<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) November 18, 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 11 pages
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
I. BALA POINTE OFFICE CENTRE
On December 5, 1997, Brandywine Operating Partnership, L.P. (the
"Operating Partnership"), a limited partnership of which Brandywine Realty
Trust (the "Company") is the sole general partner and in which the Company
owns, on the date of this Current Report of Form 8-K, an approximately 97.1%
interest, acquired a two-story office property located in Bala Cynwyd,
Montgomery County, Pennsylvania ("Bala Pointe Office Centre") containing
approximately 173,079 net rentable square feet. Bala Pointe Office Centre was
constructed in 1974. As of December 5, 1997, the Bala Pointe Office Centre
was approximately 100% leased to 56 tenants. American Business Financial
occupies more than 10% of the total net rentable area of the property.
The purchase price for Bala Pointe Office Centre totaled $26.8 million. The
Operating Partnership paid the purchase price and closing expenses using
borrowings under its existing revolving credit facility.
The seller of Bala Pointe Office Centre, TCW Realty Fund IV Pennsylvania
Trust, is a party unaffiliated with the Company and the Operating Partnership.
The Company based its determination of the purchase price of the property on the
expected cash flow, physical condition, location, competitive advantages,
existing tenancies and opportunities to retain and attract additional tenants.
The purchase price was determined by arm's-length negotiation between the
Company and the seller.
2
<PAGE>
The table set forth below shows certain information regarding rental rates
and lease expirations for Bala Pointe Office Centre.
Scheduled Lease Expirations
(Bala Pointe Office Centre)
<TABLE>
<CAPTION>
RENTABLE SQUARE FINAL ANNUALIZED
YEAR OF NUMBER OF LEASES FOOTAGE SUBJECT BASE RENT UNDER PERCENTAGE OF TOTAL
LEASE EXPIRING WITHIN TO EXPIRING EXPIRING LEASES FINAL ANNUALIZED BASE RENT
EXPIRATION THE YEAR AT(1) LEASES (2) UNDER EXPIRING LEASES
- ----------------------------- --------------------- ----------------- ----------------- ---------------------------
<S> <C> <C> <C> <C>
1997......................... 2 2,175 $ 52,949 1.4%
1998......................... 21 51,802 720,048 19.5%
1999......................... 5 6,357 101,349 2.7%
2000......................... 7 7,059 133,190 3.6%
2001......................... 15 46,842 1,173,262 31.8%
2002......................... 12 23,972 609,219 16.5%
2003......................... 14 34,872 903,507 24.5%
2004......................... -- -- -- --
2005......................... -- -- -- --
2006 and
Thereafter................. -- -- -- --
--
------- ----------------- -----
Total........................ 76 173,079 $ 3,693,524 100.0%
-- ------- ----------------- -----
-- ------- ----------------- -----
</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.
II. SCARBOROUGH PORTFOLIO
On December 11, 1997, the Operating Partnership acquired a portfolio of 14
office/flex properties located in Gibbsboro, New Jersey (collectively, the
"Scarborough Properties") containing approximately 562,455 net rentable square
feet. As of December 11, 1997, the Scarborough Properties were approximately
83.1% leased to 44 tenants. Harbor Laundry, Inc., Microwarehouse, Inc., R.F.
Power Products, Inc. and West Jersey Health each individually occupies more than
10% of the total net rentable area of the Scarborough Properties.
The purchase price for Scarborough Properties totaled $37.1 million. The
Operating Partnership paid $27.6 million of the purchase price and closing
expenses in cash using borrowings under its existing revolving credit facility
and $9.5 million of the acquisition price in the form of 389,976 units of
limited partnership interest ("Units") in the Operating Partnership.
The sellers of the Scarborough Properties consisted of various entities
controlled by Messrs. Robert K. Scarborough, R. Randle Scarborough and M. Sean
Scarborough, parties unaffiliated with the Company and the Operating
Partnership. The Company based its determination of the purchase price of the
3
<PAGE>
Scarborough Properties on the expected cash flow, physical condition, location,
competitive advantages, existing tenancies and opportunities to retain and
attract additional tenants. The purchase price was determined by arm's-length
negotiation between the Company and the sellers.
The table set forth below shows certain information regarding rental rates
and lease expirations for the Scarborough Properties.
Scheduled Lease Expirations
(Scarborough Properties)
<TABLE>
<CAPTION>
RENTABLE SQUARE FINAL ANNUALIZED
YEAR OF NUMBER OF LEASES FOOTAGE SUBJECT BASE RENT UNDER PERCENTAGE OF TOTAL
LEASE EXPIRING WITHIN TO EXPIRING EXPIRING LEASES FINAL ANNUALIZED BASE RENT
EXPIRATION THE YEAR AT(1) LEASES (2) UNDER EXPIRING LEASES
- ----------------------------- --------------------- ----------------- ----------------- ---------------------------
<S> <C> <C> <C> <C>
1997......................... 1 3,492 $ 46,789 0.9%
1998......................... 18 84,811 1,151,662 21.9%
1999......................... 9 31,093 488,675 9.3%
2000......................... 10 106,212 1,005,567 19.1%
2001......................... 4 44,372 768,006 14.6%
2002......................... 4 101,894 1,008,464 19.2%
2003......................... 2 10,104 102,216 1.9%
2004......................... -- -- -- --
2005......................... -- -- -- --
2006 and
Thereafter................. 2 83,606 690,012 13.1%
--
------- ----------------- -----
Total........................ 50 465,584 $ 5,261,391 100.0%
-- ------- ----------------- -----
-- ------- ----------------- -----
</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.
An environmental assessment performed as part of the Company's due
diligence has identified certain environmental contamination with respect to
certain of the Scarborough Properties known as Paint Works Corporate Center
("Paint Works"). Volatile organic compounds, semi-volatile organic compounds
and metals were detected in the groundwater, surface soils and sub-surface
soils. These contaminants are believed to be associated with the use by prior
owners and operators of the properties as a paint and varnish factory since
the 1850's. The Paint Works has been the subject of investigation by the New
Jersey Department of Environmental Protection ("NJDEP") since the mid-1970's.
The NJDEP has issued two directives to the former owners and operators of the
site, ordering them to investigate and remediate the contamination at the
site. The NJDEP has also entered into two Administrative Consent Orders (the
"ACO's") with Sherwin-Williams, the former owner and operator primarily
responsible for the environmental contamination at the site, pursuant to
which Sherwin-Williams has agreed to investigate and commence certain
remediation. The NJDEP has provided written assurances to the Company that
the NJDEP will not require the Company to investigate or remediate the site
so long as Sherwin-Williams continues to work with the NJDEP. The Company has
also
4
<PAGE>
been indemnified against Sherwin-Williams' failure to comply with the ACO's
and from any migration of the aforesaid compounds onto the adjacent
Scarborough Properties by PWCCW, a New Jersey general partnership, and Robert
K. Scarborough (collectively, "Scarborough"). In the event that
Sherwin-Williams ceases to work with the NJDEP and Scarborough is unable to
fulfill its obligations under its agreement with the Company, the company
could be responsible for any costs associated with any remediation. Because
the Company does not believe that the occurrence of both of these events is
probable, no amounts have been accrued for any such potential liability. The
Company is actively pursuing with various insurance companies additional
blanket environmental insurance coverage for its entire portfolio, including
the Scarborough Properties.
As part of the acquisition of the Scarborough Properties, the Company has
agreed to file a registration statement registering the resale of the Common
Shares issuable upon redemption of the Units issued as part of the
acquisition price, and has entered into certain tax indemnification
agreements, copies of which are attached as Exhibits 10.13 through 10.15,
providing for certain distributions by the Operating Partnership to its
partners in accordance with their respective percentage interests, in the
event certain of the Scarborough Properties are sold within four years.
III. FINANCIAL STATEMENTS
Financial statements for the Bala Pointe Office Centre, the Scarborough
Properties and the GMH Properties are included in this Current Report under
Item 7. After reasonable inquiry, the Company is not aware of any material
factors relating to the above mentioned properties that would cause the
reported financial information relating to such properties not to be
necessarily indicative of future operating results.
ITEM 5. OTHER EVENTS
5
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GMH PORTFOLIO
As of the date of this filing, the Company has determined that it is
probable that the Operating Partnership will acquire a portfolio of 23 office
properties containing approximately 1,975,263 net rentable square feet
(collectively, the "GMH Properties"). The properties are located throughout the
Mid-Atlantic region of the United States as follows:
<TABLE>
<CAPTION>
NET
RENTABLE NUMBER OF
PROPERTY NAME LOCATION SQUARE FEET PROPERTIES
- ----------------------------- -------------------- ----------- ----------
<S> <C> <C>
Freedom Business Center King of Prussia, PA 367,881 4
Trend Office Building King of Prussia, PA 20,600 1
Newtown Commons Newtown, PA 128,659 2
Devon West Devon, PA 61,102 1
King's Mill Cincinnati, OH 156,175 1
Atlantic Federal Building Towson, MD 120,234 1
Linden Park Wilmington, DE 105,000 1
1105 Berkshire Boulevard Reading, PA 68,984 1
1150 Berkshire Boulevard Reading, PA 26,821 1
Park 80 West Saddlebrook, NJ 483,189 2
University Plaza Newark, DE 179,722 6
520 Virginia Drive Fort Washington, PA 48,122 1
AmeriData Building (1) Frederick, MD 208,774 1
----------- --
Total 1,975,263 23
</TABLE>
(1) As part of the transaction to acquire the GMH Properties, the Company will
purchase an office property in Frederick, MD which is currently under
construction and is expected to contain approximately 208,774 net rentable
square feet upon completion. This property acquisition is contingent upon
commencement of a lease with AmeriData, which will occupy 100% of the
rentable space upon completion of construction which is anticipated to occur
in the first quarter of 1998.
As of December 17, 1997, the GMH Properties were approximately 90.3%
leased to 191 tenants, excluding the AmeriData Building discussed above. No
tenant individually occupies more than 10% of the total net rentable area of
the properties.
The Company anticipates closing the purchase of the GMH Properties on or
about January 5, 1998. The purchase price for the GMH Properties is anticipated
to total approximately $231.5 million. The Operating Partnership expects to
pay the purchase price and closing expenses using borrowings under a new,
increased credit facility. As of the date of this Current Report on Form 8-K,
the Company has made a total of $11.3 million of non-refundable deposits in
connection with the acquisition of the GMH Properties. Reference if made to Item
5 for a discussion of the pending increase in the Company's credit facility.
The sellers of the GMH Properties, University Plaza, L.P.; Park 80,
L.L.C.; BOWPL Park, L.L.C.; Virginia Drive Associates, L.P.; Trend
Associates; Linden Park Limited Partnership; The Berkshire Group; and WHDWA
Real Estate Limited Partnership, are parties unaffiliated with the Company
and the Operating Partnership. The Company based its determination of the
purchase price of the GMH Properties on the expected cash flow, physical
condition, location, competitive advantages, existing tenancies and
opportunities to retain and attract additional tenants. The purchase price
was determined by arm's-length negotiation between the Company and the
sellers.
6
<PAGE>
The table set forth below shows certain information regarding rental
rates and lease expirations for the GMH Properties.
Scheduled Lease Expirations
(GMH Properties)
<TABLE>
<CAPTION>
Year of Number of Leases Rentable Square Final Annualized Percentage of Total
Lease Expiring Within Footage Subject Base Rent under Final Annualized Base Rent
Expiration the Year at (1) to Expiring Leases Expiring Leases (2) Under Expiring Leases
- ---------- ---------------- ------------------ ------------------- --------------------------
<S> <C> <C> <C> <C>
1997 22 27,114 $ 423,933 1.5%
1998 52 163,821 2,708,980 9.6%
1999 42 251,730 4,100,214 14.5%
2000 21 158,705 2,311,221 8.2%
2001 33 321,856 5,827,290 20.6%
2002 34 305,129 6,114,642 21.6%
2003 7 122,621 2,403,342 8.5%
2004 3 40,538 1,013,914 3.6%
2005 3 194,261 3,045,307 10.8%
2006 and
Thereafter 2 12,536 319,024 1.1%
--- --------- ----------- ------
Total 219 1,598,311 $28,267,867 100.0%
--- --------- ----------- ------
--- --------- ----------- ------
</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.
The pending GMH Portfolio acquisition represents a significant step in
the Company's investment strategy to expand beyond the suburban Philadelphia
office and industrial market into additional markets within the Mid-Atlantic
region. The consummation of the purchase of the GMH Portfolio is subject to
satisfaction of certain conditions and no assurance can be given that the
Company will acquire the properties.
After giving effect to the acquisition of the Bala Pointe Office Center,
the Scarborough Properties, the GMH Properties and the several property
acquisitions discussed below in Item 5, the Company's portfolio will consist
of 122 office properties and 16 industrial properties that contain an
aggregate of approximately 9.0 million net rentable square feet.
7
<PAGE>
AMENDMENT TO PARTNERSHIP AGREEMENT
The Agreement of Limited Partnership of Brandywine Operating Partnership,
L.P. (the "Operating Partnership") was amended and restated as of November
18, 1997. A copy of the Amended and Restated Agreement of Limited Partnership
of the Operating Partnership (the "Amended Partnership Agreement") is
attached hereto as Exhibit 10.1.
In connection with the execution and delivery of the Amended Partnership
Agreement, the Company assigned to the Operating Partnership, as a capital
contribution, its right to all income, gains, profits, losses and cash flow
from the LibertyView Building located in Cherry Hill, New Jersey, an office
building acquired by the Company on July 19, 1996. In exchange for the
assignment, the Operating Partnership issued to the Company 101,388 units of
general partnership interest in the Operating Partnership. As of the date
hereof, the number of outstanding units of general and limited partnership
interests of the Operating Partnership owned by the Company equals the number
of Common Shares outstanding. A copy of the agreement effecting the
LibertyView assignment is attached hereto as Exhibit 10.2. As a result of
such assignment, the Company's economic interest in its properties derives
solely from its interest in the Operating Partnership. As of the date hereof,
and after giving effect to the Units issued in payment of a portion of the
acquisition price for certain of the Scarborough Properties, the Company owns
an approximately 97.1% interest in the Operating Partnership.
EXPANSION OF CREDIT FACILITY
As part of its debt strategy, the Company is currently negotiating with
its existing lead lender to increase its revolving credit facility (the
"Credit Facility") from $150.0 million to $300.0 million and to convert the
facility to an unsecured facility. The interest rate would be reduced by 37.5
to 60 basis points depending on the Company's degree of leverage. Upon
attainment of an investment rating, the overall interest rate reduction would
be between 60 to 75 basis points regardless of the degree of leverage. In
addition, to facilitate consummation of certain property acquisitions, the
Company is also negotiating with its existing lead lender the terms of a
$100.0 million unsecured credit facility (the "Additional Credit Facility")
that would bear interest at either 30-day LIBOR plus 150 basis points or
prime plus 25 basis points. The Additional Credit Facility would have a
120-day term, subject to a 90-day extension. During the extended term, the
interest rate would increase to 30-day LIBOR plus 175 basis points or the
prime rate plus 50 basis points, and the lender would have the option to take
collateral. There can be no assurance that the Company will be able to
increase its Credit Facility, to convert its Credit Facility to an unsecured
facility, to have the interest rate on the Credit Facility reduced or to
obtain the Additional Credit Facility. Failure to obtain the Credit Facility
and the Additional Credit Facility would adversely impact the Company's
ability to complete the pending acquisition of the GMH Properties.
8
<PAGE>
PROPERTY ACQUISITIONS
On October 29, 1997, the Operating Partnership acquired an office
property located in Cherry Hill, NJ ("5 Cherry Hill Executive Campus") for a
purchase price of $1.3 million. The property contains approximately 65,223
net rentable square feet and was 13.6% leased upon acquisition.
On October 31, 1997, the Operating Partnership acquired an office
property located in Cherry Hill, NJ ("6 Cherry Hill Executive Campus") for a
purchase price of $2.2 million. The property contains approximately 105,972
net rentable square feet and was unoccupied upon acquisition.
On November 5, 1997, the Operating Partnership acquired an office
property located in Fort Washington, PA which contains approximately 46,366
net rentable square feet ("220 Commerce Drive"). The property was 100% leased
upon acquisition and was purchased for $5.3 million.
On November 6, 1997, the Operating Partnership acquired two office
properties in Horsham, PA which contain an aggregate of approximately 57,793
net rentable square feet ("Provident Place"). These properties were acquired
for a purchase price of $6.3 million and were 100% leased upon acquisition.
On November 25, 1997, the Operating Partnership acquired an office
property in Valley Forge, PA (the "PECO Building") for a purchase price of
$9.5 million which contains approximately 107,000 net rentable square feet.
The property was purchased in a sale-leaseback transaction with PECO Energy
who is the sole tenant occupying the entire property.
5 Cherry Hill Executive Campus, 6 Cherry Hill Executive Campus, 220
Commerce Drive, Provident Place and the PECO Building were purchased from
parties unaffiliated with the Company and the Operating Partnership and were
funded through borrowings under the Company's revolving credit facility and
existing cash reserves. The Company based its determination of the each of
the respective purchase prices on the expected cash flow, physical condition,
location, competitive advantages, existing tenancies and opportunities to
retain and attract additional tenants. The purchase prices were determined by
arm's-length negotiation between the Company and the respective sellers.
Compensation Arrangements and Equity Awards
At a meeting held on December 17, 1997, the Board of
Trustees of the Company authorized certain equity awards to
senior management of the Company and other Company employees.
The Board authorized the Company to award to the Chairman of the
Board and the President and Chief Executive Officer "restricted"
common shares of beneficial interest ("Common Shares") having an
aggregate value of $4 million and $6 million, respectively, based
on the market price of the Common Shares at the beginning of
January, 1998, with the restrictions lapsing over a five year
period, subject to earlier lapsing upon the occurrence of certain
events, such as a change in control. The Board also authorized
similar awards having an aggregate value of approximately $1.2
million to four other senior members of management.
In addition, the Board authorized the award of ten-year
options exercisable for an aggregate of 2,068,704 Common Shares,
subject to varying vesting schedules (none of which exceeds five
years), with exercise prices equal to the market price of a
Common Share as of January 2, 1998 in respect of 554,034 of such
options, a 10% premium over such market price in respect of 753,296
of such options and a 15% premium in respect of 761,374 of such
options. These options were awarded to Company employees,
including the Chairman of the Board and the President and Chief
Executive Officer. The options awarded to the Chairman of the
Board and the President and Chief Executive Officer have an
aggregate combined value estimated at approximately $5.0 million
based on a Black Scholes valuation methodology. Because the
Company's current 1997 Long-Term Incentives Plan authorizes
only 750,000 Common Shares for awards thereunder, certain of the
options were awarded subject to receipt of shareholder approval
at the next meeting of the Company's shareholders. In the event
these options are not approved by shareholders, the options would
convert into share appreciation rights that would be exercisable
during the option term by the holder for a cash payment based on
the spread, if any, between the exercise price contained in the
option and the market price of a Common Share at the time of the
exercise.
In addition, the Board authorized the Company to enter into
five-year employment agreements with the Chairman of the Board
and the President and Chief Executive Officer at base salaries of
$250,000 and $300,000, respectively. The employment agreements
will include a provision for a payment equal to three times
annual salary and bonus in the event the employment of the
applicable executive is terminated under certain circumstances,
such as following a change in control.
9
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(C) Exhibits.
<TABLE>
<CAPTION>
- --------- ----------------------------------------------------------------------------------------------------------
<C> <S>
10.1 Amended and Restated Agreement of Limited Partnership of the Operating Partnership.
10.2 Agreement among the Company, the Operating Partnership and certain subsidiaries of the Company.
10.3 Purchase and Sale Agreement and Joint Escrow Instructions (111-121 Presidential Boulevard).
10.4 Agreement (500 Scarborough Drive).
10.5 Agreement (1007 Laurel Oak Road).
10.6 Agreement (1, 2, 4, 5, 7, 10 Foster Avenue, 6 East Clementon Drive and 5 United States Avenue).
10.7 Agreement of Sale (55 United States Avenue).
10.8 Agreement of Sale (50 East Clementon Drive).
10.9 Agreement of Sale (501 Scarborough Drive).
10.10 Agreement of Sale (20 East Clementon Drive).
10.11 Registration Rights Agreement.
10.12 First Amendment to Amended and Restated Agreement of Limited Partnership of the Operating Partnership.
10.13 Tax Indemnification Agreement (PWCC).
10.14 Tax Indemnification Agreement (Laurel Oak).
10.15 Tax Indemnification Agreement (English Creek).
23.1 Consent of Independent Accountants
</TABLE>
10
<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: December 17, 1997 By: /s/ Gerard H. Sweeney
----------------- -------------------------------------
Gerard H. Sweeney,
President and Chief Executive Officer
(Principal Executive Officer)
Date: December 17, 1997 By: /s/ Mark S. Kripke
----------------- -------------------------------------
Mark S. Kripke,
Chief Financial Officer
(Principal Financial and Accounting Officer)
11
<PAGE>
BRANDYWINE REALTY TRUST
INDEX TO FINANCIAL STATEMENTS
<TABLE>
I. UNAUDITED PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION
<S> <C> <C>
- - Pro Forma Condensed Consolidating Balance Sheet as of September 30, 1997........................ F-3
- - Pro Forma Condensed Consolidating Statement of Operations for the Year Ended December 31, 1996.. F-4
- - Pro Forma Condensed Consolidating Statement of Operations for the Nine Months Ended
September 30, 1997........................................................................... F-5
- - Notes and Management's Assumptions to Unaudited Pro Forma Condensed Consolidating Financial
Information.................................................................................. F-6
II. BALA POINTE OFFICE CENTRE
- - Report of Independent Public Accountants........................................................ F-13
- - Statements of Revenue and Certain Expenses for the Year Ended December 15, 1996 (audited)
and for the Nine Month Period Ended September 15, 1997 (unaudited).......................... F-14
- - Notes to Statements of Revenue and Certain Expenses............................................. F-15
III. SCARBOROUGH PROPERTIES
- - Report of Independent Public Accountants........................................................ F-17
- - Statements of Revenue and Certain Expenses for the Year Ended December 31, 1996 (audited)
and for the Nine Month Period Ended September 30, 1997 (unaudited).......................... F-18
- - Notes to Statements of Revenue and Certain Expenses............................................. F-19
IV. GMH PROPERTIES
- - Report of Independent Public Accountants........................................................ F-21
- - Statements of Revenue and Certain Expenses for the Year Ended September 30, 1997 (audited)...... F-22
- - Notes to Statements of Revenue and Certain Expenses............................................. F-23
</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 September 30, 1997 and the pro
forma condensed consolidating statements of operations for the nine months ended
September 30, 1997 and for the year ended December 31, 1996.
The pro forma condensed consolidating financial information should be read
in conjunction with the historical financial statements of the Company and those
acquisitions deemed significant pursuant to the rules and regulations of the
Securities and Exchange Commission.
The unaudited pro forma condensed consolidating financial information is
presented as if the following events occurred on September 30, 1997 for balance
sheet purposes, and at the beginning of the period presented for purposes of the
statements of operations:
- - The Company acquired the properties described in Note 1 to these pro forma
financial statements.
- - The Company acquired its partnership interests in Brandywine Operating
Partnership, L.P. (the "Operating Partnership").
- - The Company issued 4,600,000 Common Shares at $16.50 per share, of which
600,000 shares related to the underwriter's exercise of the over-allotment
option (the "1996 Offering").
- - The Company issued 636,363 Common Shares at $16.50 per share to a voting
trust established for the benefit of the Pennsylvania State Employees
Retirement System ("SERS"), in exchange for $10.5 million (the "SERS
Offering") and contributed such proceeds to the Operating Partnership in
exchange for 636,363 units of general partnership interest ("GP Units") in
the Operating Partnership.
- - The Company issued 709,090 Common Shares at $16.50 per share to two
investment funds managed by Morgan Stanley Asset Management Inc. (the "Morgan
Stanley Offering") and contributed the proceeds to the Operating Partnership
in exchange for 709,090 GP Units.
- - The Operating Partnership repaid $49,805,000 of mortgage indebtedness and
$764,000 of loans made by Safeguard Scientifics, Inc. and paid a $500,000
prepayment penalty with a portion of the proceeds of the 1996 Offering, the
SERS Offering and the Morgan Stanley Offering.
- - The Company issued 2,375,500 Common Shares at $20.625 per share, of which
175,500 shares related to the underwriter's exercise of the over-allotment
option (the "March 1997 Offering").
- - The Company issued 11,500,000 Common Shares at $20.75 per share, of which
1,500,000 shares related to the underwriter's exercise of the over-allotment
option (the "July 1997 Offering"). The net proceeds from the July 1997
Offering were contributed to the Operating Partnership in exchange for
11,500,000 GP Units.
- - The Operating Partnership repaid $160,775,000 of indebtedness under the
Company's revolving credit facility using proceeds from the July 1997
Offering.
- - The Company issued 786,840 Common Shares at $22.31 per share (the
"September 1997 Offering"). The net proceeds from the September 1997 Offering
were contributed to the Operating Partnership in exchange for 786,840 GP
Units.
The pro forma condensed consolidating financial information is unaudited and
is not necessarily indicative of what the actual financial position would have
been at September 30, 1997, nor does it purport to represent the future
financial position and the results of operations of the Company.
