenders have a
material adverse effect on the value, use, operation or management of any
Property from time to time constituting part of the collateral pool for the
Credit Facility.
Maturity Date: The term "Maturity Date" shall have the meaning given to such
term in paragraph 3 of the main body of this Agreement.
Mortgages: The term "Mortgages" as used in this Agreement shall mean fully cross
defaulted and cross collateralized blanket mortgages constituting first liens on
the fee estate of BOP in the Properties to be executed and delivered by BOP to
Agent and securing payment in full of the Debt, the forms of which are attached
hereto as Exhibits F and G.
NAREIT: The term "NAREIT" as used in this Agreement shall mean the National
Association of Real Estate Investment Trusts.
NationsBank: The term "NationsBank" as used in this Agreement shall have the
meaning given to such term in the preamble to the main body of this Agreement.
Owned Properties: The term "Owned Properties" as used in this Agreement shall
mean the Properties which, as of the date hereof, are owned by BOP and which are
so identified on Exhibit E attached hereto.
Pending Properties: The term "Pending Properties" as used in this Agreement
shall mean the Properties whose owner is identified as "Pending" on Exhibit E
attached hereto, all to which Properties Borrowers have contracted to acquire
but none of which are owned by Borrowers as of the date hereof.
Permitted Title Exceptions: The term "Permitted Title Exceptions" as used in
this Agreement shall mean those matters set forth in the title insurance
policies insuring the respective liens of the Mortgages on the date hereof and
those matters otherwise approved in writing by Co-Lenders.
Person: The term "Person" as used in this Agreement shall mean an individual, a
corporation, a firm, a limited or general partnership, an association, a joint
venture or any other entity or organization, including a governmental or
political subdivision or an agent or instrumentality thereof.
A-6
<PAGE>
Properties: The term "Properties" as used in this Agreement shall mean the
properties (including, without limitation, the Owned Properties) from time to
time constituting part of the collateral pool for the Credit Facility.
Prime Rate: The term "Prime Rate" as used in this Agreement shall have the
meaning given to such term in paragraph 1(ii) of Exhibit B to this Agreement.
Principal Balance: The term "Principal Balance" as used in this Agreement shall
have the meaning given to such term in paragraph 1(vii) of Exhibit B to this
Agreement.
REA: The term "REA" as used in this Agreement shall mean, with respect to any
individual Property, any executed and delivered comprehensive reciprocal
easement and operating agreement which encumbers a Property and which either
benefits such Property or will enhance the integrated use, operation and
management of such Property.
Rents: The term "Rents" as used in this Agreement shall mean all rents,
royalties, issues, profits, rent equivalent income, security deposits, insurance
proceeds, tax refunds, any other revenues, income benefits or proceeds of any
nature whatsoever generated by, arising from or otherwise relating to the
Properties.
Request for Advance: The term "Request for Advance" as used in this Agreement
shall have the meaning given to such term in paragraph 5 of the main body of
this Agreement.
Required Due Diligence Materials: The term "Required Due Diligence Materials" as
used in this Agreement shall mean all materials required by paragraph 1 of
Exhibit D-1 of this Agreement.
Re-Set Date: The term "Re-Set Date" as used in this Agreement shall have the
meaning given to such term in paragraph 1(viii) of Exhibit B to this Agreement.
Re-Set Date A: The term "Re-Set Date A" as used in this Agreement shall have the
meaning given to such term in paragraph 1(ix) of Exhibit B to this Agreement.
Re-Set Date B: The term "Re-Set Date B" as used in this Agreement shall have the
meaning given to such term in paragraph 1(x) of Exhibit B to this Agreement.
Re-Set Date C: The term "Re-Set Date C" as used in this Agreement shall have the
meaning given to such term in paragraph 1(xi) of Exhibit B to this Agreement.
Re-Set Date D: The term "Re-Set Date D" as used in this Agreement shall have the
meaning given to such term in paragraph 1(xii) of Exhibit B to this Agreement.
Roll Over Date: The term "Roll Over Date" as used in this Agreement shall have
the meaning given to such term in paragraph 1(xiii) of Exhibit B to this
Agreement.
Smith Barney: The term "Smith Barney" as used in this Agreement shall have the
meaning given to such term in preamble to the main body of this Agreement.
A-7
<PAGE>
Springdale: The term "Springdale" as used in this Agreement shall mean the
premises located in Whiteland Township, Chester County, Pennsylvania together
with the improvements erected thereon and commonly known as 748 and 855
Springdale Drive.
Sproul Road: The term "Sproul Road" as used in this Agreement shall mean the
premises located in Marple Township, Delaware County, Pennsylvania together with
the improvements erected thereon and commonly known as 974 Sproul Road.
Taxes: The term "Taxes" as used in this Agreement shall have the meaning given
to such term in paragraph 17 of the main body of this Agreement.
Telerate Page 3750: The term "Telerate Page 3750" as used in this Agreement
shall have the meaning given to such term in paragraph 1(v) of Exhibit B to this
Agreement.
Title Company: The term "Title Company" as used in this Agreement shall
collectively mean Commonwealth Land Title Insurance Company, a Pennsylvania
corporation.
WOP: The term "WOP" as used in this Agreement shall mean Witmer Operating
Partnership, L.P., a Delaware limited partnership.
A-8
<PAGE>
EXHIBIT B
(Credit Facility Payment Provisions)
1. The following terms as used in this Exhibit shall have the following
meanings:
(i) The term "Business Day" shall mean any day on which Agent is
open for business in the city in which its principal office is located and
on which commercial banks in the City of London, England are open for
dealings in U.S. dollar deposits in the London Interbank Market, provided,
however, that during any period of time during which the entire Principal
Balance is bearing interest at the Floating Rate in accordance with the
provisions of this Note hereinafter set forth, the term "Business Day"
shall mean any day on which Agent is open for business in the city in
which its principal office is located.
(ii) The term "Floating Rate" shall mean a rate per annum equal to
25 basis points plus the greater on a daily basis of (a) the Prime Rate,
or (b) the Alternate Credit Rate. The term "Prime Rate" shall mean such
rate of interest as is publicly announced by NationsBank or other
comparable bank designated by Agent at its principal office from time to
time as its prime rate. Any change in the Prime Rate shall be effective on
the date such change is announced by NationsBank or other comparable bank
designated by Agent. The term "Alternate Credit Rate" shall mean a rate
per annum equal to 50 basis points plus the Federal Funds Effective Rate
from time to time. The "Federal Funds Effective Rate" shall to the extent
necessary be determined by Agent separately for each day during the term
of the Credit Facility and shall for each such day be a rate per annum
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published for each such day (or if any such day
is not a business day, for the next immediately preceding business day) by
the Federal Reserve Bank of New York, or if the weighted average of such
rates is not so published for any such day which is a business day, the
average of the quotations for any such day on such transactions received
by Agent from three Federal funds brokers of recognized standing selected
by Agent. The term "business day" as used in the preceding sentence of
this subparagraph shall mean any day on which the Federal Reserve Bank of
New York is open for business. Any change in the Floating Rate as a result
of a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective on the effective date of any such change in the Prime Rate or
the Federal Funds Effective Rate, as the case may be. If for any reason
Agent shall have determined (which determination shall be conclusive and
binding on Borrowers) that Agent is unable to ascertain the Federal Funds
Effective Rate for any reason, including, without limitation, the
inability or failure of Agent to obtain sufficient bids for the purposes
of determining the Federal Funds Effective Rate in accordance with the
provisions of this subparagraph, the Floating Rate shall be determined on
the basis of the Prime Rate until the circumstances giving rise to such
inability no longer exist. The Floating Rate shall be calculated for the
actual number of days elapsed on the basis of a 360-day year. Each
determination of the Floating Rate shall be made by Agent and shall be
conclusive and binding upon Borrowers absent manifest error.
B-1
<PAGE>
(iii) The term "Interest Payment Date" shall mean July 1, 1997 and
the first day of each month thereafter during the term of the Credit
Facility, provided, however, that if the first day of any such month shall
not be a Business Day, the Interest Payment Date for such month shall be
the next succeeding Business Day.
(iv) The term "Interest Period" shall mean the period of time during
which a particular LIBOR Rate will be applicable to all or any particular
portion of the Principal Balance in accordance with the provisions of this
Exhibit, it being agreed that (a) each Interest Period (I) which commences
on a Re-Set Date A shall terminate on a ReSet Date A, (II) which commences
on a Re-Set Date B shall terminate on a Re-Set Date B, (III) which
commences on a Re-Set Date C shall terminate on a Re-Set Date C, and (IV)
which commences on a Re-Set Date D shall terminate on a Re-Set Date D, (b)
each Interest Period shall, except as specifically provided to the
contrary in this subparagraph (iv) and in paragraph 4 below, be of a
duration of one month, (c) no Interest Period shall extend beyond the
Maturity Date, and (d) the portion of the Principal Balance with respect
to which a particular Interest Period is applicable will bear interest at
the LIBOR Rate pertaining to such Interest Period from and including the
first day of such Interest Period to, but not including, the last day of
such Interest Period.
(v) The "LIBOR Rate" applicable to a particular Interest Period
shall mean a rate per annum equal to 175 basis points plus the Base LIBOR
Rate applicable to such Interest Period. The "Base LIBOR Rate" applicable
to a particular Interest Period shall mean a rate per annum equal to the
rate for U.S. dollar deposits with maturities comparable to such Interest
Period which appears on Telerate Page 3750 as of 11:00 a.m., London time,
two (2) Business Days prior to the commencement of such Interest Period,
provided, however, that if such rate does not appear on Telerate Page
3750, the "Base LIBOR Rate" applicable to such Interest Period shall mean
a rate per annum equal to the rate at which U.S. dollar deposits in an
amount approximately equal to the Principal Balance (or the portion
thereof which will bear interest at a LIBOR Rate during the Interest
Period to which such Base LIBOR Rate is applicable in accordance with the
provisions of this Exhibit), and with maturities comparable to the last
day of the Interest Period with respect to which such Base LIBOR Rate is
applicable, are offered in immediately available funds in the London
Interbank Market to the London office of NationsBank or other comparable
bank designated by Agent by leading banks in the Eurodollar market at
11:00 a.m., London time, two (2) Business Days prior to the commencement
of the Interest Period to which such Base LIBOR Rate is applicable. The
term "Telerate Page 3750" means the display designated as "Page 3750" on
the Associated Press-Dow Jones Telerate Service (or such other page as may
replace Page 3750 on the Associated Press-Dow Jones Telerate Service or
such other service as may be nominated by the British Bankers' Association
as the information vendor for the purpose of displaying British Bankers'
Association interest settlement rates for U.S. dollar deposits). Any Base
LIBOR Rate determined on the basis of the rate displayed on Telerate Page
3750 in accordance with the foregoing provisions of this subparagraph
shall be subject to corrections, if any, made in such rate and displayed
by the Associated Press-Dow Jones Telerate Service within one hour of the
time when such rate is first displayed by such Service. Each determination
of the LIBOR Rate and the Base LIBOR Rate applicable to a particular
Interest Period shall be made by Agent and shall be conclusive and binding
upon Borrowers absent manifest error. Interest
B-2
<PAGE>
at the applicable LIBOR Rate from time to time shall be calculated for the
actual number of days elapsed on the basis of a 360-day year.
(vi) The term "Maturity Date" shall mean July 30, 1997.
(vii) The term "Principal Balance" shall mean the outstanding
principal balance of the Credit Facility from time to time.
(viii) The term "Re-Set Date" shall mean, as applicable, a Re-Set
Date A, a Re-Set Date B, a Re-Set Date C or a Re-Set Date D.
(ix) The term "Re-Set Date A" shall mean May 30, 1997 and thereafter
the 30th day of each subsequent calendar month during the term of the
Credit Facility, provided, however, that if the 30th day of any such
subsequent calendar month during the term of the Credit Facility shall not
be a Business Day, the Re-Set Date A for such calendar month shall be the
next succeeding Business Day, unless the next such succeeding Business Day
would fall in the next calendar month, in which event the Re-Set Date A
for such calendar month shall be the next preceding Business Day. For the
purposes of this Exhibit the period of time between any two consecutive
Re-Set Dates As during the term of the Credit Facility shall be deemed to
be a period of one month.
(x) The term "Re-Set Date B" shall mean the date set forth in
Borrowers' Request for Advance (which date must be a Business Day) and
thereafter the numerically corresponding day of each subsequent calendar
month during the term of the Credit Facility, provided, however, that if
the numerically corresponding day of any such subsequent calendar month
during the term of the Credit Facility shall not be a Business Day, the
Re-Set Date B for such calendar month shall be the next succeeding
Business Day, unless the next such succeeding Business Day would fall in
the next calendar month, in which event the Re-Set Date B for such
calendar month shall be the next preceding Business Day. For the purposes
of this Exhibit the period of time between any two consecutive Re-Set Date
Bs during the term of the Credit Facility shall be deemed to be a period
of one month.
(xi) The term "Re-Set Date C" shall mean the date set forth in
Borrowers' Request for Advance (which date must be a Business Day) and
thereafter the numerically corresponding day of each subsequent calendar
month during the term of the Credit Facility, provided, however, that if
the numerically corresponding day of any such subsequent calendar month
during the term of the Credit Facility shall not be a Business Day, the
Re-Set Date C for such calendar month shall be the next succeeding
Business Day, unless the next such succeeding Business Day would fall in
the next calendar month, in which event the Re-Set Date C for such
calendar month shall be the next preceding Business Day. For the purposes
of this Exhibit the period of time between any two consecutive Re-Set Date
Cs during the term of the Credit Facility shall be deemed to be a period
of one month.
(xii) The term "Re-Set Date D" shall mean the date set forth in
Borrowers' Request for Advance (which date must be a Business Day) and
thereafter the numerically corresponding day of each subsequent calendar
month during the term of the Credit Facility, provided, however, that if
the numerically corresponding day of any such subsequent calendar month
during the term of the Credit Facility shall not be a Business Day, the
Re-Set Date D for such calendar month shall be the next succeeding
B-3
<PAGE>
Business Day, unless the next such succeeding Business Day would fall in
the next calendar month, in which event the Re-Set Date D for such
calendar month shall be the next preceding Business Day. For the purposes
of this Exhibit the period of time between any two consecutive Re-Set Date
Ds during the term of the Credit Facility shall be deemed to be a period
of one month.
(xiii) The "Roll Over Date" applicable to a particular Interest
Period shall mean the last day of such Interest Period.
2. Borrower shall pay to Agent, for the equal and
ratable benefit of Co-Lenders, the Principal Balance or so much thereof as may
be advanced by Co-Lenders to Borrowers and be outstanding from time to time in
accordance with the provisions of this Agreement, with interest thereon from and
including the date of this Agreement to, but not including, the date the
Principal Balance is paid in full calculated in the manner hereinafter set
forth, as follows:
(i) interest on the Principal Balance calculated in the
manner hereinafter set forth shall be due and payable in Federal funds or
other immediately available funds on each Interest Payment Date during the
term of the Credit Facility; and
(ii) the entire Principal Balance, together with all
interest accrued and unpaid thereon calculated in the manner hereinafter
set forth and all other sums due in respect of the Credit Facility in
accordance with the Credit Facility Documents, shall be due and payable on
the Maturity Date.
3. All payment in respect of the Principal Balance,
interest on the Principal Balance and all other sums which may or shall become
due and payable in respect of the Credit Facility in accordance with the
provisions of the Credit Facility Notes, this Agreement and the other Credit
Facility Documents shall (except to the extent otherwise specifically provided
to the contrary in the Credit Facility Documents) be paid to Agent for the equal
and ratable benefit of Co-Lenders.
4. The entire Principal Balance shall, except as
specifically provided to the contrary in this paragraph and in paragraph 6 and
paragraph 11 of this Exhibit, bear interest at one or more of the available
LIBOR Rates. The available LIBOR Rates shall consist of a one-month LIBOR Rate
determined in accordance with the provisions of paragraph 1 (v) and paragraph 6
of this Exhibit, it being agreed that (i) Borrowers shall have the right to
select the LIBOR Rate or Rates from time to time applicable to the Principal
Balance, and (ii) each LIBOR Rate from time to time so selected by Borrowers
shall take effect and shall end on (i) a Re-Set Date A, (ii) a Re-Set Date B,
(iii) a ReSet Date C or (iv) a Re-Set Date D. Except as hereinafter specifically
provided to the contrary in this paragraph, Borrower shall not have the right to
select more than one LIBOR Rate to take effect on any given Re-Set Date. The
LIBOR Rate selected by Borrowers or otherwise designated for a particular Re-Set
Date in accordance with the foregoing provisions of this paragraph, shall be in
effect from and including the first day of the Interest Period to which such
LIBOR Rate pertains to, but not including, the Roll Over Date applicable to such
Interest Period, and shall (subject to the following provisions of this
paragraph) be applicable to the entire portion of the Principal Balance with
respect to which a LIBOR Rate or Rates are due to be re-set on such Re-Set Date,
as well as to any portion of the Principal Balance bearing interest at a
Floating Rate and any advance of the Credit Facility
B-4
<PAGE>
scheduled to be made on such Re-Set Date. Borrowers shall have the right to
select up to, but not in excess of, two LIBOR Rates to take effect on any given
Re-Set Date by written notice given to Agent at least five (5) Business Days
prior to the applicable Re-Set Date in which Borrowers shall specify the two
LIBOR Rates so selected by Borrowers and the respective portions of the
Principal Balance (inclusive of any advance of the Credit Facility scheduled to
be made on such Re-Set Date) to which such LIBOR Rates are to respectively
pertain, subject to compliance with the following conditions: 1) the minimum
portion of the Principal Balance to which any such LIBOR Rate may pertain shall
be equal to at least $3,000,000, and 2) each such LIBOR Rate so selected by
Borrowers shall be applicable to the portion of the Principal Balance to which
it pertains from and including the first day of the applicable Interest Period
to, but not including, the Roll Over Date applicable to such Interest Period.
Each portion of the Principal Balance bearing interest at a LIBOR Rate with a
Roll Over Date other than the Maturity Date and which is less than one month
prior to the Maturity Date shall from and after such Roll Over Date at the
election of Agent either bear interest at the Floating Rate or at a one month
LIBOR Rate determined in accordance with the provisions of paragraph 1(v) and
paragraph 6 of this Exhibit from and including such Roll Over Date to, but not
including, the Maturity Date, it being agreed that any such one-month LIBOR Rate
shall be determined on the basis of an assumed Interest Period of one month.
5. Notwithstanding anything to the contrary contained
in this Agreement or the other Credit Facility Documents, Borrowers shall not
have the right (other than as provided in the next sentence) to obtain more than
one advance per month under the Credit Facility. Notwithstanding the foregoing,
Borrowers shall have the right to obtain more than one advance under the Credit
Facility per month if such additional advance is being made pursuant to this
Agreement in connection with the acquisition of a Pending Property or an
Additional Property in accordance with the provisions of this Agreement.
6. Agent shall, as soon as practicable after 9:30 a.m.,
Charlotte, North Carolina time, two (2) Business Days prior to the commencement
of a particular Interest Period, determine the LIBOR Rate which will be in
effect during such Interest Period and inform Borrowers of the LIBOR Rate so
determined (which determination shall be conclusive and binding upon Borrowers
absent manifest error). In the event, and on each occasion, that on the day two
(2) Business Days prior to the commencement of a particular Interest Period,
Agent shall have determined in good faith (which determination shall be
conclusive and binding upon Borrowers) that U.S. dollar deposits in an amount
approximately equal to the portion of the Principal Balance which is to bear
interest at a particular LIBOR Rate during such particular Interest Period in
accordance with the provisions of this Exhibit are not generally available at
such time in the London Interbank Market, or reasonable means do not exist for
ascertaining a LIBOR Rate for such particular Interest Period, Agent shall so
notify Borrowers and the interest rate applicable to the portion of the
Principal Balance with respect to which such LIBOR Rate was to pertain shall
automatically be converted to the Floating Rate as of the date upon which such
particular Interest Period was to have commenced, it being agreed that the
Floating Rate shall remain in effect thereafter with respect to such portion of
the Principal Balance unless and until Agent shall have determined in good faith
(which determination shall be conclusive and binding upon Borrowers) that the
aforesaid circumstances no longer exist, whereupon the interest rate applicable
to such portion of the Principal Balance shall be converted back to a LIBOR Rate
determined in the manner hereinabove set forth in this Exhibit effective as of
the first Re-Set Date which occurs ten (10) Business Days or more after such
good faith
B-5
<PAGE>
determination by Agent. If any change in any law or regulation or in the
interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for any one or
more of Co-Lenders to make or maintain LIBOR Rates with respect to the Principal
Balance or any portion thereof or to fund the Principal Balance or any portion
thereof at LIBOR Rates in the London Interbank Market or to give effect to their
respective obligations as contemplated by this Exhibit, then, upon notice by
Agent to Borrowers, the interest rate applicable to the entire Principal Balance
shall be automatically converted to the Floating Rate, it being agreed that any
notice given by Agent to Borrowers pursuant to this sentence shall, if lawful,
be effective insofar as it pertains to any particular portion of the Principal
Balance bearing interest at a particular LIBOR Rate on the last day of the then
existing Interest Period pertaining to such particular portion of the Principal
Balance, or if not lawful, shall be effective immediately upon being given by
Agent to Borrowers, and that the Floating Rate shall remain in effect thereafter
with respect to such particular portion of the Principal Balance unless and
until Agent shall have determined in good faith (which determination shall be
conclusive and binding upon Borrowers) that the aforesaid circumstances no
longer exist, whereupon the interest rate applicable to such portion of the
Principal Balance shall be converted to a LIBOR Rate determined in the manner
hereinabove set forth in this Exhibit effective as of the first Re-Set Date
which occurs ten (10) Business Days or more after such good faith determination
by Agent. If the interest rate applicable to any particular portion of the
Principal Balance is converted from a LIBOR Rate to the Floating Rate on a date
other than a Roll Over Date in accordance with the provisions of the preceding
sentence, Borrowers shall pay to Agent on demand an amount equal to the
prepayment premium, if any, which would have been due pursuant to the provisions
of this Exhibit hereinafter set forth if the portion of the Principal Balance
bearing interest at such LIBOR Rate was prepaid in full on the date of such
conversion.
7. Borrowers recognize that the cost to Co-Lenders of
making or maintaining LIBOR Rates with respect to the Principal Balance or any
portion thereof may fluctuate and Borrowers agree to pay Agent within ten (10)
days after demand by Agent an additional amount or amounts as Agent shall
reasonably determine will compensate Co-Lenders for actual costs incurred by
Co-Lenders in maintaining LIBOR Rates on the Principal Balance or any portion
thereof as a result of:
(i) the imposition after the date of this Agreement of,
or changes after the date of this Agreement in, or the actual maintenance
after the date of this Agreement by any Co-Lender of, reserves in
accordance with the reserve requirements now or hereafter promulgated by
the Board of Governors of the Federal Reserve System of the United States,
including, but not limited to, any reserve on Eurocurrency Liabilities as
defined in Regulation D of the Board of Governors of the Federal Reserve
System of the United States at the ratios provided in such Regulation from
time to time, it being agreed that the portion of the Principal Balance
bearing interest at LIBOR Rates from time to time in accordance with the
provisions of this Exhibit shall be deemed to constitute Eurocurrency
Liabilities, as defined by such Regulation; or
(ii) any change, after the date of this Agreement, in
applicable law, rule or regulation or in the interpretation or
administration thereof by any domestic or foreign governmental authority
charged with the interpretation or administration thereof (whether or not
having the force of law) or by any domestic or foreign court changing the
basis of
B-6
<PAGE>
taxation of payments to any Co-Lender of the Principal Balance or interest
on the Principal Balance or any portion thereof at a LIBOR Rate or any
other fees or amounts payable in respect of the Credit Facility pursuant
to the provisions of the Credit Facility Documents (other than taxes
imposed on all or any portion of the overall net income of any such
Co-Lender by the Federal government or by the state or country of
incorporation or domicile of any such Co-Lender or by any political
subdivision or taxing authority of the Federal government or any such
state or country), or imposing, modifying or applying any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, credit extended by, or any other acquisition of funds for
loans by any such Co-Lender or imposing on any such Co-Lender or on the
London Interbank Market any other condition affecting the Credit Facility,
the Credit Facility Documents or the portion of the Principal Balance
bearing interest at LIBOR Rates so as to increase the cost to any such
Co-Lender of making or maintaining LIBOR Rates with respect to the
Principal Balance or any portion thereof or to reduce the amount of any
sum received or receivable by any such Co-Lender with respect to the
Credit Facility pursuant to the provisions of the Credit Facility
Documents (whether of principal, interest or otherwise), by an amount
deemed by Agent in good faith to be material, but without duplication for
payments required under subparagraph (i) above.
Any amount or amounts payable by Borrowers to
Co-Lenders pursuant to subparagraph (i) or (ii) above shall be paid by Borrowers
to Co-Lenders within ten (10) days of receipt by Borrowers from Agent of a
statement setting forth the amount or amounts due and the basis for the
determination from time to time of such amount or amounts, which statement shall
be conclusive and binding upon Borrowers absent manifest error. Failure on the
part of Co-Lenders to demand compensation for any increased costs in any
Interest Period shall not constitute a waiver of Co-Lenders' right to demand
compensation for any increased costs incurred during any such Interest Period or
in any other subsequent or prior Interest Period. Failure on the part of
Co-Lenders to demand compensation for any increased costs in any Interest Period
shall not constitute a waiver of Agent's right to demand compensation for any
increased costs incurred during any such Interest Period or in any other
subsequent or prior Interest Period.
8. Borrowers shall indemnify each Co-Lender against any
loss or expense that any such Co-Lender may sustain or incur as a consequence of
any failure by Borrowers to take down all or any portion of any advance of the
Credit Facility (including, without limitation, the initial advance of the
Credit Facility) on the date Borrowers requested that such advance be made in
accordance with the provisions of this Agreement or as a consequence of any
default by Borrowers in the payment of any portion of the Principal Balance
bearing interest at a LIBOR Rate, or any part thereof or interest accrued
thereon at a LIBOR Rate, as and when due and payable, or the occurrence of any
Event of Default including, but not limited to, any loss or expense sustained or
incurred by any such Co-Lender in liquidating or reemploying deposits from third
parties acquired to effect or maintain a LIBOR Rate with respect to all or any
portion of the Principal Balance or any advance of the Credit Facility requested
or scheduled to be made pursuant to the provisions of this Agreement. Co-Lenders
shall provide to Borrowers a statement explaining the amount of any such loss or
expense, which statement shall be conclusive and binding upon Borrowers absent
manifest error.
9. If after the date of this Agreement, Agent shall
have determined that the adoption after the date of this Agreement of any law,
B-7
<PAGE>
rule, regulation or guideline regarding capital adequacy, or any change therein,
or any change in any of the foregoing or in the interpretation or administration
of any of the foregoing by any domestic or foreign governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Co-Lender (or any lending office of
any Co-Lender) or by any Co-Lender's holding company, as the case may be, with
any request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on any Co-Lender's capital
or on the capital of any Co-Lender's holding company, as the case may be, as a
consequence of any Co-Lender's obligations with respect to the Credit Facility
under the terms of the Credit Facility Documents to a level below that which any
such Co-Lender or any such Co-Lender's holding company, as the case may be,
could have achieved but for such adoption, change or compliance (taking into
consideration any such Co-Lender's or any such Co-Lender's holding company's
policies, as the case may be, with respect to capital adequacy) by an amount
deemed by Agent to be material, then from time to time, Borrowers shall pay to
Agent such additional amount or amounts as will compensate any such Co-Lender or
any such Co-Lender's holding company, as the case may be, for such reduction.
Any amount or amounts payable by Borrowers to Co-Lenders in accordance with the
provisions of this paragraph shall be paid by Borrowers to Agent within ten (10)
days of receipt by Borrowers from Agent of a statement setting forth the amount
or amounts due and the basis for the determination from time to time of such
amount or amounts, which statement shall be conclusive and binding upon
Borrowers absent manifest error.
10. Subject to the following provisions of this
paragraph, Borrowers shall have the right to prepay the Principal Balance in
whole, or in part, upon not less than five (5) Business Days' prior written
irrevocable notice to Agent specifying the intended date of prepayment, which
date of prepayment shall not be more than fifteen (15) days after the date of
such notice, and the amount to be prepaid and upon payment of all interest and
other sums then due and payable pursuant to the provisions of the Credit
Facility Documents. The portion of the Principal Balance specified in any such
irrevocable notice of prepayment shall, notwithstanding anything to the contrary
contained in the Credit Facility Documents, be absolutely and unconditionally
due and payable on the date specified in such notice. No prepayment premium
shall be payable if the portion of the Principal Balance being prepaid is
bearing interest on the date of prepayment at the Floating Rate in accordance
with the provisions of paragraph 11 of this Exhibit or otherwise in accordance
with the provisions of this Exhibit, or if such prepayment occurs on the Roll
Over Date pertaining to the portion of the Principal Balance being prepaid. If
any particular portion of the Principal Balance being prepaid is bearing
interest at a particular LIBOR Rate and such prepayment does not occur on the
Roll Over Date pertaining to the portion of the Principal Balance being prepaid,
Borrowers shall pay to Agent contemporaneously with such prepayment a prepayment
premium equal to the portion of the Principal Balance being prepaid, multiplied
by a per annum interest rate equal to the difference between the Base LIBOR Rate
applicable to the portion of the Principal Balance being prepaid and the 360-day
equivalent interest yield, as adjusted to reflect interest payments on a monthly
basis (hereinafter called the "Reinvestment Rate"), on any U.S. Government
Treasury Obligations selected by Agent, in its sole and absolute discretion, in
an aggregate amount comparable to the portion of the Principal Balance being
prepaid, and with maturities comparable to the Roll Over Date applicable to the
portion of the Principal Balance being prepaid, calculated over a period of time
from and including the date of prepayment to, but not
B-8
<PAGE>
including, the Roll Over Date applicable to the portion of the Principal Balance
being prepaid. If the Base LIBOR Rate applicable to the portion of the Principal
Balance being prepaid is equal to or less than the Reinvestment Rate no
prepayment premium shall be due. No prepayment premium payable under this
paragraph shall in any event or under any circumstance be deemed or construed to
be a penalty. If a portion of the Principal Balance is bearing interest at a
LIBOR Rate or Rates and a portion of the Principal Balance is bearing interest
at the Floating Rate in accordance with the provisions of this Exhibit on the
date of a partial prepayment of the Principal Balance in accordance with the
provisions of this paragraph, such partial prepayment shall be applied to the
respective portions of the Principal Balance bearing interest at such LIBOR Rate
or Rates and the Floating Rate in such order and manner so as to minimize the
prepayment premium due with respect thereto as calculated pursuant to the
provisions of this paragraph. Any payment of the Principal Balance after the
Debt shall have been declared to be immediately due and payable in accordance
with the provisions of the Credit Facility Documents, or after a foreclosure of
one or more of the Mortgages has commenced as a result of the occurrence of an
Event of Default, shall, to the extent permitted by law, be deemed to be a
voluntary prepayment for all purposes of this paragraph and a prepayment premium
calculated pursuant to the provisions of this paragraph shall be payable with
respect thereto based upon the Base LIBOR Rate or Rates applicable to the
Principal Balance immediately prior to such default, declaration or
commencement. Agent shall deliver to Borrowers a statement setting forth the
amount and basis of determination of the prepayment premium, if any, due in
connection with a prepayment of the Principal Balance in accordance with the
provisions of this paragraph, it being agreed that (a) the calculation of such
prepayment premium may be based on any U.S. Government Treasury Obligations
selected by Agent, in its sole and absolute discretion, (b) Co-Lenders shall not
be obligated or required to have actually reinvested the prepaid portion of the
Principal Balance in any such U.S. Government Treasury Obligations as a
condition precedent to Borrowers being obligated to pay a prepayment premium
calculated in accordance with the provisions of this paragraph, and (c)
Borrowers shall not have the right to question the correctness of any such
statement or the method of calculation set forth therein in the absence of
manifest error. Borrowers shall, upon receipt of such statement and
contemporaneously with any such prepayment of the Principal Balance, remit to
Agent the prepayment premium, if any, due in connection therewith, as calculated
pursuant to the provisions of this paragraph. Payee shall not be obligated to
accept any prepayment of the Principal Balance unless it is accompanied by the
prepayment premium, if any, due in connection therewith as calculated pursuant
to the provisions of this paragraph. Any partial prepayment of the Principal
Balance in accordance with the provisions of this paragraph shall be in a
minimum amount of at least $1,000,000 and shall be in even multiples of
$100,000. The provisions of this paragraph shall be applicable to any prepayment
of the Principal Balance in whole or in part, it being agreed that any payment
of the Principal Balance, in whole or in part, (i) to maintain compliance with
the Financial Covenants, (ii) in connection with any mandatory pay down of the
Principal Balance pursuant to paragraph 8 of this Agreement, or (iii) otherwise
pursuant to or as required by the provisions of the Credit Facility Documents,
shall be deemed to be a voluntary prepayment for the purposes of this paragraph
and a prepayment premium calculated pursuant to the provisions of this paragraph
shall be payable with respect thereto.
11. Borrowers shall have the option upon not less than
fifteen (15) Business Days' prior written notice to Agent given simultaneously
and in conjunction with an irrevocable notice of prepayment given by Borrowers
to Payee pursuant to paragraph 10 of this Exhibit, and provided that such
B-9
<PAGE>
prepayment constitutes a mandatory prepayment of the Principal Balance pursuant
to paragraph 8 of this Agreement, to convert the interest rate on the portion of
the Principal Balance which is to be prepaid, as set forth in such notice of
prepayment, to a Floating Rate effective as of the Re-Set Date A, the Re-Set
Date B, the Re-Set Date C or the Re-Set Date D, as the case may be, occurring
immediately prior to the designated date of prepayment, as set forth in such
notice of prepayment, it being agreed that (i) such Re-Set Date A, ReSet Date B,
Re-Set Date C or Re-Set Date D, as the case may be, must be ten (10) Business
Days or more after the date of receipt by Agent from Borrowers of Borrowers'
election to exercise such option pursuant to this paragraph, and (ii) the
interest rate applicable to a particular portion of the Principal Balance may be
converted from a particular LIBOR Rate to the Floating Rate, as of such Re-Set
Date A, Re-Set Date B, Re-Set Date C or ReSet Date D, as the case may be, only
if such Re-Set Date A, Re-Set Date B, ReSet Date C or Re-Set Date D, as the case
may be, constitutes the Roll Over Date pertaining to such LIBOR Rate and such
portion of the Principal Balance. If Borrowers exercise the aforesaid option,
the interest rate on the portion of the Principal Balance with respect to which
Borrowers have exercised such option will automatically convert to and be
calculated at the Floating Rate from and including the Re-Set Date A, the Re-Set
Date B, the Re-Set Date C or the Re-Set Date D, as the case may be, occurring
immediately prior to the specified date of prepayment, as set forth in
Borrowers' notice of prepayment, to, but not including, the earlier to occur of
(i) the date upon which such portion of the Principal Balance is paid in full,
or (ii) the first Re-Set Date A, Re-Set Date B, Re-Set Date C or Re-Set Date D,
as the case may be, occurring five (5) Business Days or more after the
designated date of prepayment whereupon the interest rate on such portion of the
Principal Balance (or so much thereof as may still be outstanding) shall
(subject to the provisions of this Exhibit) thereafter be calculated at a LIBOR
Rate determined in accordance with the provisions of this Exhibit. Nothing
contained in the preceding sentence shall be deemed to qualify, modify or affect
in any manner whatsoever the provisions of paragraph 10 of this Exhibit which
provide that the portion of the Principal Balance specified in any notice of
prepayment given by Borrowers to Agent pursuant to paragraph 10 of this Exhibit
shall be absolutely and unconditionally due and payable on the date designated
for such prepayment in such notice.
12. All sums which may or shall become due and payable
by Borrowers in accordance with the provisions of paragraph 7, 8 or 9 of this
Exhibit shall be evidenced by the Credit Facility Notes, shall be secured by the
Mortgages and shall constitute part of the Debt.
B-10
<PAGE>
================================================================================
Brandywine Operating Partnership, L.P.,
a Delaware limited partnership, as Mortgagor
to
NationsBank, N.A., not individually
but acting in its capacity as administrative
and documentation agent for the equal and
ratable benefit of the co-lenders
described herein, as Mortgagee
--------------------------
OPEN-END MORTGAGE AND SECURITY AGREEMENT
(This Mortgage Secures Future Advances)
--------------------------
Dated: As of May 30, 1997
Location: __________________
__________________
__________________
RECORD AND RETURN TO:
Battle Fowler LLP
Park Avenue Tower
75 East 55th Street
New York, New York 10022
Attention: Dean A. Stiffle, Esq.
Uniform Parcel Identifier: _______
================================================================================
Master Pennsylvania Mortgage
<PAGE>
TABLE OF CONTENTS
Page
----
1. Payment of Debt.................................................... 3
2. Warranty of Title.................................................. 3
3. Leases and Rents................................................... 3
4. Notice............................................................. 3
5. Sale of Mortgaged Property......................................... 4
6. Changes in Laws Regarding Taxation................................. 4
7. No Credits on Account of the Debt.................................. 5
8. Documentary Stamps................................................. 5
9. Events of Default.................................................. 5
10. Certain Remedies................................................... 5
11. Appointment of Receiver............................................ 6
12. Non-Waiver......................................................... 6
13. Construction....................................................... 7
14. Security Agreement................................................. 7
15. Further Acts, etc.................................................. 8
16. Headings, etc...................................................... 8
17. Filing of Mortgage, etc............................................ 8
18. Recovery of Sums Required To Be Paid............................... 8
19. Actions, Cases and Proceedings..................................... 8
20. Inapplicable Provisions............................................ 8
21. Duplicate Originals................................................ 9
22. Certain Usage...................................................... 9
23. Waiver of Notice................................................... 9
24. No Oral Change..................................................... 9
25. Waiver of Statutory Rights......................................... 9
26. Credit Agreement................................................... 9
27. Binding Effect..................................................... 9
-i-
<PAGE>
Page
----
28. Exculpation........................................................ 9
29. Open-End Mortgage.................................................. 10
ACKNOWLEDGEMENT
EXHIBIT A - (Definitions)
EXHIBIT B - (Description of Premises)
-ii-
<PAGE>
Uniform Parcel Identifier: _______
OPEN-END MORTGAGE AND SECURITY AGREEMENT
(This Mortgage Secures Future Advances)
This Mortgage entered into as of the 30th day of May,
1997, between Brandywine Operating Partnership, L.P., a Delaware
limited partnership having an office c/o Brandywine Realty Trust,
Newtown Square Corporate Campus, 16 Campus Boulevard, Suite 150,
Newtown Square, Pennsylvania (hereinafter referred to as "Mortgagor");
and NationsBank, N.A., a national banking association having an office
at 8300 Greensboro Drive, McLean, Virginia, not individually, but
acting in its capacity as administrative and documentation agent for
the equal and ratable benefit of Co-Lenders, pursuant to and in
accordance with the terms and provisions of the Credit Agreement
(NationsBank, N.A., acting in such capacity as administrative and
documentation agent being hereinafter referred to as "Mortgagee").
PRELIMINARY STATEMENT
A. All capitalized terms as used in this Mortgage shall,
unless otherwise defined in this Mortgage, have the meanings given to such terms
in Exhibit A attached hereto.
B. Mortgagor is the owner of a fee estate in the premises
described in Exhibit B attached hereto (hereinafter referred to as the
"Premises").
C. Co-Lenders have on the terms, covenants and provisions set
forth in the Credit Agreement extended to Borrowers a credit facility in the
principal sum of up to, but not in excess of, $70,000,000 (hereinafter referred
to as the "Credit Facility"), which Credit Facility is evidenced by, and payable
together with interest thereon in accordance with the provisions of, the Credit
Facility Notes.
D. Co-Lenders were willing to extend the Credit Facility to
Borrowers only if Mortgagor executed and delivered this Mortgage to Mortgagee,
as administrative and documentation agent for the equal and ratable benefit of
Co-Lenders, as security for the payment of the Debt.
E. NOW, THEREFORE, to secure the payment of an indebtedness in
the principal sum of up to, but not in excess of, Seventy Million and 00/100
Dollars ($70,000,000.00), lawful money of the United States of America, or so
much thereof as may be advanced and be outstanding from time to time in
accordance with the provisions of the Credit Agreement, to be paid with interest
in accordance with the provisions of the Credit Facility Notes and the Credit
Agreement (said indebtedness, interest and any and all sums which may or shall
become due in accordance with the provisions of the Credit Facility Documents
being hereinafter collectively referred to as the "Debt"), Mortgagor has
mortgaged, created a security interest in, given, granted, bargained, sold,
aliened, enfeoffed, conveyed, confirmed and assigned, and by
<PAGE>
these presents does mortgage, create a security interest in, give, grant,
bargain, sell, alien, enfeoff, convey, confirm and assign unto Mortgagee forever
all right, title and interest of Mortgagor now owned, or hereafter acquired, in
and to the following property, rights and interests (such property, rights and
interests being hereinafter collectively referred to as the "Mortgaged
Property"):
(a) the Premises;
(b) all buildings and improvements now or hereafter located on
the Premises (hereinafter referred collectively to as the
"Improvements");
(c) all of the estate, right, title, claim or demand of any
nature whatsoever of Mortgagor, either in law or in equity, in
possession or expectancy, in and to the Mortgaged Property or any part
thereof;
(d) all easements, rights-of-way, gores of land, streets,
ways, alleys, passages, sewer rights, waters, water courses, water
rights and powers, and all estates, rights, titles, interests,
privileges, liberties, tenements, hereditaments, and appurtenances of
any nature whatsoever, in any way belonging, relating or pertaining to
the Mortgaged Property (including, without limitation, any and all
development rights, air rights or similar or comparable rights of any
nature whatsoever now or hereafter appurtenant to the Premises or now
or hereafter transferred to the Premises) and all land lying in the bed
of any street, road or avenue, opened or proposed, in front of or
adjoining the Premises to the center line thereof;
(e) all FF&E and the right, title and interest of Mortgagor in
and to any of the FF&E which may be subject to any security agreements
(as defined in the Uniform Commercial Code) superior in lien to the
lien of this Mortgage;
(f) all awards or payments, including interest thereon, if
any, and the right to receive the same, which may be made with respect
to the Mortgaged Property, whether from the exercise of the right of
eminent domain (including any transfer made in lieu of the exercise of
said right), or for any other injury to or decrease in the value of the
Mortgaged Property;
(g) all leases, licenses and other agreements affecting or
relating to the use or occupancy of the Mortgaged Property now or
hereafter entered into (such leases, licenses and other agreements are
hereinafter collectively referred to as the "Leases") and the right to
receive and apply the rents, income, revenues, receipts, accounts,
accounts receivable, issues and profits of or derived from or relating
to the Mortgaged Property (hereinafter collectively referred to as the
"Rents") to the payment of the Debt;
(h) all proceeds of and any unearned premiums on any insurance
policies covering the Mortgaged Property, including, without
limitation, the right (subject to the provisions of the Credit
Agreement) to receive and apply the proceeds of any insurance,
judgments, or settlements made in lieu thereof, for damage to the
Mortgaged Property; and
-2-
<PAGE>
(i) the right to appear in and defend any action, case or
proceeding brought with respect to the Mortgaged Property and to
commence any action, case or proceeding to protect the interest of
Mortgagee in the Mortgaged Property;
TO HAVE AND TO HOLD the above granted and described Mortgaged
Property unto and to the proper use and benefit of Mortgagee, and the successors
and assigns of Mortgagee, forever;
PROVIDED, HOWEVER, that if Mortgagor shall pay, perform and
discharge the obligations secured hereby in full, then this Mortgage and the
estate hereby granted shall cease, terminate and become void.