F-2
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET
AS OF SEPTEMBER 30, 1997 (Notes 1 and 2)
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
BRANDYWINE
REALTY TRUST
HISTORICAL OTHER RECENT BALA POINTE
CONSOLIDATED ACQUISITIONS OFFICE CENTRE SCARBOROUGH GMH PROPERTIES PRO FORMA
(A) (B) (C) PROPERTIES(D) PROPERTIES(E) CONSOLIDATED
--------------- ----------- ------------- --------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Real estate investments, net...... $ 462,772 $ 35,326 $ 27,153 $ 37,197 $ 233,115 $ 795,563
Cash and cash equivalents......... 19,965 -- -- -- -- 19,965
Escrowed cash..................... 348 -- -- -- -- 348
Accounts receivable............... 2,465 -- -- -- -- 2,465
Due from affiliates............... -- -- -- -- -- --
Investment in management company.. 318 -- -- -- -- 318
Deferred costs and other assets... 8,470 -- -- -- -- 8,470
--------------- ----------- ------------- ------- -------- ---------
Total assets.................. 494,338 35,326 27,153 37,197 233,115 827,129
--------------- ----------- ------------- ------- -------- ---------
--------------- ----------- ------------- ------- -------- ---------
LIABILITIES:
Mortgage notes payable............ 47,984 -- -- -- -- 47,984
Notes payable, Credit Facility.... 14,000 35,326 27,153 27,689 233,115 337,283
Accrued interest.................. 303 -- -- -- -- 303
Accounts payable and accrued
expenses........................ 4,128 -- -- -- -- 4,128
Distributions payable............. 8,338 -- -- -- -- 8,338
Tenant security deposits and
deferred rents.................. 3,960 -- -- -- -- 3,960
Tenant security deposits and
deferred rents.................. 387 -- -- -- -- 387
--------------- ----------- ------------- ------- -------- ---------
Total liabilities............. 79,100 35,326 27,153 27,689 233,115 402,383
--------------- ----------- ------------- ------- -------- ---------
MINORITY INTEREST................. 4,894 -- -- 9,508 -- 14,402
--------------- ----------- ------------- ------- -------- ---------
BENEFICIARIES' EQUITY:
Common shares of beneficial
interest........................ 234 -- -- -- -- 234
Additional paid-in capital........ 428,787 -- -- -- -- 428,787
Share warrants.................... 962 -- -- -- -- 962
Cumulative earnings............... 5,209 -- -- -- -- 5,209
Cumulative distributions.......... (24,848) -- -- -- -- (24,848)
--------------- ----------- ------------- ------- -------- ---------
Total beneficiaries' equity... 410,344 -- -- -- -- 410,344
--------------- ----------- ------------- ------- -------- ---------
Total liabilities and
beneficiaries' equity....... $ 494,338 $ 35,326 $ 27,153 $ 37,197 $ 233,115 $ 827,129
--------------- ----------- ------------- ------- -------- ---------
--------------- ----------- ------------- ------- -------- ---------
</TABLE>
F-3
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996 (Notes 1 and 3)
(Unaudited)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
BRANDYWINE 1997 EVENTS
REALTY ---------------------------------------------------
TRUST 1997 1997 TOTAL
HISTORICAL 1996 OTHER RECENT PRO FORMA
CONSOLIDATED (A) EVENTS (B) SUBTOTAL EVENTS (C) ACQUISITIONS (E) CONSOLIDATED
-------------------- ------------ ----------- ------------ ------------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE:
Base rents......... $ 8,462 $ 12,646 $ 21,108 $ 43,946 $ 31,449 $ 96,503
Tenant
reimbursements... 1,372 2,838 4,210 7,319 2,435 13,964
Other.............. 196 100 296 592 91 979
---------- ------------ ----------- ------------ -------- -------
Total Revenue.... 10,030 15,584 25,614 51,857 33,975 111,446
---------- ------------ ----------- ------------ -------- -------
OPERATING EXPENSES:
Interest........... 2,751 513 3,264 5,389 21,591 30,244
Depreciation and
amortization..... 2,836 4,687 7,523 11,006 9,519 28,048
Property expenses.. 3,709 6,830 10,539 21,242 14,947 46,728
General and
administrative... 825 148 973 -- -- 973
---------- ------------ ----------- ------------ -------- -------
Total operating
expenses....... 10,121 12,178 22,299 37,637 46,057 105,993
---------- ------------ ----------- ------------ -------- -------
Income (loss) before
minority interest and
equity in income (loss)
of management
company............ (91) 3,406 3,315 14,220 (12,082) 5,453
Equity in income
(loss) of
management
company............ (26) 66 40 461 733 1,234
---------- ------------ ----------- ------------ -------- -------
Income (loss)
before minority
interest........... (117) 3,472 3,355 14,681 (11,349) 6,687
Minority interest
in (income) loss... (45) (429) (474) 22 280 (172)
---------- ------------ ----------- ------------ -------- -------
Net income (loss).... (162) 3,043 2,881 14,703 (11,069) 6,515
(Income) loss
allocated to
Preferred
Shares............. (401) (1,847) (2,248) -- -- (2,248)
---------- ------------ ----------- ------------ -------- -------
Income (loss)
allocated to
Common Shares...... $ (563) $ 1,196 $ 633 $ 14,703) $(11,069) $ 4,267
---------- ------------ ----------- ------------ -------- -------
---------- ------------ ----------- ------------ -------- -------
Earnings (loss) per
Common Share....... $ (0.43) $ 0.20
---------- -------
---------- -------
Weighted average
number of shares
outstanding
including share
equivalents........ 1,302,648 21,578,246
---------- ------------
---------- ------------
F-4
<PAGE>
</TABLE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 (Notes 1 and 3)
(Unaudited)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
1997 EVENTS
-----------------------------------------------
BRANDYWINE
REALTY
TRUST 1997 RECENT TOTAL
HISTORICAL OTHER ACQUISITIONS PRO FORMA
CONSOLIDATED (A) EVENTS (D) (E) CONSOLIDATED
-------------------- ------------ --------------- ----------------
<S> <C> <C> <C> <C>
REVENUE:
Base rents...................... $ 32,290 $ 20,264 $ 25,864 $ 78,418
Tenant reimbursements........... 5,731 3,371 1,901 11,003
Other........................... 818 227 175 1,220
------------ ----------- --------- ----------
Total Revenue............... 38,839 23,862 27,940 90,641
------------ ----------- --------- ----------
OPERATING EXPENSES:
Interest........................ 4,899 1,506 16,149 22,554
Depreciation and amortization... 10,051 5,058 7,120 22,229
Property operating expenses..... 14,805 9,129 11,256 35,190
Other expenses.................. 705 -- -- 705
------------ ----------- --------- ----------
Total operating expenses.... 30,460 15,693 34,525 80,678
------------ ----------- --------- ----------
Income (loss) before equity income
of management company and
minority interest............... 8,379 8,169 (6,585) 9,963
Equity in income (loss) of
management company.............. 332 250 420 1,002
------------ ----------- --------- ----------
Income (loss) before minority
interest........................ 8,711 8,419 (6,165) 10,965
Minority interest in (income)
loss............................ (256) (109) 41 (324)
------------ ----------- --------- ----------
Net income (loss)................. 8,455 8,310 (6,124) 10,641
(Income) loss allocated to
Preferred Shares................ (499) -- -- (499)
------------ ----------- --------- ----------
Income (loss) allocated to Common
Shares.......................... $ 7,956 $ 8,310 $ (6,124) $ 10,142
------------ ----------- --------- ----------
------------ ----------- --------- ----------
Earnings (loss) per Common
Share........................... $ 0.90 $ 0.43
------------ ----------- --------- ----------
------------ ----------- --------- ----------
Weighted average number of shares
outstanding including share
equivalents..................... 8,809,379 23,382,756
------------ ----------
------------ ----------
</TABLE>
F-5
<PAGE>
BRANDYWINE REALTY TRUST
NOTES AND MANAGEMENT'S ASSUMPTIONS TO
UNAUDITED PRO FORMA CONDENSED CONSOLIDATING
FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
1. BASIS OF PRESENTATION:
Brandywine Realty Trust (the "Company") is a Maryland real estate investment
trust. As of December 17, 1997, the Company owned 117 properties. The Company's
interest in all 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 December 17, 1997, the Company
held a 97.1% interest in the Operating Partnership.
These pro forma financial statements should be read in conjunction with the
historical financial statements and notes thereto of the Company, the SSI/TNC
Properties, the LibertyView Building, the nine properties (the "SERS
Properties") acquired in November 1996 from SERS and its subsidiaries, Delaware
Corporate Center I, 700/800 Business Center Drive, the Columbia Acquisition
Properties, the Main Street Acquisition Properties, the TA Properties, the Emmes
Properties, the Greentree Executive Campus Acquisition Properties, 748 & 855
Springdale Drive, the Green Hills Properties, the Berwyn Park Properties, 500 &
501 Office Center Drive, Metropolitan Industrial Center, Atrium 1, Bala Pointe
Office Centre, the Scarborough Properties and the GMH Properties. In
management's opinion, all adjustments necessary to reflect the effects of the
1996 Offering, the SERS Offering, the Morgan Stanley Offering, the March 1997
Offering, the July 1997 Offering, the September 1997 Offering, the acquisitions
of the SSI/ TNC Properties, the LibertyView Building, the 1996 Additional
Acquisition Properties (consisting of the SERS Properties, Delaware Corporate
Center I, 700/800 Business Center Drive and 8000 Lincoln Drive), the Columbia
Acquisition Properties, the Main Street Acquisition Properties, 1336 Enterprise
Drive, the Greentree Executive Campus, Five Eves Drive, Kings Manor, the TA
Properties, the Emmes Properties, 748 & 855 Springdale Drive, 1974 Sproul Road,
the Green Hills Properties, the Berwyn Park Properties, 500 & 501 Office Center
Drive, Metropolitan Industrial Center, Atrium 1, 5 & 6 Cherry Hill Executive
Campus, 220 Commerce Drive, Provident Place, the PECO Building, Bala Pointe
Office Centre, the Scarborough Properties and the GMH Properties by the Company
have been made.
2. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET:
(A) Reflects the Company's historical consolidated balance sheet as of
September 30, 1997.
(B) Reflects the Company's acquisiton of several property acquisitions as
follows:
<TABLE>
<CAPTION>
PROPERTY PURCHASE PRICE CLOSING COSTS TOTAL
- ------------------------------------------------------------------------ -------------- --------------- ---------
<S> <C> <C> <C>
Atrium I................................................................ $ 10,250 $ 45 $ 10,295
5 & 6 Cherry Hill Executive Campus...................................... 3,484 20 3,504
220 Commerce Drive...................................................... 5,300 129 5,429
Provident Place......................................................... 6,300 152 6,452
PECO Building........................................................... 9,500 146 9,646
------- ----- ---------
Total............................................................... $ 34,834 $ 492 $ 35,326
------- ----- ---------
------- ----- ---------
</TABLE>
F-6
<PAGE>
(C) Reflects the Company's acquisition of Bala Pointe Office Centre as
follows:
<TABLE>
<S> <C>
Purchase Price..................................................... $ 26,750
Closing Costs...................................................... 403
---------
$ 27,153
---------
---------
</TABLE>
(D) Reflects the Company's acquisition of the Scarborough Properties as
follows:
<TABLE>
<S> <C>
Purchase Price..................................................... $ 37,075
Closing Costs...................................................... 122
---------
$ 37,197
---------
---------
</TABLE>
The Company funded the acquisition of the Scarborough Properties using
borrowings under its revolving credit facility totaling $27,689 and issued
Operating Partnership units valued at $9,508.
(E) Reflects the Company's acquisition of the GMH Properties as follows:
<TABLE>
<S> <C>
Purchase Price.................................................... $ 231,450
Closing Costs..................................................... 1,665
---------
$ 233,115
---------
---------
</TABLE>
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>
1996
SSI/TNC 700/800 PRO FORMA
PROPERTIES AND DELAWARE BUSINESS 8000 & OTHER
LIBERTYVIEW SERS CORPORATE CENTER LINCOLN OFFERING
BUILDING PROPERTIES CENTER DRIVE DRIVE ADJUSTMENTS
----------------- ------------- ------------- ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Base rents......................... $ 5,714 $ 4,008 $ 2,036 $ 651 $ 237 $ --
Tenant reimbursements.............. 2,511 249 -- 76 2 --
Other.............................. 100 -- -- -- -- --
------- ------ ------ ----- ----- -------
Total revenue...................... 8,325 4,257 2,036 727 239 --
Operating Expenses:
Interest........................... 3,783 194 -- -- -- (3,464)
Depreciation and amortization...... 2,819 818 374 212 89 375
Property expenses.................. 2,831 2,217 552 270 231 729
General and administrative......... 715 -- -- -- -- (567)
------- ------ ------ ----- ----- -------
Total operating expenses......... 10,148 3,229 926 482 320 (2,927)
Income (loss) before management
company and minority interest...... (1,823) 1,028 1,110 245 (81) 2,927
Equity in income (loss) of management
company............................ 75 -- -- -- -- (9)
------- ------ ------ ----- ----- -------
Income (loss) before minority
interest........................... (1,748) 1,028 1,110 245 (81) 2,918
Minority interest in (income) loss... 513 -- -- -- -- (942)
------- ------ ------ ----- ----- -------
Net income (loss).................... (1,235) 1,028 1,110 245 (81) 1,976
Income allocated to Preferred
Shares............................. -- -- -- -- -- (1,847)
------- ------ ------ ----- ----- -------
Income (loss) allocated to Common
Shares............................. $ (1,235) $ 1,028 $ 1,110 $ 245 $ (81) $ 129
------- ------ ------ ----- ----- -------
<CAPTION>
TOTAL
PRO FORMA
1996
EVENTS
-------------
<S> <C>
Revenue:
Base rents......................... $ 12,646
Tenant reimbursements.............. 2,838
Other.............................. 100
-------------
Total revenue...................... 15,584
Operating Expenses:
Interest........................... 513
Depreciation and amortization...... 4,687
Property expenses.................. 6,830
General and administrative......... 148
-------------
Total operating expenses......... 12,178
Income (loss) before management
company and minority interest...... 3,406
Equity in income (loss) of management
company............................ 66
-------------
Income (loss) before minority
interest........................... 3,472
Minority interest in (income) loss... (429)
-------------
Net income (loss).................... 3,043
Income allocated to Preferred
Shares............................. (1,847)
-------------
Income (loss) allocated to Common
Shares............................. $ 1,196
-------------
</TABLE>
F-7
<PAGE>
(C) Reflects the pro forma statements of operations of the Columbia
Acquisition Properties, the Main Street Acquisition Properties, 1336 Enterprise
Drive, Kings Manor, Greentree Executive Campus, Five Eves Drive, the TA
Properties, the Emmes Properties, 748 & 855 Springdale Drive, 1974 Sproul Road,
the Berwyn Park Properties, the Green Hills Properties, 500/501 Office Center
Drive, Christiana Corporate Center, Metropolitan Industrial Center, Atrium 1, 5
& 6 Cherry Hill Executive Campus, 220 Commerce Drive, Provident Place and the
PECO Building for the year ended December 31, 1996 and other pro forma
adjustments to reflect the March 1997 Offering, the July 1997 Offering and the
September 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>
COLUMBIA MAIN STREET 1336 GREENTREE
ACQUISITION ACQUISITION ENTERPRISE KINGS EXECUTIVE
PROPERTIES PROPERTIES DRIVE MANOR CAMPUS
------------- ------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents............................................ $ 5,146 $ 3,141 $ 437 $ 411 $ 1,862
Tenant reimbursements................................. 359 347 75 107 175
Other................................................. 376 -- -- -- --
------ ------------- ----- ----- -----------
Total revenue....................................... 5,881 3,488 512 518 2,037
------ ------------- ----- ----- -----------
------ ------------- ----- ----- -----------
Operating Expenses:
Interest (i).......................................... 1,680 -- -- -- 841
Depreciation and amortization (ii).................... 1,007 629 117 114 359
Property expenses..................................... 1,979 2,194 107 170 1,018
General and administrative............................ -- -- -- -- --
------ ------------- ----- ----- -----------
Total operating expenses............................ 4,666 2,823 224 284 2,218
------ ------------- ----- ----- -----------
------ ------------- ----- ----- -----------
Income (loss) before equity in income of management
company and minority interest......................... 1,215 665 288 234 (181)
Equity in income (loss) of management company (iii)..... -- -- -- -- --
------ ------------- ----- ----- -----------
Income (loss) before minority interest.................. 1,215 665 288 234 (181)
Minority interest in (income) loss...................... (36) (20) (8) (7) 5
------ ------------- ----- ----- -----------
Net income.............................................. $ 1,179 $ 645 $ 280 $ 227 $ (176)
------ ------------- ----- ----- -----------
------ ------------- ----- ----- -----------
<CAPTION>
FIVE
EVES
DRIVE
---------
<S> <C>
Revenue:
Base rents............................................ $ 348
Tenant reimbursements................................. 39
Other................................................. 1
---------
Total revenue....................................... 388
---------
---------
Operating Expenses:
Interest (i).......................................... 254
Depreciation and amortization (ii).................... 108
Property expenses..................................... 151
General and administrative............................ --
---------
Total operating expenses............................ 513
---------
---------
Income (loss) before equity in income of management
company and minority interest......................... (125)
Equity in income (loss) of management company (iii)..... --
---------
Income (loss) before minority interest.................. (125)
Minority interest in (income) loss...................... 4
---------
Net income.............................................. $ (121)
---------
---------
</TABLE>
<TABLE>
<CAPTION>
748 & 855 1974 MARCH
TA EMMES SPRINGDALE SPROUL 1997
PROPERTIES PROPERTIES DRIVE ROAD OFFERING
------------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents............................................ $ 5,102 $ 6,214 $ 940 $ 774 $ --
Tenant reimbursements................................. 735 2,681 -- 118 --
Other................................................. 9 10 -- -- --
------ ----------- ----- ----- -----------
Total revenue....................................... 5,846 8,905 940 892 --
------ ----------- ----- ----- -----------
Operating Expenses:
Interest (i).......................................... 3,168 4,987 400 -- (525)
Depreciation and amortization (ii).................... 1,352 2,128 171 134 --
Property expenses..................................... 1,962 3,482 250 492 --
General and administrative............................ -- -- -- -- --
------ ----------- ----- ----- -----------
Total operating expenses............................ 6,482 10,597 821 626 (525)
------ ----------- ----- ----- -----------
Income (loss) before equity in income of management
company and minority interest......................... (636) (1,692) 119 266 525
Equity in income (loss) of management company (iii)..... 105 65 23 22 --
------ ----------- ----- ----- -----------
Income (loss) before minority interest.................. (531) (1,627) 142 288 525
Minority interest in (income) loss...................... 16 48 (4) (8) 342
------ ----------- ----- ----- -----------
Net income.............................................. $ (515) $ (1,579) $ 138 $ 280 $ 867
------ ----------- ----- ----- -----------
------ ----------- ----- ----- -----------
<CAPTION>
JULY
1997
OFFERING
-----------
<S> <C>
Revenue:
Base rents............................................ $ --
Tenant reimbursements................................. --
Other................................................. --
-----------
Total revenue....................................... --
-----------
Operating Expenses:
Interest (i).......................................... (12,058)
Depreciation and amortization (ii).................... --
Property expenses..................................... --
General and administrative............................ --
-----------
Total operating expenses............................ (12,058)
-----------
Income (loss) before equity in income of management
company and minority interest......................... 12,058
Equity in income (loss) of management company (iii)..... --
-----------
Income (loss) before minority interest.................. 12,058
Minority interest in (income) loss...................... (293)
-----------
Net income.............................................. $ 11,765
-----------
-----------
</TABLE>
F-8
<PAGE>
<TABLE>
<CAPTION>
500/501
OFFICE CHRISTIANA METROPOLITAN
BERWYN PARK GREEN HILLS CENTER CORPORATE INDUSTRIAL
PROPERTIES PROPERTIES (IV) DRIVE CENTER CENTER ATRIUM 1
------------- --------------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Base rents.................................. $ 3,815 $ 7,700 $ 1,754 $ 768 $ 1,811 $ 1,226
Tenant reimbursements....................... 720 -- 1,358 61 406 33
Other....................................... 108 -- 43 2 9 26
------ ------ ----------- ----------- ------ -----------
Total revenue............................. 4,643 7,700 3,155 831 2,226 1,285
------ ------ ----------- ----------- ------ -----------
Operating Expenses:
Interest (i)................................ -- 1,200 1,125 430 1,238 772
Depreciation and amortization (ii).......... 1,205 1,294 547 183 528 329
Property expenses........................... 1,991 3,419 1,561 337 678 755
General and administrative.................. -- -- -- -- -- --
------ ------ ----------- ----------- ------ -----------
Total operating expenses.................. 3,196 5,913 3,233 950 2,444 1,856
------ ------ ----------- ----------- ------ -----------
Income (loss) before equity in income of
management company and minority interest.... 1,447 1,787 (78) (119) (218) (571)
Equity in income (loss) of management company
(iii)....................................... 166 (115) 76 5 53 31
Income (loss) before minority interest........ 1,613 1,672 (2) (114) (165) (540)
Minority interest in (income) loss............ (47) (49) -- 3 5 16
------ ------ ----------- ----------- ------ -----------
Net income.................................... $ 1,566 $ 1,623 $ (2) $ (111) $ (160) $ (524)
------ ------ ----------- ----------- ------ -----------
------ ------ ----------- ----------- ------ -----------
</TABLE>
<TABLE>
<CAPTION>
5 & 6
CHERRY HILL 220
SEPTEMBER EXECUTIVE COMMERCE PROVIDENT PECO
1997 OFFERING CAMPUS DRIVE PLACE BUILDING (V)
--------------- ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents..................................... $ -- $ 152 $ 572 $ 756 $ 1,017
Tenant reimbursements.......................... -- -- -- 105 --
Other.......................................... -- -- -- 8 --
----- ----- ----- ----------- ------
Total revenue................................ -- 152 572 869 1,017
----- ----- ----- ----------- ------
Operating Expenses:
Interest (i)................................... -- 263 407 484 723
Depreciation and amortization (ii)............. -- 112 174 206 309
Property expenses.............................. -- 169 194 333 --
General and administrative..................... -- -- -- -- --
----- ----- ----- ----------- ------
Total operating expenses..................... -- 544 775 1,023 1,032
----- ----- ----- ----------- ------
Income (loss) before equity in income of
management company and minority interest....... -- (392) (203) (154) (15)
Equity in income (loss) of management company
(iii).......................................... -- -- 12 18 --
Income (loss) before minority interest........... -- (392) (191) (136) (15)
Minority interest in (income) loss............... 33 12 6 4 --
----- ----- ----- ----------- ------
Net income....................................... $ 33 $ (380) $ (185) $ (132) $ (15)
----- ----- ----- ----------- ------
----- ----- ----- ----------- ------
<CAPTION>
TOTAL
OTHER
1997
EVENTS
---------
<S> <C>
Revenue:
Base rents..................................... $ 43,946
Tenant reimbursements.......................... 7,319
Other.......................................... 592
---------
Total revenue................................ 51,857
---------
Operating Expenses:
Interest (i)................................... 5,389
Depreciation and amortization (ii)............. 11,006
Property expenses.............................. 21,242
General and administrative..................... --
---------
Total operating expenses..................... 37,637
---------
Income (loss) before equity in income of
management company and minority interest....... 14,220
Equity in income (loss) of management company
(iii).......................................... 461
Income (loss) before minority interest........... 14,681
Minority interest in (income) loss............... 22
---------
Net income....................................... $ 14,703
---------
---------
</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 adjustments for the March 1997 Offering
and the July 1997 Offering represent interest savings related to the payoff
of $7 million and $160.8 million, respectively, of credit facility
borrowings at an effective rate of 7.5%.
(ii) Pro forma depreciation expense is presented assuming an 80% building and
20% land allocation of the purchase price and capitalized closing costs and
assumes a useful life of 25 years.
(iii) Pro forma equity in income of management company is presented based on
management fees less incremental costs estimated to be incurred.
(iv) Pro forma property expenses of the Green Hill Properties exclude $666,000
from historical amounts. Such amount represents expected salary savings.
(v) Pro forma base rents for the Peco Building are based on the lease in place
as of November 25, 1997 as historically the property was owner occupied and
was not an operating property. All property expenses are paid directly by
the tenant.
(D) Reflects the pro forma adjustments relating to the Columbia Acquisition
Properties, the Main Street Acquisition Properties, 1336 Enterprise Drive, Kings
Manor, Greentree Executive Campus, Five Eves
F-9
<PAGE>
Drive, the TA Properties, the Emmes Properties, 748 & 855 Springdale Drive,
1974 Sproul Road, the Berwyn Park Properties, the Green Hills Properties,
500/501 Office Center Drive, Christiana Corporate Center, Metropolitan
Industrial Center, Atrium 1, 5 & 6 Cherry Hill Executive Campus, 220 Commerce
Drive, Provident Place and the PECO Building for the nine months ended
September 30, 1997 and other pro forma adjustments to reflect the March 1997
Offering, the July 1997 Offering and the September 1997 Offering for the nine
months ended September 30, 1997. The operating results reflected below
include the historical results and related pro forma adjustments to reflect
the period January 1, 1997 through the earlier of the respective acquisition
date or September 30, 1997.
<TABLE>
<CAPTION>
COLUMBIA MAIN STREET 1336 GREENTREE
ACQUISITION ACQUISITION ENTERPRISE EXECUTIVE
PROPERTIES PROPERTIES DRIVE KINGS MANOR CAMPUS
------------- --------------- --------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents....................................... $ 338 $ 542 $ 78 $ 105 $ 602
Tenant reimbursements............................ 24 60 13 27 17
Other............................................ 25 -- -- -- --
----- ----- --- ----- -----
Total revenue.................................. 387 602 91 132 619
----- ----- --- ----- -----
Operating Expenses:
Interest (i)..................................... 110 -- -- -- 249
Depreciation and amortization (ii)............... 66 109 21 29 106
Property expenses................................ 130 379 19 43 272
General and administrative....................... -- -- -- -- --
----- ----- --- ----- -----
Total operating expenses....................... 306 488 40 72 627
----- ----- --- ----- -----
Income (loss) before equity in income of management
company and minority interest.................... 81 114 51 60 (8)
Equity in income (loss) of management company
(iii)............................................ -- -- -- -- --
----- ----- --- ----- -----
Income (loss) before minority interest............. 81 114 51 60 (8)
Minority interest in (income) loss................. (2) (3) (1) (2) --
----- ----- --- ----- -----
Net income......................................... $ 79 $ 111 $ 50 $ 58 $ (8)
----- ----- --- ----- -----
----- ----- --- ----- -----
<CAPTION>
FIVE
EVES
DRIVE
-----
<S> <C>
Revenue:
Base rents....................................... $ 103
Tenant reimbursements............................ 12
Other............................................ --
-----
Total revenue.................................. 115
-----
Operating Expenses:
Interest (i)..................................... 75
Depreciation and amortization (ii)............... 32
Property expenses................................ 45
General and administrative....................... --
-----
Total operating expenses....................... 152
-----
Income (loss) before equity in income of management
company and minority interest.................... (37)
Equity in income (loss) of management company
(iii)............................................ --
-----
Income (loss) before minority interest............. (37)
Minority interest in (income) loss................. 1
-----
Net income......................................... $ (36)
-----
-----
</TABLE>
<TABLE>
<CAPTION>
748 & 855
EMMES SPRINGDALE 1974 SPROUL MARCH 1997
TA PROPERTIES PROPERTIES DRIVE ROAD OFFERING
--------------- ----------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents.................................. $ 2,053 $ 2,570 $ 414 $ 354 $ --
Tenant reimbursements....................... 299 1,130 -- 54 --
Other....................................... 6 2 -- -- --
------ ----------- ----- ----- ---
Total revenue............................. 2,358 3,702 414 408 --
------ ----------- ----- ----- ---
Operating Expenses:
Interest (i)................................ 1,241 2,049 171 -- (91)
Depreciation and amortization (ii).......... 530 875 73 61 --
Property expenses........................... 698 1,332 99 225 --
General and administrative.................. -- -- -- -- --
------ ----------- ----- ----- ---
Total operating expenses.................. 2,469 4,256 343 286 (91)
------ ----------- ----- ----- ---
Income (loss) before equity in income of
management company and minority interest.... (111) (554) 71 122 91
Equity in income (loss) of management company
(iii)....................................... 41 27 10 10 --
------ ----------- ----- ----- ---
Income (loss) before minority interest........ (70) (527) 81 132 91
Minority interest in (income) loss............ 2 15 (2) (4) (52)
------ ----------- ----- ----- ---
Net income.................................... $ (68) $ (512) $ 79 $ 128 $ 39
------ ----------- ----- ----- ---
------ ----------- ----- ----- ---
<CAPTION>
JULY 1997
OFFERING
-----------
<S> <C>
Revenue:
Base rents.................................. $ --
Tenant reimbursements....................... --
Other....................................... --
-----------
Total revenue............................. --
-----------
Operating Expenses:
Interest (i)................................ (6,904)
Depreciation and amortization (ii).......... --
Property expenses........................... --
General and administrative.................. --
-----------
Total operating expenses.................. (6,904)
-----------
Income (loss) before equity in income of
management company and minority interest.... 6,904
Equity in income (loss) of management company
(iii)....................................... --
-----------
Income (loss) before minority interest........ 6,904
Minority interest in (income) loss............ (42)
-----------
Net income.................................... $ 6,862
-----------
-----------
</TABLE>
F-10
<PAGE>
<TABLE>
<CAPTION>
500/501
OFFICE CHRISTIANA METROPOLITAN
BERWYN PARK GREEN HILLS CENTER CORPORATE INDUSTRIAL
PROPERTIES PROPERTIES (IV) DRIVE CENTER CENTER
------------- --------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents.................................. $ 2,492 $ 4,567 $ 1,106 $ 615 $ 1,395
Tenant reimbursements....................... 376 -- 919 22 306
Other....................................... 36 -- 48 45 33
------ ------ ----------- ----- ------
Total revenue............................. 2,904 4,567 2,073 682 1,734
------ ------ ----------- ----- ------
Operating Expenses:
Interest (i)................................ -- 690 700 309 926
Depreciation and amortization (ii).......... 700 745 340 131 395
Property expenses........................... 1,073 2,059 971 218 472
General and administrative.................. -- -- -- -- --
------ ------ ----------- ----- ------
Total operating expenses.................. 1,773 3,494 2,011 658 1,793
------ ------ ----------- ----- ------
Income (loss) before equity in income of
management company and minority interest.... 1,131 1,073 62 24 (59)
Equity in income (loss) of management company
(iii)....................................... 95 (66) 44 4 40
------ ------ ----------- ----- ------
Income (loss) before minority interest........ 1,226 1,007 106 28 (19)
Minority interest in (income) loss............ (36) (30) (3) (1) 1
------ ------ ----------- ----- ------
Net income.................................... $ 1,190 $ 977 $ 103 $ 27 $ (18)
------ ------ ----------- ----- ------
------ ------ ----------- ----- ------
<CAPTION>
ATRIUM 1
-----------
<S> <C>
Revenue:
Base rents.................................. $ 962
Tenant reimbursements....................... 33
Other....................................... 26
-----
Total revenue............................. 1,021
-----
Operating Expenses:
Interest (i)................................ 577
Depreciation and amortization (ii).......... 246
Property expenses........................... 555
General and administrative.................. --
-----
Total operating expenses.................. 1,378
-----
Income (loss) before equity in income of
management company and minority interest.... (357)
Equity in income (loss) of management company
(iii)....................................... 23
-----
Income (loss) before minority interest........ (334)
Minority interest in (income) loss............ 10
-----
Net income.................................... $ (324)
-----
-----
</TABLE>
<TABLE>
<CAPTION>
5 & 6 CHERRY
SEPTEMBER HILL
1997 EXECUTIVE 220 COMMERCE PROVIDENT PECO
OFFERING CAMPUS DRIVE PLACE BUILDING (V)
--------------- --------------- ----------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents.............................. $ -- $ 114 $ 525 $ 567 $ 762
Tenant reimbursements................... -- -- -- 79 --
Other................................... -- -- -- 6 --
--- ----- ----- ----- -----
Total revenue......................... -- 114 525 652 762
--- ----- ----- ----- -----
Operating Expenses:
Interest (i)............................ -- 197 304 362 541
Depreciation and amortization (ii)...... -- 84 130 154 231
Property expenses....................... -- 126 164 249 --
General and administrative.............. -- -- -- -- --
--- ----- ----- ----- -----
Total operating expenses.............. -- 407 598 765 772
--- ----- ----- ----- -----
Income (loss) before equity in income of
management company and minority
interest................................ -- (293) (73) (113) (10)
Equity in income (loss) of management
company (iii)........................... -- -- 9 13 --
Income (loss) before minority interest.... -- (293) (64) (100) (10)
Minority interest in (income) loss........ 26 9 2 3 --
--- ----- ----- ----- -----
Net income................................ $ 26 $ (284) $ (62) $ (97) $ (10)
--- ----- ----- ----- -----
--- ----- ----- ----- -----
<CAPTION>
TOTAL
OTHER
1997 EVENTS
-----------
<S> <C>
Revenue:
Base rents.............................. $ 20,264
Tenant reimbursements................... 3,371
Other................................... 227
-----------
Total revenue......................... 23,862
-----------
Operating Expenses:
Interest (i)............................ 1,506
Depreciation and amortization (ii)...... 5,058
Property expenses....................... 9,129
General and administrative.............. --
-----------
Total operating expenses.............. 15,693
-----------
Income (loss) before equity in income of
management company and minority
interest................................ 8,169
Equity in income (loss) of management
company (iii)........................... 250
Income (loss) before minority interest.... 8,419
Minority interest in (income) loss........ (109)
-----------
Net income................................ $ 8,310
-----------
-----------
</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 adjustments for the March 1997 Offering
and the July 1997 Offering represent interest savings related to the payoff
of $7 million and $160.8 million, respectively, of credit facility
borrowings at an effective rate of 7.5%.
(ii) Pro forma depreciation expense is presented assuming an 80% building and
20% land allocation of the purchase price and capitalized closing costs and
assumes a useful life of 25 years.
(iii) Pro forma equity in income of management company is presented based on
management fees less incremental costs estimated to be incurred.
(iv) Pro forma property expenses for the Green Hill Properties exclude $333,000
from historical amounts. Such amount represents expected salary savings.
(v) Pro forma base rents for the Peco Building are based on the lease in place
as of November 25, 1997 as historically the property was owner occupied and
was not an operating property. All property expenses are paid directly by
the tenant.
F-11
<PAGE>
(E) Reflects the pro forma statements of operations of Bala Pointe Office
Centre, the Scarborough Properties and the GMH Properties for the nine months
ended September 30, 1997 and for the year ended December 31, 1996. All amounts
represent historical operations except for the pro forma adjustments noted:
- For the nine months ended September 30, 1997:
<TABLE>
<CAPTION>
TOTAL
BALA POINTE SCARBOROUGH GMH RECENT
OFFICE CENTRE PROPERTIES PROPERTIES ACQUISITIONS
------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Revenue:
Base rents................................................ $ 2,837 $ 4,292 $ 18,735 $ 25,864
Tenant reimbursements..................................... 27 425 1,449 1,901
Other..................................................... 28 17 130 175
------ ------ ----------- -----------
Total revenue........................................... 2,892 4,734 20,314 27,940
------ ------ ----------- -----------
Operating Expenses:
Interest (i).............................................. 1,523 1,549 13,077 16,149
Depreciation and amortization (ii)........................ 650 890 5,580 7,120
Property expenses......................................... 1,243 1,834 8,179 11,256
General and administrative................................ -- -- -- --
------ ------ ----------- -----------
Total operating expenses................................ 3,416 4,273 26,836 34,525
------ ------ ----------- -----------
Income (loss) before equity in income of management company
and minority interest..................................... (524) 461 (6,522) (6,585)
Equity in income (loss) of management company (iii)......... 37 68 315 420
------ ------ ----------- -----------
Income (loss) before minority interest...................... (487) 529 (6,207) (6,165)
Minority interest in (income) loss.......................... 14 (155) 182 41
------ ------ ----------- -----------
Net income ................................................. $(473) $ 374 $ (6,025) $ (6,124)
------ ------ ----------- -----------
------ ------ ----------- -----------
</TABLE>
- For the year ended December 31, 1996:
<TABLE>
<CAPTION>
TOTAL
BALA POINTE SCARBOROUGH GMH RECENT
OFFICE CENTRE PROPERTIES PROPERTIES ACQUISITIONS
------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Revenue:
Base rents................................................ $ 3,572 $ 4,971 $ 22,906 $ 31,449
Tenant reimbursements..................................... 21 239 2,175 2,435
Other..................................................... 35 -- 56 91
------ ------ ----------- -----------
Total revenue........................................... 3,628 5,210 25,137 33,975
------ ------ ----------- -----------
Operating Expenses:
Interest (i).............................................. 2,036 2,071 17,484 21,591
Depreciation and amortization (ii)........................ 869 1,190 7,460 9,519
Property expenses......................................... 1,559 2,424 10,964 14,947
General and administrative................................ -- -- -- --
------ ------ ----------- -----------
Total operating expenses................................ 4,464 5,685 35,908 46,057
------ ------ ----------- -----------
Income (loss) before equity in income of
management company and minority interest.................. (836) (475) (10,771) (12,082)
Equity in income (loss) of management company (iii)......... 64 119 550 733
------ ------ ----------- -----------
Income (loss) before minority interest...................... (772) (356) (10,221) (11,349)
Minority interest in (income) loss.......................... 23 (43) 300 280
------ ------ ----------- -----------
Net income.................................................. $(749) $ (399) $ (9,921) $ (11,069)
------ ------ ----------- -----------
------ ------ ----------- -----------
</TABLE>
(i) Pro forma interest expense is presented assuming an effective rate of 7.5%
on borrowings under the Company(1)s revolving credit facility.
(ii) Pro forma depreciation expense is presented assuming an 80% building
and 20% land allocation of the purchase price and capitalized closing
costs and assumes a useful life of 25 years.
(iii) Pro forma equity in income of management company is presented based on
management fees less incremental costs estimated to be incurred.
F-12
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Brandywine Realty Trust:
We have audited the statement of revenue and certain expenses of Bala Pointe
Office Centre, described in Note 1, for the year ended December 15, 1996.
This financial statement is the responsibility of management. Our
responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
The 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 Bala Pointe Office Centre's revenue and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenue and certain expenses of Bala Pointe Office
Centre for the year ended December 15, 1996, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
December 3, 1997
F-13
<PAGE>
BALA POINTE OFFICE CENTRE
STATEMENTS OF REVENUE AND CERTAIN EXPENSES (NOTE 1)
<TABLE>
<CAPTION>
FOR THE FOR THE NINE
YEAR ENDED MONTHS ENDED
DECEMBER 15, SEPTEMBER 15,
1996 1997
------------ -------------
(UNAUDITED)
<S> <C> <C>
REVENUE:
Minimum rent (Note 2)............................................................. $3,572,000 $ 2,837,000
Tenant reimbursements............................................................. 21,000 27,000
Other............................................................................. 35,000 28,000
------------ -------------
Total revenue................................................................... 3,628,000 2,892,000
------------ -------------
CERTAIN EXPENSES:
Maintenance and other operating expenses.......................................... 753,000 586,000
Utilities......................................................................... 567,000 468,000
Real estate taxes................................................................. 239,000 189,000
------------ -------------
Total certain expenses.......................................................... 1,559,000 1,243,000
------------ -------------
REVENUE IN EXCESS OF CERTAIN EXPENSES............................................... $2,069,000 $ 1,649,000
------------ -------------
------------ -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-14
<PAGE>
BALA POINTE OFFICE CENTRE
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
DECEMBER 15, 1996
1. BASIS OF PRESENTATION:
The statements of revenue and certain expenses reflect the operations of
Bala Pointe Office Centre ("Bala Pointe Office Centre") located in Bala Cynwyd,
Pennsylvania. Bala Pointe Office Centre is expected to be acquired by Brandywine
Realty Trust (the "Company") from WestMark Realty Advisors ("WestMark") in
December 1997 for a net purchase price of approximately $26.8 million. Bala
Pointe Office Centre has an aggregate net rentable area of approximately 173,000
square feet which was 90% leased as of December 15, 1996. These statements of
revenue and certain expenses are to be included in the Company's Current Report
on Form 8-K as the above described transaction has been deemed significant
pursuant to the rules and regulations of the Securities and Exchange Commission.
The accounting records of Bala Pointe Office Centre 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 Bala Pointe Office Centre.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities which
affect the reported amounts of revenue and expenses during the reporting period.
The ultimate results could differ from those estimates.
The statement of revenue and certain expenses for the nine months ended
September 15, 1997 is unaudited; however, in the opinion of management, all
adjustments (consisting solely of normal recurring adjustments) necessary for
the fair presentation of the revenue and certain expenses of Bala Pointe Office
Centre for the nine months ended September 15, 1997 have been included. The
results of the interim period are not necessarily indicative of the results for
the full year.
F-15
<PAGE>
2. OPERATING LEASES:
Minimum rent includes straight-line adjustments for rental revenue increases
in accordance with generally accepted accounting principles. The aggregate
rental revenue increases resulting from the straight-line adjustments for the
year ended December 15, 1996 and the nine months ended September 15, 1997 were
$63,000 and $14,000, (unaudited), respectively.
The following tenants had minimum rental payments greater than 10% of the
total minimum rent in 1996:
<TABLE>
<S> <C>
American Business Financial.............................. $ 421,000
Synergic Resources Corporation........................... $ 386,000
</TABLE>
The Bala Pointe Office Centre is leased to tenants under operating leases
with expiration dates extending to the year 2003. Future minimum rentals under
noncancelable operating leases, excluding tenant reimbursements of operating
expenses as of December 15, 1996, are as follows:
<TABLE>
<S> <C>
1997..................................... $ 3,471,000
1998..................................... 2,890,000
1999..................................... 2,064,000
2000..................................... 2,045,000
2001..................................... 1,547,000
Thereafter................................ 710,000
-----------
$12,727,000
-----------
-----------
</TABLE>
Certain leases also include provisions requiring tenants to reimburse Bala
Pointe Office Centre 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
Scarborough 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
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 Scarborough 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 Scarborough
Properties for the year ended December 31, 1996, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
November 14, 1997
F-17
<PAGE>
SCARBOROUGH PROPERTIES
COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES (NOTE 1)
<TABLE>
<CAPTION>
FOR THE FOR THE NINE
YEAR ENDED MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
(UNAUDITED)
<S> <C> <C>
REVENUE:
Base rents (Note 2)................................................................ $4,971,000 $ 4,292,000
Tenant reimbursements.............................................................. 239,000 425,000
Other.............................................................................. -- 17,000
------------ -------------
Total revenue..................................................................... 5,210,000 4,734,000
------------ -------------
CERTAIN EXPENSES:
Maintenance and other operating expenses........................................... 1,294,000 1,084,000
Utilities.......................................................................... 487,000 385,000
Real estate taxes.................................................................. 643,000 365,000
------------ -------------
Total certain expenses............................................................ 2,424,000 1,834,000
------------ -------------
REVENUE IN EXCESS OF CERTAIN
EXPENSES........................................................................... $2,786,000 $ 2,900,000
------------ -------------
------------ -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-18
<PAGE>
SCARBOROUGH PROPERTIES
NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 1996
2. BASIS OF PRESENTATION:
Brandywine Operating Partnership, L.P. (the "Operating Partnership"), a
limited partnership of which Brandywine Realty Trust (the "Company") is the
sole general partner, signed a letter of intent to acquire The Scarborough
Properties ("Scarborough Properties"), a portfolio of thirteen office
buildings located in Gibbsboro, New Jersey. The Scarborough Properties have
an aggregate net rentable area of approximately 565,000 square feet which
were 83% leased as of December 31, 1996. The expected net purchase price for
Scarborough Properties is $37.1 million.
The combined statements of revenue and certain expenses reflect the
operations of Scarborough Properties. These combined statements of revenue
and certain expenses are to be included in the Company's Current Report on
Form 8-K, pursuant to the rules and regulations of the Securities and
Exchange Commission.
The accounting records of Scarborough 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 Scarborough Properties.
The combined statement of revenue and certain expenses for the nine months
ended September 30, 1997 is unaudited. In the opinion of management, all
adjustments (consisting solely of normal recurring adjustments) necessary to
present fairly the revenue and certain expenses of Scarborough Properties for
the nine months ended September 30, 1997 have been included. The combined
revenue and certain expenses for such interim period is not necessarily
indicative of the results for the full year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities which
affect the reported amounts of revenue and expenses during the reporting
period. The ultimate results could differ from those estimates.
2. OPERATING LEASES:
Base rents for the year ended December 31, 1996 and for the nine months ended
September 30, 1997 include straight-line adjustments for rental revenue
increases in accordance with generally accepted accounting principles. The
aggregate rental revenue decreases resulting from the straight-line
adjustments for the year ended December 31, 1996 and the nine months ended
September 30, 1997 were $1,000 and $9,000 (unaudited), respectively.
Individual tenant minimum rental payments greater than 10% of the total base
rents in 1996 were as follows:
<TABLE>
<S> <C>
Lockheed Martin............................................................... $ 675,000
Micro Warehouse, Inc.......................................................... $ 574,000
</TABLE>
F-19
<PAGE>
The Scarborough 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, are as follows:
<TABLE>
<S> <C>
1997............................. $4,992,000
1998............................. 3,896,000
1999............................. 2,974,000
2000............................. 2,539,000
2001............................. 926,000
Thereafter....................... 3,170,000
------------
$18,497,000
------------
------------
</TABLE>
Certain leases also include provisions requiring tenants to reimburse
Scarborough Properties for management costs and other operating expenses up
to stipulated amounts.
F-20
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Brandywine Realty Trust:
We have audited the combined statement of revenue and certain expenses of GMH
Properties, described in Note 1, for the twelve month period ended September
30, 1997. This financial statement is the responsibility of management. Our
responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
The combined statement of revenue and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the Current Report on Form 8-K of
Brandywine Realty Trust as described in Note 1 and is not intended to be a
complete presentation of GMH 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 GMH Properties for
the twelve month period ended September 30, 1997, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
December 13, 1997
F-21
<PAGE>
GMH PROPERTIES
COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES (NOTE 1)
<TABLE>
<CAPTION>
FOR THE TWELVE
MONTH PERIOD ENDED
SEPTEMBER 30,
1997
-------------------
<S> <C>
REVENUE:
Minimum rent (Note 2)....................................................................... $ 24,596,000
Tenant reimbursements....................................................................... 1,974,000
Other....................................................................................... 156,000
-------------------
Total revenue.............................................................................. 26,726,000
-------------------
CERTAIN EXPENSES:
Maintenance and other operating expenses.................................................... 5,785,000
Utilities................................................................................... 2,756,000
Real estate taxes........................................................................... 2,453,000
-------------------
Total certain expenses..................................................................... 10,994,000
-------------------
REVENUE IN EXCESS OF CERTAIN EXPENSES........................................................ $ 15,732,000
-------------------
-------------------
</TABLE>
The accompanying notes are an integral part of this financial statement.
F-22
<PAGE>
GMH PROPERTIES
NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE TWELVE MONTH PERIOD ENDED SEPTEMBER 30, 1997
3. BASIS OF PRESENTATION:
The combined statement of revenue and certain expenses reflects the
operations of GMH Properties, ("GMH Properties") a portfolio of twenty-two
office buildings and parcel of land under construction owned by GMH
Associates ("GMH Associates") as described below:
<TABLE>
<CAPTION>
Square
Property Location Footage
- ------------------------------ ------------------------------------------ ----------
<S> <C> <C>
Newt Associates #105 Newtown, Pennsylvania 85,000
Newt Associates #140 Newtown, Pennsylvania 44,000
Devon West Associates Devon, Pennsylvania 61,000
Freedom Business Center #610 King of Prussia, Pennsylvania 63,000
Freedom Business Center #620 King of Prussia, Pennsylvania 87,000
Freedom Business Center #630 King of Prussia, Pennsylvania 86,000
Freedom Business Center #640 King of Prussia, Pennsylvania 132,000
Atlantic Federal Office Building Towson, Maryland 120,000
King's Mill Office Building Mason, Ohio 156,000
Linden Park Limited Partnership Wilmington, Delaware 105,000
The Berkshire Group #1105 Wyomissing, Pennsylvania 69,000
The Berkshire Group #1150 Wyomissing, Pennsylvania 27,000
Park 80 -- One Saddlebrook, New Jersey 214,000
Park 80 -- Two Saddlebrook, New Jersey 255,000
Cambridge Building Newark, Delaware 24,000
Bellevue Building Newark, Delaware 31,000
Commonwealth Building Newark, Delaware 29,000
Oxford Building Newark, Delaware 33,000
Chopin Building Newark, Delaware 40,000
Stockton Building Newark, Delaware 23,000
Trend Associates West Norriton, Pennsylvania 21,000
520 Virginia Drive Fort Washington, Pennsylvania 48,000
</TABLE>
In addition, GMH Associates owns a parcel of land located in Frederick,
Maryland upon which a single tenant office building is currently under
construction. GMH Associates acquired the land in the beginning of 1997 and
construction is expected to be completed by early 1998.
GMH Properties are expected to be acquired by Brandywine Realty Trust (the
"Company") from GMH Associates in January 1998 for a net purchase price of
approximately $231.5 million. GMH Properties were 92% leased as of September
30, 1997. The combined statement of revenue and certain expenses is to be
included in the Company's Current Report on Form 8-K as the above described
transaction has been deemed significant pursuant to the rules and regulations
of the Securities and Exchange Commission.
The accounting records of GMH Properties are maintained on a modified cash
basis. Adjusting entries have been made to present the accompanying financial
statements in accordance with generally accepted accounting
F-23
<PAGE>
principles. The accompanying financial statement excludes certain expenses
such as interest, depreciation and amortization, and other costs not directly
related to the future operations of GMH Properties.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities which affect the
reported amounts of revenue and expenses during the reporting period. The
ultimate results could differ from those estimates.
2. OPERATING LEASES:
Minimum rent includes straight-line adjustments for rental revenue increases
in accordance with generally accepted accounting principles. The aggregate
rental revenue decrease resulting from the straight-line adjustment for the
twelve month period ended September 30, 1997 was $128,000.
No tenants have minimum rental payments greater than 10% of total minimum
rent for the twelve month period ended September 30, 1997.
GMH Properties are leased to tenants under operating leases with expiration
dates extending to the year 2007. Future minimum rentals under noncancelable
operating leases, excluding tenant reimbursements of operating expenses as of
September 30, 1997, are as follows:
<TABLE>
<S> <C>
1998............................... $24,116,000
1999............................... 21,244,000
2000............................... 18,208,000
2001............................... 15,330,000
2002............................... 8,578,000
Thereafter......................... 9,635,000
-----------
$97,111,000
-----------
-----------
</TABLE>
Certain leases also include provisions requiring tenants to reimburse GMH
Properties for management costs and other operating expenses up to stipulated
amounts.
3. COMMITMENTS:
The Park 80 Two property is obligated under a ground lease agreement
extending to the year 2009 on the building and surrounding area. Annual
ground lease payments under this lease are $50,000. Payments under the lease
will be adjusted annually commencing July 1, 1997 and expiring on June 30,
2009 based on increases in the consumer price index.
4. RELATED PARTY TRANSACTIONS:
GMH Properties pays management fees to GMH Management, Inc. ("GMH
Management"), an affiliate of GMH Associates, for accounting services and
administration of day-to-day operations. Management fees are based on a range
of 3% to 5% of gross revenue, however, six of the properties pay a management
fee based on the greater of 4% of gross revenue or $4,000 per month.
Management fees paid by GMH Properties to GMH Management were $985,000 for
the twelve month period ended September 30, 1997.
F-24
<PAGE>
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
BRANDYWINE OPERATING PARTNERSHIP, L.P.