AND Mortgagor covenants and agrees with and represents and
warrants to Mortgagee as follows:
1. Payment of Debt. Mortgagor will pay the Debt at the time
and in the manner provided for its payment in the Credit Facility Documents.
2. Warranty of Title. Subject only to those exceptions to
title specifically set forth in the title policy issued or to be issued by the
Title Company to Mortgagee and insuring the lien of this Mortgage, Mortgagor
warrants the title to the Premises, the Improvements, the FF&E and the balance
of the Mortgaged Property.
3. Leases and Rents. Subject to the terms of this paragraph,
Mortgagee waives the right to enter the Mortgaged Property for the purpose of
collecting the Rents, and grants Mortgagor the right to collect the Rents.
Mortgagor shall collect and hold the Rents, or an amount sufficient to discharge
all current sums due on the Debt, in trust for use in payment of the Debt. The
right of Mortgagor to collect the Rents may be revoked by Mortgagee upon the
occurrence of any Event of Default by giving notice of such revocation to
Mortgagor. Following such notice and as long as such Event of Default is
continuing (it being understood that the decision whether or not to accept the
cure of an Event of Default shall be in the sole and absolute discretion of
Mortgagee), Mortgagee may retain and apply the Rents toward payment of the Debt
in such order, priority and proportions as Mortgagee, in its discretion, shall
deem proper, or to the operation, maintenance and repair of the Mortgaged
Property, and irrespective of whether Mortgagee shall have commenced a
foreclosure of this Mortgage or shall have applied or arranged for the
appointment of a receiver. In addition, Mortgagee shall have the absolute and
unconditional right following the occurrence and during the continuance of an
Event of Default to notify the tenants under the Leases that all Rents should be
paid directly to Mortgagee. In addition to the rights which Mortgagee may have
herein, if an Event of Default shall occur and shall be continuing Mortgagee, at
its option, may require Mortgagor to pay monthly in advance to Mortgagee, or any
receiver appointed to collect the Rents, the fair and reasonable rental value
for the use and occupation of such part of the Mortgaged Property as may be in
possession of Mortgagor. Upon default in any such payment, Mortgagor will vacate
and surrender possession of the Mortgaged Property to Mortgagee, or to such
receiver and, in default thereof, Mortgagor may be evicted by summary
proceedings or otherwise. Nothing contained in this paragraph shall be construed
as imposing on Mortgagee any of the obligations of the landlord under the
Leases.
4. Notice. Any notice, request, demand, statement,
authorization, approval or consent made hereunder shall be in writing and shall
be sent by Federal Express, or other reputable national courier service,
-3-
<PAGE>
or by postage pre-paid registered or certified mail, return receipt requested,
and shall be deemed given (i) when received at the following addresses if sent
by Federal Express, or other reputable national courier service, and (ii) three
(3) business days after being postmarked and addressed as follows if sent by
registered or certified mail, return receipt requested:
If to Mortgagor:
c/o Brandywine Realty Trust
Newtown Square Corporate Campus
16 Campus Boulevard, Suite 150
Newtown Square, Pennsylvania 19073
Attention: Gerard H. Sweeney
President and Chief Executive Officer
With a copy to:
Pepper, Hamilton & Scheetz
3000 Two Logan Square
Eighteenth and Arch Streets
Philadelphia, Pennsylvania 19103-2799
Attention: Michael H. Friedman, Esq.
If to Mortgagee:
NationsBank, N.A.
Real Estate Banking
8300 Greensboro Drive
McLean, Virginia 22102-3604
Attention: Cheryl D. Fitzgerald
Vice President
With copies to:
Cadwalader, Wickersham & Taft
201 South College Street - Suite 1510
Charlotte, North Carolina 28244
Attention: James P. Carroll, Esq.
and
Battle Fowler LLP
Park Avenue Tower
75 East 55th Street
New York, New York 10022
Attention: Dean A. Stiffle, Esq.
Each party may designate a change of address by notice to the other party, given
at least fifteen (15) days before such change of address is to become effective.
5. Sale of Mortgaged Property. If this Mortgage is foreclosed,
the Mortgaged Property, or any interest therein, may, at the discretion of
Mortgagee, be sold in one or more parcels or in several interests or portions
and in any order or manner.
6. Changes in Laws Regarding Taxation. In the event of the
passage after the date of this Mortgage of any law of the State in which the
-4-
<PAGE>
Premises are located deducting from the value of real property for the purpose
of taxation any lien or encumbrance thereon or changing in any way the laws for
the taxation of mortgages or debts secured by mortgages for state or local
purposes or the manner of the collection of any such taxes, and imposing a tax,
either directly or indirectly, on this Mortgage, the Credit Facility Notes or
the Debt, Mortgagor shall, if permitted by law, pay any tax imposed as a result
of any such law within the statutory period or within thirty (30) days after
demand by Mortgagee, whichever is less, provided, however, that if, in the
opinion of the attorneys for Mortgagee, Mortgagor is not permitted by law to pay
such taxes, Mortgagee shall have the right, at its option, to declare the Debt
due and payable on a date specified in a prior notice to Mortgagor of not less
than sixty (60) days.
7. No Credits on Account of the Debt. Mortgagor will not claim
or demand or be entitled to any credit or credits on account of the Debt for any
part of the Taxes assessed against the Mortgaged Property or any part thereof
and no deduction shall otherwise be made or claimed from the taxable value of
the Mortgaged Property, or any part thereof, by reason of this Mortgage or the
Debt.
8. Documentary Stamps. If at any time the United States of
America, any state thereof, or any governmental subdivision of any such state,
shall require revenue or other stamps to be affixed to the Credit Facility Notes
(or any of them), this Mortgage or any of the other Credit Facility Documents,
Mortgagor will, to the extent permitted by law, pay for the same, with interest
and penalties thereon, if any.
9. Events of Default. The Debt shall become due at the option
of Mortgagee upon the occurrence of any one or more of the Events of Default.
10. Certain Remedies. Following the occurrence of any Event of
Default, Mortgagee shall have all rights and remedies provided pursuant to the
Credit Facility Documents, at law and in equity.
(a) Without limiting the generality of the foregoing,
Mortgagee may:
(i) Entry. Enter and take possession of Mortgaged
Property or any part thereof, exclude Mortgagee and/or any
lessee of any portion of the Mortgaged Property and all
persons claiming under them wholly or partly therefrom, and
operate, use, manage and control the same, or cause the same
to be operated by a person selected by Mortgagee, either in
the name of Mortgagor or otherwise, and upon such entry, from
time to time, at the expense of Mortgagor, make all such
repairs, replacements, alterations, additions or improvements
thereto as Mortgagee may deem proper, and collect and receive
the income therefrom and apply the same to the payment of all
expenses which Mortgagee may be authorized to incur under the
provisions of this Mortgage and the other Credit Facility
Documents and applicable law, the remainder to be applied to
the payment, performance and discharge of the obligations
secured hereby in such order, priority and proportion as
Mortgagee may determine in the exercise of its sole and
absolute discretion until the same have been paid in full.
(ii) Foreclosure. Institute an action for the
foreclosure of this Mortgage and the sale of the Mortgaged
Property pursuant to the judgment or decree of a court of
competent jurisdiction.
-5-
<PAGE>
(iii) Sale. Sell the Mortgaged Property at
foreclosure to the highest bidder or bidders at public auction
at sales held at such places and times and upon such notice
and otherwise in such manner as may be required by law, or in
the absence of any such requirement, as Mortgagee may deem
appropriate, and from time to time adjourn such sale by
announcement at the time and place specified for such sale or
for such adjourned sale without further notice.
(iv) Specific Performance. Take all steps to protect
and enforce the rights of Mortgagee under this Mortgage by
suit for specific performance of any covenant herein
contained, or in aid of the execution of any power herein
granted or for the enforcement of any other rights.
(b) If Mortgagor fails or refuses to surrender possession of
the Mortgaged Property after any sale thereof, Mortgagor shall be
deemed a tenant at sufferance, subject to eviction by means of forcible
entry and detainer proceedings, provided that this remedy is not
exclusive or in derogation of any other right or remedy available to
Mortgagee or any purchaser of the Mortgaged Property under any
provision of this Mortgage or pursuant to any judgment or decree of
court.
(c) FOR THE PURPOSES OF THE REMEDIES AFFORDED MORTGAGEE IN
THIS MORTGAGE, MORTGAGOR HEREBY AUTHORIZES ANY ATTORNEY OF ANY COURT OF
RECORD TO APPEAR FOR IT TO SIGN AN AGREEMENT FOR ENTERING AN AMICABLE
ACTION OF EJECTMENT FOR POSSESSION OF ANY OF THE MORTGAGED PROPERTY AND
TO CONFESS JUDGMENT THEREON AGAINST MORTGAGOR IN FAVOR OF MORTGAGEE,
WHEREUPON A WRIT MAY FORTHWITH ISSUE FOR THE IMMEDIATE POSSESSION OF
ANY OF THE MORTGAGED PROPERTY, WITHOUT ANY PRIOR WRIT OR PROCEEDING
WHATSOEVER; AND FOR SO DOING, THIS MORTGAGE OR A COPY HEREOF VERIFIED
BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT.
(d) Mortgagor hereby waives and releases all procedural
errors, defects and imperfections in any proceedings instituted by
Mortgagee under this Mortgage except for required notices under this
Mortgage.
11. Appointment of Receiver. Mortgagee, in any action to
foreclose this Mortgage or upon the actual or threatened waste to any part of
the Mortgaged Property or upon the occurrence of any Event of Default, shall be
at liberty, without notice, to apply for the appointment of a receiver of the
Rents, and shall be entitled to the appointment of such receiver as a matter of
right, without regard to the value of the Mortgaged Property as security for the
Debt, or the solvency or insolvency of any person then liable for the payment of
the Debt.
12. Non-Waiver. The failure of Mortgagee to insist upon strict
performance of any term of this Mortgage shall not be deemed to be a waiver of
any term of this Mortgage. Mortgagor shall not be relieved of Mortgagor's
obligation to pay the Debt at the time and in the manner provided for its
payment in the Credit Facility Documents by reason of (i) failure of Mortgagee
to comply with any request of Mortgagor to take any action to foreclose this
Mortgage or any other mortgage or deed of trust securing the Debt or any portion
thereof or otherwise enforce any of the provisions of this Mortgage or any of
the other Credit Facility Documents, (ii) the release, regardless of
consideration, of the whole or any part of the Mortgaged Property or any other
security for the Debt, or (iii) any agreement or stipulation between Mortgagee
and any subsequent owner or owners of the Mortgaged Property or other person
-6-
<PAGE>
extending the time of payment or otherwise modifying or supplementing the terms
of the Credit Facility Documents without first having obtained the consent of
Mortgagor, and in the latter event, Mortgagor shall continue to be obligated to
pay the Debt at the times and in the manner provided in the Credit Facility
Documents, as so extended, modified and supplemented, unless expressly released
and discharged from such obligation by Mortgagee in writing. Regardless of
consideration, and without the necessity for any notice to or consent by the
holder of any subordinate lien, encumbrance, right, title or interest in or to
the Mortgaged Property, Mortgagee may release any person at any time liable for
the payment of the Debt or any portion thereof or any part of the security held
for the Debt and may extend the time of payment of the Debt or otherwise modify
the terms of the Credit Facility Documents, including, without limitation, a
modification of the interest rate payable on the Principal Balance of the Credit
Facility Notes, without in any manner impairing or affecting this Mortgage or
the lien thereof or the priority of this Mortgage, as so extended and modified,
as security for the Debt over any such subordinate lien, encumbrance, right,
title or interest. Mortgagee may resort for the payment of the Debt to any other
security held by Mortgagee in such order and manner as Mortgagee, in its
discretion, may elect. Mortgagee may take action to recover the Debt, or any
portion thereof, or to enforce any covenant hereof without prejudice to the
right of Mortgagee thereafter to foreclose this Mortgage. Mortgagee shall not be
limited exclusively to the rights and remedies herein stated but shall be
entitled to every additional right and remedy set forth in the Credit Facility
Documents or now or hereafter afforded by law. The rights of Mortgagee under
this Mortgage and the other Credit Facility Documents shall be separate,
distinct and cumulative and none shall be given effect to the exclusion of the
others. No act of Mortgagee shall be construed as an election to proceed under
any one provision of this Mortgage or of the other Credit Facility Documents to
the exclusion of any other provision set forth in this Mortgage or the other
Credit Facility Documents.
13. Construction. The terms of this Mortgage shall be
construed in accordance with the laws of the State in which the Premises are
located.
14. Security Agreement. This Mortgage constitutes both a real
property mortgage and a "security agreement", within the meaning of the Uniform
Commercial Code, and the Mortgaged Property includes both real and personal
property and all other rights and interest, whether tangible or intangible in
nature, of Mortgagor in the Mortgaged Property. This Mortgage secures, and the
obligations secured hereby include, future advances. All advances and
indebtedness arising and accruing from time to time under the Credit Facility
shall be secured hereby to the same extent as though the Credit Agreement and
the other Credit Facility Documents were fully incorporated in this Mortgage.
Under the Credit Agreement and the other Credit Facility Documents advances may
be made and indebtedness may be incurred from time to time hereafter, but each
such advance or indebtedness shall be secured hereby as if made on the date
hereof. Mortgagor by executing and delivering this Mortgage has granted to
Mortgagee, as security for the Debt, a security interest in the Mortgaged
Property, including, without limitation, FF&E. This Mortgage constitutes and is
effective as a fixture filing as provided in Section 402 of Division 9 of the
Uniform Commercial Code, as to those portions of the Mortgaged Property are or
are to become fixtures as defined in the Uniform Commercial Code. If an Event of
Default shall occur, Mortgagee, in addition to any other rights and remedies
which it may have, shall have and may exercise immediately and without demand
any and all rights and remedies granted to a secured party upon default under
the Uniform Commercial Code, including, without limiting the generality of the
-7-
<PAGE>
foregoing, the right to take possession of the FF&E or any part thereof, and to
take such other measures as Mortgagee may deem necessary for the care,
protection and preservation of the FF&E. Mortgagor shall pay to Mortgagee on
demand any and all expenses (including reasonable attorneys' fees) actually
incurred or paid by Mortgagee in protecting its interest in the FF&E and in
enforcing its rights hereunder with respect to the FF&E. Any notice of sale,
disposition or other intended action by Mortgagee with respect to the FF&E sent
to Mortgagor in accordance with the provisions of this Mortgage at least seven
(7) business days prior to the date of any such sale, disposition or other
action, shall constitute reasonable notice to Mortgagor (except in the case of
FF&E which is perishable or is of a type customarily sold on a recognized
market, in which case such seven (7) business days' notice shall not be
required), and the method of sale or disposition or other intended action set
forth or specified in such notice shall conclusively be deemed to be
commercially reasonable within the meaning of the Uniform Commercial Code unless
objected to in writing by Mortgagor within five (5) days after receipt by
Mortgagor of such notice. The proceeds of any sale or disposition of the FF&E,
or any part thereof, may be applied by Mortgagee to the payment of the Debt in
such order, priority and proportions as Mortgagee in its discretion shall deem
proper.
15. Further Acts, etc. Mortgagor will, at the cost of
Mortgagor, and without expense to Mortgagee, do, execute, acknowledge and
deliver all and every such further acts, deeds, conveyances, mortgages,
assignments, notices of assignments, transfers and assurances as Mortgagee
shall, from time to time, require for the better assuring, conveying, assigning,
transferring and confirming unto Mortgagee the property and rights hereby
mortgaged or intended now or hereafter so to be, or which Mortgagor may be or
may hereafter become bound to convey or assign to Mortgagee, or for carrying out
the intention or facilitating the performance of the terms of this Mortgage or
for filing, registering or recording this Mortgage and, on demand, will execute
and deliver and hereby authorizes Mortgagee to execute in the name of Mortgagor
to the extent Mortgagee may lawfully do so, one or more financing statements,
chattel mortgages or comparable security instruments, to evidence more
effectively the lien hereof upon the Mortgaged Property.
16. Headings, etc. The headings, titles and captions of
various paragraphs of this Mortgage are for convenience of reference only and
are not to be construed as defining or limiting, in any way, the scope or intent
of the provisions hereof.
17. Filing of Mortgage, etc. Mortgagor forthwith upon the
execution and delivery of this Mortgage and thereafter, from time to time, will
cause this Mortgage, and any security instrument creating a lien or evidencing
the lien hereof upon the Mortgaged Property and each instrument of further
assurance to be filed, registered or recorded in such manner and in such places
as may be required by any present or future law in order to publish notice of
and fully to protect, preserve and perfect the lien hereof upon, and the
interest of Mortgagee in, the Mortgaged Property. Mortgagor will pay all filing,
registration and recording fees, and all expenses incident to the preparation,
execution and acknowledgement of this Mortgage, any mortgage supplemental
hereto, any security instrument with respect to the Mortgaged Property, and any
instrument of further assurance, and all Federal, state, county and municipal
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of this Mortgage, any mortgage supplemental
hereto, any security instrument with respect to the Mortgaged Property or any
instrument of further assurance. Mortgagor shall hold harmless and indemnify
Mortgagee, its successors and
-8-
<PAGE>
assigns, against any liability incurred by reason of the imposition of any tax
on the making and recording of this Mortgage.
18. Recovery of Sums Required To Be Paid. Mortgagee shall have
the right from time to time to take action to recover any sum or sums which
constitute a part of the Debt as the same become due, without regard to whether
or not the balance of the Debt shall be due, and without prejudice to the right
of Mortgagee thereafter to bring an action of foreclosure, or any other action,
for a default or defaults by Mortgagor existing at the time such earlier action
was commenced.
19. Actions, Cases and Proceedings. Mortgagee shall have the
right to appear in and defend any action, case or proceeding brought with
respect to the Mortgaged Property and to bring any action, case or proceeding,
which Mortgagee, in its discretion, feels should be brought to protect its
interest in the Mortgaged Property.
20. Inapplicable Provisions. If any term, covenant or
condition of this Mortgage shall be held to be invalid, illegal or unenforceable
in any respect, this Mortgage shall be construed without such provision.
21. Duplicate Originals. This Mortgage may be executed in any
number of duplicate originals and each such duplicate original shall be deemed
to constitute but one and the same instrument.
22. Certain Usage. Unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, words used in
this Mortgage shall be used interchangeably in singular or plural form. Whenever
the context may require, any pronouns used herein shall include the
corresponding masculine, feminine or neuter forms, and the singular forms of
nouns and pronouns shall include the plural and vice versa.
23. Waiver of Notice. Mortgagor shall not be entitled to any
notices of any nature whatsoever from Mortgagee except with respect to matters
for which this Mortgage specifically and expressly provides for the giving of
notice by Mortgagee to Mortgagor, and Mortgagor (to the full extent it may
lawfully do so) hereby expressly waives the right to receive any notice from
Mortgagee with respect to any matter for which this Mortgage does not
specifically and expressly provide for the giving of notice by Mortgagee to
Mortgagor.
24. No Oral Change. This Mortgage may only be modified,
amended or changed by an agreement in writing signed by Mortgagor and Mortgagee,
and may only be released, discharged or satisfied of record by an agreement in
writing signed by Mortgagee. No waiver of any term, covenant or provision of
this Mortgage shall be effective unless given in writing by Mortgagee and if so
given by Mortgagee shall only be effective in the specific instance in which
given.
25. Waiver of Statutory Rights. Mortgagor shall not and will
not apply for or avail itself of any appraisement, valuation, stay, extension or
exemption laws, or any so-called "Moratorium Laws", now existing or hereafter
enacted, in order to prevent or hinder the enforcement or foreclosure of this
Mortgage, but hereby waives the benefit of such laws to the full extent that
Mortgagor may do so under applicable law. Mortgagor for itself and all who may
claim through or under it waives any and all right to have the property and
estates comprising the Mortgaged Property marshalled upon any foreclosure of the
lien of this Mortgage and agrees that any court having jurisdiction to
-9-
<PAGE>
foreclose such lien may order the Mortgaged Property sold as an entirety.
Mortgagor hereby waives for itself and all who may claim through or under it,
and to the full extent Mortgagor may do so under applicable law, any and all
rights of redemption from sale under any order or decree of foreclosure of this
Mortgage or granted under any statute now existing or hereafter enacted.
26. Credit Agreement. This Mortgage is subject to all of the
terms, covenants and conditions of the Credit Agreement, which Credit Agreement
and all of the terms, covenants and conditions thereof are by this reference
incorporated herein with the same force and effect as if fully set forth herein.
The proceeds of the Credit Facility secured hereby are to be advanced by
Co-Lenders to Mortgagor in accordance with the provisions of the Credit
Agreement. Mortgagor shall observe and perform all of the terms, covenants and
conditions of the Credit Agreement on Mortgagor's part to be observed or
performed. All advances (including future advances) made and all indebtedness
arising and accruing under the Credit Agreement from time to time shall
constitute part of the Debt and shall be secured hereby as if made on the date
hereof.
27. Binding Effect. The terms, covenants and provisions of
this Mortgage shall be binding on and shall inure to the benefit of Mortgagor,
Mortgagee, and their respective successors and assigns.
28. Exculpation. No recourse shall be had for any obligation
of BRT under this Mortgage or any of the other Credit Facility Documents or for
any claim based thereon or otherwise in respect thereof, against any past,
present or future trustee, shareholder, officer or employee of BRT, 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
each other party to this Mortgage and the other Credit Facility Documents.
29. Open-End Mortgage. This Mortgage is an open-end mortgage
securing future advances pursuant to 42 Pa. C.S.A. ss.8143. Without limiting the
foregoing or any other provision of this Mortgage, this Mortgage secures, inter
alia, present and future advances of the Credit Facility made by Co-Lenders or
Mortgagee pursuant to the Credit Agreement and/or the other Credit Facility
Documents; advances made by Mortgagee or Co-Lenders with respect to the
Mortgaged Premises for the payment of taxes, assessments, maintenance charges,
insurance premiums or costs incurred for the protection of the Mortgaged
Premises or the lien of this Mortgage; and expenses incurred by Mortgagee or
Co-Lenders by reason of the occurrence of an Event of Default. The priority of
such future advances and expenses shall relate back to the date of this
Mortgage, or to such later date as required by applicable law, regardless of the
date upon which such advances are made or such expenses are incurred. If the
Credit Facility Documents provide that any advances of the Credit Facility shall
be made by Co-Lenders upon completion by Mortgagor of certain performance
obligations under the Credit Agreement and/or the other Credit Facility
Documents (including, without limitation, compliance with the terms of the
Credit Agreement and/or the other Credit Facility Documents such that no default
or Event of Default shall have occurred), such advances of the Credit Facility
shall be and be deemed "obligatory advances" solely for the purpose of the
application of the obligatory advance doctrine to confirm the lien priority of
such advances of the Credit Facility actually made by Co-Lenders, whether such
advances of the Credit Facility are initially either (1) advanced by Co-Lenders
or Mortgagee into an escrow subject to Mortgagee's or Co-Lenders' control or (2)
retained by Co-Lenders or Mortgagee.
-10-
<PAGE>
IN WITNESS WHEREOF, Mortgagor has duly executed and delivered
this Mortgage as of the day and year first above written.
BRANDYWINE OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership
By: Brandywine Realty Trust, a Maryland
real estate investment trust
By:/s/ Gerard H. Sweeney
---------------------------------------
Name: Gerard H. Sweeney
Title: President and Chief
Executive Officer
Certificate of Residence of the Mortgagee
The business address of the Mortgagee herein is 8300
Greensboro Drive, McLean, Virginia 22102-3604.
_________________________________________
Agent/Attorney for Mortgagee
-11-
<PAGE>
ACKNOWLEDGEMENT
(To be attached)
<PAGE>
EXHIBIT A
(Definitions)
Borrowers: The term "Borrowers" as used in this Mortgage shall mean Mortgagor
and BRT.
BRT: The term "BRT" as used in this Mortgage shall mean Brandywine Realty Trust,
a Maryland real estate investment trust.
Co-Lenders: The term "Co-Lenders" as used in this Mortgage shall mean,
collectively, Smith Barney and NB.
Co-Lenders Agreement: The term "Co-Lenders Agreement" as used in this Mortgage
shall mean that certain Co-Lender and Servicing Agreement dated as of the date
hereof between Smith Barney and NB, in its individual capacity and in its
capacity as administrative and documentation agent for the Credit Facility, as
the same may be amended from time to time.
Credit Agreement: The term "Credit Agreement" as used in this Mortgage shall
mean that certain Credit Agreement dated as of the date of this Mortgage among
Smith Barney, NB, in its individual capacity, Mortgagor and BRT, and NB, acting
in its capacity as administrative and documentation agent for the Credit
Facility, as the same may be amended from time to time, and pursuant to the
provisions of which the Credit Facility is being extended by Co-Lenders to
Mortgagor.
Credit Facility: The term "Credit Facility" as used in this Mortgage shall have
the meaning given to such term in paragraph C of the Preliminary Statement of
this Mortgage.
Credit Facility Documents: The term "Credit Facility Documents" as used in this
Mortgage shall have the meaning given to such term in the Credit Agreement.
Credit Facility Notes: The term "Credit Facility Notes" as used in this Mortgage
shall have the meaning given to such term in the Credit Agreement.
Debt: The term "Debt" as used in this Mortgage shall have the meaning given to
such term in paragraph E of the Preliminary Statement of this Mortgage.
Default Rate: The term "Default Rate" as used in this Mortgage shall have the
meaning given to such term in the Credit Agreement.
Events of Default: The term "Events of Default" as used in this Mortgage shall
have the meaning given to such term in the Credit Agreement.
FF&E: The term "FF&E" as used in this Mortgage shall mean, collectively, all
goods (as such term is defined in the Uniform Commercial Code), now owned or
hereafter acquired by Mortgagor, located at or used in connection with the
Improvements and the operation of the Improvements, including, without
limitation, (i) all furniture and furnishings and all other items of personal
property (including inventory now owned or hereafter acquired by Mortgagor) now
and hereafter located on, or used in connection with the operation of the
Improvements, together with all replacements, modifications, alterations and
additions thereto; and (ii) all equipment, fixtures, machinery and other items
of property required or incidental to the use of the Improvements, including
A-1
<PAGE>
all components thereof, now and hereafter permanently affixed to or incorporated
into the Improvements, including, without limitation, all furnaces, boilers,
heaters, electrical equipment, heating, plumbing, lighting, ventilating,
refrigerating, incineration, air and water pollution control, waste, disposal,
air-cooling and air conditioning systems and apparatus, sprinkler systems and
fire and theft protection equipment, together with all replacements,
modifications, alterations and additions thereto.
Improvements: The term "Improvements" as used in this Mortgage shall have the
meaning given to such term in the granting clause of this Mortgage.
Leases: The terms "Leases" as used in this Mortgage shall have the meaning given
to such term in the granting clause of this Mortgage.
Principal Balance: The term "Principal Balance" as used in this Mortgage shall
have the meaning given to such term in the Credit Agreement.
Mortgaged Property: The term "Mortgaged Property" as used in this Mortgage shall
have the meaning given to such term in the granting clause of this Mortgage.
Mortgagee: The term "Mortgagee" as used in this Mortgage shall have the meaning
given to such term in the preamble to this Mortgage.
Mortgagor: The term "Mortgagor" as used in this Mortgage shall have the meaning
given to such term in the preamble to this Mortgage.
NB: The term "NB" as used in this Mortgage shall mean NationsBank, N.A., a
national banking association.
Premises: The term "Premises" as used in this Mortgage shall have the meaning
given to such term in paragraph B of the Preliminary Statement of this Mortgage.
Rents: The term "Rents" as used in this Mortgage shall have the meaning given to
such term in the granting clause of this Mortgage.
Smith Barney: The term "Smith Barney" as used in this Mortgage shall mean Smith
Barney Mortgage Capital Group, Inc., a Delaware corporation.
Taxes: The term "Taxes" as used in this Mortgage shall have the meaning given to
such term in the Credit Agreement.
Title Company: The term "Title Company" as used in this Mortgage shall have the
meaning given to such term in the Credit Agreement.
Uniform Commercial Code: The term "Uniform Commercial Code" as used in this
Mortgage shall mean the Uniform Commercial Code of the State in which the
Premises are located.
A-2
<PAGE>
*EXHIBIT B
(Description of Premises)
- --------
* Legal description of premises should include insurable description of
any easements which are appurtenant to the Premises.
<PAGE>
================================================================================
Brandywine Operating Partnership, L.P.,
a Delaware limited partnership, as Mortgagor
to
NationsBank, N.A., not individually
but acting in its capacity as administrative
and documentation agent for the equal and
ratable benefit of the co-lenders
described herein, as Mortgagee
--------------------------
MORTGAGE
--------------------------
Dated: As of May 30, 1997
Location: __________________
__________________
__________________
RECORD AND RETURN TO:
Battle Fowler LLP
Park Avenue Tower
75 East 55th Street
New York, New York 10022
Attention: Dean A. Stiffle, Esq.
================================================================================
Master New Jersey Mortgage
THIS MORTGAGE WAS PREPARED BY:
_____________________________
Attorney at Law
<PAGE>
TABLE OF CONTENTS
Page
----
1. Payment of Debt................................................... 3
2. Warranty of Title................................................. 3
3. Leases and Rents.................................................. 3
4. Notice............................................................ 3
5. Sale of Mortgaged Property........................................ 4
6. Changes in Laws Regarding Taxation................................ 4
7. No Credits on Account of the Debt................................. 5
8. Documentary Stamps................................................ 5
9. Events of Default................................................. 5
10. Appointment of Receiver........................................... 5
11. Non-Waiver........................................................ 5
12. Construction...................................................... 6
13. Security Agreement................................................ 6
14. Further Acts, etc................................................. 6
15. Headings, etc..................................................... 7
16. Filing of Mortgage, etc........................................... 7
17. Recovery of Sums Required To Be Paid.............................. 7
18. Actions, Cases and Proceedings.................................... 7
19. Inapplicable Provisions........................................... 7
20. Duplicate Originals............................................... 7
21. Certain Usage..................................................... 8
22. Waiver of Notice.................................................. 8
23. No Oral Change.................................................... 8
24. Waiver of Statutory Rights........................................ 8
25. Credit Agreement.................................................. 8
26. Binding Effect.................................................... 8
<PAGE>
Page
----
27. Exculpation..................................................... 8
ACKNOWLEDGEMENT
EXHIBIT A (Definitions)
EXHIBIT B (Description of Premises)
-ii-
<PAGE>
MORTGAGE
This Mortgage entered into as of the 30th day of May,
1997, between Brandywine Operating Partnership, L.P., a Delaware
limited partnership having an office c/o Brandywine Realty Trust,
Newtown Square Corporate Campus, 16 Campus Boulevard, Suite 150,
Newtown Square, Pennsylvania (hereinafter referred to as "Mortgagor");
and NationsBank, N.A., a national banking association having an office
at 8300 Greensboro Drive, McLean, Virginia, not individually, but
acting in its capacity as administrative and documentation agent for
the equal and ratable benefit of Co-Lenders, pursuant to and in
accordance with the terms and provisions of the Credit Agreement
(NationsBank, N.A., acting in such capacity as administrative and
documentation agent being hereinafter referred to as "Mortgagee").
PRELIMINARY STATEMENT
A. All capitalized terms as used in this Mortgage shall,
unless otherwise defined in this Mortgage, have the meanings given to such terms
in Exhibit A attached hereto.
B. Mortgagor is the owner of a fee estate in the premises
described in Exhibit B attached hereto (hereinafter referred to as the
"Premises").
C. Co-Lenders have on the terms, covenants and provisions set
forth in the Credit Agreement extended to Borrowers a credit facility in the
principal sum of up to, but not in excess of, $70,000,000 (hereinafter referred
to as the "Credit Facility"), which Credit Facility is evidenced by, and payable
together with interest thereon in accordance with the provisions of, the Credit
Facility Notes.
D. Co-Lenders were willing to extend the Credit Facility to
Borrowers only if Mortgagor executed and delivered this Mortgage to Mortgagee,
as administrative and documentation agent for the equal and ratable benefit of
Co-Lenders, as security for the payment of the Debt.
E. NOW, THEREFORE, to secure the payment of an indebtedness in
the principal sum of up to, but not in excess of, Seventy Million and 00/100
Dollars ($70,000,000.00), lawful money of the United States of America, or so
much thereof as may be advanced and be outstanding from time to time in
accordance with the provisions of the Credit Agreement, to be paid with interest
in accordance with the provisions of the Credit Facility Notes and the Credit
Agreement (said indebtedness, interest and any and all sums which may or shall
become due in accordance with the provisions of the Credit Facility Documents
being hereinafter collectively referred to as the "Debt"), Mortgagor has
mortgaged, given, granted, bargained, sold, aliened, enfeoffed, conveyed,
confirmed and assigned, and by these presents does mortgage, give, grant,
bargain, sell, alien, enfeoff, convey, confirm and assign unto Mortgagee forever
all right, title and interest of Mortgagor now owned, or hereafter acquired, in
and to the following property, rights and interests (such property, rights and
interests being hereinafter collectively referred to as the "Mortgaged
Property"):
<PAGE>
(a) the Premises;
(b) all buildings and improvements now or hereafter located on
the Premises (hereinafter referred collectively to as the
"Improvements");
(c) all of the estate, right, title, claim or demand of any
nature whatsoever of Mortgagor, either in law or in equity, in
possession or expectancy, in and to the Mortgaged Property or any part
thereof;
(d) all easements, rights-of-way, gores of land, streets,
ways, alleys, passages, sewer rights, waters, water courses, water
rights and powers, and all estates, rights, titles, interests,
privileges, liberties, tenements, hereditaments, and appurtenances of
any nature whatsoever, in any way belonging, relating or pertaining to
the Mortgaged Property (including, without limitation, any and all
development rights, air rights or similar or comparable rights of any
nature whatsoever now or hereafter appurtenant to the Premises or now
or hereafter transferred to the Premises) and all land lying in the bed
of any street, road or avenue, opened or proposed, in front of or
adjoining the Premises to the center line thereof;
(e) all FF&E and the right, title and interest of Mortgagor in
and to any of the FF&E which may be subject to any security agreements
(as defined in the Uniform Commercial Code) superior in lien to the
lien of this Mortgage;
(f) all awards or payments, including interest thereon, if
any, and the right to receive the same, which may be made with respect
to the Mortgaged Property, whether from the exercise of the right of
eminent domain (including any transfer made in lieu of the exercise of
said right), or for any other injury to or decrease in the value of the
Mortgaged Property;
(g) all leases, licenses and other agreements affecting or
relating to the use or occupancy of the Mortgaged Property now or
hereafter entered into (such leases, licenses and other agreements are
hereinafter collectively referred to as the "Leases") and the right to
receive and apply the rents, income, revenues, receipts, accounts,
accounts receivable, issues and profits of or derived from or relating
to the Mortgaged Property (hereinafter collectively referred to as the
"Rents") to the payment of the Debt;
(h) all proceeds of and any unearned premiums on any insurance
policies covering the Mortgaged Property, including, without
limitation, the right (subject to the provisions of the Credit
Agreement) to receive and apply the proceeds of any insurance,
judgments, or settlements made in lieu thereof, for damage to the
Mortgaged Property; and
(i) the right to appear in and defend any action, case or
proceeding brought with respect to the Mortgaged Property and to
commence any action, case or proceeding to protect the interest of
Mortgagee in the Mortgaged Property;
-2-
<PAGE>
TO HAVE AND TO HOLD the above granted and described Mortgaged
Property unto and to the proper use and benefit of Mortgagee, and the successors
and assigns of Mortgagee, forever;
AND Mortgagor covenants and agrees with and represents and
warrants to Mortgagee as follows:
1. Payment of Debt. Mortgagor will pay the Debt at the time
and in the manner provided for its payment in the Credit Facility Documents.
2. Warranty of Title. Subject only to those exceptions to
title specifically set forth in the title policy issued or to be issued by the
Title Company to Mortgagee and insuring the lien of this Mortgage, Mortgagor
warrants the title to the Premises, the Improvements, the FF&E and the balance
of the Mortgaged Property.
3. Leases and Rents. Subject to the terms of this paragraph,
Mortgagee waives the right to enter the Mortgaged Property for the purpose of
collecting the Rents, and grants Mortgagor the right to collect the Rents.
Mortgagor shall collect and hold the Rents, or an amount sufficient to discharge
all current sums due on the Debt, in trust for use in payment of the Debt. The
right of Mortgagor to collect the Rents may be revoked by Mortgagee upon the
occurrence of any Event of Default by giving notice of such revocation to
Mortgagor. Following such notice and as long as such Event of Default is
continuing (it being understood that the decision whether or not to accept the
cure of an Event of Default shall be in the sole and absolute discretion of
Mortgagee), Mortgagee may retain and apply the Rents toward payment of the Debt
in such order, priority and proportions as Mortgagee, in its discretion, shall
deem proper, or to the operation, maintenance and repair of the Mortgaged
Property, and irrespective of whether Mortgagee shall have commenced a
foreclosure of this Mortgage or shall have applied or arranged for the
appointment of a receiver. In addition, Mortgagee shall have the absolute and
unconditional right following the occurrence and during the continuance of an
Event of Default to notify the tenants under the Leases that all Rents should be
paid directly to Mortgagee. In addition to the rights which Mortgagee may have
herein, if an Event of Default shall occur and shall be continuing Mortgagee, at
its option, may require Mortgagor to pay monthly in advance to Mortgagee, or any
receiver appointed to collect the Rents, the fair and reasonable rental value
for the use and occupation of such part of the Mortgaged Property as may be in
possession of Mortgagor. Upon default in any such payment, Mortgagor will vacate
and surrender possession of the Mortgaged Property to Mortgagee, or to such
receiver and, in default thereof, Mortgagor may be evicted by summary
proceedings or otherwise. Nothing contained in this paragraph shall be construed
as imposing on Mortgagee any of the obligations of the landlord under the
Leases.
4. Notice. Any notice, request, demand, statement,
authorization, approval or consent made hereunder shall be in writing and shall
be sent by Federal Express, or other reputable national courier service, or by
postage pre-paid registered or certified mail, return receipt requested, and
shall be deemed given (i) when received at the following addresses if sent by
Federal Express, or other reputable national courier service, and (ii) three (3)
business days after being postmarked and addressed as follows if sent by
registered or certified mail, return receipt requested:
-3-
<PAGE>
If to Mortgagor:
c/o Brandywine Realty Trust
Newtown Square Corporate Campus
16 Campus Boulevard, Suite 150
Newtown Square, Pennsylvania 19073
Attention: Gerard H. Sweeney
President and Chief Executive Officer
With a copy to:
Pepper, Hamilton & Scheetz
3000 Two Logan Square
Eighteenth and Arch Streets
Philadelphia, Pennsylvania 19103-2799
Attention: Michael H. Friedman, Esq.
If to Mortgagee:
NationsBank, N.A.
Real Estate Banking
8300 Greensboro Drive
McLean, Virginia 22102-3604
Attention: Cheryl D. Fitzgerald
Vice President
With copies to:
Cadwalader, Wickersham & Taft
201 South College Street - Suite 1510
Charlotte, North Carolina 28244
Attention: James P. Carroll, Esq.
and
Battle Fowler LLP
Park Avenue Tower
75 East 55th Street
New York, New York 10022
Attention: Dean A. Stiffle, Esq.
Each party may designate a change of address by notice to the other party, given
at least fifteen (15) days before such change of address is to become effective.
5. Sale of Mortgaged Property. If this Mortgage is foreclosed,
the Mortgaged Property, or any interest therein, may, at the discretion of
Mortgagee, be sold in one or more parcels or in several interests or portions
and in any order or manner.
6. Changes in Laws Regarding Taxation. In the event of the
passage after the date of this Mortgage of any law of the State in which the
Premises are located deducting from the value of real property for the purpose
of taxation any lien or encumbrance thereon or changing in any way the laws for
the taxation of mortgages or debts secured by mortgages for state or local
-4-
<PAGE>
purposes or the manner of the collection of any such taxes, and imposing a tax,
either directly or indirectly, on this Mortgage, the Credit Facility Notes or
the Debt, Mortgagor shall, if permitted by law, pay any tax imposed as a result
of any such law within the statutory period or within thirty (30) days after
demand by Mortgagee, whichever is less, provided, however, that if, in the
opinion of the attorneys for Mortgagee, Mortgagor is not permitted by law to pay
such taxes, Mortgagee shall have the right, at its option, to declare the Debt
due and payable on a date specified in a prior notice to Mortgagor of not less
than sixty (60) days.
7. No Credits on Account of the Debt. Mortgagor will not claim
or demand or be entitled to any credit or credits on account of the Debt for any
part of the Taxes assessed against the Mortgaged Property or any part thereof
and no deduction shall otherwise be made or claimed from the taxable value of
the Mortgaged Property, or any part thereof, by reason of this Mortgage or the
Debt.
8. Documentary Stamps. If at any time the United States of
America, any state thereof, or any governmental subdivision of any such state,
shall require revenue or other stamps to be affixed to the Credit Facility Notes
(or any of them), this Mortgage or any of the other Credit Facility Documents,
Mortgagor will, to the extent permitted by law, pay for the same, with interest
and penalties thereon, if any.
9. Events of Default. The Debt shall become due at the option
of Mortgagee upon the occurrence of any one or more of the Events of Default.
10. Appointment of Receiver. Mortgagee, in any action to
foreclose this Mortgage or upon the actual or threatened waste to any part of
the Mortgaged Property or upon the occurrence of any Event of Default, shall be
at liberty, without notice, to apply for the appointment of a receiver of the
Rents, and shall be entitled to the appointment of such receiver as a matter of
right, without regard to the value of the Mortgaged Property as security for the
Debt, or the solvency or insolvency of any person then liable for the payment of
the Debt.