<PAGE>
TABLE OF CONTENTS
Page
BACKGROUND.................................................................. 1
AGREEMENTS.................................................................. 1
ARTICLE I - DEFINITIONS..................................................... 2
ARTICLE II - GENERAL PROVISIONS............................................. 11
2.1. Continuation of the Partnership.................................. 11
2.2. Name, Principal Place of Business and Registered Office.......... 11
2.3. Purpose.......................................................... 11
2.4. Powers........................................................... 12
2.5. Term............................................................. 12
2.6. Amendment of Certificate......................................... 12
2.7. Partnership Assets............................................... 12
2.8. Limitation on Liability of Persons Related to Partners........... 13
2.9. Conflicts of Interest and Transactions with Affiliates........... 13
2.10. Statutory Compliance............................................. 13
ARTICLE III - PARTNERSHIP INTERESTS......................................... 14
3.1. In General....................................................... 14
3.2. Class A Units.................................................... 14
3.3. Creation and Issuance of Additional Partnership Interests........ 15
3.4. Issuance of Additional GP Units to General Partner............... 15
3.5. Other Provisions Relating to All Classes of Partnership Interests 16
3.6. Issuance of Class A Units Upon Exercise of Option to Acquire
Retained Interests............................................... 16
3.7. Issuance of Additional Class A and GP Units Upon Achievement
of Mortgage Discounts............................................ 17
3.8. Register......................................................... 18
ARTICLE IV - CAPITAL CONTRIBUTIONS.......................................... 19
4.1. Capital Contributions of the Partners............................ 19
4.2. Capital Contributions Generally.................................. 19
4.3. No Third Party Beneficiary....................................... 19
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<PAGE>
ARTICLE V - CAPITAL ACCOUNTS................................................ 20
5.1. Establishment and Maintenance of Capital Accounts................ 20
5.2. Succession to Capital Accounts................................... 20
5.3. Certain Adjustments.............................................. 20
ARTICLE VI - DISTRIBUTIONS.................................................. 20
6.1. Distributions.................................................... 20
6.2. Distributions upon Liquidation................................... 21
6.3. Additional Distribution Rules.................................... 21
6.4. Taxes Withheld................................................... 22
6.5. In-Kind Distributions............................................ 22
ARTICLE VII - ALLOCATIONS................................................... 23
7.1. Allocation of Net Income and Net Loss............................ 23
7.2. Special Allocations.............................................. 24
7.3. Tax Allocations.................................................. 25
ARTICLE VIII - EXPENSES; RIGHTS, DUTIES AND RESTRICTIONS OF THE
GENERAL PARTNER; VOTING RIGHTS OF LIMITED PARTNERS........... 26
8.1. Expenses Borne by the Partnership................................ 26
8.2. Powers and Duties of General Partner............................. 27
8.3. Required Notice.................................................. 30
8.4. Proscriptions.................................................... 31
8.5. Compensation of the General Partner.............................. 31
8.6. Waiver and Indemnification....................................... 31
8.7. Operation in Accordance with REIT Requirements................... 32
8.8. Reliance by Third Parties........................................ 32
8.9. Other Matters Concerning the General Partner..................... 33
8.10. Meetings of Partners............................................. 34
ARTICLE IX - ACCOUNTING AND RECORDS......................................... 35
9.1. Books and Records................................................ 35
9.2. Annual Reports................................................... 35
9.3. Tax Returns...................................................... 36
9.4. Fiscal Year...................................................... 36
9.5. Bank Accounts.................................................... 36
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<PAGE>
ARTICLE X - CHANGES IN GENERAL PARTNERS.................................... 37
10.1. Permitted Assignment of General Partnership Interest......... 37
10.2. Admission of Additional General Partners..................... 37
10.3. Effect of Withdrawal of General Partner...................... 37
10.4. Liability of a Withdrawn General Partner..................... 38
ARTICLE XI - TRANSFERS OF LIMITED PARTNERSHIP INTERESTS.................... 38
11.1. General Transfer Provisions and Restrictions................. 38
11.2. Expenses..................................................... 39
11.3. Allocations with Respect to Transferred Interest............. 40
11.4. Section 754 Election......................................... 40
11.5. Transferee's Rights.......................................... 40
ARTICLE XII - ADMISSION OF PARTNERS........................................ 40
12.1. Procedure.................................................... 40
12.2. Admission.................................................... 41
ARTICLE XIII - DISSOLUTION, LIQUIDATION AND WINDING-UP..................... 41
13.1. Events of Dissolution........................................ 41
13.2. Continuation of the Business of the Partnership After
Dissolution................................................. 41
13.3. Effect of Event of Dissolution............................... 42
13.4. Accounting................................................... 42
13.5. Distribution on Dissolution.................................. 42
13.6. Timing Requirements.......................................... 43
13.7. Sale of Partnership Assets................................... 43
13.8. Distributions in Kind........................................ 43
13.9. Documentation of Liquidation................................. 43
13.10. Liability of the Liquidating Trustee......................... 44
ARTICLE XIV - RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS............... 44
14.1. No Participation in Management............................... 44
14.2. Death, Incompetence, Bankruptcy, Etc......................... 44
14.3. No Withdrawal................................................ 44
14.4. Power of Attorney............................................ 44
14.5. Limited Liability of Limited Partners........................ 45
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<PAGE>
ARTICLE XV - GRANT OF REDEMPTION RIGHTS TO LIMITED PARTNERS................. 45
15.1. Grant of Redemption Rights.................................... 45
15.2. General Partner Exchange...................................... 46
15.3. Certain Limitations on Redemption Right....................... 47
15.4. Adjustments................................................... 47
15.5. Certain Covenants............................................. 48
15.6. Certain Changes............................................... 48
ARTICLE XVI - LIMITED PARTNER REPRESENTATIONS AND WARRANTIES................ 48
ARTICLE XVII - GENERAL PARTNER REPRESENTATIONS AND WARRANTIES............... 50
ARTICLE XVIII - INDEMNIFICATION............................................. 51
18.1. Indemnification............................................... 51
18.2. Limitations on Indemnification Obligations.................... 51
18.3. Security and Remedies......................................... 52
18.4. Restriction on Transfer....................................... 53
18.5. No Credit to Capital Accounts................................. 54
18.6. Release of Collateral......................................... 54
18.7. Applicability................................................. 54
ARTICLE XIX - ARBITRATION OF DISPUTES....................................... 54
19.1. Settlement of Disputes........................................ 54
19.2. Arbitration................................................... 55
19.3. Binding Character............................................. 55
19.4. Exclusivity................................................... 55
19.5. No Alteration of Agreement.................................... 55
ARTICLE XX - ASSUMPTION OF LIABILITIES AND INDEMNIFICATIONS................. 56
20.1. Assumption of Liabilities..................................... 56
20.2. Indemnification............................................... 56
ARTICLE XXI - GENERAL PROVISIONS............................................ 56
21.1. Notices....................................................... 56
21.2. Successors.................................................... 56
21.3. Effect and Interpretation..................................... 57
21.4. Counterparts.................................................. 57
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<PAGE>
21.5. Partners Not Agents........................................... 57
21.6. Entire Understanding; Etc..................................... 57
21.7. Amendments.................................................... 57
21.8. Prior Reference Clarification................................. 58
21.9. Severability.................................................. 58
21.10. Trust Provision............................................... 59
21.11. Pronouns and Headings......................................... 59
21.12. Assurances.................................................... 59
21.13. Effective Time of Amendment................................... 59
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<PAGE>
EXHIBITS
Exhibit A List of Partners
Exhibit B List of Contributed Assets
Exhibit C List of Applicable Mortgage Indebtedness
Encumbering Certain Properties
Exhibit D List of Retained Interests
SCHEDULES
Schedule 1 Form of Notice of Redemption
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<PAGE>
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
BRANDYWINE OPERATING PARTNERSHIP, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
BRANDYWINE OPERATING PARTNERSHIP, L.P. (the "Agreement") dated as of November
18, 1997 by and among BRANDYWINE REALTY TRUST, a Maryland real estate
investment trust as general partner ("BRT" or "General Partner"), and the
PERSONS identified on Exhibit A attached hereto, as limited partners
(together with any other Person who becomes a limited partner in the
Partnership as hereinafter provided and subject to their continuation as
limited partners in the partnership, the "Limited Partners"). The General
Partner and the Limited Partners are sometimes referred to individually as a
"Partner" and collectively as the "Partners."
BACKGROUND
Brandywine Operating Partnership, L.P. (the "Partnership") was
formed as a Delaware limited partnership on August 13, 1996 upon the filing
of the Certificate (defined below) with the Secretary of the State of
Delaware. In connection with the formation of the Partnership, the General
Partner and certain persons executed that certain Agreement of Limited
Partnership of Brandywine Operating Partnership. L.P. dated as of August 22,
1996 (the "Original Agreement"). The Original Agreement was amended by
Amendment No. 1 dated November 6, 1996; Amendment No. 2 dated December 18,
1996; and Amendment No. 3 dated May 23, 1997. The Original Agreement, as
previously amended, is hereafter referred to as the "Prior Partnership
Agreement".
This Agreement has been executed and delivered by the General
Partner and the other persons whose signatures appear on the signature page
hereto in order to amend and restate in its entirety the Prior Partnership
Agreement and to continue the Partnership in accordance with this Agreement
and, to the extent not inconsistent therewith, the Act.
AGREEMENTS
In consideration of the foregoing and the mutual promises herein
contained and intending to be legally bound, the parties hereto agree as
follows:
<PAGE>
ARTICLE I
DEFINITIONS
Except as otherwise herein expressly provided, the following terms
and phrases used in this Agreement and the Exhibits hereto shall have the
meanings set forth below:
"Act" shall mean the Revised Uniform Limited Partnership Act of the
State of Delaware as in effect on the date hereof, and as the same may
hereafter be amended from time to time.
"Adjusted Capital Account Deficit" shall mean, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of any relevant fiscal year and after giving effect to the following
adjustments:
(a) credit to such Capital Account any amounts which such
Partner is obligated or treated as obligated to restore with respect to any
deficit balance in such Capital Account pursuant to Section
1.704-1(b)(2)(ii)(c) of the Regulations, or is deemed to be obligated to
restore with respect to any deficit balance pursuant to the penultimate
sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations; and
(b) debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the requirements of the alternate test for economic
effect contained in Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall
be interpreted consistently therewith.
"Affiliate" shall mean, with respect to any Person, (a) any Person
directly or indirectly controlling, controlled by or under common control
with such Person, (b) any Person owing or controlling ten percent (10%) or
more of the outstanding voting interests of such Person, (c) any Person of
which such Person owns or controls ten percent (10%) or more of the voting
interests, or (d) any officer, director, general partner or trustee of such
Person or of any Person referred to in clauses (a), (b) and (c) above. For
purposes of this definition, "control" when used with respect to any Person,
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities,
by contract or otherwise, and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Agreement" shall mean this Amended and Restated Agreement of
Limited Partnership of Brandywine Operating Partnership, L.P., as it may be
amended, supplemented or restated from time to time.
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<PAGE>
"Assumed Liabilities" shall have the meaning set forth in Section
21.1 of the Original Agreement.
"Audited Financial Statements" shall mean financial statements
(balance sheet, statement of operations, statement of partners' equity and
statement of cash flows) prepared in accordance with generally accepted
accounting principles and accompanied by an independent auditor's report.
"August 1996 Property" shall mean each of the 23 Properties
contributed directly or indirectly through Partnership interests to the
capital of the Partnership on August 22, 1996.
"Bankruptcy" shall mean, with respect to any Partner, (a) the
commencement by such Partner of any proceeding seeking relief under any
provision or chapter of the federal Bankruptcy Code, 11 U.S.C. Section 101 et
seq., as the same may be amended from time to time, or any other federal or
state law relating to insolvency, bankruptcy or reorganization; (b) an
adjudication that such Partner is insolvent or bankrupt; (c) the entry of an
order for relief under the federal Bankruptcy Code with respect to such
Partner; (d) the filing of any such petition or the commencement of any such
case or proceeding against such Partner, unless such petition and the case or
proceeding initiated thereby are stayed or dismissed within ninety (90) days
from the date of such filing; (e) the filing of an answer by such Partner
admitting the allegations of any such petition; (f) the appointment of a
trustee, receiver or custodian for all or substantially all of the assets of
such Partner unless such appointment is stayed, vacated or dismissed within
ninety (90) days from the date of such appointment but not less than five (5)
days before the proposed sale of any assets of such Partner; (g) the
insolvency of such Partner or the execution by such Partner of a general
assignment for the benefit of creditors; (h) the convening by such Partner of
a meeting of its creditors, or any class thereof, for purposes of effecting a
moratorium upon or extension or composition of its debts; (i) the failure of
such Partner to pay its debts as they mature; (j) the levy, attachment,
execution or other seizure of substantially all of the assets of such Partner
where such seizure is not discharged within thirty (30) days thereafter; (k)
the admission by such Partner in writing of its inability generally to pay
its debts as they mature or that it is generally not paying its debts as they
become due; or (l) the taking of any corporate or partnership action in
connection with the foregoing.
"BRT Administrative Expenses" shall mean all those administrative
costs and expenses of BRT described in Section 8.1(b).
"Business Day" shall mean any day other than a Saturday, a Sunday or
a day on which the New York Stock Exchange or The NASDAQ Stock Market is
closed.
"Capital Account" shall mean, with respect to any Partner, the
separate "book" account which the Partnership shall establish and maintain
for such Partner in accordance with Section 704(b) of the Code and Section
1.704-1(b)(2)(iv) of the Regulations and such other
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<PAGE>
provisions of Section 1.704-1(b) of the Regulations that must be complied
with in order for the Capital Accounts to be determined in accordance with
the provisions of said Regulations.
"Capital Contribution" shall mean, with respect to any Partner, the
amount of money and the fair market value of assets contributed to the
Partnership by such Partner (net of liabilities to which such contributed
assets are subject).
"Cash Amount" shall mean an amount of cash per Class A Unit equal to
the Current Per Share Market Price of the number of Common Shares issuable in
respect of one Class A Unit pursuant to Section 15.2.
"Cash Equivalents" shall mean obligations of the United States
government with a maturity of not more than 60 days and time deposits and
accounts maintained in a national banking association and fully insured by
the Federal Deposit Insurance Corporation.
"Certificate" shall mean the Certificate of Limited Partnership
establishing the Partnership, as filed with the office of the Secretary of
State of Delaware, as amended and as it may hereafter be amended from time to
time in accordance with the terms of this Agreement and the Act.
"Class A Limited Partnership Interest" shall have the meaning
ascribed to it in Section 3.1.
"Class A Units" shall have the meaning ascribed to it in Section 3.1.
"Closing Price" on any date shall mean the last sale price of the
Common Shares, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices of the Common Shares, regular
way, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on
the New York Stock Exchange, or such other national securities exchange or
The NASDAQ Stock Market on which the Common Shares are then listed or
admitted to trading.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall have the meaning set forth in Section 18.3(a)
hereof.
"Common Shares" shall mean the common shares of beneficial interest,
par value $.01 per share, of BRT.
"Contributed Assets" shall mean those assets contributed to the
Partnership on or before the date hereof and as reflected on Exhibit B
hereof, as such Exhibit may be amended by
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<PAGE>
the General Partner from time to time to reflect additional contributions of
property to the Partnership hereafter.
"Control" shall mean the ability, whether by the direct or indirect
ownership of shares or other equity interests, by contract or otherwise, to
elect a majority of the directors of a corporation, to elect a majority of
the trustees of a trust, to select the managing partner of a partnership, or
otherwise to select, or have the power to remove and then select, a majority
of those persons exercising governing authority over an Entity. In the case
of a limited partnership, the sole general partner, all of the general
partners to the extent each has equal management control and authority, or
the managing general partner or managing general partners thereof shall be
deemed to have control of such partnership and, in the case of a trust, any
trustee thereof or any Person having the right to select any such trustee
shall be deemed to have control of such trust.
"Current Per Share Market Price" shall mean, with respect to a
Common Share and a given date, the average of the Closing Prices of Common
Shares for the five (5) consecutive Trading Days ending on such date.
"Depreciation" shall mean, with respect to any asset of the
Partnership for any fiscal year or other period, the depreciation, depletion
or amortization, as the case may be, allowed or allowable for federal income
tax purposes in respect of such asset for such fiscal year or other period;
provided, however, that if there is a difference between the Gross Asset
Value and the adjusted tax basis of such asset, Depreciation shall mean "book
depreciation, depletion or amortization" as determined under Section
1.704-1(b)(2)(iv)(g)(3) of the Regulations.
"Discount" shall have the meaning ascribed to it in Section 3.7(b).
"Encumbrance" shall mean any liens, security interests, mortgages,
deeds of trust, charges, claims, encumbrances, pledges, options, rights of
first offer or first refusal and any other rights or interests of others of
any kind or nature, actual or contingent, or other similar encumbrances of
any nature whatsoever.
"Entity" shall mean any general partnership, limited partnership,
corporation, joint venture, limited liability company, trust, business trust,
cooperative or association.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time (or any corresponding provisions of
succeeding laws).
"Event of Withdrawal" shall mean any event specified in Section
17-402 of the Act or any corresponding provision of succeeding law.
"Existing 1996 Mortgage Indebtedness" shall mean the mortgage
indebtedness outstanding on August 22, 1996 on certain of the Properties, and
identified on Exhibit C hereto.
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<PAGE>
"Fiscal Year" shall have the meaning ascribed to it in Section 9.4.
"General Partner" shall mean Brandywine Realty Trust, a Maryland
real estate investment trust, in its capacity as general partner of the
Partnership, its duly admitted successors and assigns and any other person
who is a general partner of the Partnership at the time of reference thereto.
"General Partnership Interest" shall mean the Partnership Interest
of any General Partner.
"GP Shares Amount" shall mean one Common Share, as such number may
be adjusted pursuant to Section 15.4.
"GP Units" shall have the meaning ascribed to it in Section 3.1.
"Gross Asset Value" shall mean, with respect to any asset, the
asset's adjusted basis for federal income tax purposes except as follows:
(i) The initial Gross Asset Value of any asset
contributed by a Partner to the Partnership shall be the gross fair market
value of such asset at the time of such contribution, as agreed to by the
Partners;
(ii) The Gross Asset Values of all Partnership assets
shall be adjusted to equal their respective gross fair market values, as
agreed to by the Partners, as of the following times: (a) the acquisition of
an additional interest in the Partnership by any new or existing Partner in
exchange for more than a de minimis capital contribution; (b) the
distribution by the Partnership to a Partner of more than a de minimis amount
of Partnership property other than money, unless all Partners receive
simultaneous distributions of undivided interests in the distributed property
in proportion to their respective Percentage Interests; (c) the liquidation
of the Partnership within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g); and (d) the termination of the Partnership for federal
income tax purposes pursuant to Section 708(b)(1)(B) of the Code; and
(iii) The Gross Asset Value of any Partnership asset
distributed to any Partner shall be the gross fair market value of such asset
on the date of distribution.
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to subparagraph (i) or (ii) hereof, such Gross Asset Value shall
thereafter be adjusted by the Depreciation taken into account with respect to
such asset for purposes of computing Net Income and Net Loss.
"Indemnity Notice" shall have the meaning set forth in Section
18.3(b) hereof.
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<PAGE>
"Liabilities" shall have the meaning set forth in Section 18.1 hereof.
"Limited Partner" shall mean any Person listed on Exhibit A hereto
(as such Exhibit may be amended from time to time) in such Person's capacity
as a limited partner of the Partnership, such Person's permitted successors
or assigns as a limited partner hereof, or any Person who, at the time of
reference thereto, is a limited partner of the Partnership.
"Limited Partnership Interest" shall mean any equity interest in the
Partnership held by any person or entity as a Limited Partner.
"Liquidating Trustee" shall mean such individual or Entity as is
selected as the Liquidating Trustee hereunder by the General Partner, which
individual or Entity may include the General Partner or an Affiliate of the
General Partner, provided such Liquidating Trustee agrees in writing to be
bound by the terms of this Agreement. The Liquidating Trustee shall be
empowered to give and receive notices, reports and payments in connection
with the dissolution, liquidation and/or winding-up of the Partnership and
shall hold and exercise such other rights and powers as are necessary or
required to permit all parties to deal with the Liquidating Trustee in
connection with the dissolution, liquidation and/or winding-up of the
Partnership.
"Management Company" means Brandywine Realty Services Corporation, a
Pennsylvania corporation.
"Minimum Gain Attributable to Partner Nonrecourse Debt" shall mean
"partner nonrecourse debt minimum gain" as determined in accordance with
Regulation Section 1.704-2(i)(2).
"Net Income or Net Loss" shall mean, for each Fiscal Year or other
applicable period, an amount equal to the Partnership's net income or loss
for such year or period as determined for federal income tax purposes and in
accordance with Section 703(a) of the Code (for this purpose, all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a) of the Code shall be included in taxable income or loss), with
the following adjustments: (a) by including as an item of gross income any
tax-exempt income received by the Partnership; (b) by treating as a
deductible expense any expenditure of the Partnership described in Section
705(a)(2)(B) of the Code (including amounts paid or incurred to organize the
Partnership (unless an election is made pursuant to Code Section 709(b)) or
to promote the sale of interests in the Partnership and by treating
deductions for any losses incurred in connection with the sale or exchange of
Partnership property disallowed pursuant to Section 267(a)(1) or Section
707(b) of the Code as expenditures described in Section 705(a)(2)(B) of the
Code; (c) in lieu of depreciation, depletion, amortization, and other cost
recovery deductions taken into account in computing total income or loss,
there shall be taken into account Depreciation; (d) gain or loss resulting
from any disposition of Partnership property with respect to which gain or
loss is recognized for federal income tax purposes shall be computed by
reference to the Gross Asset Value of such property rather than its adjusted
tax basis; and (e) in the event of an
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<PAGE>
adjustment of the Gross Asset Value of any Partnership asset which requires
that the Capital Accounts of the Partnership be adjusted pursuant to
Regulation Section 1.704-1(b)(2)(iv)(e), (f) and (m), the amount of such
adjustment is to be taken into account as additional Net Income or Net Loss
pursuant to Article VII hereof.
"Nichols" shall mean The Nichols Company and Anthony A. Nichols, Sr.
"Nonrecourse Deductions" shall have the meaning set forth in
Sections 1.704-2(b)(1) and (c) of the Regulations.
"Nonrecourse Liabilities" shall have the meaning set forth in
Section 1.704-2(b)(3) of the Regulations.
"Notice of Redemption" shall mean the Notice of Redemption referred
to in Section 15.1 hereof and substantially in the form of Schedule 1 to this
Agreement.
"Option Agreement" shall mean that certain Option Agreement dated
August 22, 1996 between the Partnership and C/N Horsham Towne Limited
Partnership, a limited partnership, pursuant to which the Partnership has the
right and option to purchase the Option Properties.
"Option Properties" shall mean the office building properties known
as "Horsham 11-14" that the Partnership has the right to purchase pursuant to
the Option Agreement.
"Partner Nonrecourse Deductions" shall have the meaning set forth in
Section 1.704-2(i)(2) of the Regulations.
"Partners" shall mean the General Partner and the Limited Partners,
their duly admitted successors or assigns or any Person who is a partner of
the Partnership at the time of reference hereto.
"Partnership" shall mean the limited partnership hereby
constituted, as such limited partnership may from time to time be constituted.
"Partnership Minimum Gain" shall have the meaning set forth in
Section 1.704-2(b)(2) of the Regulations.
"Partnership Interest" shall mean the entire ownership interest of a
Partner in the Partnership at any particular time, including the right of
such Partner to any and all benefits to which a Partner may be entitled as
provided in this Agreement and in the Act, together with the obligations of
such Partner to comply with all of the terms and provisions of this Agreement
and of the Act.
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<PAGE>
"Partnership Unit" shall mean a unit of interest in the Partnership
issued under this Agreement as more fully described in Section 3.1.
"Percentage Interest" shall mean, as to each Partner, such Partner's
interest in the Partnership as determined by dividing (a) the total number of
Partnership Units owned by such Partner, by (b) the total number of
Partnership Units of all classes of Partnership Units issued and outstanding
at the time of determination.
"Person" shall mean any individual or Entity.
"Property" shall mean any real property in which the Partnership,
directly or indirectly, acquires ownership of all or a portion of a fee or
leasehold interest (whether by contribution to, or acquisition by, the
Partnership).
"Record Date" shall mean the date established by the General Partner
for the purpose of making any proper determination in connection with, but
not limited to, the following matters: (i) the Partners entitled to receive
cash distributions pursuant to Section 6.1 hereof; (ii) consent to any matter
for which consent of the Partners is permitted or required under any
provision of this Agreement; or (iii) otherwise when Partners are allocated
rights hereunder.
"Redeeming Partner" shall have the meaning set forth in Section 15.1
hereof.
"Redemption Rights" shall have the meaning set forth in Section 15.1
hereof.
"Register" shall mean the register established pursuant to Section
3.8.
"Registered Office" shall mean the location of the principal office
of the Partnership as set forth in filings made by the Partnership pursuant
to the Act.
"Regulations" shall mean the final or temporary income tax
regulations promulgated under the Code, as such regulations may be amended
and in affect from time to time (including corresponding provisions of
succeeding regulations).
"Regulatory Allocations" shall have the meaning set forth in Section
7.2(f).
"REIT" shall mean a real estate investment trust as defined in
Section 856 of the Code.
"REIT Requirements" shall mean the requirements for qualifying as a
real estate investment trust under the Code and Regulations.
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"Retained Interest" shall mean the 11% capital interest and 1%
profits interest retained by Safeguard and The Nichols Company, as
applicable, in the Title Holding Partnerships identified on Exhibit D.
"Safeguard" shall mean Safeguard Scientifics, Inc., a Pennsylvania
corporation.
"Section 704(c) Tax Items" shall have the meaning set forth in
Section 7.3(c).
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Specified Redemption Date" shall mean the tenth (10th) Business Day
after receipt by the General Partner of a Notice of Redemption delivered to
the Partnership.
"Tax Items" shall have the meaning set forth in Section 7.3(a).
"Tax Matters Partner" shall have the meaning ascribed to it in
Section 9.3.
"Tax Payment Loan" shall have the meaning ascribed to it in Section
6.4.
"The Nichols Company" shall mean The Nichols Company, a Pennsylvania
corporation.
"Title Holding Partnership" shall mean any partnership in which
either the Partnership or the Witmer Partnership is the sole general partner
and which holds fee title to an August 1996 Property. The Title Holding
Partnerships of the Partnership, and the August 1996 Properties held by them,
as of the date hereof are listed on Exhibit D.
"Trading Day" shall mean a day on which the principal national
securities exchange or market on which the Common Shares are listed or
admitted to trading is open for the transaction of business or, if the Common
Shares are not listed or admitted to trading on any national securities
exchange, shall mean any Business Day.
"Transfer" as a noun, shall mean any sale, assignment, conveyance,
pledge, hypothecation, gift, encumbrance or other transfer, and as a verb,
shall mean to sell, assign, convey, pledge, hypothecate, give, encumber or
otherwise transfer.
"Unit" shall have the meaning ascribed to it in Section 3.1.
"Withholding Tax Act" shall have the meaning ascribed to it in
Section 6.4.
"Witmer Partnership" shall mean Witmer Operating Partnership I, L.P.
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ARTICLE II
GENERAL PROVISIONS
2.1. Continuation of the Partnership. The Partners hereby agree to
continue the Partnership as a limited partnership pursuant to the provisions
of the Act for the purposes and upon the terms and conditions set forth in
this Agreement. The Partners agree that the rights and liabilities of the
Partners shall be as provided herein, except as otherwise expressly required
by the Act or other applicable law, if any.
2.2. Name, Principal Place of Business and Registered Office.
(a) The business of the Partnership shall be conducted under
the name of "BRANDYWINE OPERATING PARTNERSHIP, L.P." or such other name as
the General Partner may select, and all transactions of the Partnership and
title to all of the Partnership's assets, to the extent permitted by
applicable law, shall be carried on and completed in such name.
(b) The principal place of business and registered office of
the Partnership shall be located at Newtown Corporate Campus, 16 Campus
Boulevard, Suite 150, Newtown Square, PA 19073. The General Partner may
change the principal place of business or the registered office of the
Partnership at any time in its sole discretion, and, in such event, shall
give written notice thereof to all Limited Partners and file any amendment to
the Certificate required by the Act.
2.3. Purpose. The purpose of the Partnership shall be, directly or
indirectly, to acquire, hold, own, develop, redevelop, construct, improve,
maintain, operate, manage, sell, lease, rent, transfer, encumber, mortgage,
convey, exchange, and otherwise dispose of or deal with real and personal,
tangible and intangible, property of every kind and nature; to act as and
exercise all of the powers of the general partner or a limited partner, as
the case may be, in partnerships or joint ventures in which the Partnership
has an interest; to acquire, own, deal with and dispose of securities and
other interests in partnerships, corporations or joint ventures, including
corporations, partnerships, joint ventures and other associations formed for
the acquisition, development or redevelopment of real and personal property
or the provision of services thereto; to undertake such other activities as
may be necessary, advisable, desirable or convenient to the business of the
Partnership; to engage in such other ancillary activities as shall be
necessary or desirable to effectuate the foregoing purposes; and to otherwise
engage in or conduct any enterprise, business or activity that a limited
partnership may engage in or conduct under the Act.
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2.4. Powers. The Partnership shall have and exercise all powers now
or hereafter permitted by the State of Delaware to be exercised by a limited
partnership formed under the laws of that state. In connection with (and
without limiting) the foregoing, the Partnership shall have full power and
authority, directly or through its interests in other partnerships,
corporations, joint ventures or other associations, to enter into, perform,
and carry out contracts of any kind, to borrow and lend money and to issue
evidences of indebtedness, whether or not secured by mortgages, trust deeds,
pledges or other liens, and to guaranty, provide security for or cause any
subsidiary joint venture or other association in which the Partnership has an
interest to guaranty or provide security for indebtedness or other
obligations of the Partnership or any subsidiary.