11. Non-Waiver. The failure of Mortgagee to insist upon strict
performance of any term of this Mortgage shall not be deemed to be a waiver of
any term of this Mortgage. Mortgagor shall not be relieved of Mortgagor's
obligation to pay the Debt at the time and in the manner provided for its
payment in the Credit Facility Documents by reason of (i) failure of Mortgagee
to comply with any request of Mortgagor to take any action to foreclose this
Mortgage or any other mortgage or deed of trust securing the Debt or any portion
thereof or otherwise enforce any of the provisions of this Mortgage or any of
the other Credit Facility Documents, (ii) the release, regardless of
consideration, of the whole or any part of the Mortgaged Property or any other
security for the Debt, or (iii) any agreement or stipulation between Mortgagee
and any subsequent owner or owners of the Mortgaged Property or other person
extending the time of payment or otherwise modifying or supplementing the terms
of the Credit Facility Documents without first having obtained the consent of
Mortgagor, and in the latter event, Mortgagor shall continue to be obligated to
pay the Debt at the times and in the manner provided in the Credit Facility
Documents, as so extended, modified and supplemented, unless expressly released
and discharged from such obligation by Mortgagee in
-5-
<PAGE>
writing. Regardless of consideration, and without the necessity for any notice
to or consent by the holder of any subordinate lien, encumbrance, right, title
or interest in or to the Mortgaged Property, Mortgagee may release any person at
any time liable for the payment of the Debt or any portion thereof or any part
of the security held for the Debt and may extend the time of payment of the Debt
or otherwise modify the terms of the Credit Facility Documents, including,
without limitation, a modification of the interest rate payable on the Principal
Balance of the Credit Facility Notes, without in any manner impairing or
affecting this Mortgage or the lien thereof or the priority of this Mortgage, as
so extended and modified, as security for the Debt over any such subordinate
lien, encumbrance, right, title or interest. Mortgagee may resort for the
payment of the Debt to any other security held by Mortgagee in such order and
manner as Mortgagee, in its discretion, may elect. Mortgagee may take action to
recover the Debt, or any portion thereof, or to enforce any covenant hereof
without prejudice to the right of Mortgagee thereafter to foreclose this
Mortgage. Mortgagee shall not be limited exclusively to the rights and remedies
herein stated but shall be entitled to every additional right and remedy set
forth in the Credit Facility Documents or now or hereafter afforded by law. The
rights of Mortgagee under this Mortgage and the other Credit Facility Documents
shall be separate, distinct and cumulative and none shall be given effect to the
exclusion of the others. No act of Mortgagee shall be construed as an election
to proceed under any one provision of this Mortgage or of the other Credit
Facility Documents to the exclusion of any other provision set forth in this
Mortgage or the other Credit Facility Documents.
12. Construction. The terms of this Mortgage shall be
construed in accordance with the laws of the State in which the Premises are
located.
13. Security Agreement. This Mortgage constitutes both a real
property mortgage and a "security agreement", within the meaning of the Uniform
Commercial Code, and the Mortgaged Property includes both real and personal
property and all other rights and interest, whether tangible or intangible in
nature, of Mortgagor in the Mortgaged Property. Mortgagor by executing and
delivering this Mortgage has granted to Mortgagee, as security for the Debt, a
security interest in the Mortgaged Property, including, without limitation,
FF&E. If an Event of Default shall occur, Mortgagee, in addition to any other
rights and remedies which it may have, shall have and may exercise immediately
and without demand any and all rights and remedies granted to a secured party
upon default under the Uniform Commercial Code, including, without limiting the
generality of the foregoing, the right to take possession of the FF&E or any
part thereof, and to take such other measures as Mortgagee may deem necessary
for the care, protection and preservation of the FF&E. Mortgagor shall pay to
Mortgagee on demand any and all expenses (including reasonable attorneys' fees)
actually incurred or paid by Mortgagee in protecting its interest in the FF&E
and in enforcing its rights hereunder with respect to the FF&E. Any notice of
sale, disposition or other intended action by Mortgagee with respect to the FF&E
sent to Mortgagor in accordance with the provisions of this Mortgage at least
seven (7) business days prior to the date of any such sale, disposition or other
action, shall constitute reasonable notice to Mortgagor (except in the case of
FF&E which is perishable or is of a type customarily sold on a recognized
market, in which case such seven (7) business days' notice shall not be
required), and the method of sale or disposition or other intended action set
forth or specified in such notice shall conclusively be deemed to be
commercially reasonable within the meaning
-6-
<PAGE>
of the Uniform Commercial Code unless objected to in writing by Mortgagor within
five (5) days after receipt by Mortgagor of such notice. The proceeds of any
sale or disposition of the FF&E, or any part thereof, may be applied by
Mortgagee to the payment of the Debt in such order, priority and proportions as
Mortgagee in its discretion shall deem proper.
14. Further Acts, etc. Mortgagor will, at the cost of
Mortgagor, and without expense to Mortgagee, do, execute, acknowledge and
deliver all and every such further acts, deeds, conveyances, mortgages,
assignments, notices of assignments, transfers and assurances as Mortgagee
shall, from time to time, require for the better assuring, conveying, assigning,
transferring and confirming unto Mortgagee the property and rights hereby
mortgaged or intended now or hereafter so to be, or which Mortgagor may be or
may hereafter become bound to convey or assign to Mortgagee, or for carrying out
the intention or facilitating the performance of the terms of this Mortgage or
for filing, registering or recording this Mortgage and, on demand, will execute
and deliver and hereby authorizes Mortgagee to execute in the name of Mortgagor
to the extent Mortgagee may lawfully do so, one or more financing statements,
chattel mortgages or comparable security instruments, to evidence more
effectively the lien hereof upon the Mortgaged Property.
15. Headings, etc. The headings, titles and captions of
various paragraphs of this Mortgage are for convenience of reference only and
are not to be construed as defining or limiting, in any way, the scope or intent
of the provisions hereof.
16. Filing of Mortgage, etc. Mortgagor forthwith upon the
execution and delivery of this Mortgage and thereafter, from time to time, will
cause this Mortgage, and any security instrument creating a lien or evidencing
the lien hereof upon the Mortgaged Property and each instrument of further
assurance to be filed, registered or recorded in such manner and in such places
as may be required by any present or future law in order to publish notice of
and fully to protect, preserve and perfect the lien hereof upon, and the
interest of Mortgagee in, the Mortgaged Property. Mortgagor will pay all filing,
registration and recording fees, and all expenses incident to the preparation,
execution and acknowledgement of this Mortgage, any mortgage supplemental
hereto, any security instrument with respect to the Mortgaged Property, and any
instrument of further assurance, and all Federal, state, county and municipal
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of this Mortgage, any mortgage supplemental
hereto, any security instrument with respect to the Mortgaged Property or any
instrument of further assurance. Mortgagor shall hold harmless and indemnify
Mortgagee, its successors and assigns, against any liability incurred by reason
of the imposition of any tax on the making and recording of this Mortgage.
17. Recovery of Sums Required To Be Paid. Mortgagee shall have
the right from time to time to take action to recover any sum or sums which
constitute a part of the Debt as the same become due, without regard to whether
or not the balance of the Debt shall be due, and without prejudice to the right
of Mortgagee thereafter to bring an action of foreclosure, or any other action,
for a default or defaults by Mortgagor existing at the time such earlier action
was commenced.
-7-
<PAGE>
18. Actions, Cases and Proceedings. Mortgagee shall have the
right to appear in and defend any action, case or proceeding brought with
respect to the Mortgaged Property and to bring any action, case or proceeding,
which Mortgagee, in its discretion, feels should be brought to protect its
interest in the Mortgaged Property.
19. Inapplicable Provisions. If any term, covenant or
condition of this Mortgage shall be held to be invalid, illegal or unenforceable
in any respect, this Mortgage shall be construed without such provision.
20. Duplicate Originals. This Mortgage may be executed in any
number of duplicate originals and each such duplicate original shall be deemed
to constitute but one and the same instrument.
21. Certain Usage. Unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, words used in
this Mortgage shall be used interchangeably in singular or plural form. Whenever
the context may require, any pronouns used herein shall include the
corresponding masculine, feminine or neuter forms, and the singular forms of
nouns and pronouns shall include the plural and vice versa.
22. Waiver of Notice. Mortgagor shall not be entitled to any
notices of any nature whatsoever from Mortgagee except with respect to matters
for which this Mortgage specifically and expressly provides for the giving of
notice by Mortgagee to Mortgagor, and Mortgagor (to the full extent it may
lawfully do so) hereby expressly waives the right to receive any notice from
Mortgagee with respect to any matter for which this Mortgage does not
specifically and expressly provide for the giving of notice by Mortgagee to
Mortgagor.
23. No Oral Change. This Mortgage may only be modified,
amended or changed by an agreement in writing signed by Mortgagor and Mortgagee,
and may only be released, discharged or satisfied of record by an agreement in
writing signed by Mortgagee. No waiver of any term, covenant or provision of
this Mortgage shall be effective unless given in writing by Mortgagee and if so
given by Mortgagee shall only be effective in the specific instance in which
given.
24. Waiver of Statutory Rights. Mortgagor shall not and will
not apply for or avail itself of any appraisement, valuation, stay, extension or
exemption laws, or any so-called "Moratorium Laws", now existing or hereafter
enacted, in order to prevent or hinder the enforcement or foreclosure of this
Mortgage, but hereby waives the benefit of such laws to the full extent that
Mortgagor may do so under applicable law. Mortgagor for itself and all who may
claim through or under it waives any and all right to have the property and
estates comprising the Mortgaged Property marshalled upon any foreclosure of the
lien of this Mortgage and agrees that any court having jurisdiction to foreclose
such lien may order the Mortgaged Property sold as an entirety. Mortgagor hereby
waives for itself and all who may claim through or under it, and to the full
extent Mortgagor may do so under applicable law, any and all rights of
redemption from sale under any order or decree of foreclosure of this Mortgage
or granted under any statute now existing or hereafter enacted.
-8-
<PAGE>
25. Credit Agreement. This Mortgage is subject to all of the
terms, covenants and conditions of the Credit Agreement, which Credit Agreement
and all of the terms, covenants and conditions thereof are by this reference
incorporated herein with the same force and effect as if fully set forth herein.
The proceeds of the Credit Facility secured hereby are to be advanced by
Co-Lenders to Mortgagor in accordance with the provisions of the Credit
Agreement. Mortgagor shall observe and perform all of the terms, covenants and
conditions of the Credit Agreement on Mortgagor's part to be observed or
performed. All advances made and all indebtedness arising and accruing under the
Credit Agreement from time to time shall constitute part of the Debt and shall
be secured hereby.
26. Binding Effect. The terms, covenants and provisions of
this Mortgage shall be binding on and shall inure to the benefit of Mortgagor,
Mortgagee, and their respective successors and assigns.
27. Exculpation. No recourse shall be had for any obligation
of BRT under this Mortgage or any of the other Credit Facility Documents or for
any claim based thereon or otherwise in respect thereof, against any past,
present or future trustee, shareholder, officer or employee of BRT, 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
each other party to this Mortgage and the other Credit Facility Documents.
IN WITNESS WHEREOF, Mortgagor has duly executed and delivered
this Mortgage as of the day and year first above written.
BRANDYWINE OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership
By: Brandywine Realty Trust, a Maryland
real estate investment trust
By:/s/ Gerard H. Sweeney
-------------------------------
Name: Gerard H. Sweeney
Title: President and Chief
Executive Officer
-9-
<PAGE>
ACKNOWLEDGEMENT
(To be attached)
<PAGE>
EXHIBIT A
(Definitions)
Borrowers: The term "Borrowers" as used in this Mortgage shall mean Mortgagor
and BRT.
BRT: The term "BRT" as used in this Mortgage shall mean Brandywine Realty Trust,
a Maryland real estate investment trust.
Co-Lenders: The term "Co-Lenders" as used in this Mortgage shall mean,
collectively, Smith Barney and NB.
Co-Lenders Agreement: The term "Co-Lenders Agreement" as used in this Mortgage
shall mean that certain Co-Lender and Servicing Agreement dated as of the date
hereof between Smith Barney and NB, in its individual capacity and in its
capacity as administrative and documentation agent for the Credit Facility, as
the same may be amended from time to time.
Credit Agreement: The term "Credit Agreement" as used in this Mortgage shall
mean that certain Credit Agreement dated as of the date of this Mortgage among
Smith Barney, NB, in its individual capacity, Mortgagor and BRT, and NB, acting
in its capacity as administrative and documentation agent for the Credit
Facility, as the same may be amended from time to time, and pursuant to the
provisions of which the Credit Facility is being extended by Co-Lenders to
Mortgagor.
Credit Facility: The term "Credit Facility" as used in this Mortgage shall have
the meaning given to such term in paragraph C of the Preliminary Statement of
this Mortgage.
Credit Facility Documents: The term "Credit Facility Documents" as used in this
Mortgage shall have the meaning given to such term in the Credit Agreement.
Credit Facility Notes: The term "Credit Facility Notes" as used in this Mortgage
shall have the meaning given to such term in the Credit Agreement.
Debt: The term "Debt" as used in this Mortgage shall have the meaning given to
such term in paragraph E of the Preliminary Statement of this Mortgage.
Default Rate: The term "Default Rate" as used in this Mortgage shall have the
meaning given to such term in the Credit Agreement.
Events of Default: The term "Events of Default" as used in this Mortgage shall
have the meaning given to such term in the Credit Agreement.
FF&E: The term "FF&E" as used in this Mortgage shall mean, collectively, all
goods (as such term is defined in the Uniform Commercial Code), now owned or
hereafter acquired by Mortgagor, located at or used in connection with the
Improvements and the operation of the Improvements, including, without
limitation, (i) all furniture and furnishings and all other items of personal
property (including inventory now owned or hereafter acquired by Mortgagor) now
and hereafter located on, or used in connection with the operation of the
Improvements, together with all replacements, modifications, alterations and
additions thereto; and (ii) all equipment, fixtures, machinery and other items
of property required or incidental to the use of the Improvements, including
<PAGE>
all components thereof, now and hereafter permanently affixed to or incorporated
into the Improvements, including, without limitation, all furnaces, boilers,
heaters, electrical equipment, heating, plumbing, lighting, ventilating,
refrigerating, incineration, air and water pollution control, waste, disposal,
air-cooling and air conditioning systems and apparatus, sprinkler systems and
fire and theft protection equipment, together with all replacements,
modifications, alterations and additions thereto.
Improvements: The term "Improvements" as used in this Mortgage shall have the
meaning given to such term in the granting clause of this Mortgage.
Leases: The terms "Leases" as used in this Mortgage shall have the meaning given
to such term in the granting clause of this Mortgage.
Principal Balance: The term "Principal Balance" as used in this Mortgage shall
have the meaning given to such term in the Credit Agreement.
Mortgaged Property: The term "Mortgaged Property" as used in this Mortgage shall
have the meaning given to such term in the granting clause of this Mortgage.
Mortgagee: The term "Mortgagee" as used in this Mortgage shall have the meaning
given to such term in the preamble to this Mortgage.
Mortgagor: The term "Mortgagor" as used in this Mortgage shall have the meaning
given to such term in the preamble to this Mortgage.
NB: The term "NB" as used in this Mortgage shall mean NationsBank, N.A., a
national banking association.
Premises: The term "Premises" as used in this Mortgage shall have the meaning
given to such term in paragraph B of the Preliminary Statement of this Mortgage.
Rents: The term "Rents" as used in this Mortgage shall have the meaning given to
such term in the granting clause of this Mortgage.
Smith Barney: The term "Smith Barney" as used in this Mortgage shall mean Smith
Barney Mortgage Capital Group, Inc., a Delaware corporation.
Taxes: The term "Taxes" as used in this Mortgage shall have the meaning given to
such term in the Credit Agreement.
Title Company: The term "Title Company" as used in this Mortgage shall have the
meaning given to such term in the Credit Agreement.
Uniform Commercial Code: The term "Uniform Commercial Code" as used in this
Mortgage shall mean the Uniform Commercial Code of the State in which the
Premises are located.
A-2
<PAGE>
*EXHIBIT B
(Description of Premises)
- --------
* Legal description of premises should include insurable description of
any easements which are appurtenant to the Premises.
<PAGE>
================================================================================
Brandywine Operating Partnership, L.P.,
a Delaware limited partnership, as Assignor
and
NationsBank, N.A., not individually, but acting in
its capacity as collateral agent for the equal and
ratable benefit of the co-lenders described herein,
as Assignee
-------------------------------
ASSIGNMENT OF LEASES AND RENTS
-------------------------------
Dated: As of May 30, 1997
Location: __________________
__________________
__________________
RECORD AND RETURN TO:
Battle Fowler LLP
Park Avenue Tower
75 East 55th Street
New York, New York 10022
Attention: Dean A. Stiffle, Esq.
<PAGE>
================================================================================
MASTER ASSIGNMENT OF LEASES
<PAGE>
ASSIGNMENT OF LEASES AND RENTS
This Assignment of Leases and Rents entered
into as of the 30th day of May, 1997, by Brandywine Operating
Partnership, L.P., a Delaware limited partnership having an
office c/o Brandywine Realty Trust, Newtown Square Corporate
Campus, 16 Campus Boulevard, Suite 150, Newtown Square,
Pennsylvania (hereinafter referred to as "Assignor"); and
NationsBank, N.A., a national banking association having an
office at 8300 Greensboro Drive, McLean, Virginia, not
individually, but acting in its capacity as administrative and
documentation agent for the equal and ratable benefit of
Co-Lenders pursuant to and in accordance with the terms and
provisions of the Credit Agreement (NationsBank, N.A. acting
in such capacity as administrative and documentation agent
being hereinafter referred to as "Assignee").
PRELIMINARY STATEMENT
A. All capitalized terms as used in this Assignment shall,
unless otherwise defined in this Assignment, have the meanings given to such
terms in Exhibit A attached hereto.
B. Assignor is the owner of a fee estate in the premises
described in Exhibit B attached hereto (hereinafter referred to as the
"Premises");
C. Co-Lenders have on the terms, covenants and provisions set
forth in the Credit Agreement extended to Borrowers a credit facility in the
principal sum of up to, but not in excess of, $70,000,000 (hereinafter referred
to as the "Credit Facility"), which Credit Facility is evidenced by, and payable
together with interest thereon in accordance with the provisions of, the Credit
Facility Notes.
D. Co-Lenders were willing to extend the Credit Facility to
Assignor only if Assignor assigned to Assignee, for the equal and ratable
benefit of Co-Lenders, in the manner hereinafter provided, as additional
security for the payment of the Debt and the observance and performance by
Borrowers of all of the terms, covenants and provisions of the Credit Facility
Documents on Borrowers' part to be observed and performed, all right, title and
interest of Assignor now owned, or hereafter acquired, in and to (i) all leases,
licenses and other agreements (hereinafter collectively referred to as the
"Leases") now as hereafter entered into and affecting or relating to the use or
occupancy of the Premises or of the improvements now or hereafter erected
thereon (the "Improvements"), and (ii) the rents, income, revenues, receipts,
accounts, accounts receivable, issues and profits of or derived from or relating
to the Premises or the Improvements or any portion thereof (hereinafter
collectively referred to as the "Rents").
E. NOW, THEREFORE, in consideration of the extension of the
Credit Facility and other good and valuable consideration, the receipt of which
is hereby acknowledged, Assignor hereby assigns to Assignee, as additional
security for the payment of the Debt and the observance and performance by
Borrowers of all of the terms, covenants and provisions of the
<PAGE>
Credit Facility Documents on Borrowers' part to be observed or performed, all of
Assignor's right, title and interest now owned, or hereafter acquired, in and to
the Leases and the Rents, and Assignor hereby represents and warrants to and
covenants and agrees with Assignee as follows:
1. Except as expressly set forth to the contrary in the
certified rent roll for the Property being delivered by Assignor to Assignee in
connection with the execution and delivery of this Assignment, Assignor
represents and warrants that as of the date hereof (i) Assignor is the owner and
holder of the landlord's interest under the Leases, (ii) there are no prior or
subordinate assignments of the Leases or of any portion of the Rents due and
payable or to become due and payable thereunder which are presently outstanding,
(iii) all of the Leases are in full force and effect and the respective terms
thereof have commenced pursuant to the provisions thereof, (iv) the premises
demised under each of the Leases have been completed and the tenants under the
Leases have taken possession of the premises demised thereunder on a rent-paying
basis, (v) neither Assignor nor any tenant under the Leases is in default under
any of the terms, covenants or provisions of the Leases and Assignor knows of no
event which, but for the passage of time or the giving of notice or both, would
constitute an event of default under any of the Leases, (vi) neither Assignor
nor any tenant under the Leases has commenced any action or given or served any
notice for the purpose of terminating any of the Leases, (vii) all Rents due and
payable under the Leases have been paid in full and no such Rents have been paid
more than one (l) month in advance of the due dates thereof, and (viii) there
are no offsets or defenses to the payment of any portion of the Rents.
2. Assignor shall, at its sole cost and expense, (i) fulfill
and perform, or cause to be fulfilled and performed, each and every term,
covenant and provision of the Leases on the part of the Assignor thereunder to
be observed and performed, (ii) promptly send copies of all notices of default
which Assignor shall send or receive under the Leases to Assignee, (iii) enforce
the observance and performance of the terms and provisions of the Leases by the
tenants thereunder, (iv) enforce the observance and performance of each and
every term, covenant and provision of the Leases on the part of the tenants
thereunder to be observed and performed and (v) appear in and defend any action
or proceeding arising under or in any manner connected with the Leases or with
the obligations and undertakings of the landlord or the tenants thereunder.
3. Assignor shall not, without the prior consent of
Co-Lenders, (i) further transfer, sell, assign, pledge, encumber or grant a
security interest in all or any portion of the Rents or the Leases, (ii) accept
prepayments of installments of the Rents for a period of more than one (1) month
in advance, (iii) make or suffer to be made any Lease, including any renewal of
an existing Lease (other than renewals at rents and/on other terms expressly
reserved in such Lease) other than in accordance and in a manner consistent with
the provisions of the Credit Agreement, (iv) consent to or permit the assignment
or subletting of any leasehold estate created under any Lease (other than in
accordance with the express provisions of such Lease), (v) terminate, modify or
amend, or consent to the termination, modification or amendment of, any Lease or
any term thereof other than in accordance and in a manner consistent with the
provisions of the Credit Agreement, (vi) commence or continue proceedings to
evict, remove or dispossess the tenant under any Lease, provided, however, that
Assignor may commence and continue such a proceeding without obtaining the prior
consent of Assignor if the Lease in question does not cover in excess of 20,000
square feet of space in the Improvements and the commencement of such proceeding
is otherwise consistent
-2-
<PAGE>
with customary business practices for the operation of improvements which are
comparable to the Improvements, or (vii) waive, cancel, release, modify, excuse,
condone, set-off, compromise or in any manner release or discharge the tenant
under any Lease other than in a manner which is consistent with customary
business practices for the operation of improvements comparable to the
Improvements.
4. This Assignment shall not be deemed or construed to
obligate Assignee or any Co-Lender to take any action or incur any expense or
perform or discharge any obligation, duty or liability under the Leases, and
Assignor hereby agrees to indemnify and hold Assignee and Co-Lenders harmless
from and against all liability, loss or damage, including, but not limited to,
reasonable attorneys' fees, which Assignee or any Co-Lender may or might incur
under the Leases or under or by reason of this Assignment and from and against
any and all claims whatsoever which may be asserted against Assignee or any
Co-Lender by reason of any alleged obligation or undertaking on the part of
Assignee or any Co-Lender to perform or discharge any of the terms, covenants or
provisions contained in the Leases.
5. This Assignment has been made as additional security for
the payment of the Debt and the observance and performance by Borrowers of the
terms, covenants and provisions of the Credit Facility Documents on Borrowers'
part to be observed and performed. Subject to the provisions of this Assignment
hereinafter set forth, Assignee waives the right to enter the Premises for the
purpose of collecting the Rents, and grants Assignor the right to collect the
Rents. Assignor shall collect and hold the Rents, or an amount sufficient to
discharge all current sums due on the Debt, in trust for use in the payment of
the Debt. The right of Assignor to collect the Rents may be revoked by Assignee
upon the occurrence of any Event of Default, by giving notice of such revocation
to Assignor. Following such notice and as long as such Event of Default is
continuing (it being understood that the decision whether or not to accept the
cure of an Event of Default shall be in the sole and absolute discretion of
Assignee), Assignee may retain and apply the Rents toward payment of the Debt in
such order, priority and proportions as Assignee in its discretion, shall deem
proper, or to the operation, maintenance and repair of the Property, and
irrespective of whether Assignee shall have declared the Debt to be immediately
due and payable, or shall have commenced a foreclosure of the Mortgage or shall
have applied or arranged for the appointment of a receiver. In addition,
Assignee shall have the absolute and unconditional right following the
occurrence and during the continuance of an Event of Default, to notify the
tenants under the Leases that all Rents should be paid directly to Assignee.
Upon the occurrence and during the continuance of an Event of Default, the
tenants under the Leases shall, upon notice from Assignee of the occurrence of
such Event of Default, thereafter pay to Assignee or to any appointed receiver
the Rents due or to become due under the Leases without any obligation to
determine whether or not such Event of Default does in fact exist, and Assignor
shall facilitate in all reasonable ways the collection of the Rents by Assignee,
and without implying the necessity therefor will, upon demand of Assignee,
execute written notices to the tenants under the Leases directing the tenants
under the Leases to pay the Rents to Assignee, which Rents may, during the
continuance of such Event of Default, be retained and applied by Assignee toward
the payment of the Debt in such order, priority and proportions as Assignee in
its discretion, shall deem proper, or to the operation, maintenance and repair
of the Property.
6. Upon the occurrence of an Event of Default and for so long
as such Event of Default continues Assignee shall have the right, at its option,
to enter upon and take over and assume the management, operation and
-3-
<PAGE>
maintenance of the Property and to perform all necessary and proper acts and to
expend such sums out of the income of the Property as may be necessary in
connection therewith, in the same manner and to the same extent as Assignor
theretofore might do, including the right to effect new Leases, cancel or
surrender the Leases, alter, modify or amend the provisions thereof, or make
concessions to the tenants thereunder and Assignor hereby releases and waives
all claims against Assignee arising out of such management, operation and
maintenance. Assignor shall, from time to time, at its expense, execute,
deliver, file and record any statement, assignment, instrument, document,
agreement or other paper and take any other action (including any filings of
financing or continuation statements under the Uniform Commercial Code) that
from time to time may be necessary or desirable, or that Assignee may reasonable
request, in order to create, preserve, perfect, confirm or validate the
assignment of the Leases and Rents made pursuant to the provisions of this
Assignment or to enable Assignee to obtain the full benefits of this Assignment,
or to enable Assignee to exercise and enforce any of its rights, powers and
remedies hereunder. To the extent permitted by applicable law, Assignor hereby
authorizes Assignee, and appoints Assignee as its true and lawful attorney (with
full power of substitution, in the name of Assignor), to execute and file
financing statements or continuation statements without Assignor's signature
appearing thereon.
7. Nothing contained in this Assignment, and no entry by
Assignee upon the Property as hereinabove provided, shall be construed as to
constitute Assignee as a mortgagee in possession.
8. Nothing contained in this Assignment is intended or shall
be construed to prevent Assignee in the exercise of its discretion from
foreclosing the Mortgage or otherwise enforcing the provisions thereof or of any
of the other Credit Facility Documents, in whole or in part, in accordance with
their terms.
9. No alteration, extension, renewal, change, modification,
release, amendment, compromise or cancellation, in whole or in part, of any
term, covenant or provision of any of the other Credit Facility Documents shall
affect this Assignment in any manner or diminish or release any of the rights of
Assignee hereunder.
10. Assignor hereby waives any and all legal requirements that
Assignee institute any action or proceeding in law or in equity against any
other party, or exhaust its remedies under any of the other Credit Facility
Documents as a condition precedent to exercising its rights and remedies under
this Assignment. All remedies afforded to Assignee by reason of this Assignment
are separate and cumulative remedies and it is agreed that no one of such
remedies whether exercised by Assignee or not, shall be deemed to be in
exclusion of any of the other remedies available to Assignee and shall not in
any manner limit or prejudice any other legal or equitable remedies which
Assignee may have, including, but not limited to, all rights and remedies of
Assignee under any of the other Credit Facility Documents.
11. It is the intention of the parties hereto that any and all
other Leases affecting the Property or any portion thereof presently in effect
or hereafter entered into by Assignor or in which Assignor shall otherwise have
an interest shall be covered by the provisions of this Assignment and all such
Leases and all of Assignor's right, title and interest in all such Leases, and
the rents, additional rents, charges, issues, profits and other sums payable
thereunder, are hereby assigned to Assignee until the end of the respective
terms thereof and any renewals or extensions thereof, subject to
-4-
<PAGE>
all of the terms, covenants and provisions of this Assignment. Assignor shall
deliver a true and correct copy of each such Lease to Assignee promptly after
the execution and delivery of the same. Assignor shall, upon the request of
Assignee, execute and deliver in recordable form all instruments which Assignee
may reasonably request to further evidence and confirm such assignment of each
such Lease.
12. This Assignment shall be binding upon Assignor, and its
successors and assigns and shall inure to the benefit of Assignee, and its
successors and assigns.
13. This Assignment may only be modified, altered, amended, or
terminated by an agreement in writing executed by the parties hereto.
14. Any notice, request, demand, statement or consent made
hereunder or in connection herewith shall be in writing and shall be sent in the
manner specified in the Credit Agreement.
15. If any term, covenant or condition of this Assignment
shall be held to be invalid, illegal or unenforceable in any respect, this
Assignment shall be construed without such provision.
16. This Assignment shall be governed by and construed under
the laws of the State in which the Property is located.
18. No recourse shall be had for any obligation of BRT under
this Assignment or any of the other Credit Facility Documents or for any claim
based thereon or otherwise in respect thereof, against any past, present or
future trustee, shareholder, officer or employee of BRT, 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 each
other party to this Assignment and the other Credit Facility Documents.
-5-
<PAGE>
IN WITNESS WHEREOF, Assignor has duly executed this Assignment
as of the day and year first above written.
BRANDYWINE OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership
By: Brandywine Realty Trust, a Maryland
real estate investment trust
By:/s/ Gerard H. Sweeney
-------------------------------
Name: Gerard H. Sweeney
Title: President and Chief
Executive Officer
-6-
<PAGE>
ACKNOWLEDGMENTS
(To be attached)
-7-
<PAGE>
EXHIBIT A
(Definitions)
Assignee: The term "Assignee" as used in this Assignment shall have the
meaning given to such term in the preamble to this Agreement.
Assignor: The term "Assignor" as used in this Assignment shall have the
meaning given to such term in the preamble to this Agreement.
BOP: The term "BOP" as used in this Agreement shall mean Brandywine Operating
Partnership, L.P., a Delaware limited partnership.
Borrowers: The term "Borrowers" as used in this Assignment shall collectively
mean BRT and BOP.
BRT: The term "BRT" as used in this Assignment shall mean Brandywine Realty
Trust, a Maryland real estate investment trust.
Co-Lenders: The term "Co-Lenders" as used in this Assignment shall collectively
mean, Smith Barney Mortgage Capital Group, Inc., a Delaware corporation and
NationsBank, N.A., a national banking association acting in its individual
capacity.
Co-Lenders Agreement: The term "Co-Lenders Agreement" as used in this Assignment
shall mean that certain Co-Lender and Servicing Agreement dated as of the date
of this Assignment among Smith Barney Mortgage Capital Group, Inc., NationsBank,
N.A., acting in its individual capacity, and NationsBank, N.A., acting in its
capacity as administrative and documentation agent for the equal and ratable
benefit of Co-Lenders in accordance with the provisions of the Credit Agreement,
as the same may be further amended from time to time.
Credit Agreement: The term "Credit Agreement" as used in this Assignment shall
mean that certain Credit Agreement dated as of the date of this Assignment among
Smith Barney Mortgage Capital Group, Inc., NationsBank, N.A., acting in its
individual capacity, Borrowers and NationsBank, N.A., acting in its capacity as
administrative and documentation agent for the equal and ratable benefit of
Co-Lenders, as the same may be amended from time to time, and pursuant to the
provisions of which the Credit Facility is being extended by Co-Lenders to
Borrowers.
Credit Facility: The term "Credit Facility" as used in this Assignment shall
have the meaning given to such term in paragraph C of the Preliminary Statement
of this Assignment.
Credit Facility Notes: The term "Credit Facility Notes" as used in this
Assignment shall have the meaning given to such term in the Credit Agreement.
Credit Facility Documents: The term "Credit Facility Documents" as used in this
Assignment shall have the meaning given to such term in the Credit Agreement.
Debt: The term "Debt" as used in this Assignment shall have the meaning given
to such term in the Credit Agreement.
Event of Default: The term "Event of Default" as used in this Assignment shall
have the meaning given to such term in the Credit Agreement.
<PAGE>
Improvements: The term "Improvements" as used in this Assignment shall have the
meaning given to such term in paragraph D of the Preliminary Statement of this
Assignment.
Leases: The term "Leases" as used in this Assignment shall have the meaning
given to such term in paragraph D of the Preliminary Statement of this
Assignment.
Mortgage: The term "Mortgage" as used in this Assignment shall mean that certain
Mortgage dated as of the date hereof given by Assignor to Assignee as security
for the payment of the Debt and the observance and performance by Borrowers of
the terms, covenants and provisions of the Credit Facility Document on
Borrowers' part to be observed and performed, and encumbering Assignor's right,
title and interest in and to the Property and intended to be duly recorded in
the office of the _______ of ______ County, __________.
Property: The term "Property" as used in this Assignment shall collectively
mean the Premises and the Improvements.
Premises: The term "Premises" as used in this Assignment shall have the meaning
given to such term in paragraph B of the Preliminary Statement of this
Assignment.
Rents: The term "Rents" as used in this Assignment shall have the meaning given
to such term in paragraph D of the Preliminary Statement of this Assignment.
A-2
<PAGE>
EXHIBIT B
(Description of Premises)
<PAGE>
GUARANTY OF PAYMENT
This Guaranty entered into as of the 30th day of May, 1997, among
Witmer Operating Partnership, L.P. ("WOP"), a Delaware general partnership;
Brandywine Realty Partners, a Pennsylvania general partnership ("BRP");
Brandywine Realty Services Corporation ("BRSC"), a Pennsylvania corporation, all
having an office c/o Brandywine Realty Trust, Newtown Square Corporate Campus,
16 Campus Boulevard, Suite 150, Newtown Square, Pennsylvania (WOP, BRP and BRSC
are hereinafter collectively referred to as "Guarantors"); and NationsBank,
N.A., a national banking association having an office at 8300 Greensboro Drive,
McLean, Virginia, in its capacity as administrative and documentation agent for
the equal and ratable benefit of Co-Lenders pursuant to and in accordance with
the terms and provisions of the Credit Agreement (NationsBank, N.A., acting in
such capacity as administrative and documentation agent being hereinafter
referred to as "Agent").
PRELIMINARY STATEMENT
A. All capitalized terms as used in this Guaranty shall, unless
otherwise defined in this Guaranty, have the meanings given to such terms in
Exhibit A attached hereto.
B. Co-Lenders have agreed on the terms, covenants and provisions
of the Credit Agreement to extend to Borrowers a credit facility in the
principal sum of up to, but not in excess of, $70,000,000 (the "Credit
Facility"), which Credit Facility shall be evidenced by the Credit Facility
Notes and secured inter alia by the Mortgages.
C. Co-Lenders were willing to extend the Credit Facility to
Borrowers only if Guarantors execute and deliver this Guaranty and guarantee
payment in full of the Debt to Agent, for the equal and ratable benefit of Co-
Lenders.
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other
good and valuable consideration, the receipt of which is hereby acknowledged,
and to induce Co-Lenders to extend the Credit Facility, Guarantors hereby
represent and warrant to and covenant and agree with Agent, for the equal and
ratable benefit of Co-Lenders, as follows:
1. Guarantors hereby guarantee, absolutely and unconditionally, to
Agent, for the equal and ratable benefit of Co-Lenders, the payment in full of
the Debt.
2. Guarantors agree that, with or without notice or demand,
Guarantors will reimburse Agent, to the extent that such reimbursement is not
made by Borrowers, for all costs and expenses (including, without limitation,
reasonable attorney's fees) incurred by Agent or any Co-Lender in connection
with the collection of the Debt or any portion thereof or in any action, case or
proceeding brought by Agent to enforce the obligations of Guarantors under this
Guaranty.
3. All moneys available to Agent for application in payment or
reduction of the Debt may be applied by Agent in such manner and in such
<PAGE>
amounts and at such time or times and in such order, priority and proportions as
Agent may see fit to the payment or reduction of such portion of the Debt as
Agent may elect.
4. Guarantors hereby consent that from time to time, before or
after any default by Borrowers, with or without further notice to or assent from
Guarantors, any security at any time held by or available to Agent or any
Co-Lender for any obligation of Borrowers, or any security at any time held by
or available to Agent or any Co-Lender for any obligation of any other person or
party secondarily or otherwise liable for all or any portion of the Debt, may be
exchanged, surrendered or released and any obligation of Borrowers, or of any
such other person or party, may be changed, altered, renewed, extended,
continued, surrendered, compromised, waived or released in whole or in part, or
any default with respect thereto waived, and Agent or any Co-Lender may fail to
set off and may release, in whole or in part, any balance of any deposit account
or credit on its books in favor of Borrowers, or of any such other person or
party, and may extend further credit in any manner whatsoever to Borrowers, and
generally deal with Borrowers or any such security or other person or party as
Agent or such Co-Lender may see fit; and Guarantors shall remain bound under
this Guaranty notwithstanding any such exchange, surrender, release, change,
alteration, renewal, extension, continuance, compromise, waiver, inaction,
extension of further credit or other dealing.
5. Guarantors hereby waive (a) notice of acceptance of this
Guaranty and of the extension of the Credit Facility and of the making of any
advance thereof pursuant to the Credit Facility Documents; (b) presentment and
demand for payment of the Debt or any portion thereof; (c) protest and notice of
dishonor or default to Guarantors or to any other person or party with respect
to the Debt or any portion thereof; (d) all other notices to which Guarantors
might otherwise be entitled except as otherwise specifically provided to the
contrary herein; and (e) any demand for payment under this Guaranty.
6. This Guaranty is a guaranty of payment and not of collection
and Guarantors further waive any right to require that any action, case or
proceeding be brought against Borrowers or any other person or party or to
require that resort be had to any security or to any balance of any deposit
account or credit on the books of Agent or any Co-Lender in favor of Borrowers
or any other person or party.
7. Each reference herein to Agent or Co-Lenders shall be deemed to
include their respective successors and assigns, in whose favor the provisions
of this Guaranty shall also inure. Each reference herein to Guarantors shall be
deemed to include the successors and assigns of Guarantors, all of whom shall be
bound by the provisions of this Guaranty, provided, however, that Guarantors
shall in no event or under any circumstance have the right without obtaining the
prior written consent of Agent to assign or transfer their respective
obligations and liabilities under this Guaranty, in whole or in part, to any
other person, party or entity.
8. The term "Guarantors" as used herein shall mean the "Guarantors
and each of them" and each undertaking herein contained shall be their joint and
several undertaking, provided, however, that in the next succeeding paragraph
hereof the term "Guarantors" shall mean the "Guarantors or any of them".
9. No delay on the part of Agent in exercising any right or remedy
under this Guaranty or failure to exercise the same shall operate as a
-2-
<PAGE>
waiver in whole or in part of any such right or remedy. No notice to or demand
on Guarantors shall be deemed to be a waiver of the obligation of Guarantors or
of the right of Agent to take further action without notice or demand as
provided in this Guaranty.
10. This Guaranty may only be modified, amended, changed or
terminated by an agreement in writing signed by Agent and Guarantors. No waiver
of any term, covenant or provision of this Guaranty shall be effective unless
given in writing by Agent and if so given by Agent shall only be effective in
the specific instance in which given.
11. Guarantors acknowledge that this Guaranty and Guarantors'
obligations under this Guaranty are and shall at all times continue to be
absolute and unconditional in all respects, and shall at all times be valid and
enforceable irrespective of (a) any other agreements or circumstances of any
nature whatsoever which might otherwise constitute a defense (other than a
defense of payment) to this Guaranty and the obligations of Guarantors under
this Guaranty or the obligations of Borrowers or any other person or party
relating to this Guaranty or the obligations of Guarantors hereunder or
otherwise with respect to the Credit Facility, including, but not limited to,
the realization by Agent or any Co-Lender upon any collateral given, pledged or
assigned as security for all or any portion of the Debt, or the filing of a
petition or the commencement of a case with respect to any Borrower or any
Guarantor under Title 11 of the United States Code, as now constituted or
hereafter amended (the "Bankruptcy Code"), or under any other applicable Federal
or state bankruptcy, insolvency or similar law, or the obtaining by Agent or any
Co-Lender of title to any collateral given, pledged or assigned as security for
the Debt, by foreclosure or enforcement of Agent's or any Co-Lender's lien
thereon, acceptance of an assignment or deed in lieu of foreclosure or sale, or
otherwise, or (b) any modification, impairment, abatement, reduction, release,
limitation, restructure, reinstatement or cure, in whole or part, of interest,
principal or other sum payable by Borrowers under the Credit Agreement, the
Credit Facility Notes, the Mortgages or the other Credit Facility Documents or
of any other obligation of Borrowers under the Credit Facility Documents
pursuant to an order by a bankruptcy court or other court of competent
jurisdiction in any action, case or proceeding brought under the Bankruptcy Code
or under any other applicable Federal or state bankruptcy, insolvency or similar
law, it being expressly acknowledged and agreed by Guarantors that if any such
modification, impairment, abatement, reduction, release, limitation,
restructure, reinstatement or cure, in whole or part, is so ordered in any such
action, case or proceeding, Guarantors' obligations under this Guaranty will
nevertheless continue to be determined as if such order had not been issued
(i.e., as if Borrowers was still obligated to pay interest, principal and other
sums and to otherwise perform and observe its other obligations strictly in
accordance with the terms, covenants and provisions of the Credit Agreement, the
Credit Facility Notes, the Mortgages and the other Credit Facility Documents as
in existence prior to the issuance of any such order). Guarantors absolutely,
unconditionally and irrevocably waive any and all right to assert any defense,
setoff, counterclaim or crossclaim of any nature whatsoever with respect to this
Guaranty or the obligations of Guarantors under this Guaranty or the obligations
of Borrowers or any other person or party relating to this Guaranty or the
obligations of Guarantors hereunder or otherwise with respect to the Credit
Facility in any action, case or proceeding brought by Agent or Co-Lenders to
collect the Debt, or any portion thereof, or to enforce the obligations of
Guarantors under this Guaranty (provided, however, that the foregoing provisions
of this sentence shall not be deemed a waiver of the right of the Guarantors to
assert any compulsory counterclaim in any such action, case or proceeding
brought by
-3-
<PAGE>
Agent or Co-Lenders in any state court if such counterclaim is compelled under
local law or rule or procedure, or in any such action, case or proceeding
brought by Agent or Co-Lenders in a court of the United States, nor shall the
foregoing provisions of this sentence be deemed a waiver of the right of the
Guarantors to assert any claim which would otherwise constitute a defense,
setoff, counterclaim or crossclaim of any nature whatsoever against Agent or
Co-Lenders in any separate action, case or proceeding brought by the Guarantors
against Agent or Co-Lenders). Guarantors acknowledge that no oral or other
agreements, understandings, representations or warranties exist with respect to
this Guaranty or with respect to the obligations of Guarantors under this
Guaranty, except those specifically set forth in this Guaranty, and that this
Guaranty sets forth the entire agreement and understanding of Agent, Co-Lenders
and Guarantors.