2.5. Term. The Partnership commenced on August 13, 1996 and shall
dissolve at 12:01 a.m. on December 31, 2094, unless sooner dissolved pursuant
to law or this Agreement.
2.6. Amendment of Certificate. The General Partner shall make all
filings, including amendments to the Certificate, as required by the Act,
elections, notices, instruments, documents or certificates as may be required
by applicable law, including, without limitation, applications to do business
in all jurisdictions where the Partnership will own property, and which may
be necessary to enable the Partnership to conduct its business, and to own
its properties, under the Partnership's name, to be amended and/or filed or
recorded in all appropriate public offices.
2.7. Partnership Assets.
(a) The Partners shall use the Partnership's credit and assets
solely for the benefit of the Partnership. All real and personal property
owned by the Partnership shall be owned by the Partnership, and the Partners
as such shall have no direct interest therein.
(b) To the extent allowable under applicable law, title to all
or any part of the properties of the Partnership may be held in the name of
the Partnership or any other Person as nominee for the Partnership. Any such
title holder shall perform any and all of its respective functions to the
extent and upon such terms and conditions as may be determined from time to
time by the General Partner.
(c) No Partner shall, either directly or indirectly, take any
action to require partition or appraisement of the Partnership or of any of
its assets or properties or cause the sale of any Partnership property for
other than a Partnership purpose, and notwithstanding any provision of
applicable law to the contrary, each Partner (and its legal representatives,
successors and assigns) hereby irrevocably waives any and all right to
maintain any action for partition or to compel any sale with respect to its
Partnership Interest or with respect to any assets or properties of the
Partnership, except as expressly provided in this Agreement.
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2.8. Limitation on Liability of Persons Related to Partners. Except
as otherwise required by applicable law or as expressly agreed in writing, no
director, trustee, officer, shareholder, partner, employee or agent of any
Partner shall be personally liable for the payment of any sums owing by such
Partner to the Partnership or any other Partner under the terms of this
Agreement or for the performance of any other covenant or agreement of such
Partner contained herein.
2.9. Conflicts of Interest and Transactions with Affiliates.
(a) Subject to the limitations expressly set forth herein, any
Partner and any Affiliate of any Partner may engage in or possess an interest
in any business or activity whatsoever, whether now existing or hereafter
created, without any accountability to the Partnership or any Partner. This
Agreement shall not give the Partnership or any Partner any interest in, or
right to, any such business or activity or any proceeds, income or profit
thereof or therefrom. No Partner shall be obligated to offer any business
opportunity to the Partnership or any other Partner.
(b) Subject to the limitations expressly set forth herein, the
Partnership may enter into any arrangement, contract, agreement or business
venture that is not prohibited under the Act with any Partner or any
Partner's Affiliates. Each Partner understands and acknowledges that the
conduct of the business of the Partnership will involve business dealings
with such other business ventures or undertakings of the Partners and their
Affiliates. Without limiting the generality of the foregoing, the
Partnership, at the discretion of the General Partner, may borrow funds from
any Partner or any Partner's Affiliates. Except to the extent otherwise
expressly provided herein, any material transaction between the Partnership
and any Partner or Affiliate of a Partner shall be on terms reasonably
determined by the General Partner to be no less favorable than the terms
which could be obtained from unrelated third parties.
2.10. Statutory Compliance. The General Partner shall execute
such further documents and take such further action as shall be appropriate
to comply with the Act and all other all requirements of law for the
formation and operation of a limited partnership in the State of Delaware and
all other jurisdictions in which the Partnership may elect to do business.
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ARTICLE III
PARTNERSHIP INTERESTS
3.1. In General.
(a) The Partnership has two (2) classes of Partnership
Interest: "General Partnership Interests," and "Class A Limited Partnership
Interests," each of which shall be divided into units as provided in
paragraph (c) below, which units shall evidence a Person's interest in a
particular class of Partnership Interest. The Class A Limited Partnership
Interests are sometimes referred to herein as "Limited Partnership
Interests." The Partnership may create and issue additional classes of
General or Limited Partnership Interests in accordance with Section 3.3
hereof.
(b) Any Person may at the same time hold more than one class
of Partnership Interest and, in such event, shall for the purposes of this
Agreement be separately entitled to the rights afforded a Partner in each of
such classes under this Agreement. If a General Partner contributes to the
capital of the Partnership as a Limited Partner or acquires any Limited
Partnership Interest, it shall be treated in all respects as a Limited
Partner as to such Limited Partnership Interests.
(c) Each class of Partnership Interest issued by the
Partnership shall be divided into units ("Units") with each Unit within a
class of Partnership Interest representing an equal undivided fractional
share of each item of Partnership income, gain, and loss, and in each
distribution of Partnership assets, allocable to the Units of that class of
Partnership Interest. Accordingly, the General Partnership Interests shall be
divided into GP Units and the Class A Limited Partnership Interests shall be
divided into the Class A Units.
(d) The aggregate total of Units for each class of Partnership
Interest and the aggregate total of all Units outstanding shall be as set
forth on Exhibit A attached hereto, as such Exhibit may be amended from time
to time, and each Partner shall be deemed to hold those Units set forth next
to such Partner's name on Exhibit A attached hereto.
3.2. Class A Units. The Class A Units shall be entitled to the
rights of redemption specified in Article XV hereof and such voting and other
rights as may be herein specified. Additional Class A Units are authorized
for issuance in the future to acquire the Retained Interests as provided in
Section 3.6, upon the achievement of Discounts as provided in Section 3.7,
pursuant to the Option Agreement and as otherwise provided for or
contemplated by this Agreement.
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3.3. Creation and Issuance of Additional Partnership Interests.
(a) Subject only to the limitations expressly set forth in
this Agreement, the General Partner is hereby authorized to cause the
Partnership from time to time to solicit and accept additional Capital
Contributions from any Person and/or cause the Partnership to issue to the
Partners (including the General Partner) or other persons (including, without
limitation, in connection with the contribution of property to the
Partnership) (i) additional Units representing General Partnership Interests
and additional Units representing Class A Limited Partnership Interests, (ii)
additional Partnership Interests and Units in one or more newly created
classes of Partnership Interests, (iii) one or more series of any such
classes of Partnership Interests (iv), rights, options, or warrants
exercisable for or convertible into Partnership Interests, and (v) other
securities or instruments of any type or class whatsoever. Any of the
foregoing may be issued for cash, property, services, or such other type,
form, and amount of consideration (including notes, other evidences of
indebtedness or obligations of the Person acquiring the interest, rights,
instrument or security, as the case may be) as the General Partner may
determine to be appropriate.
(b) Each class of Partnership Interest newly created and
issued hereunder, and any series within such class, shall have such rights,
privileges, preferences and designations, and be subject to such limitations,
as the General Partner shall specify in its sole discretion, including,
without limitation, (i) the allocations of items of Partnership income, gain,
loss, deduction and credit to each such class or series of Partnership
Interest; (ii) the right of each such class or series of Partnership Interest
to share in Partnership distributions; (iii) the rights of each such class or
series of Partnership Interest upon dissolution and liquidation of the
Partnership; (iv) the voting rights of such class or series; and (v)
restrictions on transfer (in addition to the restrictions set forth in
Section 11.1(b)).
(c) The creation of an additional class of Partnership
Interest permitted hereunder, or series within any such class, may be made by
the General Partner by setting forth either in an amendment or an addendum to
this Agreement the relative rights, obligations, duties, and preferences of
each new class, or series within any such class, of Partnership Interests
created. A copy of this Agreement as so amended, or the addendum as so
adopted, as the case may be, shall be provided to each other Partner. Any
filings necessary to be made under the Act or applicable law in connection
with the creation of such interests shall be made by the General Partner on
behalf of the Partnership.
(d) No Limited Partner shall have any preemptive or
preferential or similar right with respect to the issuance or sale of any
Partnership Units.
3.4. Issuance of Additional GP Units to General Partner. If the
General Partner issues additional Common Shares and contributes the net
proceeds thereof as a Capital Contribution to the Partnership, then the
Partnership shall issue to the General Partner additional
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GP Units equal to the number of Common Shares issued by the General Partner,
the net proceeds of which are contributed to the Partnership.
3.5. Other Provisions Relating to All Classes of Partnership
Interests.
(a) Fractional Units may be issued, with the amount of any
such fractional interest being rounded to the fourth decimal place.
(b) By executing this Agreement, each Partner consents and
authorizes the Partnership, acting solely through the General Partner, to
issue, subject only to the express requirements hereof, such interests,
instruments and securities upon such terms and conditions as the General
Partner may from time to time determine to be appropriate.
(c) Certificates for Units may be issued, at the request of
the holder of any Units, but no Class A Units comprising Collateral may be
certificated prior to the time such Units cease to be Collateral hereunder
unless the certificates are delivered to the holder of the first priority
security interest thereon, duly endorsed in blank for transfer or accompanied
by duly executed transfer powers.
3.6. Issuance of Class A Units Upon Exercise of Option to Acquire
Retained Interests.
(a) The Nichols Company and Safeguard each hereby grants to
the Partnership the irrevocable right and option with respect to each
Retained Interest owned by it as reflected on Exhibit D in a Title Holding
Partnership to acquire, free and clear of any Encumbrance, such Retained
Interest in exchange for Class A Units issued by the Partnership. The
Partnership shall exercise its option hereunder by giving written notice to
such effect to The Nichols Company or Safeguard, as the case may be, at least
five (5) days prior to the exercise of such option. Such option may be
exercised by the Partnership at any time prior to September 1, 1999 (the
"Option Expiration Date"). The exercise notice shall contain the agreement
of the Partnership to pay all Pennsylvania real estate transfer taxes that
may become payable upon the transfer of such Retained Interest as a result of
such option being exercised prior to the Option Expiration Date.
(b) If the option granted pursuant to Section 3.6(a) has not
been exercised prior to the Option Expiration Date, then on the Option
Expiration Date, the Partnership shall acquire from The Nichols Company and
Safeguard, and The Nichols Company and Safeguard shall each Transfer to the
Partnership, all Retained Interests described in paragraph (a), free and
clear of any Encumbrance.
(c) Concurrently with the acquisition of the Retained
Interests pursuant to paragraph (a) or (b) above, the Partnership shall cause
Witmer Partnership or its designee to acquire all of The Nichols Company's
Retained Interests owned by it reflected on
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Exhibit D in each Title Holding Partnership owning a Portfolio A Property in
exchange for Class A Units of Limited Partnership Interest in Witmer
Partnership in accordance with the provisions of Section 13 of the Agreement
of Limited Partnership dated November 21, 1995 of Witmer Partnership no later
than the Option Expiration Date. The Partnership shall pay, or cause to be
paid, all Pennsylvania real estate taxes that may become payable as a result
of the acquisition of such Retained Interest prior to the Option Expiration
Date.
(d) Immediately upon Witmer Partnership acquiring such
Retained Interests, the Partnership shall issue to The Nichols Company Class
A Units in exchange for the Class A Units of Limited Partnership Interest in
Witmer Partnership acquired by The Nichols Company in exchange for such
Retained Interests.
(e) The total number of Class A Units to be issued by the
Partnership to acquire all of the Retained Interests and Class A Units of
Witmer Partnership described in paragraphs (b) and (c) above shall be 44,322
Class A Units. At the closing for the Transfer of the Retained Interests and
Class A Units of Witmer Partnership to the Partnership in accordance with the
preceding paragraphs of this Section 3.6, the Partnership shall issue to
Safeguard and The Nichols Company, or to their successors or designees, that
number of such 44,322 Class A Units as is indicated opposite their names on
Exhibit D and shall pay to each such person the amount, if any, that is equal
to the aggregate amount that would have been distributed in respect of such
Units had they been issued on the date hereof less any amounts distributed to
such person after August 22, 1996 and prior to the date of such acquisition
of the Retained Interests and Class A Units of Witmer Partnership from such
person in respect of such person's Retained Interests and Class A Units of
Witmer Partnership. All such Class A Units shall be, when issued, validly
issued, fully paid, and, except as otherwise required under the Act,
nonassessable.
3.7. Issuance of Additional Class A and GP Units Upon Achievement of
Mortgage Discounts.
(a) If any Existing Mortgage Indebtedness is repaid or
otherwise discharged or satisfied at a Discount as defined in Section 3.7(b),
and as a result thereof additional net equity in the Property is realized,
the Partnership shall issue the number of additional Class A Units and GP
Units that is equal in the aggregate to (x) the dollar amount of the
additional net equity so achieved divided by (y) $16.50 as adjusted in
accordance with customary practice for stock splits, stock combinations and
stock dividends occurring after the date hereof. Twenty-five percent (25%)
of such additional Units shall be GP Units and issued to the General Partner;
and the remaining seventy-five percent (75%) of such additional Units shall
be Class A Units and issued to the persons identified on Exhibit C under the
column entitled "Name of Limited Partners Entitled to Receive Class A Units
Upon Realization Discount", which persons shall receive such Units in the
relative proportions indicated thereon.
(b) For purposes of this Section 3.7, "Discount" shall be the
amount greater than zero obtained by subtracting from (A) the outstanding
principal balance of such
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Existing Mortgage Indebtedness immediately prior to its repayment, (B) the
amount of the cash paid, plus the fair value of any other assets conveyed, to
fully discharge the Identified Indebtedness. If such computation does not
result in a number greater than zero, there shall be no Discount realized in
the repayment of such Identified Indebtedness.
(c) For purposes of this Section 3.7, the additional net
equity in a Property realized through the repayment of Mortgage Indebtedness
at a Discount shall be the amount, greater than zero, obtained by (A) if the
original net equity of the Property is positive, (i) adding the amount of the
Discount to the original net equity of the Property shown on Exhibit C, and
(ii) subtracting therefrom the original net equity assigned to the Property
on Exhibit C; or (B) if the original net equity of the Property is negative,
by subtracting from the Discount, the amount of such negative net equity.
(d) Whenever the Partnership shall issue additional Class A
Units to any person under this Section 3.7, it shall pay to each such person
the amount, if any, that is equal to the aggregate amount that would have
been distributed in respect of such Units had they been issued on the date
hereof.
(e) The persons identified on Exhibit C as being entitled to
receive additional Units issuable under the circumstances set forth in this
Section 3.7 shall remain entitled to receive any such Units notwithstanding
that any such person may, after the date hereof, cease to be a Partner.
3.8. Register. The General Partner shall maintain a Register at the
principal place of business of the Partnership setting forth the names and
addresses and the number and class of Partnership Interests and Units held by
each Partner. Upon any adjustment or cancellation of any Partner's
Partnership Interest and Units, the General Partner shall make such
adjustment or cancellation in the Register and send written notice thereof to
the Partner so affected. Upon an assignment by a Partner of all or a part of
its Partnership Interest and Units in the Partnership pursuant to the terms
hereof and as permitted hereby, the General Partner shall register such
assignment in the Register. The General Partner shall note on the Register
any restrictions on the transfer of all or any part of any Partner's
Partnership Interest and Units and any such Units that are held in escrow
hereunder. In the absence of manifest error, the Register shall constitute
conclusive evidence of the interest of each Partner and other Person in the
Partnership Interests represented by the Units.
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ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1. Capital Contributions of the Partners.
(a) As of the date hereof, each Partner owns the Partnership
Interest represented by Units as set forth on Exhibit A attached hereto,
which Exhibit may be amended from time to time by the General Partner to the
extent necessary to reflect redemptions, conversions, additional Capital
Contributions, the issuance of additional Partnership Interests and Units, or
similar events having an effect on a Partner's ownership of a Partnership
Interest and Units.
(b) The Contributed Assets of the Partnership are indicated on
Exhibit B hereof, which schedule may be amended from time to time by the
General Partner to reflect additional contributions to the Partnership.
4.2. Capital Contributions Generally. Except as otherwise expressly
provided herein or to the extent that a Partner agrees to make a Capital
Contribution to, or to purchase Partnership Interests from, the Partnership:
no Partner shall be required to contribute any capital to the Partnership;
no Partner may withdraw any of its capital from the Partnership; no Partner
shall be required to make any loan to the Partnership; loans by a Partner to
the Partnership shall not be considered a contribution of capital, shall not
increase the Capital Account of the lending Partner or the lending Partner's
ownership interest in the Partnership and the repayment of such loans by the
Partnership shall not decrease, or result in any adjustment to, the Capital
Account of the Partner making the loans; no interest shall be paid on any
capital contributed to the Partnership by any Partner; under any
circumstances requiring a return of all or any portion of a Capital
Contribution, no Partner shall have the right to receive property other than
cash; and no Partner shall be required at any time to restore any deficit in
such Partner's Capital Account.
4.3. No Third Party Beneficiary. No creditor or other third party
having dealings with the Partnership shall have the right to enforce the
right or obligation of any Partner to make Capital Contributions or loans or
to pursue any other right or remedy hereunder or at law or in equity, it
being understood and agreed that the provisions of this Agreement shall be
solely for the benefit of, and may be enforced solely by, the parties hereto
and their respective successors and assigns. None of the rights or
obligations of the Partners herein set forth to make Capital Contributions or
loans to the Partnership shall be deemed an asset of the Partnership for any
purpose by any creditor or other third party, nor may such rights or
obligations be sold, transferred or assigned by the Partnership or pledged or
encumbered by the Partnership to secure any debt or other obligation of the
Partnership or of any of the Partners.
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ARTICLE V
CAPITAL ACCOUNTS
5.1. Establishment and Maintenance of Capital Accounts. A Capital
Account shall be established for each Partner in the amount of such Partner's
Capital Contribution to the Partnership as reflected on Exhibit B attached
hereto, as such Exhibit may be amended from time to time by the General
Partner. Unless otherwise provided in this Agreement, each Partner's Capital
Account shall be determined and maintained in accordance with the rules of
Treasury Regulation Section 1.704-1(b)(2)(iv) (or any corresponding provision
of succeeding law), and all provisions of this Agreement relating to the
maintenance of Capital Accounts shall be interpreted and applied in a manner
consistent therewith. If the General Partner shall determine that it is
prudent to modify the manner in which the Capital Accounts, or any debits or
credits thereto, are computed in order to comply with such regulations, the
General Partner shall make such modifications. Pursuant to the foregoing
accounting rules, a Partner's Capital Account shall be increased, decreased,
adjusted, and maintained as provided in Article VII.
5.2. Succession to Capital Accounts. Subject to Section 11.4, in
the event of a transfer of any Partnership Interest permitted herein, the
Capital Account of the transferor Partner that is attributable to the
transferred Partnership Interest shall be carried over to the transferee of
such interest and adjusted as provided in the Regulations under Code section
704.
5.3. Certain Adjustments. In connection with any Capital
Contribution to the Partnership in consideration for a Partnership Interest,
or a distribution by the Partnership to a Partner in respect of a Partnership
Interest, the General Partner shall be authorized to increase or decrease the
Capital Accounts to reflect a revaluation of Partnership property as provided
in Regulation Section 1.704-1(b)(2)(iv)(f).
ARTICLE VI
DISTRIBUTIONS
6.1. Distributions. The General Partner shall cause the Partnership
to distribute, on a quarterly or other basis as determined by the General
Partner in its sole discretion, out of funds legally available therefor, such
amount as the General Partner in its discretion shall determine, to the
Partners of record as of the applicable Record Date, which distributions
shall be made to the Partners pro rata based on the number of Units held by
them as of such Record Date, subject to such preferential or subordinated
distributions as may be required to be made by the Partnership on any
additional class of Units that are hereafter created and that have a
different right to share in partnership distributions than the GP Units and
Class A Units. Notwithstanding the foregoing, the General Partner reserves
the right to pro-rate distributions to incoming Limited Partners who were
admitted during the applicable quarter or such other period in which a
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distribution hereunder is to be made (but excluding any incoming Limited
Partners who received Units from an existing Limited Partner) and who held
Partnership Units as of the applicable Record Date but held such Partnership
Units for less than the entire period with respect to which the distribution
hereunder is to be made, such pro-ration to be based on the number of days
such Units were outstanding during the applicable period or any other method
of pro-ration deemed equitable by the General Partner. In the event that
pro-ration is made hereunder, the General Partner shall be authorized to
adjust the amount of the distribution payable to all other Partners as the
General Partner deems necessary. In no event may a Partner receive a
distribution with respect to a Unit if such Partner is entitled to receive a
distribution with respect to a Common Share for which such Unit has been
exchanged, and such distribution shall be made to the Company.
6.2. Distributions upon Liquidation. Liquidating distributions
shall in all cases be made in accordance with the provisions of Section 13.5.
6.3. Additional Distribution Rules.
(a) Effective Date. Distributions shall be charged against
the Partners' Capital Accounts as of the date the distributions are made.
(b) Division Among Limited Partners. Except as may otherwise
be provided herein or in the instruments creating a class of Partnership
Interests, each distribution made to the Limited Partners of a given class
pursuant to this Article VI shall be divided among the Limited Partners of
such class so that each of them shall receive the same proportion thereof as
the Units of such class owned by such Limited Partner bear to all Units of
the same class then owned by all Limited Partners.
(c) Obligation to Repay Distribution. In the absence of fraud
or mistake, or except as otherwise required by law, no Partner shall have any
obligation or responsibility to repay to the Partnership any distribution
made by the Partnership to a Partner pursuant to this Agreement.
(d) Legal Requirements. Notwithstanding anything contained
herein to the contrary, the General Partner may withhold making a
distribution to any Limited Partner, or to any transferee of a Limited
Partner, until the Limited Partner or the transferee has provided the General
Partner with all necessary information and assurances, including an opinion
of counsel satisfactory to the General Partner requested by the General
Partner, to determine that such distribution will be in compliance with all
applicable laws.
(e) Additional Distributions. If the Partnership has taxable
income for any Fiscal Year then the Partnership shall, out of any funds
legally available therefor, distribute to the Partners, in the proportions
described in Section 6.1, on or before the 90th day following the end of the
calendar year that includes the last day of such Fiscal Year, the amount
necessary
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for the original holders of Class A Units issued on August 22, 1996 to pay
federal, state and local income taxes with respect to such taxable income
allocable to such Units, computed by multiplying such taxable income by the
highest combined federal, state and local income tax rate applicable to any
such Partner for the calendar year that includes the last day of the Fiscal
Year in which such taxable income is allocated to such Partner. The
Partnership shall not make a distribution under this Section 6.3(e) if it
does not have sufficient cash on hand to fund such distribution.
6.4. Taxes Withheld. Unless treated as a Tax Payment Loan (as
hereinafter defined), any amount paid by the Partnership for or with respect
to any Partner on account of any withholding tax or other tax payable with
respect to the income, profits or distributions of the Partnership pursuant
to the Code, the Regulations, or any state or local statute, regulation or
ordinance requiring such payment (a "Withholding Tax Act") shall be treated
as a distribution to such Partner for all purposes of this Agreement,
consistent with the character or source of the income, profits or cash which
gave rise to the payment or withholding obligation. To the extent that the
amount required to be remitted by the Partnership under a Withholding Tax Act
exceeds the amount then otherwise distributable to such Partner, the excess
shall constitute a loan from the Partnership to such Partner (a "Tax Payment
Loan") which shall be payable upon demand and shall bear interest, from the
date that the Partnership makes the payment to the relevant taxing authority,
at the federal tax underpayment rate, under section 6621(a)(2) of the Code,
as reported from time to time. So long as any Tax Payment Loan or the
interest thereon remains unpaid, the Partnership shall make future
distributions due to such Partner under this Agreement by applying the amount
of any such distribution first to the payment of any unpaid interest on all
Tax Payment Loans of such Partner and then to the repayment of the principal
of all Tax Payment Loans of such Partner. The General Partner shall have the
authority to take all actions necessary to enable the Partnership to comply
with the provisions of any Withholding Tax Act applicable to the Partnership
and to carry out the provisions of this Section. Nothing in this Section
shall create any obligation on the General Partner to advance funds to the
Partnership or to borrow funds from third parties in order to make any
payments on account of any liability of the Partnership under a Withholding
Tax Act.
6.5. In-Kind Distributions. If, at the discretion of the General
Partner, any assets of the Partnership other than cash are distributed to the
Partners in kind, such assets shall be valued on the basis of the fair market
value thereof as determined by the General Partner in its reasonable
discretion on the date of distribution. Without limiting the General
Partner's discretion to make such a valuation or requiring that any such
appraisal be made, the valuation of any asset by the General Partner on the
basis of the determination of its fair market value by an independent
appraiser shall be deemed to be a reasonable value for such asset and a
reasonable exercise of such discretion. If any Partnership property other
than cash is distributed to a Partner, the Capital Accounts of the Partners
shall be adjusted to reflect the manner in which the unrealized income, gain,
loss or deduction inherent in such property (that has not previously been
reflected in the Partners' Capital Accounts) would be allocated among the
Partners if there had been a taxable disposition of such property at its fair
market value on the date of distribution.
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The Capital Accounts of the Partner receiving a distribution in kind shall
then be reduced by the fair market value of the property distributed.
Subject to the limitations on such distributions in connection with any
distribution of property of the Partnership in kind, including any
distribution in connection with the liquidation of the Partnership, the
General Partner need not distribute each asset ratably to all Partners, so
long as all Partners concurrently receive distributions of cash and other
property, valued as provided above, in the proportion to which they would
otherwise be entitled.
ARTICLE VII
ALLOCATIONS
7.1. Allocation of Net Income and Net Loss. After giving effect to
the special allocations set forth in Section 7.2 hereof, Net Income or Net
Loss shall be allocated among the Partners as follows:
(a) Net Income for any Fiscal Year shall be allocated first to
the Partners until the cumulative amount of Net Income allocated pursuant to
this Section 7.1(a) is equal to the cumulative amount of Net Loss allocated
to the Partners pursuant to Section 7.1(b) hereof for all prior periods
(without duplication) in reverse order to which prior Net Loss was allocated.
Thereafter, Net Income shall be allocated to the Partners in accordance with
their Percentage Interests.
(b) Net Loss for any Fiscal Year shall be allocated first, to
the extent Net Income has been allocated pursuant to Section 7.1(a) hereof
for any prior Fiscal Year (pro rata among the Partners in proportion to their
share of the Net Income being offset); provided that to the extent any
allocations of Net Income are offset pursuant to this Section, such
allocations shall be disregarded for purposes of computing subsequent
allocations pursuant to this Section 7.1(b). Thereafter, Net Loss shall be
allocated to the Partners in accordance with their Percentage Interests.
(c) Notwithstanding the provisions of Section 7.1(b), no
amount of Net Loss shall be allocated to any Partner if such allocation would
cause or increase a deficit balance in such Partner's Capital Account, after
adjusting such Capital Account for the items described in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d)(4),(5), and (6) to the extent
required therein and increasing such Capital Account by such Partner's share
of Partnership Minimum Gain and Minimum Gain Attributable to Partner
Nonrecourse Debt, if any. Rather, such Net Loss shall be allocated to the
General Partner and, to the extent Losses have been so allocated, then,
notwithstanding Section 7.1(a), subsequent Net Income shall be allocated one
hundred percent (100%) to the General Partner until the aggregate amount of
Net Income allocated under this Section 7.1(c) for the current Fiscal Year
and all previous Fiscal Years is equal to the aggregate amount of Net Loss
allocated to the General Partner under this Section 7.1(c).
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7.2. Special Allocations. Notwithstanding anything to the contrary
contained in this Agreement, the following allocations shall be made as
applicable:
(a) Minimum Gain Chargeback (Nonrecourse Liabilities). If
there is a net decrease in Partnership Minimum Gain for any Partnership
fiscal year (except as a result of conversion or refinancing of Partnership
indebtedness, certain capital contributions or revaluation of the Partnership
property as further outlined in Regulation Sections 1.704-2(d)(4), (f)(2) or
(f)(3)), each Partner shall be specially allocated items of Partnership
income and gain for each year (and, if necessary, subsequent years) in an
amount equal to that Partner's share of the net decrease in Partnership
Minimum Gain. The items to be so allocated shall be determined in accordance
with Regulation Section 1.704-2(g). This paragraph (a) is intended to comply
with the minimum gain chargeback requirement in said section of the
Regulations and shall be interpreted consistently therewith. Allocations
pursuant to this paragraph (a) shall be made in proportion to the respective
amounts required to be allocated to each Partner pursuant hereto.
(b) Minimum Gain Attributable to Partner Nonrecourse Debt. If
there is a net decrease in Minimum Gain Attributable to Partner Nonrecourse
Debt during any fiscal year (other than due to the conversion, refinancing or
other change in the debt instrument causing it to become partially or wholly
nonrecourse, certain capital contributions, or certain revaluations of
Partnership property as further outlined in Regulation Section
1.704-2(i)(4)), each Partner shall be specially allocated items of
Partnership income and gain for such year (and, if necessary, subsequent
years) in an amount equal to that Partner's share of the net decrease in the
Minimum Gain Attributable to Partner Nonrecourse Debt. The items to be so
allocated shall be determined in accordance with Regulation Section
1.704-2(i)(4) and (j)(2). This paragraph (b) is intended to comply with the
minimum gain chargeback requirement with respect to Partner Nonrecourse Debt
contained in said section of the Regulations and shall be interpreted
consistently therewith. Allocations pursuant to this paragraph (b) shall be
made in proportions to the respective amounts required to be allocated to
each Partner pursuant hereto.
(c) Qualified Income Offset. In the event a Partner receives
any adjustments, allocations or distributions described in Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6), and such Partner has an Adjusted Capital
Account Deficit, items of Partnership income and gain shall be specially
allocated to such Partner in an amount and manner sufficient to eliminate the
Adjusted Capital Account Deficit as quickly as possible. This paragraph (c)
is intended, among other things, to meet the requirements for a "qualified
income offset" under Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any
fiscal year or other applicable period shall be allocated to the Partners in
accordance with their respective Percentage Interests.
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(e) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any fiscal year or other applicable period shall be specially
allocated to the Partner that bears the economic risk of loss for the debt
(i.e., the Partner Nonrecourse Debt) in respect of which such Partner
Nonrecourse Deductions are attributable (as determined under Regulation
Section 1.704-2(b)(4) and (i)(1)).
(f) Curative Allocations. The Regulatory Allocations shall be
taken into account in allocating other items of income, gain, loss and
deduction among the Partners so that, to the extent possible, the cumulative
net amount of allocations of Partnership items under Sections 7.1 and 7.2
shall be equal to the net amount that would have been allocated to each
Partner if the Regulatory Allocations had not occurred. This paragraph (f)
is intended to minimize to the extent possible and to the extent necessary
any economic distortions which may result from application of the Regulatory
Allocations and shall be interpreted in a manner consistent therewith. For
purposes hereof, "Regulatory Allocations" shall mean the allocations provided
under this Section 7.2 (save paragraphs (d) and (f) hereof).
7.3. Tax Allocations.
(a) Generally. Subject to paragraphs (b), (c) and (d) hereof,
items of income, gain, loss, deduction and credit to be allocated for income
tax purposes (collectively, "Tax Items") shall be allocated among the
Partners on the same basis as their respective book items.
(b) Sections 1245/1250 Recapture. If any portion of gain from
the sale of property is treated as gain which is ordinary income by virtue of
the application of Code Sections 1245 or 1250 ("Affected Gain"), then such
Affected Gain shall be allocated among the Partners in the same proportion
that the depreciation and amortization deductions giving rise to the Affected
Gain were allocated and other Tax Items of gain of the same character that
would have been recognized, but for the application of Code Sections 1245
and/or 1250, shall be allocated away from those Partners who are allocated
Affected Gain pursuant to clause (i) so that, to the extent possible, the
other Partners are allocated the same amount, and type, of capital gain that
would have been allocated to them had Code Sections 1245 and/or 1250 not
applied. For purposes hereof, in order to determine the proportionate
allocations of depreciation and amortization deductions for each fiscal year
or other applicable period, such deductions shall be deemed allocated on the
same basis as Net Income and Net Loss for such respective period.
(c) Allocations Respecting Section 704(c) and Revaluations.
Notwithstanding paragraph (b) hereof, Tax Items with respect to Partnership
property that is subject to Code Section 704(c) and/or Regulation Section
1.704-1(b)(2)(iv)(f) (collectively "Section 704(c) Tax Items") shall be
allocated in accordance with said Code section and/or Regulation Section
1.704-1(b)(4)(i), as the case may be. The Partnership shall apply the
"traditional method" for such allocations, as described in Regulation Section
1.704-3(b), and the
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allocation of Tax Items shall be subject to the ceiling rule stated in
Regulation Section 1.704-3(b)(1).
(d) Pre-contribution Gain. In the event that, during any
fiscal year or other applicable period, any Title Holding Partnership
allocates to the Partnership Pre-contribution Gain (as defined below), each
Partner (or its successors in interest) who, pursuant to Article IV hereof,
contributed to the capital of the Partnership the Contributed Asset to which
a distributive share of Pre-contribution Gain is attributable shall be
allocated that Pre-contribution Gain in accordance with its respective
interest in such Pre-contributed Gain. For purposes hereof, "Pre-contribution
Gain" shall mean, with respect to each Property owned by a Title Holding
Partnership, that unrealized gain attributable to the excess of the fair
market value of such Property on the date at which the Contributed Asset is
contributed to the capital of the Partnership pursuant to Article IV hereof,
over the adjusted tax basis of such Property on the date of such
contribution; provided, however, that the amount of any Pre-contribution Gain
associated with a Property shall be adjusted to account for allocations made
in accordance with the provisions of paragraph (c) of this Section 7.3 and
shall not, in any event, exceed that amount of gain actually allocated to the
Partnership by a Title Holding Partnership as a result of the sale or other
disposition of such Property.
ARTICLE VIII
EXPENSES; RIGHTS, DUTIES AND RESTRICTIONS OF THE GENERAL PARTNER;
VOTING RIGHTS OF LIMITED PARTNERS
8.1. Expenses Borne by the Partnership.
(a) The Partnership shall pay all fees and other costs that it
incurs for legal, accounting and other services provided to the Partnership
by third parties, including, without limitation, costs and expenses incurred
in connection with the preparation and maintenance of the books and records,
financial statements, and tax returns of the Partnership. The General
Partner shall be entitled to reimbursement by the Partnership for any such
expenditures incurred by the General Partner on behalf of, or for the benefit
of, the Partnership.
(b) All fees, costs and expenses incurred by BRT for employee
salaries, as well as for legal, accounting and other services in connection
with the preparation and maintenance of BRT's books and records, financial
statements, tax returns and reports to shareholders and the Securities and
Exchange Commission (collectively, "BRT Administrative Expenses") shall be
paid by the Partnership (or reimbursed to BRT, if paid by BRT); provided,
however, that if BRT acquires and holds any Properties outside of, and not
for the benefit of, the Partnership, then BRT Administrative Expenses to be
paid (or reimbursed) by the Partnership hereunder shall be reduced to an
amount that is fair and equitable to the Partnership under the circumstances,
as determined by the General Partner in its sole discretion.
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8.2. Powers and Duties of General Partner.
(a) The General Partner shall be responsible for the
management of the Partnership's business and affairs. Except as otherwise
herein expressly provided and subject to Sections 8.3 and 8.4 hereof, the
General Partner shall have, and is hereby granted, full and complete power,
authority and discretion to take such action for and on behalf of the
Partnership as the General Partner shall, in its sole and absolute
discretion, deem necessary or appropriate to carry out the purposes for which
the Partnership was organized. Except as otherwise expressly provided herein
and subject to Sections 8.3 and 8.4 hereof, the General Partner shall
exercise all of the powers of the Partnership and have specifically, without
limiting the foregoing, the right, power and authority:
(i) To manage, control, invest, reinvest, acquire by
purchase, lease or otherwise, sell, contract to purchase or sell, grant,
obtain, or exercise options to purchase, options to sell or conversion
rights, assign, transfer, convey, deliver, endorse, exchange, pledge,
mortgage, abandon, improve, repair, maintain, insure, lease for any term and
otherwise deal with any and all property of whatsoever kind and nature, and
wheresoever situated, in furtherance of the business or purposes of the
Partnership;
(ii) To acquire, directly or indirectly, interests in real
estate of any kind and of any type, and any and all kinds of interests
therein and interests in Entities investing therein, and to determine the
manner in which title thereto is to be held; to manage (directly or through
property managers), insure against loss, protect and subdivide any of the
real estate, interests therein or parts thereof; to improve, develop or
redevelop any such real estate; to participate in the ownership and
development of any property; to dedicate for public use, to vacate any
subdivisions or parts thereof, to re-subdivide, to contract to sell, to grant
options to purchase or lease, to sell on any terms; to convey, to mortgage,
pledge or otherwise encumber said property, or any part thereof; to lease
said property or any part thereof from time to time, upon any terms and for
any period of time, and to renew or extend leases, to amend, change or modify
the terms and provisions of any leases and to grant options to lease and
options to renew leases and options to purchase; to partition or to exchange
said real property, or any part thereof, for other real or personal property;
to collect all rental and other income accruing to the Partnership; to grant
easements or charges of any kind; to release, convey or assign any right,
title or interest in or about or easement appurtenant to said property or any
part thereof; to construct and reconstruct, remodel, alter, repair, add to or
take from buildings on said premises; to insure any Person having an interest
in or responsibility for the care, management or repair of such property; to
direct the trustee of any land trust to mortgage, lease, convey or contract
to convey the real estate held in such land trust or to execute and deliver
deeds, mortgages, notes, and any and all documents pertaining to the property
subject to such land trust or in any matter regarding such trust; to execute
assignments of all or any part of the beneficial interest in such land trust;
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(iii) To employ, engage or contract with or dismiss
from employment or engagement Persons to the extent deemed necessary or
appropriate by the General Partner for the operation and management of the
Partnership business, including but not limited to, contractors,
subcontractors, engineers, architects, surveyors, mechanics, consultants,
accountants, attorneys, insurance brokers, real estate brokers and others;
(iv) To enter into, make, amend, perform and carry out or
cancel and rescind, contracts and other obligations on behalf of the
Partnership and to cause all Administrative Expenses to be paid;
(v) To borrow money, procure loans and advances from any
Person for Partnership purposes, and to apply for and secure, from any
Person, credit or accommodations; to contract liabilities and obligations,
direct or contingent and of every kind and nature (including interest rate
swaps, caps and hedges) with or without security; and to repay, discharge,
settle, adjust, compromise, or liquidate any such loan, advance, credit,
obligation or liability;
(vi) To pledge, hypothecate, mortgage, assign, deposit;
deliver, enter into sale and leaseback arrangements or otherwise give as
security or as additional or substitute security, or for sale or other
disposition any and all Partnership property, tangible or intangible,
including, but not limited to, real estate and beneficial interests in land
trusts, and to make substitutions thereof, and to receive any proceeds
thereof upon the release or surrender thereof; to sign, execute and deliver
any and all assignments, deeds and other contracts and instruments in
writing; to authorize, give, make, procure, accept and receive moneys,
payments, property, notices, demands, vouchers, receipts, releases,
compromises and adjustments; to waive notices, demands, protests and
authorize and execute waivers of every kind and nature; to enter into, make,
execute, deliver and receive written agreements, undertakings and instruments
of every kind and nature; to give oral instructions and make oral agreements;
and generally to do any and all other acts and things incidental to any of
the foregoing or with reference to any dealings or transactions which the
General Partner may deem necessary, proper or advisable to effect or
accomplish any of the foregoing or to carry out the business and purposes of
the Partnership;
(vii) To sell or otherwise dispose of any or all
assets of the Partnership;
(viii) To acquire and enter into any contract of
insurance which the General Partner deems necessary or appropriate for the
protection of the Partnership, for the conservation of the Partnership's
assets or for any purpose convenient or beneficial to the Partnership and to
settle claims under such insurance;
(ix) To conduct any and all banking transactions on behalf
of the Partnership; to adjust and settle checking, savings, and other
accounts with such institutions as the General Partner shall deem
appropriate; to draw, sign, execute, accept, endorse, guarantee,
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deliver, receive and pay any checks, drafts, bills of exchange, acceptances,
notes, obligations, undertakings and other instruments for or relating to the
payment of money in, into, or from any account in the Partnership's name; to
execute, procure, consent to and authorize extensions and renewals of the
same; to make deposits and withdraw the same and to negotiate or discount
commercial paper, acceptances, negotiable instruments, bills of exchange and
dollar drafts; to pay all taxes, assessments, rents and other impositions
applicable to the assets of the Partnership and to seek to reduce the same;
to invest all monies of the Partnership;
(x) To demand, sue for, receive, and otherwise take steps
to collect or recover all debts, rents, proceeds, interests, dividends,
goods, chattels, income from property, damages and all other property, to
which the Partnership may be entitled or which are or may become due the
Partnership from any Person; to commence, prosecute or enforce, or to defend,
answer or oppose, contest and abandon all legal proceedings in which the
Partnership is or may hereafter be interested; and to settle, compromise or
submit to arbitration any accounts, debts, claims, disputes and matters which
may arise between the Partnership and any other Person and to grant an
extension of time for the payment or satisfaction thereof on any terms, with
or without security;
(xi) To confess judgment against the Partnership;
(xii) To make arrangements for financing, including
the taking of all action deemed necessary or appropriate by the General
Partner to cause any approved loans to be closed including, without
limitation, the execution and delivery on behalf of the Partnership of notes,
mortgages, deeds of trust and like instruments;
(xiii) To take all reasonable measures necessary to
insure compliance by the Partnership with applicable arrangements, and other
contractual obligations and arrangements entered into by the Partnership from
time to time in accordance with the provisions of this Agreement, including
periodic reports as required to be submitted to lenders and using all due
diligence to insure that the Partnership is in compliance with its
contractual obligations;
(xiv) To maintain the Partnership's books and records;
(xv) To prepare and deliver, or cause to be prepared and
delivered by the Partnership's accountants, all financial and other reports
with respect to the operations of the Partnership, and all federal and state
tax returns and reports;
(xvi) To act in any state or nation in which the
Partnership may lawfully act, for itself or as principal, agent or
representative for any Person, including the Partnership, with respect to any
business of the Partnership;
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(xvii) To become a partner or member in, and perform
the obligations of a partner or member of, any general or limited partnership
or limited liability company;
(xviii) To apply for, register, obtain, purchase or
otherwise acquire trademarks, trade names, labels and designs relating to or
useful in connection with any business of the Partnership, and to use,
exercise, develop and license the use of the same;
(xix) To pay or reimburse any and all actual fees,
costs and expenses incurred in the formation and organization of the
Partnership;
(xx) To do all acts which are necessary, customary or
appropriate for the protection and preservation of the Partnership's assets,
including the establishment of reserves;
(xxi) To exercise all rights, and to perform all
duties, responsibilities and obligations, granted to or required of the
General Partner by this Agreement;
(xxii) In general, to exercise all of the general
rights, privileges and powers permitted to be had and exercised by the
provisions of the Act; and
(xxiii) To issue additional classes or series of
Partnership Interests or Partnership Units.
(b) Notwithstanding Section 8.2(a), the Management Company, as
and to the extent determined by the General Partner, may (i) provide the
Partnership with all office space and administrative services needed by the
Partnership in the ordinary course of its business, and (ii) perform all of
its duties under management contracts entered into for the management of
Properties. All costs and expenses of the Management Company so incurred,
such as for office rent, telephone, postage, travel and entertainment, and
compensation of officers and employees and other overhead shall be borne by
the Management Company out of the management fees payable under its
management contracts and shall not be separately charged back to the
Partnership, except for compensation and other related expenses of property
management and maintenance personnel that are permitted under a management
contract to be charged against a Property.
8.3. Required Notice. The Partnership shall not refinance or pay
off (other than payments of principal and interest in accordance with the
existing mortgage amortization schedule) the mortgage indebtedness identified
on Exhibit C that encumbers the Property at 7310 Tilghman Street without the
consent of Safeguard unless it shall first have given Safeguard at least
thirty (30) days' prior written notice thereof.
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8.4. Proscriptions. Notwithstanding Section 8.2 hereof, the General
Partner shall not have the authority to:
(a) Do any act in contravention of this Agreement;
(b) Possess any Partnership property or assign rights in
specific Partnership property for other than Partnership purposes;
(c) Do any act in contravention of applicable law; or
(d) Without the consent of the holders of at least fifty
percent (50%) of the then outstanding Class A Units, cause the Partnership to
make a general assignment for the benefit of creditors, or appoint or
acquiesce in the appointment of a custodian, receiver or trustee for all or
any part of the Partnership's assets, or commence any proceeding seeking
relief for the Partnership under any provision of the federal Bankruptcy Code
11 U.S.C. Section 101 et seq. or any other federal or state law relating to
insolvency, bankruptcy or reorganization.
Nothing herein contained shall impose any obligation on any Person
or firm doing business with the Partnership to inquire as to whether or not
the General Partner has properly exercised its authority in executing any
contract, lease, mortgage, deed or other instrument on behalf of the
Partnership, and any such third Person shall be fully protected in relying
upon such authority.
8.5. Compensation of the General Partner. The General Partner shall
not be entitled to any compensation for services rendered to the Partnership
solely in its capacity as General Partner except with respect to
reimbursement for those costs and expenses pursuant to Section 8.1 hereof
including those constituting BRT Administrative Expenses; provided that
nothing in this Section 8.5 hereof shall preclude the General Partner from
receiving the distributions, payments and allocations to which it may be
entitled under this Agreement.
8.6. Waiver and Indemnification.
(a) Except as otherwise provided in Article XVIII, neither the
General Partner nor any Person acting on its behalf, pursuant hereto, shall
be liable, responsible or accountable in damages or otherwise to the
Partnership or to any Partner for any acts or omissions performed or omitted
to be performed by it within the scope of the authority conferred upon the
General Partner by this Agreement and the Act, provided that the General
Partner's or such other Person's conduct or omission to act was taken in good
faith and in the belief that such conduct or omission was in the best
interests of the Partnership and, provided further, that the General Partner
or such other Person shall not be guilty of fraud, willful misconduct or
gross negligence as determined by a court of competent jurisdiction.
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(b) The Partnership shall, and hereby does, indemnify and hold
harmless the General Partner and its Affiliates and any individual acting on
their behalf from any loss, cost or expense, damage, claim or liability,
including, but not limited to, reasonable attorneys' fees and expenses,
incurred by them by reason of any act performed by them for or on behalf of
the Partnership or the General Partner, or omitted to be performed by them,
in accordance with the standards set forth above or in enforcing the
provisions of this indemnity; provided, however, no Partner or any of its
Affiliates shall have any personal liability with respect to the foregoing
indemnification, and any such liability or indemnification shall be satisfied
solely out of the assets of the Partnership.
(c) All rights of any indemnitee hereunder shall survive the
dissolution of the Partnership; provided, however, that a claim for
indemnification under this Agreement must be made by or on behalf of the
Person seeking indemnification prior to the time the Partnership is
liquidated hereunder. The indemnification rights contained in this Agreement
shall be cumulative of, and in addition to, any and all other rights,
remedies and recourse to which the person seeking indemnification shall be
entitled, whether at law or at equity.
8.7. Operation in Accordance with REIT Requirements. The Partners
acknowledge and agree that the Partnership shall be operated in a manner that
will enable the General Partner to (a) satisfy the REIT Requirements and (b)
avoid the imposition of any federal income or excise tax liability on either
the General Partner or the Partnership. Notwithstanding any provision of
this Agreement, the General Partner shall not be required to take any action
which would result in the General Partner ceasing to satisfy the REIT
Requirements or the imposition of any federal income or excise tax liability
on the General Partner.
8.8. Reliance by Third Parties.
(a) Notwithstanding anything to the contrary in this
Agreement, any Person dealing with the Partnership shall be entitled to
assume that the General Partner has full power and authority to encumber,
sell or otherwise use in any manner any and all assets of the Partnership and
to enter into any contracts on behalf of the Partnership, and such Person
shall be entitled to deal with the General Partner as if it were the
Partnership's sole party in interest, both legally and beneficially.
(b) Each Limited Partner hereby waives any and all defenses or
other remedies which may be available against such Person to contest, negate
or disaffirm any action of the General Partner in connection with any such
dealing. In no event shall any Person dealing with the General Partner or
its representatives be obligated to ascertain that the terms of this
Agreement have been complied with or to inquire into the necessity or
expedience of any act or action of the General Partner or its
representatives. Each and every certificate, document or other instrument
executed on behalf of the Partnership by the General Partner shall be
conclusive evidence in favor of any and every person relying thereon or
claiming thereunder that (i) at the time of the execution and delivery of
such certificate, document or instrument, this Agreement
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was in full force and effect, (ii) the Person executing and delivering such
certificate, document or instrument was duly authorized and empowered to do
so for and on behalf of the Partnership, and (iii) such certificate, document
or instrument was duly executed and delivered in accordance with the terms
and provisions of this Agreement and is binding upon the Partnership.
8.9. Other Matters Concerning the General Partner.
(a) The General Partner may rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, or other document believed by it to be genuine
and to have been singed or presented by the proper party or parties.
(b) The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers and other
consultants and advisers selected by it, and any act taken or omitted to be
taken in reliance upon the opinion of such Persons as to matters which such
General Partner reasonably believes to be within such Person's professional
expertise shall be conclusively presumed to have been done or omitted in good
faith and in accordance with such opinion.
(c) The General Partner shall have the right, in respect of
any of its powers or obligations hereunder, to act through any of its duly
authorized officers and any attorney or attorneys-in-fact duly appointed by
the General Partner; and any Person dealing with the Partnership shall be
entitled to rely on any certificate, document or other instrument executed on
behalf of the Partnership by a duly authorized officer or by a duly
authorized attorney or attorneys-in-fact of the General Partner. Each such
attorney-in-fact shall, to the extent provided by the General Partner in the
power of attorney, have full power and authority to do and perform all and
every act and duty which is permitted or required to be done by the General
Partner hereunder.
(d) Notwithstanding any other provisions of this Agreement or
the Act, any action of the General Partner on behalf of the Partnership or
any decision of the General Partner to refrain from acting on behalf of the
Partnership, undertaken in the good faith belief that such action or omission
is necessary or advisable in order (i) to protect or further the ability of
the General Partner to continue to qualify as a REIT or (ii) to avoid the
General Partner incurring any taxes under Section 857 or Section 4981 of the
Code, is expressly authorized under this Agreement and is deemed approved by
all of the Limited Partners. Nothing however in this Agreement shall be
deemed to give rise to any liability on the part of the Limited Partners for
the General Partner's failure to qualify or continue to qualify as a REIT or
failure to avoid incurring any taxes under the foregoing Sections of the Code.
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8.10. Meetings of Partners.
(a) Meetings of Partners may be called at any time by the
General Partner to consider, and shall be so called so that the Partners may
act on, any matter on which they are entitled to act under the terms of this
Agreement or the Act. In addition, the General Partner shall call a meeting
of Class A Limited Partners when directed to do so by holders of not less
than twenty-five percent (25%) of the then outstanding Class A Units. Such
direction shall be given by delivering to the General Partner a request in
writing stating that such holders desire to call a meeting and indicating the
general or specific purpose for which the meeting is to be called.
(b) The General Partner may fix a date not more than sixty
(60) nor less than five (5) days preceding the date of any meeting of
Partners, or preceding the last day on which the consent of Partners may be
effectively expressed for any purpose without a meeting, as a record date for
the determination of the Partners entitled to notice of, and to vote at, such
meeting or to express such consent. In either such case, such Partners, and
only such Partners as shall be Partners of record on the Record Date shall be
entitled to notice of, and to vote at, such meeting and any adjournment
thereof, or to express such consent, as the case may be, notwithstanding any
transfer of any Partnership Interest on the Register after any such Record
Date fixed as aforesaid.
(c) Notice of any meeting at which Partners are entitled to
vote, or of any matter upon which action by written consent of such Partners
is to be taken, shall be given to each Partner of record not less than five
(5) nor more than sixty (60) days prior to the date of such meeting or the
date on which consent must be given, as the case may be. Each such notice
will include a statement setting forth (i) the date, time and place of the
meeting or the date by which such action is to be taken, (ii) a description
of the matter on which such Partners are entitled to vote or of such matter
upon which written consent is sought and (iii) instructions for the delivery
of proxies or consents.
(d) Except as otherwise provided by law, at any meeting of
Partners, the holders of a majority of the Units entitled to vote as such
meeting shall constitute a quorum at such meeting. In the absence of a
quorum, the holders of a majority of the Units entitled to vote thereat
present in person or by proxy may adjourn any meeting, from time to time,
until a quorum shall be present. At any such adjourned meeting at which a
quorum shall be present, any business may be transacted which might have been
transacted at the meeting as originally called.
(e) Each Partner entitled to vote at a meeting or entitled to
express consent to Partnership action in writing without a meeting may
authorize another person or persons to act for him by proxy. A proxy acting
for any Partner shall be duly appointed by an instrument in writing
subscribed by such Partner and reasonably acceptable in form and substances
to the General Partner. Except as otherwise provided by law, no vote on any
question upon which a vote of the Partners may be taken need be by ballot
unless the General Partner shall
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determine that it shall be by ballot or the holders of a majority of all
Units present in person or by proxy and entitled to participate in such vote
shall so demand. In a vote by ballot each ballot shall state the Partnership
Interests voted and the name of the Partner or proxy voting. Unless otherwise
provided by law or by this Agreement, all questions shall be decided by the
vote of the holders of a majority of the Units present in person or by proxy
at the meeting and entitled to vote on the question.
(f) Any action required to or which may be taken at a meeting
of Partners may be taken without a meeting, without prior notice and without
a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by Partners having not less than the minimum number of
votes that would be necessary to authorize such action at a meeting at which
all Units entitled to vote thereon were present and voted, and shall be
delivered to the Partnership by delivery to the General Partner (who shall
have custody of the books in which proceedings of meetings of Partners are
recorded). Prompt notice of the taking of action without a meeting shall be
given to the Partners entitled to vote who have not consented in writing.