12. GUARANTORS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, AND
AGENT AND CO-LENDERS BY THEIR ACCEPTANCE OF THIS GUARANTY IRREVOCABLY AND
UNCONDITIONALLY WAIVE, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, CASE,
PROCEEDING, SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH, OUT OF OR OTHERWISE
RELATING TO THIS GUARANTY.
13. Notwithstanding any payments made by Guarantors pursuant to
the provisions of this Guaranty, Guarantors shall not seek to enforce or collect
upon any rights which Guarantors now have or may acquire against Borrowers
either by way of subrogation, indemnity, reimbursement or contribution for any
amount paid under this Guaranty, nor shall Guarantors file, assert or receive
payment on any claim, whether now existing or hereafter arising, against
Borrowers subsequent to the commencement of a case by or against Borrowers under
the Bankruptcy Code or under any other applicable Federal or state bankruptcy,
insolvency or similar law, in each case unless and until the Debt has been paid
in full and provided that no such action by Guarantors could, in the reasonable
opinion of Agent and its counsel, result in the "preference" period (as set
forth in Section 547(b)(4) of the Bankruptcy Code or any successor provision)
with respect to any payment or other transfer of assets to Agent or to any
Co-Lender from or on behalf of Borrowers being held to be longer than such
period would have been held to be if Guarantors had not taken such action. In
the event an action, case or proceeding is filed or commenced under the
Bankruptcy Code or under any other applicable Federal or state bankruptcy,
insolvency or similar law in regard to Borrowers or an action, case or
proceeding is otherwise commenced for the benefit of the creditors of Borrowers,
this Guaranty shall at all times thereafter remain effective in regard to any
payments or other transfers of assets to Agent or any Co-Lender received from or
on behalf of Borrowers which are held voidable on the grounds of preference,
fraudulent conveyance or otherwise, whether or not the Debt has been paid in
full.
14. If at any time any payment, or portion thereof, made by, or
for the account of, Guarantors on account of the obligations under this
Guaranty, is set aside by any court or trustee having jurisdiction as a voidable
preference, fraudulent conveyance or otherwise as being subject to avoidance or
recovery under the provisions of the Bankruptcy Code or under any other
applicable Federal or state bankruptcy, insolvency or similar law, Guarantors
hereby agree that this Guaranty (a) shall continue and remain in full force and
effect, or (b) if previously terminated as a result of Guarantors having
fulfilled Guarantors' obligations hereunder in full or as a result of Agent
having released Guarantors from Guarantors' obligations and liabilities
hereunder, shall without further act or instrument be reinstated and shall
thereafter remain in full force and effect, in either case with the
-4-
<PAGE>
same force and effect as though such payment or portion thereof had not been
made, and if applicable, as if such previous termination had not occurred.
15. Any notice, request or demand given or made under this
Guaranty shall be in writing and shall be sent by Federal Express or other
reputable national courier service or by postage prepaid registered or certified
mail, return receipt requested, and shall be deemed given (i) when received at
the following addresses if sent by Federal Express or other reputable national
courier service, and (ii) three (3) business days after being postmarked and
addressed as follows if sent by registered or certified mail, return receipt
requested:
If to Agent:
NationsBank, N.A.
Real Estate Banking
8300 Greensboro Drive
McLean, Virginia 22102-3604
Attention: Cheryl D. Fitzgerald
Vice President
With copies to:
Cadwalader, Wickersham & Taft
201 South College Street - Suite 1510
Charlotte, South Carolina 28244
Attention: James P. Carroll, Esq.
and
Battle Fowler LLP
Park Avenue Tower
75 East 55th Street
New York, New York 10022
Attention: Dean A. Stiffle, Esq.
If to Guarantors:
c/o Brandywine Realty Trust
Newtown Square Corporate Campus
16 Campus Boulevard, Suite 150
Newtown Square, Pennsylvania 19073
Attention: Gerard H. Sweeney
President and Chief Executive Officer
With a copy to:
Pepper, Hamilton & Scheetz
3000 Two Logan Square
Eighteenth and Arch Streets
Philadelphia, Pennsylvania 19103-2799
Attention: Michael H. Friedman, Esq.
Each party to this Guaranty may designate a change of address by notice given to
the other parties fifteen (15) days prior to the date such change of address is
to become effective.
-5-
<PAGE>
16. This Guaranty is, and shall be deemed to be, a contract
entered into under and pursuant to the laws of the State of New York and shall
be in all respects governed, construed, applied and enforced in accordance with
the laws of the State of New York. No defense given or allowed by the laws of
any other state or country shall be interposed in any action, case or proceeding
hereon unless such defense is also given or allowed by the laws of the State of
New York.
17. No exculpatory provisions contained in the Credit Facility
Documents shall in any event or under any circumstance be deemed or construed to
modify, qualify, or affect in any manner whatsoever the personal recourse
obligations and liabilities of Guarantors under this Guaranty.
18. Guarantors agree to submit to personal jurisdiction in the
State of New York in any action, case or proceeding arising out of this Guaranty
and, in furtherance of such agreement, Guarantors hereby agree and consent that
without limiting other methods of obtaining jurisdiction, personal jurisdiction
over Guarantors in any such action, case or proceeding may be obtained within or
without the jurisdiction of any court located in New York and that any process
or notice of motion or other application to any such court in connection with
any such action, case or proceeding may be served upon Guarantors by registered
or certified mail to or by personal service at the last known addresses of
Guarantors, whether such addresses be within or without the jurisdiction of any
such court. Guarantors also agree that the venue of any litigation arising in
connection with the Debt or in respect of any of the obligations of Guarantors
under this Guaranty shall, to the extent permitted by law, be in New York
County, New York.
19. The obligations and liabilities of Guarantors under this
Guaranty are in addition to the obligations and liabilities of Guarantors under
the Other Guaranties (as hereinafter defined). The discharge of Guarantors'
obligations and liabilities under any one or more of the Other Guaranties by
Guarantors or by reason of operation of law or otherwise shall in no event or
under any circumstance constitute or be deemed to constitute a discharge, in
whole or in part, of Guarantors' obligations and liabilities under this
Guaranty. Conversely, the discharge of Guarantors' obligations and liabilities
under this Guaranty by Guarantors or by reason of operation of law or otherwise
shall in no event or under any circumstance constitute or be deemed to
constitute a discharge, in whole or in part, of Guarantors' obligations and
liabilities under any of the Other Guaranties. The term "Other Guaranties" as
used herein shall mean any other guaranty of payment, guaranty of performance,
completion guaranty, indemnification agreement or other guaranty or instrument
of personal recourse obligation or undertaking of any nature whatsoever (other
than this Guaranty) now or hereafter executed and delivered by Guarantors to
Agent or Co-Lenders or any of them in connection with the Credit Facility.
20. This Guaranty may be executed in one or more counterparts by
some or all of the parties hereto, each of which counterparts shall be an
original and all of which together shall constitute a single agreement of
guaranty. The failure of any party listed below to execute this Guaranty, or any
counterpart hereof, shall not relieve the other signatories from their
obligations hereunder.
21. No recourse shall be had for any obligation of BRT under this
Guaranty or for any claim based thereon or otherwise in respect thereof, against
any past, present or future trustee, shareholder, officer or employee of BRT,
whether by virtue of any statute or rule of law, or by the enforcement
-6-
<PAGE>
of any assessment or penalty or otherwise, all such liability being expressly
waived and released by each other party to and beneficiary of this Guaranty.
22. No personal recourse shall be had for any obligation of BRP
under this Guaranty or for any claim based thereon or otherwise in respect
thereof, against Brandywine Specified Property Investors Limited Partnership, a
Pennsylvania limited partnership and one of the general partners of BRP, 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 each other party to and beneficiary of this Guaranty and by each of the other
general partners of BRP.
-7-
<PAGE>
IN WITNESS WHEREOF, Guarantors have duly executed and delivered
this Guaranty to Agent as of the day and year first above set forth.
WITMER OPERATING PARTNERSHIP, L.P., a Delaware
limited partner
By: Brandywine Holdings I, Inc., a
Pennsylvania corporation, its general
partner
By: /s/ Gerard H. Sweeney
-------------------------------
Name: Gerard H. Sweeney
Title: President and Chief
Executive Officer
BRANDYWINE REALTY PARTNERS, a Pennsylvania
general partnership
By: Brandywine Realty Trust, a Maryland real
estate investment trust, its general
partner
By: /s/ Gerard H. Sweeney
---------------------------------------
Name: Gerard H. Sweeney
Title: President and Chief
Executive Officer
-8-
<PAGE>
EXHIBIT A
(Definitions)
Agent: The term "Agent" as used in this Guaranty shall have the meaning given to
such term in the preamble to this Guaranty.
BOP: The term "BOP" as used in this Guaranty shall mean Brandywine Operating
Partnership, L.P., a Delaware limited partnership.
Borrowers: The term "Borrowers" as used in this Guaranty shall mean
collectively BRT and BOP.
BRP: The term "BRP" as used in this Guaranty shall have the meaning given to
such term in the preamble to this Guaranty.
BRSC: The term "BRSC" as used in this Guaranty shall have the meaning given to
such term in the preamble to this Guaranty.
BRT: The term "BRT" as used in this Guaranty shall mean Brandywine Realty Trust,
a Maryland real estate investment trust.
Co-Lenders: The term "Co-Lenders" as used in this Guaranty shall collectively
mean Smith Barney Mortgage Capital Group, Inc., a Delaware corporation, and
NationsBank, N.A., a national banking association.
Co-Lenders Agreement: The term "Co-Lenders Agreement" as used in this Guaranty
shall mean that certain Co-Lender and Servicing Agreement dated as of the date
hereof among Smith Barney Mortgage Capital Group, Inc., NationsBank, N.A., in
its individual capacity, and NationsBank, N.A., in its capacity as Agent, as the
same may be further amended from time to time.
Credit Agreement: The term "Credit Agreement" as used in this Guaranty shall
mean that certain Credit Agreement dated as of the date hereof among Smith
Barney Mortgage Capital Group, Inc., NationsBank, N.A., in its individual
capacity, Borrowers and NationsBank, N.A., in its capacity as Agent and pursuant
to the provisions of which the Credit Facility is being extended by Co-Lenders
to Borrowers, as the same may be further amended from time to time.
Credit Facility: The term "Credit Facility" as used in this Guaranty shall have
the meaning given to such term in paragraph B of the Preliminary Statement of
this Guaranty.
Credit Facility Documents: The term "Credit Facility Documents" as used in this
Guaranty shall have the meaning given to such term in the Credit Agreement.
Credit Facility Notes: The term "Credit Facility Notes" as used in this Guaranty
shall have the meaning given to such term in the Credit Agreement.
Debt: The term "Debt" as used in this Guaranty shall have the meaning given
to such term in the Credit Agreement.
Guarantors: The term "Guarantors" as used in this Guaranty shall have the
meaning given to such term in the preamble to this Guaranty.
A-1
<PAGE>
Mortgages: The term "Mortgages" as used in this Guaranty shall have the
meaning given to such term in the Credit Agreement.
Other Guaranties: The term "Other Guaranties" as used in this Guaranty shall
have the meaning given to such term in paragraph 19 of this Guaranty.
WOP: The term "WOP" as used in this Guaranty shall have the meaning given to
such term in the preamble to this Guaranty.
A-2
<PAGE>
HAZARDOUS MATERIAL
GUARANTY AND
INDEMNIFICATION AGREEMENT
This Guaranty and Indemnification Agreement entered
into as of the 30th day of May, 1997, among Brandywine Realty Trust
("BRT"), a Maryland real estate investment trust; Brandywine Operating
Partnership, L.P. ("BOP), a Delaware limited partnership, (BRT and BOP
are hereinafter collectively referred to as "Borrowers"); Witmer
Operating Partnership, L.P. ("WOP"), a Delaware limited partnership;
Brandywine Realty Partners, a Pennsylvania general partnership ("BRP");
Brandywine Realty Services Corporation ("BRSC"), a Pennsylvania
corporation (BRT, BOP, WOP, BRP and BRSC are hereinafter collectively
referred to as "Guarantors"); and NationsBank, N.A., a national banking
association having an office at 8300 Greensboro Drive, McLean, Virginia
in its capacity as administrative and documentation agent for the equal
and ratable benefit of Co-Lenders pursuant to and in accordance with
the terms and provisions of the Credit Agreement (NationsBank, N.A.,
acting in such capacity as administrative and documentation agent being
hereinafter referred to as "Agent").
PRELIMINARY STATEMENT
A. All capitalized terms as used in this Guaranty and
Indemnification Agreement shall, unless otherwise defined in this Guaranty and
Indemnification Agreement, have the meanings given to such terms in Exhibit A
attached hereto.
B. Co-Lenders have agreed on the terms, covenants and
provisions of the Credit Agreement to extend to Borrowers a credit facility in
the principal sum of up to, but not in excess of, $70,000,000 (the "Credit
Facility"), which Credit Facility shall be evidenced by the Credit Facility
Notes and secured inter alia by the Mortgages.
C. Co-Lenders were willing to extend the Credit Facility to
Borrowers only if Guarantors execute and deliver this Guaranty and
Indemnification Agreement to Agent, individually, and as administrative and
documentation agent for the equal and ratable benefit of Co-Lenders.
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and
other good and valuable consideration, the receipt of which is hereby
acknowledged, and to induce Co-Lenders to extend the Credit Facility, Guarantors
hereby represent and warrant to and covenant and agree with Agent, individually
and for the equal and ratable benefit of Co-Lenders, as follows:
1. Guarantors hereby represents and warrants to Agent that to
the best of Guarantors' knowledge (i) no Hazardous Material is currently located
at, on, in, under or about any Property, except as specifically set forth in the
Environmental Reports, (ii) no Hazardous Material is currently located at, in,
on, under or about any Property in a manner which violates any Environmental
Requirement, or which requires cleanup or corrective action of
<PAGE>
any kind under any Environmental Requirement, (iii) no releasing, emitting,
discharging, leaching, dumping or disposing of any Hazardous Material from any
Property onto or into any other property or from any other property onto or into
any Property has occurred or is occurring in violation of any Environmental
Requirement, (iv) no notice of violation, lien, complaint, suit, order or other
notice with respect to any Property is presently outstanding under any
Environmental Requirement, and (v) each Property and the operation thereof are
in full compliance with all Environmental Requirements.
2. Guarantors absolutely and unconditionally guarantee to
Agent that Borrowers will fully comply with all of the Environmental Provisions
of the Credit Agreement. If Borrowers do not fully comply with all of the
Environmental Provisions of the Credit Agreement, Guarantors shall reimburse
Agent upon demand for all costs and expenses (including, but not limited to,
reasonable legal fees) incurred by Agent or any Co-Lender (to the extent not
otherwise reimbursed to Agent or any such Co-Lender by Borrowers) in connection
with Agent or any of Co-Lenders performing Borrowers' obligations under or in
respect of the Environmental Provisions of the Credit Agreement, together with
interest thereon at the Default Rate.
3. Guarantors will defend, indemnify, and hold harmless Agent
and Co-Lenders, and their respective employees, agents, officers and directors,
from and against any and all claims, demands, penalties, causes of action,
fines, liabilities, settlements, damages, costs or expenses of whatever kind or
nature, known or unknown, foreseen or unforeseen, contingent or otherwise
(including, without limitation, consultant fees and expenses, investigation and
laboratory fees and expenses, court costs, litigation expenses and reasonable
attorneys fees) arising out of, or in any way related to (i) any breach by
Borrowers of any of the Environmental Provisions of the Credit Agreement, (ii)
the presence, disposal, spillage, discharge, emission, leakage, release, or
threatened release of any Hazardous Material which is at, in, on, under, about,
from or affecting any Property, including without limitation, any damage or
injury resulting from any such Hazardous Material to or affecting any Property
or the soil, water, air, vegetation, buildings, personal property, persons or
animals located on any Property or on any other property or otherwise, (iii) any
personal injury (including wrongful death) or property damage (real or personal)
arising out of or related to any such Hazardous Material, (iv) any lawsuit
brought or threatened, settlement reached, or order or directive of or by any
Governmental Authority relating to such Hazardous Material, or (v) any violation
of any Environmental Requirement.
4. The indemnifications hereinabove set forth in this Guaranty
and Indemnification Agreement shall not be applicable to any claim, demand,
penalty, cause of action, fine, liability, settlement, damage, cost or other
expense of any type whatsoever pertaining to a particular Property (i)
occasioned, arising and caused solely and directly as the result of the
negligence or willful misconduct of Agent or any Co-Lender, or any nominee or
any wholly owned subsidiary of Agent or a Co-Lender or any of their respective
employees or agents and irrespective of whether occurring prior or subsequent to
the date upon which Agent or any Co-Lender or any nominees or any wholly owned
subsidiaries of Agent or any Co-Lender acquires possession of such Property by
foreclosure of a Mortgage, a sale of such Property pursuant to the provisions of
a Mortgage, acceptance of a deed or assignment in lieu of foreclosure or sale or
otherwise, or (ii) occasioned, arising and caused solely and directly as the
result of any act of any person or party (other than (A) an act of Borrowers or
Guarantors, their respective employees or agents or persons or parties under the
control of Borrowers or Guarantors, or
-2-
<PAGE>
(B) an act of Agent or any Co-Lender, any nominee or any wholly owned subsidiary
of Agent or any Co-Lender or any of their respective employees or agents which
does not constitute negligence or willful misconduct, or (C) an act of any
Governmental Authority, including, without limitation, any change in any
Environmental Requirement) and occurring subsequent to the earlier to occur of
(x) the date of payment in cash of the entire Debt, and (y) the date upon which
Agent, Co-Lenders, any nominee(s) or any wholly owned subsidiary(ies) of Agent
or Co-Lenders acquire possession of such Property by foreclosure of a Mortgage,
a sale of such Property pursuant to the provisions of a Mortgage, acceptance of
a deed or assignment in lieu of foreclosure or sale or otherwise.
5. Except as hereinabove specifically provided to the contrary
in paragraph 4 above, the obligations and liabilities of Guarantors under this
Guaranty and Indemnification Agreement shall survive and continue in full force
and effect and shall not be terminated, discharged or released, in whole or in
part, irrespective of whether the Debt has been paid in full and irrespective of
any foreclosure of the Mortgages, the sale of any one or more of the Properties
pursuant to the provisions of the Mortgages or acceptance by Agent, Co-Lenders,
their nominee(s) or wholly-owned subsidiary(ies), of one or more deeds or
assignments in lieu of foreclosure or sale and irrespective of any other fact or
circumstance whatsoever.
6. Guarantors hereby consent that from time to time, before or
after any default by Borrowers, with or without further notice to or assent from
Guarantors, any security at any time held by or available to Agent or any
Co-Lender for any obligation of Borrowers, or any security at any time held by
or available to Agent or any Co-Lenders for any obligation of any other person
or party secondarily or otherwise liable for all or any portion of the Debt or
for the performance of all or any portion of the Environmental Provisions of the
Credit Agreement, may be exchanged, surrendered or released and any obligation
of Borrowers, or of any such other person or party, may be changed, altered,
renewed, extended, continued, surrendered, compromised, waived or released in
whole or in part, or any default with respect thereto waived, and Agent or any
Co-Lender may fail to set off and may release, in whole or in part, any balance
of any deposit account or credit on its books in favor of Borrowers, or of any
such other person or party, and may extend further credit in any manner
whatsoever to Borrowers, and generally deal with Borrowers or any such security
or other person or party as Agent or such Co-Lender may see fit; and Guarantors
shall remain bound under this Guaranty and Indemnification Agreement
notwithstanding any such exchange, surrender, release, change, alteration,
renewal, extension, continuance, compromise, waiver, inaction, extension of
further credit or other dealing.
7. To the full extent that this Guaranty and Indemnification
Agreement relates to any monetary obligation of Borrowers in respect of the
Environmental Provisions of the Credit Agreement, this Guaranty and
Indemnification Agreement is a guaranty of payment and not of collection and
Guarantors further waive any right to require that any action, case or
proceeding be brought against Borrowers or any other person or party or to
require that resort be had to any security or to any balance of any deposit
account or credit on the books of Agent or any Co-Lender in favor of Borrowers
or any other person or party.
8. Each reference herein to Co-Lenders and to Agent shall be
deemed to include their respective successors and assigns, in whose favor the
provisions of this Guaranty and Indemnification Agreement shall also inure. Each
reference herein to Guarantors shall be deemed to include the successors
-3-
<PAGE>
and assigns of Guarantors, all of whom shall be bound by the provisions of this
Guaranty and Indemnification Agreement, provided, however, that Guarantors shall
in no event or under any circumstance have the right without obtaining the prior
written consent of Agent to assign or transfer their respective obligations and
liabilities under this Guaranty and Indemnification Agreement, in whole or in
part, to any other person, party or entity.