(g) The General Partner, in its sole discretion, shall
establish all other provisions relating to meetings of Partners, in addition
to those expressly provided herein, including notice of the time, place or
purpose of any meeting at which any matter is to be voted on by any Partner,
waiver of any such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements, voting in person or by
proxy or any other matter with respect to the exercise of any such right to
vote, in each case consistent with the terms hereof and in accordance with
the Act.
ARTICLE IX
ACCOUNTING AND RECORDS
9.1. Books and Records. The General Partner shall keep books of
account for the Partnership in accordance with the method of accounting used
for federal income tax purposes. Upon at least five (5) Business Days' prior
notice to the General Partner, any Limited Partner shall have the right, to
the extent provided for in the Act, to inspect and copy at its own expense
the Partnership's books and records during normal business hours.
9.2. Annual Reports.
(a) Not later than ninety (90) days after the end of each
Fiscal Year (or such earlier date as may be required under the Code) the
General Partner shall deliver to each Partner a report indicating each
Partner's share for federal income tax purposes of the Partnership's income,
credits and deductions for the immediately preceding Fiscal Year, together
with all other information concerning the Partnership which may be required
by the Code from time to time.
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(b) The General Partner shall furnish to the Limited Partners
within 120 days after the end of each Fiscal Year Audited Financial
Statements of the General Partner and may also furnish the Limited Partners
with such other periodic reports concerning the Partnership's business and
activities as the General Partner considers necessary to advise all Partners
properly about their investment in the Partnership and shall, upon the
written request of any Limited Partner, provide such Partner with:
(i) a copy of any report filed with the Securities and Exchange
Commission by the General Partner pursuant to the Securities Exchange Act of
1934;
(ii) a copy of the Partnership's federal, state and local
income tax returns for each Fiscal Year;
(iii) a current list of the name and last known
business, residence or mailing address of each Partner; and
(iv) a copy of this Agreement and the Certificate and all
amendments thereto, together with executed copies of all powers of attorney
pursuant to which this Agreement, the Certificate and all amendments thereto
have been executed.
(c) Notwithstanding any other provision of this Section 9.2,
the General Partner may keep confidential from the Limited Partners, for such
period of time as the General Partner determines in its sole discretion to be
reasonable, any information that (i) the General Partner reasonably believes
to be in the nature of trade secrets or other information the disclosure of
which the General Partner in good faith believes is not in the best interests
of the Partnership or could damage the Partnership or its business, or (ii)
the Partnership is required by law or by agreements with an unaffiliated
third party to keep confidential.
9.3. Tax Returns. The General Partner shall cause all income and
other tax returns of the Partnership to be prepared and filed in a timely
manner. The General Partner shall be the Tax Matters Partner (as defined in
section 6231(a)(7) of the Code) of the Partnership.
9.4. Fiscal Year. The fiscal year ("Fiscal Year") of the
Partnership shall be the calendar year.
9.5. Bank Accounts. All funds of the Partnership shall be deposited
in such accounts established in the Partnership's name with such financial
institutions as may be determined from time to time by the General Partner.
Withdrawals from any such accounts shall be made in the Partnership's name
upon the signature of such officers of the General Partner and such other
signature or signatures, if any, as the General Partner shall from time to
time designate. Funds in such accounts shall not be commingled with the funds
of any Partner.
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ARTICLE X
CHANGES IN GENERAL PARTNERS
10.1. Permitted Assignment of General Partnership Interest. The
General Partner shall not have the right to resign or withdraw or to Transfer
all or any portion of its General Partnership Interest represented by GP
Units, except that the General Partner may (a) assign all or a portion of its
General Partnership Interest represented by outstanding GP Units to a
substitute or additional General Partner permitted under Section 10.2; (b)
assign its General Partnership Interest represented by outstanding GP Units
to any Entity that has acquired, or in connection with such assignment will
acquire, by merger, consolidation or otherwise, substantially all of its
assets or equity interests and has been designated to succeed to its rights
and obligations under this Agreement in accordance herewith; and (c) pledge
or grant a security interest in its right to receive payments and
distributions under this Agreement. In connection with any Transfer
described in clauses (a) and (b) of all the General Partnership Interest, the
General Partner may withdraw as such upon the admission of the assignee.
Sections 10.2 and 10.4 shall apply in the case of a Transfer of all or a
portion of a General Partnership Interest.
10.2. Admission of Additional General Partners. One or more
additional or substitute General Partners may be admitted to the Partnership
from time to time by the General Partner in the circumstances contemplated by
Section 10.1, provided the additional or substitute general partner is
reasonably expected, as determined by a majority of the Board of Trustees of
BRT, to be able to fulfill the duties of a general partner hereunder.
Otherwise, no additional General Partner may be admitted to the Partnership
except as provided in Section 13.2. The terms of such assignment and the
nature of the duties of the newly admitted General Partner shall be as agreed
upon between the General Partner and such additional General Partner.
10.3. Effect of Withdrawal of General Partner.
(a) Upon the occurrence of an Event of Withdrawal of the
General Partner (other than one permitted by Section 10.1), the General
Partner shall cease to be such, and its General Partnership Interest shall be
converted to an undesignated Limited Partnership Interest entitling the
holder thereof to the same share of the Partnership's income, gain, loss,
deduction and distributions as are allocated to the General Partner
hereunder, subject to the Partnership's right to set off (i) any damages
caused to the Partnership if the Event of Withdrawal is in violation of this
Agreement and (ii) any obligation of the General Partner under paragraph (b).
(b) Upon the occurrence of an Event of Withdrawal of the
General Partner, the General Partner shall pay to the Partnership in cash the
amount of any deficit balance in its Capital Account unless the Event of
Withdrawal is permitted by Section 10.1.
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10.4. Liability of a Withdrawn General Partner. Any General
Partner who shall commit or suffer an Event of Withdrawal or shall otherwise
withdraw from the Partnership shall remain liable for obligations and
liabilities incurred by it as General Partner prior to the occurrence of such
Event of Withdrawal or other withdrawal, but it shall be free of any such
obligation or liability incurred on account of the activities of the
Partnership thereafter.
ARTICLE XI
TRANSFERS OF LIMITED PARTNERSHIP INTERESTS
11.1. General Transfer Provisions and Restrictions.
(a) Subject to the restrictions set forth in this Section
11.1, any Limited Partner may Transfer all or any portion of, or right in or
to, his or its Limited Partnership Interest, without the consent of the
General Partner or any other Partner, except that no Limited Partner may
Transfer Class A Units comprising Collateral in violation of the provisions
of Article XVIII below.
(b) Notwithstanding the foregoing,
(i) No Transfer of any Limited Partnership Interest shall
be permitted if, in the opinion of the General Partner based on the advice of
counsel, there is a significant possibility that such Transfer:
(A) may not be effected without registration under
the Securities Act of 1933, or would result in the violation of any
applicable state securities laws; or
(B) would result in the termination of the
Partnership within the meaning of section 708 of the Code, or would have a
material adverse effect on any Partner for federal income tax purposes; or
(C) would cause the Partnership to be taxed other
than as a partnership for federal income tax purposes or impair the ability
of the Partnership to take advantage of any favorable tax election or
treatment as a result of being taxed as a partnership (whether such
impairment shall arise from the termination of the Partnership for federal
tax purposes or otherwise); or
(D) would cause the Partnership to become, with
respect to any employee benefit plan subject to Title 1 of ERISA, a
"party-in-interest" (as defined in Section 3(14) of ERISA) or a "disqualified
person" (as defined in Section 4975(c) of the Code); or
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(E) would cause any portion of the assets of the
Partnership to constitute assets of any employee benefit plan pursuant to
Department of Labor Regulations Section 2510.2-101; and
(ii) No Limited Partner shall effect any Transfer:
(A) to any person or entity who lacks the legal
right, power or capacity to own Partnership Units;
(B) in violation of any provision of any mortgage or
trust deed (or the note or bond secured thereby) to which the Partnership is
a party or is otherwise bound;
(C) of any component portion of Partnership Units,
such as the Capital Account, or rights to distribution, separate and apart
from all other components of Partnership Units; or
(D) in the event such Transfer would cause BRT or
any successor thereto to cease to comply with the REIT Requirements.
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In furtherance of this subsection, the General Partner and the
Partnership shall in no event recognize any trade of a Limited Partnership
Interest in a secondary market or the substantial equivalent thereof and
shall take such actions as are necessary so that such trades are not
recognized.
(c) All Transfers of Limited Partnership Interests shall be by
instrument in form and substance reasonably satisfactory to the General
Partner. Any Transfer of Limited Partnership Interests in violation of this
Agreement shall be null and void ab initio and shall not operate to vest any
rights in any transferee.
(d) In no event shall the Partnership dissolve or terminate
upon the admission of any Partner to the Partnership or upon any permitted
Transfer of a Partnership Interest by any Partner. Each Partner hereby
waives its right to dissolve, liquidate or terminate the Partnership in such
event. No Transfer of any Limited Partnership Interest in the Partnership
shall constitute a change of Control of the Partnership.
11.2. Expenses. All expenses of the Partnership and of the
Partners occasioned by a Transfer permitted under Section 11.1 shall be borne
by the Partner effecting such Transfer.
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11.3. Allocations with Respect to Transferred Interest. Upon
the permitted Transfer of all or any part of a Partnership Interest, each
item of Partnership income (or loss) and deduction allocable to such
Partnership Interest shall be pro rated (as to the Transferred Partnership
Interest) between the transferor and transferee on the basis of the number of
days in the taxable year of the Partnership preceding (and including) and
succeeding, respectively, the date as of which the assignment is executed.
Unless otherwise agreed by the Transferor and Transferee Partners and written
notice of such agreement has been given to the General Partner, gain or loss
from the sale or other taxable disposition of a Partnership capital asset
shall be allocated to the Persons who were Partners at the time such gain or
loss was recognized by the Partnership.
11.4. Section 754 Election. The General Partner may, in its
sole discretion, cause the Partnership to elect, pursuant to section 754 of
the Code, to adjust the basis of Partnership property as provided in sections
734(b) and 743(b) of the Code. The General Partner shall be responsible for
determining the adjustments required or permitted by said sections of the
Code, except that, in the case of any adjustment required or permitted under
section 743(b) of the Code, the Transferee Partner or Partners shall be
solely responsible for determining the adjustments required thereunder unless
such Partner or Partners provide the General Partner with all the information
necessary for the General Partner to determine the adjustments. If any
adjustments to the basis of Partnership property are made pursuant to section
732(d), 734(b) or 743(b), the capital accounts of the Partners shall be
adjusted as specified in Regulation Section 1.704-1(b)(2)(iv)(m).
11.5. Transferee's Rights. The Transfer of a Limited
Partnership Interest in accordance with this Agreement entitles the
transferee, subject to Section 11.3, to share in such profits and losses, to
receive such distributions, and to receive such allocations of income, gain,
loss, deduction, or credit or similar item to which the transferor Partner
was entitled (to the extent of the interest Transferred) but does not entitle
the transferee to become or to exercise any other rights of a Partner unless
and until the transferor Partner has advised the General Partner that such
transferor Partner is to be admitted as a Partner pursuant to Article XII.
ARTICLE XII
ADMISSION OF PARTNERS
12.1. Procedure. Substitute or additional General or Limited
Partners may be admitted to the Partnership as a result of a permitted
Transfer of Partnership Interests pursuant to Article X or XI. Additional
General or Limited Partners shall also be admitted to the Partnership as a
result of the issuance of additional Partnership Interests pursuant to
Article III. Each substitute or additional Partner shall sign a supplement
to this Agreement at the time such Partner is admitted confirming the
admission of the new Partner hereunder, and containing such Person's binding
agreement to be bound by all of the terms of this Agreement.
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12.2. Admission. In connection with the admission of any new
Partner to the Partnership, the General Partner shall have the power, right
and authority to amend this Agreement and any applicable Exhibit or Schedule
hereto to reflect the rights and obligations of such new Partner, including
without limitation its obligations to contribute to the capital of the
Partnership, rights to distributions, and rights to approve or consent to
Partnership actions.
ARTICLE XIII
DISSOLUTION, LIQUIDATION AND WINDING-UP
13.1. Events of Dissolution. The occurrence of any of the
following shall constitute an event of dissolution of the Partnership (an
"Event of Dissolution"):
(a) the expiration of the term of the Partnership as provided
in Section 2.5;
(b) the sale or other disposition in a single transaction or
series of related transactions of all or substantially all of the assets of
the Partnership unless such sale or other disposition involves any deferred
payment of the consideration for such sale or disposition, in which case the
General Partner may elect to defer the dissolution of the Partnership until
the last day of the Fiscal Year during which the Partnership shall receive
the balance of such deferred payment;
(c) subject to Section 13.2, the occurrence of an Event of
Withdrawal with respect to a General Partner;
(d) the acquisition by a single Person of all of the
Partnership Interests;
(e) the issuance of a decree of dissolution by a court of
competent jurisdiction pursuant to the Act; or
(f) the consent of the General Partner and the holders of at
least a majority of the then outstanding Class A Units.
13.2. Continuation of the Business of the Partnership After
Dissolution.
(a) Notwithstanding Section 13.1(c), if, at the time of an
Event of Withdrawal, there shall be one or more General Partners not affected
by the Event of Withdrawal, then such other General Partner or General
Partners shall (and are hereby authorized to) carry on the business of the
Partnership, and if they do so, the Partnership shall not be liquidated and
its business wound up.
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(b) Notwithstanding Section 13.1(c), at the time of an Event
of Withdrawal to which subsection (a) is not applicable, the Partnership
shall not be liquidated and its business wound up if, within 90 days after
the occurrence of the Event of Withdrawal, Limited Partners owning a majority
of the Units of each class then outstanding agree in writing to continue the
business of the Partnership and to the appointment of one or more replacement
General Partners who agree to serve as such.
13.3. Effect of Event of Dissolution. Upon the occurrence of an
Event of Dissolution, unless otherwise provided in Section 13.2, the
Partnership shall be dissolved and shall continue solely for the purposes of
winding up its business and liquidating in accordance with this Article XIII
all of its assets and collecting the proceeds from such liquidation, at which
time the Partnership shall be wound up. Unless the business of the
Partnership is continued as provided in Section 13.2, after the occurrence of
an Event of Dissolution, the Partnership shall engage in no further business
other than as necessary to operate on an interim basis and for the
Partnership to collect its receivables, liquidate its assets and pay or
discharge its liabilities in accordance with this Article XIII.
13.4. Accounting. In the event of the dissolution, liquidation
and winding-up of the Partnership, a proper accounting (which shall be
certified) shall be made of the Capital Account of each Partner and of the
Net Income or Net Losses of the Partnership from the date of the last
previous accounting to the date of dissolution. Financial statements
presenting such accounting shall include a report thereon of a certified
public accountant selected by the Liquidating Trustee.
13.5. Distribution on Dissolution.
(a) In the event of the dissolution and liquidation of the
Partnership for any reason, the assets of the Partnership shall be liquidated
for distribution and distributed in the following rank and order:
(i) First, for payment of creditors of the Partnership
(other than Partners) in the order of priority as provided by law;
(ii) Next, for establishment of reserves as provided by
the Liquidating Trustee to provide for contingent liabilities, if any;
(iii) Next, for payment of debts of the Partnership to
Partners, if any, in the order of priority provided by law; and
(iv) Last, for payment to the General Partner and to the
holders of the Class A Units, in accordance with the positive balances in
their respective Capital Accounts after giving effect to all contributions,
distributions and allocations for all periods,
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including the period in which such distribution occurs (other than those
adjustments made pursuant to this Section 13.5(a)(iv)).
(b) Whenever the Liquidating Trustee reasonably determines
that any reserves established pursuant to paragraph (a)(ii) above are in
excess of the reasonable requirements of the Partnership, the amount
determined to be excess shall be distributed to the Partners in accordance
with the above provisions.
13.6. Timing Requirements. In the event that the Partnership is
"liquidated" within the meaning of Section 1.704-1(b)(2)(ii)(g) of the
Regulations, any and all distributions to the Partners pursuant to Section
13.5(a) hereof shall be made no later than the later to occur of (i) the last
day of the taxable year of the Partnership in which such liquidation occurs,
or (ii) ninety (90) days after the date of such liquidation.
13.7. Sale of Partnership Assets. In the event of the
liquidation of the Partnership in accordance with the terms of this
Agreement, the Liquidating Trustee may sell Partnership or Title Holding
Partnership property if the Liquidating Trustee has in good faith solicited
bids from unrelated third parties before making any such sale; provided,
however, all sales, leases, encumbrances or transfers of Partnership assets
shall be made by the Liquidating Trustee solely on an "arm's-length" basis,
at the best price and on the best terms and conditions as the Liquidating
Trustee in good faith believes are reasonably available at the time and under
the circumstances and on a non-recourse basis to the Limited Partners. The
liquidation of the Partnership shall not be deemed finally completed until
the Partnership shall have received cash payments in full with respect to
obligations such as notes, installment sale contracts or other similar
receivables received by the Partnership in connection with the sale of
Partnership assets and all obligations of the Partnership have been
satisfied, released or assumed by the General Partner. The Liquidating
Trustee shall continue to act to enforce all of the rights of the Partnership
pursuant to any such obligations until such obligations are paid in full or
otherwise satisfied.
13.8. Distributions in Kind. In the event that it becomes
necessary to make a distribution of Partnership property in kind, the
Liquidating Trustee may transfer and convey such property to the distributees
as tenants in common, subject to any liabilities attached thereto, so as to
vest in them undivided interests in the whole of such property in proportion
to their respective rights to share in the proceeds of the sale of such
property (other than as a creditor) in accordance with the provisions of
Section 13.5 hereof.
13.9. Documentation of Liquidation. Upon the completion of the
dissolution and liquidation of the Partnership, the Partnership shall
terminate and the Liquidating Trustee shall have the authority to execute and
record any and all documents or instruments required to effect the
dissolution, liquidation and termination of the Partnership.
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13.10. Liability of the Liquidating Trustee. The Liquidating
Trustee shall be indemnified and held harmless by the Partnership from and
against any and all claims, demands, liabilities, costs, damages and causes
of action of any nature whatsoever arising out of or incidental to the
Liquidating Trustee's taking of any action authorized under or within the
scope of this Agreement; provided, however, that the Liquidating Trustee
shall not be entitled to indemnification, and shall not be held harmless,
where the claim, demand, liability, cost, damage or cause of action at issue
arose out of (a) a matter entirely unrelated to the Liquidating Trustee's
action or conduct pursuant to the provisions of this Agreement; or (b) the
willful misconduct or gross negligence of the Liquidating Trustee.
ARTICLE XIV
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
14.1. No Participation in Management. The Limited Partners
shall not take part in the management or control of the Partnership's
business, transact any business in the Partnership's name, have the power to
sign documents for or otherwise bind the Partnership or except as required by
the Act or expressly provided by this Agreement, have any right to vote on or
consent to any matter, provided, however, that nothing in the foregoing shall
be deemed to prohibit or preclude any Limited Partner or its Affiliates from
serving as an officer, trustee, director or employee of the General Partner
or its Affiliates or otherwise transacting business with the Partnership.
14.2. Death, Incompetence, Bankruptcy, Etc. The death,
incompetence, Bankruptcy, dissolution or liquidation of a Limited Partner
shall not cause a dissolution of the Partnership. The rights of such a
Limited Partner to share in the income and losses of the Partnership, to
receive distributions and to assign its Partnership Interest pursuant to this
Article, on the happening of such an event, shall devolve on such Limited
Partner's beneficiary or other successor, executor, administrator, guardian
or other legal representative for the purpose of settling the estate or
administering the property of such Limited Partner. Such successor or
personal representative, however, shall be admitted as a Limited Partner only
upon compliance with the requirements set forth in Article XII.
14.3. No Withdrawal. No Limited Partner may withdraw from the
Partnership without the prior written consent of the General Partner, other
than as expressly provided in this Agreement.
14.4. Power of Attorney. Each Limited Partner constitutes and
appoints the General Partner, any Liquidating Trustee, and authorized
officers and attorneys-in-fact of each, and each of those acting singly, in
each case with full power of substitution, as its true and lawful agent and
attorney-in-fact, with full power and authority in its name, place and stead
to: execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (i) all certificates, documents
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and other instruments (including, without limitation, this Agreement and the
Certificate and all amendments or restatements thereof) that the General
Partner or the Liquidating Trustee deems appropriate or necessary to form,
qualify or continue the existence or qualification of the Partnership as a
limited partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware and in all other jurisdictions in
which the Partnership may conduct business or own property; (ii) all
instruments that the General Partner deems appropriate or necessary to
reflect any amendment, change, modification or restatement of this Agreement
in accordance with its terms; (iii) all conveyances and other instruments or
documents that the General Partner deems appropriate or necessary to reflect
the dissolution and liquidation of the Partnership pursuant to the terms of
this Agreement, including, without limitation, a certificate of cancellation;
and (iv) all instruments relating to the admission, withdrawal, removal or
substitution of any Partner pursuant to the provisions of this Agreement, or
the Capital Contribution of any Partner. The foregoing power of attorney is
irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying upon the power of the General
Partner to act as contemplated by this Agreement in any filing or other
action by it on behalf of the Partnership, and it shall survive the death,
incapacity or incompetency of a Limited Partner to the effect and extent
permitted by law and the Transfer of all or any portion of such Limited
Partner's Partnership Units and shall extend to such Limited Partner's heirs,
distributees, successors, assigns and personal representatives.
14.5. Limited Liability of Limited Partners. The Limited
Partners shall not be personally liable for any obligations or debts of the
Partnership to third parties, except to the extent provided in the Act.
ARTICLE XV
GRANT OF REDEMPTION RIGHTS TO LIMITED PARTNERS
15.1. Grant of Redemption Rights.
(a) The Partnership does hereby grant to each Limited Partner
owning Class A Units and each such Limited Partner does hereby accept the
right, but not the obligation (hereinafter such right sometimes referred to
as the "Redemption Right"), to require the Partnership to redeem, for cash,
on the Specified Redemption Date all or any portion of the Class A Units held
by such Limited Partner at a redemption price equal to the Cash Amount. The
Redemption Right of a Limited Partner may be exercised on one or more
occasions by the Limited Partner. The Redemption Right shall be exercised
pursuant to a Notice of Redemption delivered to the Partnership (with a copy
to the General Partner) by the Limited Partner (the "Redeeming Partner") who
is exercising the Redemption Right. A Limited Partner may not exercise the
Redemption Right as to fewer Class A Units than the number of such Units that
is equal to the lesser of (a) 100 Units or (b) all of the Class A Units held
by such Limited Partner. Neither the Redeeming Partner nor any assignee of
any Limited Partner shall have any right with respect to any Class A Units so
redeemed to receive any distributions from the Partnership made after the
Specified Redemption Date. The
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assignee of any Limited Partner may exercise the rights of such Limited
Partner pursuant to this Section 15.1, and such Limited Partner shall be
deemed to have assigned such rights to such assignee and shall be bound by
the exercise of such rights by such Limited Partner's assignee. In
connection with any exercise of such rights by such assignee on behalf of
such Limited Partner, the Cash Amount shall be paid by the Partnership
directly to such assignee and not to such Limited Partner.
(b) The General Partner may, in connection with the issuance
by the Partnership of additional Class A Units, impose restrictions on the
exercise by the Limited Partners owning such Class A Units of the Redemption
Right for such period of time as the General Partner may designate.
15.2. General Partner Exchange.
(a) Notwithstanding the provisions of Section 15.1, if a
Limited Partner elects to exercise the Redemption Right, the General Partner
may, in its sole and absolute discretion, elect to assume directly and
satisfy a Redemption Right by paying to the Redeeming Partner either the Cash
Amount or the GP Shares Amount for each Class A Unit redeemed, as elected by
the General Partner (in its sole and absolute discretion) on the Specified
Redemption Date, whereupon the General Partner shall acquire the Class A
Units offered for redemption by the Redeeming Partner and shall be treated
for all purposes of this Agreement as the owner of such Partnership Interests.
(b) In the event that the Partnership shall fail to pay the
Cash Amount to any Redeeming Partner on the Specified Redemption Date
pursuant to Section 15.1, and the General Partner shall not have elected
pursuant to Section 15.2(a) to assume the obligations of the Partnership with
respect thereto, the General Partner shall on the Specified Redemption Date
contribute to the capital of the Partnership in cash (or, at its election,
pay directly to the Redeeming Partner the full Cash Amount or GP Shares
Amount) the full amount necessary to permit the Partnership to satisfy its
obligations to pay to the Redeeming Partner the Cash Amount on the Specified
Redemption Date, and the Partnership shall thereupon immediately pay to such
Redeeming Partner such Cash Amount.
(c) The General Partner shall provide the Redeeming Partner
with at least five (5) days' written notice prior to the Specified Redemption
Date whether the Redemption Right will be redeemed by the Partnership or the
General Partner for the Cash Amount or GP Shares Amount. The Redeeming
Partner may rescind his or its Notice of Redemption at any time prior to the
Specified Redemption Date if the Redemption Right is to be redeemed for the
Cash Amount.
(d) In the event that the General Partner satisfies the
Redemption Right in the manner described in Sections 15.2(a) or (b), each of
the Redeeming Partner, the Partnership, and the General Partner shall treat
the transaction between the General Partner and the Redeeming Partner for
federal income tax purposes as a sale of the Redeeming Partner's Partnership
Units to the General Partner.
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(e) Each Redeeming Partner shall execute such documents as the
General Partner may reasonably require in connection with the issuance of
Common Shares upon exercise of the Redemption Right, including, without
limitation, acknowledgment that the shares will be issued without
registration under the Securities Act, and may not be resold unless
subsequently registered or an exemption from registration is available.
(f) If the Redemption Right is satisfied by the delivery of
Common Shares, the Redeeming Partner shall be deemed to become a holder of
Common Shares as of the close of business on the Specified Redemption Date.
15.3. Certain Limitations on Redemption Right. Notwithstanding
the provisions of Section 15.1, no Limited Partner shall have the right to
require the Partnership to redeem any Class A Units constituting Collateral
until such Collateral is required to be released pursuant to the provisions
of Section 18.3, unless the Limited Partner acknowledges and agrees at the
time of conversion that the cash paid or Common Shares issued in redemption
of the Class A Units shall continue to constitute Collateral under Article
XVIII.
15.4. Adjustments. The number of Common Shares comprising the
GP Shares Amount shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows:
(a) Adjustment for Change in Shares of Beneficial Interest.