9. The term "Guarantors" as used herein shall mean the
"Guarantors and each of them" and each undertaking herein contained shall be
their joint and several undertaking, provided, however, that in the next
succeeding paragraph hereof the term "Guarantors" shall mean the "Guarantors or
any of them."
10. No delay on the part of Agent in exercising any right or
remedy under this Guaranty and Indemnification Agreement or failure to exercise
the same shall operate as a waiver in whole or in part of any such right or
remedy. No notice to or demand on Guarantors shall be deemed to be a waiver of
the obligation of Guarantors or of the right of Agent to take further action
without notice or demand as provided in this Guaranty and Indemnification
Agreement.
11. This Guaranty and Indemnification Agreement may only be
modified, amended, changed or terminated by an agreement in writing signed by
Agent and Guarantors. No waiver of any term, covenant or provision of this
Guaranty and Indemnification Agreement shall be effective unless given in
writing by Agent and if so given by Agent shall only be effective in the
specific instance in which given.
12. Guarantors acknowledge that this Guaranty and
Indemnification Agreement and Guarantors's obligations under this Guaranty and
Indemnification Agreement are and shall at all times continue to be absolute and
unconditional in all respects, and shall at all times be valid and enforceable
irrespective of (a) any other agreements or circumstances of any nature
whatsoever which might otherwise constitute a defense (other than a defense of
payment) to this Guaranty and Indemnification Agreement and the obligations of
Guarantors under this Guaranty and Indemnification Agreement or the obligations
of Borrowers or of any other person or party relating to this Guaranty and
Indemnification Agreement or the obligations of Guarantors hereunder or
otherwise with respect to the Credit Facility, including, but not limited to,
the realization by Agent or any Co-Lender upon any collateral given, pledged or
assigned as security for all or any portion of the Debt or for the performance
of the Environmental Provisions of the Credit Agreement, or the filing of a
petition or the commencement of a case with respect to any Borrower or any
Guarantor under Title 11 of the United States Code, as now constituted or
hereafter amended (the "Bankruptcy Code"), or under any other applicable Federal
or state bankruptcy, insolvency or similar law, or the obtaining by Agent or any
Co-Lender of title to any collateral given, pledged or assigned as security for
the Debt or for the performance of the Environmental Provisions of the Credit
Agreement, by foreclosure or enforcement of Agent's or any Co-Lender's lien
thereon, acceptance of an assignment or deed in lieu of foreclosure or sale, or
otherwise, or (b) any modification, impairment, abatement, reduction, release,
limitation, restructure, reinstatement or cure, in whole or part, of the
Environmental Provisions of the Credit Agreement (including, without limitation,
any such modification, impairment, abatement, reduction, release, limitation,
restructure, reinstatement or cure, in whole or in part, of any interest or
other sums payable by Borrowers under or in respect of the Environmental
Provisions of the Credit Agreement) pursuant to an order by a bankruptcy court
or other court of competent jurisdiction in any action, case
-4-
<PAGE>
or proceeding brought under the Bankruptcy Code or under any other applicable
Federal or state bankruptcy, insolvency or similar law, it being expressly
acknowledged and agreed by Guarantors that if any such modification, impairment,
abatement, reduction, release, limitation, restructure, reinstatement or cure,
in whole or part, is so ordered in any such action, case or proceeding,
Guarantors' obligations under this Guaranty and Indemnification Agreement will
nevertheless continue to be determined as if such order had not been issued.
Guarantors absolutely, unconditionally and irrevocably waive any and all right
to assert any defense, setoff, counterclaim or crossclaim of any nature
whatsoever with respect to this Guaranty and Indemnification Agreement or the
obligations of Guarantors under this Guaranty and Indemnification Agreement or
the obligations of Borrowers or any other person or party relating to this
Guaranty and Indemnification Agreement or the obligations of Guarantors
hereunder or otherwise with respect to the Credit Facility, in any action, case
or proceeding brought by Agent or Co-Lenders to enforce the obligations of
Guarantors under this Guaranty and Indemnification Agreement (provided, however,
that the foregoing provisions of this sentence shall not be deemed a waiver of
the right of the Guarantors to assert any compulsory counterclaim in any such
action, case or proceeding brought by Agent or Co-Lenders in any state court if
such counterclaim is compelled under local law or rule or procedure, or in any
such action, case or proceeding brought by Agent or Co-Lenders in a court of the
United States, nor shall the foregoing provisions of this sentence be deemed a
waiver of the right of the Guarantors to assert any claim which would otherwise
constitute a defense, setoff, counterclaim or crossclaim of any nature
whatsoever against Agent or Co-Lenders in any separate action, case or
proceeding brought by the Guarantors against Agent of Co-Lenders). Guarantors
acknowledge that no oral or other agreements, understandings, representations or
warranties exist with respect to this Guaranty and Indemnification Agreement or
with respect to the obligations of Guarantors under this Guaranty and
Indemnification Agreement, except those specifically set forth in this Guaranty
and Indemnification Agreement, and that this Guaranty and Indemnification
Agreement sets forth the entire agreement and understanding of Agent, Co-Lenders
and Guarantors.
13. GUARANTORS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE,
AND AGENT AND CO-LENDERS BY THEIR ACCEPTANCE OF THIS GUARANTY AND
INDEMNIFICATION AGREEMENT IRREVOCABLY AND UNCONDITIONALLY WAIVE, ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, CASE, PROCEEDING, SUIT OR COUNTERCLAIM
ARISING IN CONNECTION WITH, OUT OF OR OTHERWISE RELATING TO THIS GUARANTY AND
INDEMNIFICATION AGREEMENT.
14. Notwithstanding any payments made by Guarantors pursuant
to the provisions of this Guaranty and Indemnification Agreement, Guarantors
shall not seek to enforce or collect upon any rights which Guarantors now have
or may acquire against Borrowers either by way of subrogation, indemnity,
reimbursement or contribution for any amount paid under this Guaranty and
Indemnification Agreement, nor shall Guarantors file, assert or receive payment
on any claim, whether now existing or hereafter arising, against Borrowers
subsequent to the commencement of a case by or against Borrowers under the
Bankruptcy Code or under any other applicable Federal or state bankruptcy,
insolvency or similar law, in each case unless and until the Debt has been paid
in full and provided that no such action by Guarantors could, in the reasonable
opinion of Agent and its counsel, result in the "preference" period (as set
forth in Section 547(b)(4) of the Bankruptcy Code or any successor provision)
with respect to any payment or other transfer of assets to Agent or to any
Co-Lender from or on behalf of Borrowers being held to be longer than such
period would have been held to be if Guarantors had not taken such action. In
the event an action, case or proceeding is filed or commenced
-5-
<PAGE>
under the Bankruptcy Code or under any other applicable Federal or state
bankruptcy, insolvency or similar law in regard to Borrowers or an action, case
or proceeding is otherwise commenced for the benefit of the creditors of
Borrowers, this Guaranty and Indemnification Agreement shall at all times
thereafter remain effective in regard to any payments to Agent or any Co- Lender
or other transfers of assets to Agent or any Co-Lender received from or on
behalf of Borrowers under or in respect of the Environmental Provisions of the
Credit Facility Documents which are held voidable on the grounds of preference,
fraudulent conveyance or otherwise, whether or not the Debt has been paid in
full or whether or not the Mortgages or any or all of the Environmental
Provisions of the Credit Agreement have been discharged or released.
15. If at any time any payment, or portion thereof, made by,
or for the account of, Guarantors on account of the obligations under this
Guaranty and Indemnification Agreement, is set aside by any court or trustee
having jurisdiction as a voidable preference, fraudulent conveyance or otherwise
as being subject to avoidance or recovery under the provisions of the Bankruptcy
Code or under any other applicable Federal or state bankruptcy, insolvency or
similar law, Guarantors hereby agree that this Guaranty and Indemnification
Agreement (a) shall continue and remain in full force and effect, or (b) if
previously terminated as a result of Guarantors having fulfilled Guarantors'
obligations hereunder in full or as a result of Agent having released Guarantors
from Guarantors' obligations and liabilities hereunder, shall without further
act or instrument be reinstated and shall thereafter remain in full force and
effect, in either case with the same force and effect as though such payment or
portion thereof had not been made, and if applicable, as if such previous
termination had not occurred.
16. Any notice, request or demand given or made under this
Guaranty and Indemnification Agreement shall be in writing and shall be sent by
Federal Express or other reputable national courier service or by postage
prepaid registered or certified mail, return receipt requested, and shall be
deemed given (i) when received at the following addresses if sent by Federal
Express or other reputable national courier service, and (ii) three (3) business
days after being postmarked and addressed as follows if sent by registered or
certified mail, return receipt requested:
If to Agent:
NationsBank, N.A.
Real Estate Banking
8300 Greensboro Drive
McLean, Virginia 22102-3604
Attention: Cheryl D. Fitzgerald
Vice President
With copies to:
Cadwalader, Wickersham & Taft
201 South College Street - Suite 1510
Charlotte, North Carolina 28244
Attention: James P. Carroll, Esq.
and
-6-
<PAGE>
Battle Fowler LLP
Park Avenue Tower
75 East 55th Street
New York, New York 10022
Attention: Dean A. Stiffle, Esq.
If to Borrowers:
c/o Brandywine Realty Trust
Newtown Square Corporate Campus
16 Campus Boulevard, Suite 150
Newtown Square, Pennsylvania 19073
Attention: Gerard H. Sweeney
President and Chief
Executive Officer
With a copy to:
Pepper, Hamilton & Scheetz
3000 Two Logan Square
Eighteenth and Arch Streets
Philadelphia, Pennsylvania 19103-2799
Attention: Michael H. Friedman, Esq.
If to Guarantors:
c/o Brandywine Realty Trust
Newtown Square Corporate Campus
16 Campus Boulevard, Suite 150
Newtown Square, Pennsylvania 19073
Attention: Gerard H. Sweeney
President and Chief
Executive Officer
With a copy to:
Pepper, Hamilton & Scheetz
3000 Two Logan Square
Eighteenth and Arch Streets
Philadelphia, Pennsylvania 19103-2799
Attention: Michael H. Friedman, Esq.
Each party to this Guaranty and Indemnification Agreement may designate a change
of address by notice given to the other parties fifteen (15) days prior to the
date such change of address is to become effective.
17. This Guaranty and Indemnification Agreement is, and shall
be deemed to be, a contract entered into under and pursuant to the laws of the
State of New York and shall be in all respects governed, construed, applied and
enforced in accordance with the laws of the State of New York. No defense given
or allowed by the laws of any other state or country shall be interposed in any
action, case or proceeding hereon unless such defense is also given or allowed
by the laws of the State of New York.
18. Guarantors agree to submit to personal jurisdiction in the
State of New York in any action, case or proceeding arising out of this Guaranty
and Indemnification Agreement and, in furtherance of such agreement, Guarantors
hereby agree and consent that without limiting other methods of
-7-
<PAGE>
obtaining jurisdiction, personal jurisdiction over Guarantors in any such
action, case or proceeding may be obtained within or without the jurisdiction of
any court located in New York and that any process or notice of motion or other
application to any such court in connection with any such action, case or
proceeding may be served upon Guarantors by registered or certified mail to or
by personal service at the last known addresses of Guarantors, whether such
addresses be within or without the jurisdiction of any such court. Guarantors
also agree that the venue of any litigation arising in connection with the
Environmental Provisions of the Credit Agreement, the Debt or in respect of any
of the obligations of Guarantors under this Guaranty and Indemnification
Agreement shall, to the extent permitted by law, be in New York County, New
York.
19. No exculpatory provisions contained in any of the Credit
Facility Documents shall in any event or any circumstance be deemed or construed
to modify, qualify, or affect in any manner whatsoever the personal recourse
obligations and liabilities of Guarantors under this Guaranty and
Indemnification Agreement.
20. The obligations and liabilities of Guarantors under this
Guaranty and Indemnification Agreement are in addition to the obligations and
liabilities of Guarantors under the Other Guaranties (as hereinafter defined).
The discharge of Guarantors' obligations and liabilities under any one or more
of the Other Guaranties by Guarantors or by reason of operations of law or
otherwise shall in no event or under any circumstance in and of itself
constitute or be deemed to constitute a discharge, in whole or in part, of
Guarantors' obligations and liabilities under this Guaranty and Indemnification
Agreement. Conversely, the discharge of Guarantors' obligations and liabilities
under this Guaranty and Indemnification Agreement by Guarantors or by reason of
operation of law or otherwise shall in no event or under any circumstance in and
of itself constitute or be deemed to constitute a discharge, in whole or in
part, of Guarantors' obligations and liabilities under any of the Other
Guaranties. The term "Other Guaranties" as used herein shall mean any other
guaranty of payment, guaranty of performance, completion guaranty,
indemnification agreement or other guaranty or instrument of personal recourse
obligation or undertaking of any nature whatsoever (other than this Guaranty and
Indemnification Agreement) now or hereafter executed and delivered by Guarantors
to Agent or Co-Lenders or any of them in connection with the Credit Facility.
21. This Guaranty and Indemnification Agreement may be
executed in one or more counterparts by some or all of the parties hereto, each
of which counterparts shall be an original and all of which together shall
constitute a single agreement of guaranty. The failure of any party listed below
to execute this Guaranty and Indemnification Agreement, or any counterpart
hereof, shall not relieve the other signatories from their obligations
hereunder.
22. Guarantors agree that, with or without notice or demand,
Guarantors will reimburse Agent, (to the extent that such reimbursement is not
made by Borrowers), for all costs and expenses (including, without limitation,
reasonable attorneys' fees) incurred by Agent or any Co-Lender in connection
with any action, case or proceeding brought by Agent to enforce the obligations
of Guarantors under this Guaranty and Indemnification Agreement.
23. No recourse shall be had for any obligation of BRT under
this Guaranty and Indemnification Agreement or for any claim based thereon or
otherwise in respect thereof, against any past, present or future trustee,
-8-
<PAGE>
shareholder, officer or employee of BRT, 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 each other party to
and beneficiary of this Guaranty and Indemnification Agreement.
24. No recourse shall be had for any obligation of BRP under
this Guaranty and Indemnification Agreement or any of the other Credit Facility
Documents or for any claim based thereon or otherwise in respect thereof,
against Brandywine Specified Property Investors Limited Partnership, a
Pennsylvania limited partnership and one of the general partners of BRP, 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 each other party to and beneficiary of this Guaranty and Indemnification
Agreement and by the other general partners of BRP.
-9-
<PAGE>
IN WITNESS WHEREOF, Guarantors have duly executed and
delivered this Guaranty and Indemnification Agreement to Agent as of the day and
year first above set forth.
BRANDYWINE REALTY TRUST, a Maryland real estate
investment trust
By: /s/ Gerard H. Sweeney
---------------------------------------------
Name: Gerard H. Sweeney
Title: President and Chief
Executive Officer
BRANDYWINE OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership
By: Brandywine Realty Trust, a Maryland real
estate investment trust, its general
partner
By: /s/ Gerard H. Sweeney
------------------------------------
Name: Gerard H. Sweeney
Title: President and Chief
Executive Officer
WITMER OPERATING PARTNERSHIP, L.P.
By: Brandywine Holdings I, Inc., a
Pennsylvania corporation, its general
partner
By: /s/ Gerard H. Sweeney
------------------------------------
Name: Gerard H. Sweeney
Title: President and Chief
Executive Officer
BRANDYWINE REALTY PARTNERS, a Pennsylvania
general partnership
By: Brandywine Realty Trust, a Maryland
limited partnership, its general partner
By: /s/ Gerard H. Sweeney
------------------------------------
Name: Gerard H. Sweeney
Title: President and Chief
Executive Officer
BRANDYWINE REALTY SERVICES CORPORATION, a
Pennsylvania corporation
By: /s/ Gerard H. Sweeney
------------------------------------
Name: Gerard H. Sweeney
Title: President and Chief
Executive Officer
-10-
<PAGE>
EXHIBIT A
(Definitions)
Agent: The term "Agent" as used in this Guaranty and Indemnification Agreement
shall have the meaning given to such term in the preamble to this Guaranty and
Indemnification Agreement.
BOP: The term "BOP" as used in this Guaranty and Indemnification Agreement
shall have the meaning given to such term in the preamble to this Guaranty and
Indemnification Agreement.
Borrowers: The term "Borrowers" as used in this Guaranty and Indemnification
Agreement shall have the meaning given to such term in the preamble to this
Guaranty and Indemnification Agreement.
BRP: The term "BRP" as used in this Guaranty and Indemnification Agreement
shall have the meaning given to such term in the preamble to this Guaranty and
Indemnification Agreement.
BRSC: The term "BRSC" as used in this Guaranty and Indemnification Agreement
shall have the meaning given to such term in the preamble to this Guaranty and
Indemnification Agreement.
BRT: The term "BRT" as used in this Guaranty and Indemnification Agreement
shall have the meaning given to such term in the preamble to this Guaranty and
Indemnification Agreement.
Co-Lenders: The term "Co-Lenders" as used in this Guaranty and Indemnification
Agreement shall collectively mean Smith Barney Mortgage Capital Group, Inc., a
Delaware corporation, and NationsBank, N.A., a national banking association.
Co-Lenders Agreement: The term "Co-Lenders Agreement" as used in this Guaranty
and Indemnification Agreement shall mean that certain Co-Lender and Servicing
Agreement dated as of the date hereof among Smith Barney Mortgage Capital Group,
Inc., NationsBank, N.A., in its individual capacity, and NationsBank, N.A., in
its capacity as Agent, as the same may be further amended from time to time.
Credit Agreement: The term "Credit Agreement" as used in this Guaranty and
Indemnification Agreement shall mean that certain Credit Agreement dated as of
the date hereof among Smith Barney Mortgage Capital Group, Inc., NationsBank,
N.A., in its individual capacity, Borrowers and NationsBank, N.A., in its
capacity as Agent and pursuant to the provisions of which the Credit Facility is
being extended by Co-Lenders to Borrowers, as the same may be further amended
from time to time.
Credit Facility: The term "Credit Facility" as used in this Guaranty and
Indemnification Agreement shall have the meaning given to such term in paragraph
B of the Preliminary Statement of this Guaranty and Indemnification Agreement.
A-1
<PAGE>
Credit Facility Documents: The term "Credit Facility Documents" as used in this
Guaranty and Indemnification Agreement shall have the meaning given to such term
in the Credit Agreement.
Credit Facility Notes: The term "Credit Facility Notes" as used in this
Guaranty and Indemnification Agreement shall have the meaning given to such term
in the Credit Agreement.
Debt: The term "Debt" as used in this Guaranty and Indemnification Agreement
shall have the meaning given to such term in the Credit Agreement.
Default Rate: The term "Default Rate" as used in this Guaranty and
Indemnification Agreement shall to the extent necessary be determined on a daily
basis and shall be equal to four (4%) percent plus the Floating Rate.
Environmental Provisions: The term "Environmental Provisions" as used in this
Guaranty and Indemnification Agreement shall mean the terms, covenants and
provisions set forth in the paragraph of the Credit Agreement entitled
"Environmental Provisions" on the part of Borrowers to be observed and
performed.
Environmental Requirements: The term "Environmental Requirements" as used in
this Guaranty and Indemnification Agreement shall mean all present and future
laws, statutes, ordinances, rules, regulations, orders, codes, licenses,
permits, decrees, judgments, directives or the equivalent of or by any
Governmental Authority and relating to or addressing the protection of the
environment or human health.
Environmental Reports: The term "Environmental Reports" as used in this
Guaranty and Indemnification Agreement shall have the meaning given to such
term in the Credit Agreement.
Floating Rate: The term "Floating Rate" as used in this Guaranty and
Indemnification Agreement shall have the meaning given to such term in the
Credit Agreement.
Governmental Authority: The term "Governmental Authority" as used in this
Guaranty and Indemnification Agreement shall mean the Federal government, or any
state or other political subdivision thereof, or any agency, court or body of
the Federal government, any state or other political subdivision thereof,
exercising executive, legislative, judicial, regulatory or administrative
functions.
Guarantors: The term "Guarantors" as used in this Guaranty and Indemnification
Agreement shall have the meaning given to such term in the preamble to this
Guaranty and Indemnification Agreement.
Hazardous Material: The term "Hazardous Material" as used in this Guaranty and
Indemnification Agreement shall mean any material or substance that, whether by
its nature or use, is now or hereafter defined as a hazardous waste, hazardous
substance, pollutant or contaminant under any Environmental Requirement, or
which is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous and which is now or hereafter
regulated under any Environmental Requirement, or which is or contains
petroleum, gasoline, diesel fuel or another petroleum hydrocarbon product.
A-2
<PAGE>
Mortgages: The term "Mortgages" as used in this Guaranty and Indemnification
Agreement shall have the meaning given to such term in the Credit Agreement.
Other Guaranties: The term "Other Guaranties" as used in this Guaranty and
Indemnification Agreement shall have the meaning given to such term in paragraph
20 of this Guaranty and Indemnification Agreement.
Properties: The term "Properties" as used in this Guaranty and
Indemnification Agreement shall have the meaning given to such term in the
Credit Agreement.
WOP: The term "WOP" as used in this Guaranty and Indemnification Agreement
shall have the meaning given to such term in the preamble to this Guaranty and
Indemnification Agreement.
A-3
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports dated May 29, 1997 and June 3, 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.,
June 6, 1997