If at any time after the date of this Agreement, the General Partner:
(i) pays a dividend or makes a distribution on its Common
Shares in its Common Shares;
(ii) subdivides its outstanding Common Shares into a
greater number of shares;
(iii) combines its outstanding Common Shares into a
smaller number of shares;
(iv) makes a distribution on its Common Shares in its
shares of beneficial interest other than Common Shares; or
(v) issues by reclassification of its Common Shares any
of its shares of beneficial interest;
then the number of Common Shares comprising the GP Shares Amount shall be
adjusted so that the holder of a Class A Unit may receive in an exchange
therefor pursuant to Section 15.2, the number of Common Shares which the
holder of the Class A Unit would have owned immediately following such action
if such Unit had been exchanged immediately prior thereto. In lieu of
adjusting the
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number of Common Shares comprising the GP Shares Amount, the General Partner
may, in its sole discretion, cause an adjustment to be made to the number of
outstanding Class A Units such that, following any of the actions described
above, each Class A Unit shall be converted into that number of Class A Units
equal to the product that results from multiplying one Class A Unit by a
fraction, the numerator of which is the number of Common Shares that will be
outstanding immediately following the Record Date for the dividend or
distribution or the effective date for the subdivision, combination or
reclassification, as applicable, and the denominator of which is the number
of Common Shares outstanding immediately prior to the dividend, distribution,
subdivision, combination or reclassification, as applicable (assuming for
such purposes that the dividend or distribution was paid on the Record Date).
In either case, the adjustment shall become effective immediately after the
Record Date in the case of a dividend or distribution, and immediately after
the effective date in the case of a subdivision, combination or
reclassification.
(b) When No Adjustment Required. No adjustment need be made
for a change in the par value or no par value of the Common Shares.
15.5. Certain Covenants. Each Limited Partner covenants and
agrees with the General Partner that all Class A Units delivered for
redemption by it pursuant to this Article XV shall be delivered to the
Partnership or the General Partner, as the case may be, free and clear of all
Encumbrances.
15.6. Certain Changes. In the event of a merger or
consolidation of the General Partner with a third party or the sale of all or
substantially all of the assets of the General Partner or a third party
acquisition of all of the outstanding Common Shares, the General Partner may
make such changes to this Article 15 as it deems to be appropriate in order
to provide that each holder of Class A Units receives, in such transaction,
or in connection with such transaction, the amount of cash, securities or
other property which such holder would be entitled to receive if it exercised
its Redemption Right and received the GP Shares Amount in exchange for its
Class A Units immediately prior to consummation of such transaction. If the
General Partner makes such provision then, in connection therewith, it may
also terminate or modify the Redemption Right.
ARTICLE XVI
LIMITED PARTNER REPRESENTATIONS AND WARRANTIES
16.1. Representations and Warranties of the Limited Partners.
(a) Each of the Limited Partners hereby represents and
warrants, severally and not jointly, to the Partnership and the General
Partner as follows:
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(i) That such Partner, if a corporation, partnership or
other entity formed pursuant to any statute or other governmental authority,
is validly formed and in good standing under the laws of the jurisdiction of
its formation.
(ii) That, if such Partner is an Entity, the execution,
delivery and performance of this Agreement by such Partner has been duly and
validly authorized by all necessary corporate, partnership, or other similar
action.
(iii) That this Agreement has been duly executed and
delivered by such Limited Partner, and constitutes such Partner's legal,
valid and binding obligation, enforceable against it in accordance with the
terms hereof.
(iv) That no consent, waiver, approval or authorization
of, or filing, registration or qualification with, or notice to any
governmental unit or other person is required to be made, obtained or given
by such Limited Partner in connection with the execution, delivery and
performance of this Agreement and the transactions contemplated hereby other
than consents, waivers, approvals or authorizations which have been obtained
prior to the date hereof.
(v) That such Partner understands that the Class A Units
to be issued hereunder and the Common Shares issuable in redemption of Class
A Units pursuant to Article XV hereof will not be registered under the
Securities Act, on the grounds that the issuance of such securities is exempt
from registration pursuant to Section 4(2) of the Securities Act or
Regulation D promulgated thereunder, and that the reliance of the General
Partner and the Partnership on such exemptions is predicated in part on the
Limited Partner's representations, warranties and covenants set forth herein.
(vi) That the Units and any Common Shares acquired in
exchange therefor by such Partner will be acquired for its own account, not
as a nominee or agent, and without a view to resale or other distribution
within the meaning of the Securities Act and the rules and regulations
thereunder and that it will not distribute any such securities in violation
of the Securities Act.
(vii) That such Partner's principal residence or place
of business is as set forth on Exhibit A.
(viii) That such Partner understands that the Units and
Common Shares issued in respect thereof must be held indefinitely unless
subsequently registered under the Securities Act or an exemption from
registration is available, and that any routine sales of Common Shares made
under Rule 144 of the Securities and Exchange Commission under the Securities
Act may be made only in limited amounts and in accordance with the terms and
conditions of that Rule and that Rule 144 will not be available for use in
connection with resales of any shares of Common Shares issued in respect of
Units for at least one year after the date of issuance or for any Units at
any time.
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(ix) That such Partner is well versed in financial
matters, has had dealings in securities, including "restricted securities,"
and is fully capable of understanding the type of investment being made in
the Units and the Common Shares and the risks involved in connection
therewith.
(x) That such Partner will not sell transfer or otherwise
dispose of any of the Units or the Common Shares acquired in exchange
therefor unless such securities have been registered under the Securities Act
or the holder thereof shall have furnished to the General Partner such
information as the General Partner may reasonably require to the effect that
such securities may be sold without registration thereunder.
(b) Each Limited Partner also agrees that certificates, if
any, representing Units or Common Shares issued to it may contain a
restrictive legend noting the restrictions on transfer described in this
section and required by federal and applicable state securities laws and that
appropriate "stop-transfer" instructions may be given to the transfer agent
for the General Partner and the Partnership.
ARTICLE XVII
GENERAL PARTNER REPRESENTATIONS AND WARRANTIES
17.1. Representations and Warranties of the General Partner.
The General Partner represents and warrants to the Partnership and the
Limited Partners as follows
(a) The General Partner is a real estate investment trust duly
formed and existing under and by virtue of the laws of the State of Maryland.
(b) The execution, delivery and performance of this Agreement
by the General Partner has been duly and validly authorized by all necessary
trust action of the General Partner. This Agreement has been duly executed
and delivered by the General Partner, and constitutes a legal, valid and
binding obligation of the General Partner, enforceable against the General
Partner in accordance with the terms hereof.
(c) No consent, waiver, approval or authorization of, or
filing, registration or qualification with, or notice to, any governmental
unit or any other person is required to be made, obtained or given by the
General Partner in connection with the execution, delivery and performance of
this Agreement other than consents, waivers, approvals or authorizations
which have been obtained prior to the date hereof.
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ARTICLE XVIII
INDEMNIFICATION
18.1. Indemnification.
(a) Subject to the provisions of Section 18.2, the General
Partner hereby indemnifies and holds harmless the Partnership and each
Limited Partner against and from any and all liabilities, demands, claims,
actions, causes of action, assessments, losses, fines, penalties, costs,
damages and expenses (including, without limitation, attorneys' and
accounting fees and expenses) (any such item, a "Liability," and collectively
"Liabilities") sustained or incurred by such Limited Partner or the
Partnership as a result of or arising out of (i) any inaccuracy in any
representation or warranty made in this Agreement by the General Partner, or
(ii) any breach by the General Partner of any of its obligations under this
Agreement.
(b) Subject to the provisions of Section 18.2 hereof, each
Limited Partner who is a Pledgor (as defined in Section 18.3(a)), severally
and not jointly, indemnifies and holds harmless the Partnership and the
General Partner against and from all Liabilities sustained or incurred by the
Partnership or the General Partner as a result of or arising out of (i) any
inaccuracy in a representation or warranty made under this Agreement by such
Limited Partner, or (ii) any breach by such Limited Partner of its
obligations hereunder.
18.2. Limitations on Indemnification Obligations.
(a) No indemnified person hereunder shall be entitled to
indemnification under Section 18.1 hereof unless the indemnified person shall
have delivered a written notice specifying in reasonable detail the matter
giving rise to such person's right to indemnification to the indemnifying
party on or before the second anniversary of the date hereof.
(b) No person providing indemnification hereunder shall be
liable under Section 18.1 hereof unless the total amount recoverable from
such indemnifying person exceeds, with respect to all indemnities provided by
such indemnifying person hereunder, an aggregate of $75,000 in the case of
Safeguard, an aggregate of $75,000 in the case of The Nichols Company, and an
aggregate of $75,000 in the case of BRT.
(c) If a claim for indemnification arises from a third party
claim asserted against the Partnership, the indemnifying party shall have the
right, at its own expense, to participate in the defense of the claim, action
or proceeding which resulted in the claim for indemnification, and if such
right is exercised, the parties shall cooperate in the defense of such action
or proceeding; provided, however, the indemnified party shall at all times
have the right to be in control of such defense.
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(d) Indemnification pursuant to Section 18.1 hereof and the
remedies in respect thereof as set forth in Section 18.3 hereof shall be the
sole and exclusive remedy of the indemnified parties for any matter covered
thereby, regardless of the legal theories on which the claim for
indemnification is based.
18.3. Security and Remedies.
(a) Each of Safeguard and Nichols, on behalf of themselves and
their affiliates (collectively, "Pledgors") hereby grants to the Partnership
a lien upon and continuing security interest in such Pledgor's Class A Units,
and in any Common Shares issued upon redemption of such Class A Units
pursuant to Article XV (collectively, the "Collateral") which shall be
security for the indemnification obligations of such Pledgor hereunder. The
indemnification obligation of each Pledgor shall be payable out of such
Pledgor's entire Collateral, but only from such Collateral. Any transfer by a
Pledgor of such Pledgor's Class A Units, or Common Shares issued upon
redemption of Class A Units, shall be subject to the lien and security
interest granted hereby. Each Pledgor represents and warrants that his or
its Class A Units constituting Collateral are owned by it free and clear of
Encumbrances other than Permitted Encumbrances, which Permitted Encumbrances
are senior in priority to the lien and security interest created under this
Section 18.3.
(b) Any person claiming indemnification hereunder shall (when
the amount claimed is known) deliver written notice (the "Indemnity Notice")
to the party or parties from whom indemnification is claimed describing in
reasonable detail the rationale for the amount for which indemnification is
sought. A Limited Partner shall be entitled to satisfy his indemnification
obligation by directing the Partnership to cancel in the Register that number
of Class A Units included in the Collateral as shall be equal in value (based
on the Current Per Share Market Price of the Common Shares issuable in
exchange therefor pursuant to Section 15.2 as of the date of the Indemnity
Notice) to the amount recoverable from such Limited Partner hereunder. If
such indemnification obligation shall not have been satisfied by any party
within thirty (30) days after its receipt of an Indemnity Notice, the matter
shall be submitted for binding arbitration in accordance with the provisions
of Article XIX below.
(c) In the case of an adverse decision by the arbitrators in
respect of indemnification being provided by any Limited Partner, if such
Limited Partner does not satisfy the obligations within ten (10) days after
the decision is rendered in the arbitration, then the Partnership shall
cancel in the Register, without the payment of any consideration to or the
taking of any action required by the Limited Partner, that number of Class A
Units included in the Collateral as shall be equal in value (based on the
Current Per Share Market Price of the Common Shares issuable in exchange
therefor pursuant to Section 15.2 as of the date of the Indemnity Notice) to
the amount recoverable from such Limited Partner hereunder. Within ten (10)
days thereafter, the General Partner shall deliver notice of such
cancellation to the Limited Partner affected.
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(d) The rights of the Partnership and General Partner to
cancel Collateral shall be the sole and exclusive remedy of the General
Partner or the Partnership under this Article XVIII and no Limited Partner
shall have any personal liability hereunder, except as otherwise provided in
the next succeeding section.
18.4. Restriction on Transfer.
(a) In connection with the security interests granted by the
Limited Partners to the Partnership under Section 18.3 hereof, except as
provided in paragraph (b), the Limited Partners agree that any Class A Units
owned by such Limited Partners shall not be Transferred, without the consent
of the General Partner until August 22, 1998. In addition, in the event that
notice of a claim for indemnification has been duly given pursuant to Section
18.2(a) but the matter for which indemnification is sought or the amount of
the indemnification required to be paid has not been finally determined as of
August 22, 1998, Class A Units having a sufficient value (based on the
Current Per Share Market Price at such date of the Common Shares issuable in
exchange therefor pursuant to Section 15.2) shall remain subject to the
restrictions of this Section 18.4(a), until such time as the matter in
question has been finally determined.
(b) Nothing in this Agreement shall prohibit the following
Transfers: (i) transfers occurring by reason of a Limited Partner's exercise
of his Redemption Rights subject to the pledge of the Common Shares received
upon redemption pursuant to Section 18.3(a); (ii) transfers by The Nichols
Company of Class A Units to its equity owners; (iii) transfers by a Limited
Partner to his or its Affiliates; or (iv) transfers in connection with the
foreclosure of a Permitted Encumbrance. In the event of a Transfer permitted
under clause (ii) or (iii), the transferee shall as a condition of such
transfer execute an agreement acknowledging that the Class A Units are
Collateral and are being transferred subject to the Partnership's security
interest therein.
(c) Notwithstanding the foregoing, a Limited Partner may, with
the consent of the General Partner exercised by its independent trustees in
their sole and absolute discretion, be relieved of the restrictions on
transferability contained in this Section 18.4 by (i) consenting to personal
liability (by execution and delivery of an agreement to such effect in form
and substance reasonably satisfactory to the General Partner) for any
indemnification obligations secured by the Partnership Units, or (ii)
pledging (by execution and delivery of a pledge agreement in form and
substance reasonably satisfactory to the General Partner) substitute
collateral which, in the reasonable determination of the General Partner, is
substantially equivalent in value to the Class A Units then comprising
Collateral. In the event that a Limited Partner is relieved of the
restrictions on transferability in accordance with the terms of this Section
18.4, the security interest in such Limited Partner's Class A Units hereunder
shall terminate without further action, and the Partnership, at the request
of such Limited Partner, shall promptly execute and deliver any document or
instrument reasonably requested by such Limited Partner to evidence such
termination.
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18.5. No Credit to Capital Accounts. No payments made by a
Limited Partner pursuant to this Article XVIII shall be credited to the
Capital Account of such Limited Partner.
18.6. Release of Collateral. The lien and security interest on
the Collateral shall terminate on the second anniversary of the date of this
Agreement, except to the extent provided in the next sentence. In the event
that notice of a claim for indemnification has been duly given pursuant to
Section 18.2(a) but the matter for which indemnification is sought or the
amount of the indemnification required to be paid has not been finally
determined at the second anniversary of the date hereof, Class A Units having
a sufficient value (based on the Current Per Share Market Price at such date
of the Common Shares issuable in exchange therefor pursuant to Section 15.2)
shall remain subject to the lien and security created under Section 18.3,
until such time as the matter in question has been finally determined.
18.7. Applicability. The provisions of this Article XVIII shall
not be applicable to any Person that becomes a Limited Partner after August
22, 1996 except as and to the extent agreed to by the General Partner and
such Person in connection with such Person's admission as a Limited Partner.
ARTICLE XIX
ARBITRATION OF DISPUTES
19.1. Settlement of Disputes. The parties will attempt in good
faith to resolve any and all controversies of every kind and nature between
the parties to this Agreement arising out of or in connection with the
existence, construction, validity, interpretation or meaning, performance,
non-performance, enforcement, operation, breach, continuance or termination
of this Agreement (each, a "Dispute") promptly by negotiations between senior
executives of the parties who have authority to settle the Dispute (and who
do not have direct responsibility for administration of this Agreement). The
disputing party shall give the other party written notice of the Dispute.
Within twenty (20) days after receipt of said notice, the receiving party
shall submit to the other a written response. The notice and response shall
include (a) a statement of each party's position and a summary of the
evidence and arguments supporting its position, and (b) the name and title of
the executive who will represent that party. The executives shall meet at a
mutually acceptable time and place within thirty days of the date of the
disputing party's notice and thereafter as often as they reasonably deem
necessary to exchange relevant information and to attempt to resolve the
Dispute. If the matter has not been resolved within sixty (60) days of the
disputing party's notice, or if the party receiving said notice will not meet
within thirty days, either party may initiate mediation of the controversy or
claim in accordance with the Center for Public Resources Model Procedure for
Mediation of Business Disputes.
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19.2. Arbitration.
(a) If the Dispute has not been resolved pursuant to the
aforesaid mediation procedure within sixty (60) days of the initiation of
such procedure, or if either party will not participate in a mediation, the
Dispute shall be submitted to binding arbitration in accordance with the
rules of the American Arbitration Association. The parties further agree
that all matters shall be governed by the laws of the Commonwealth of
Pennsylvania. The parties further agree that any arbitration conducted
pursuant to this Section shall be held in Philadelphia, Pennsylvania before a
panel of three (3) arbitrators, one selected by the Partnership, and one
selected by Safeguard and The Nichols Company, and the third selected by the
arbitrators selected by the parties. All deadlines specified in this Section
may be extended by mutual agreement.
(b) The arbitration panel shall have the discretion to include
in its decision a direction that all or part of the attorneys' fees and costs
of any party or parties and/or the costs of such arbitration be paid by any
other party or parties. On the application of a party before or after the
initial decision of the arbitration panel, and proof of its attorneys' fees
and costs, the arbitration panel shall order the other party to make any
payments directed pursuant to the preceding sentence.
19.3. Binding Character. Any decision rendered by the
arbitration panel pursuant to this Article XIX shall be final and binding on
the parties hereto, and judgment thereon may be entered by any state or
federal court of competent jurisdiction.
19.4. Exclusivity. Arbitration shall be the exclusive method
available for resolution of claims, disputes and controversies described in
Section 19.1 hereof, and the Partnership and its Partners stipulate that the
provisions hereof shall be a complete defense to any suit, action, or
proceeding in any court or before any administrative or arbitration tribunal
with respect to any such claim, controversy or dispute. The provisions of
this Article XIX shall survive the dissolution of the Partnership.
19.5. No Alteration of Agreement. Nothing contained herein
shall be deemed to give the arbitrators any authority, power or right to
alter, change, amend, modify, add to, or subtract from any of the provisions
of this Agreement.
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ARTICLE XX
ASSUMPTION OF LIABILITIES AND INDEMNIFICATIONS
20.1. Assumption of Liabilities. The Partnership has assumed
and shall pay, perform and discharge when due, each of those liabilities and
obligations that constitute Assumed Liabilities. Obligations of the
Partnership under this Section 20.1 shall continue to inure to the benefit of
Partners notwithstanding any subsequent redemption of Units held by them and
their cessation as Partners in connection therewith.
20.2. Indemnification. From and after the date hereof, the
Partnership shall indemnify and hold harmless each of the Limited Partners
and its Affiliates against and from all liability, demands, claims, actions
or causes of action, assessments, losses, fines, penalties, costs, damages
and expenses (including, without limitation, reasonable attorneys' and
accountants' fees and expenses) sustained or incurred by such Limited Partner
or Affiliate or any assignee or successor thereof (including, without
limitation, any Substituted Limited Partner) as a result of or arising out of
any Assumed Liability. If a claim for indemnification is asserted against
the Partnership hereunder, the Partnership shall have the right, at its own
expense, to participate in the defense of any claim asserted against such
Limited Partner or its Affiliate which resulted in the claim for
indemnification, and if such right is exercised, the parties shall cooperate
in the defense of such action or proceeding.
ARTICLE XXI
GENERAL PROVISIONS
21.1. Notices. All notices, offers or other communications
required or permitted to be given pursuant to this Agreement shall be in
writing and may be personally served, telecopied, delivered by reputable
courier service or sent by United States mail and shall be deemed to have
been given when delivered in person, upon receipt of telecopy or courier
service or three business days after deposit in United States Mail,
registered or certified, postage prepaid, and properly addressed, by or to
the appropriate party. For purposes of this Section 21.1, the addresses of
the parties hereto shall be as set forth on Exhibit A hereto. The address of
any party hereto may be changed by a notice in writing given in accordance
with the provisions hereof.
21.2. Successors. This Agreement and all the terms and
provisions hereof shall be binding upon and shall inure to the benefit of all
Partners, and their legal representatives, heirs, successors and permitted
assigns, except as expressly herein otherwise provided.
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21.3. Effect and Interpretation. This Agreement and all of the
terms and provisions hereof shall be governed by and construed in accordance
with the law, including the law on conflicts of law, of the State of Delaware.
21.4. Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which shall
constitute one and the same instrument.
21.5. Partners Not Agents. Nothing contained herein shall be
construed to constitute any Partner the agent of another Partner, except as
specifically provided herein, or in any manner to limit the Partners in the
carrying on of their own respective businesses or activities. Notwithstanding
anything to the contrary contained herein, no recourse shall be had by the
Partnership or any Partner against any trustee, director, shareholder,
officer, employee, agent or attorney of the General Partner under this
Agreement, and none of the foregoing shall have any personal liability for or
with respect to any of the foregoing.
21.6. Entire Understanding; Etc. This Agreement constitutes the
entire agreement and understanding among the Partners and supersedes any
prior understandings and/or written or oral agreements among them respecting
the subject matter within.
21.7. Amendments.
(a) Except as provided in Sections 21.7(b) and (c), the
General Partner shall have the power and authority, in its sole discretion
and without the consent of any other Partner, to amend any and all of the
provisions of this Agreement to issue additional Partnership Interests, or to
establish the rights, privileges, duties and obligations of any Partner or
class of Partnership Interest, or otherwise, except that, without the consent
of each existing Partner adversely affected thereby, the General Partner
shall not (except, in each and every case, as may be required to correct
plain errors or ambiguities in this Agreement) amend this Agreement so as to
(i) require any Partner to make any additional contribution to the capital of
the Partnership; or (ii) require any Partner to restore any negative balance
in its capital account or otherwise to contribute any capital to the
Partnership, except as required under the Act, the Code or other applicable
laws or as expressly provided herein.
(b) This Agreement shall not be amended without the prior
written consent of each Partner adversely affected if such amendment would
(i) convert a Limited Partnership Interest in the Partnership into a General
Partnership Interest, or (ii) modify the limited liability of a Limited
Partner.
(c) In addition to the foregoing, for so long as any Class A
Units remain outstanding, this Agreement may not be amended unless such
amendment is approved by the holders of at least a majority of the Class A
Units then outstanding (including the Class A Units held by the General
Partner), except:
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(i) as otherwise expressly provided herein;
(ii) to add to the obligations of the General Partner or
surrender any right or power granted to the General Partner or any Affiliate
of the General Partner for the benefit of the Limited Partners;
(iii) to reflect the issuance of additional
Partnership Interests, and the admission, substitution, termination or
withdrawal of Partners, in each case in accordance with the provisions of
this Agreement;
(iv) to record permitted Transfers of Partnership Units on
the books of the Partnership;
(v) to reflect a change that is of an inconsequential
nature and does not adversely affect the holders of the Class A Units in any
material respect;
(vi) to cure any ambiguity or correct plain errors in this
Agreement; or
(vii) to satisfy any requirements, conditions, or
guidelines contained in any order, directive, opinion, ruling or regulation
of a federal or state agency or contained in federal or state law.
(d) In any matter requiring the vote or consent of holders of
Class A Units hereunder, Class A Units, if any, held by the General Partner
will be entitled to be counted in such vote or consent.
(e) This Section 21.7 may not be amended except with the prior
written consent of the General Partner and the holders of at least a majority
of the Class A United then outstanding.
21.8. Prior Reference Clarification. All references in the
Prior Agreement to "Safeguard Scientifics (Delaware), Inc." or "SSI" shall be
deemed to have been references to Safeguard Scientifics, Inc., a Pennsylvania
corporation, notwithstanding the stated effective date of this amendment and
restatement of the Prior Agreement.
21.9. Severability. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid by a court of competent jurisdiction, the remainder of this
Agreement, or the application of such provision to persons or circumstances
other than those to which it is held invalid by such court, shall not be
affected thereby.
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21.10. Trust Provision. This Agreement, to the extent executed
by the trustee of a trust, is executed by such trustee solely as trustee and
not in a separate capacity. Nothing herein contained shall create any
liability on, or require the performance of any covenant by, any such trustee
individually, nor shall anything contained herein subject the individual
personal property of any trustee to any liability. No recourse shall be had
for any obligation of the General Partner against any past, present or future
trustee, shareholder, officer or employee thereof.
21.11. Pronouns and Headings. As used herein, all pronouns shall
include the masculine, feminine and neuter, and all defined terms shall
include the singular and plural thereof wherever the context and facts
require such construction. The headings, titles and subtitles herein are
inserted for convenience of reference only and are to be ignored in any
construction of the provisions hereof. Any references in this Agreement to
"including" shall be deemed to mean "including without limitation."
21.12. Assurances. Each of the Partners shall hereafter execute
and deliver such further instruments and do such further acts and things as
may be required or useful to carry out the intent and purpose of this
Agreement and as are not inconsistent with the terms hereof.
21.13. Effective Time of Amendment. This amendment and
restatement of the Prior Partnership Agreement shall become effective
automatically as of November 18, 1997 upon the execution and delivery of this
Agreement by the General Partner and the holders of 75% or more of the
outstanding Class A Units (as of the date of this Agreement).
SPACE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the parties hereto have executed this Amended
and Restated Agreement of Limited Partnership of Brandywine Operating
Partnership, L.P. as of the date and year first above written.
GENERAL PARTNER:
BRANDYWINE REALTY TRUST
By: /s/ Gerard H. Sweeney
--------------------------------
Name: Gerard H. Sweeney,
President and Chief Executive Officer
CLASS A LIMITED PARTNERS:
Safeguard Scientifics, Inc.
By: /s/ James A. Ounsworth
--------------------------------
Name: James A. Ounsworth
Title: Senior Vice President
The Nichols Company
By: /s/ Anthony A. Nichols, Sr.
--------------------------------
Anthony A. Nichols, Sr., President
/s/ Brian F. Belcher
-------------------------------------
Brian F. Belcher
EXECUTIONS CONTINUED
-60-
<PAGE>
/s/ Jack R. Loew
--------------------------------
Jack R. Loew
/s/ Craig C. Hough
--------------------------------
Craig C. Hough
--------------------------------
Gary C. Bender
/s/ Werner Fricker
--------------------------------
Werner Fricker
EXECUTIONS CONTINUED
-61-
<PAGE>
BRANDYWINE HOLDINGS I, INC.
By: /s/ Gerard H. Sweeney
--------------------------------
Name: Gerard H. Sweeney,
President and Chief Executive Officer
BRANDYWINE REALTY TRUST
By: /s/ Gerard H. Sweeney
--------------------------------
Name: Gerard H. Sweeney,
President and Chief Executive Officer
The Management Company joins in this Agreement solely for the
purpose of agreeing to be bound by the provisions of Section 8.2(b) hereof.
BRANDYWINE REALTY SERVICES
CORPORATION
By: /s/ Gerard H. Sweeney
--------------------------------
Authorized Officer
END OF EXECUTIONS
-62-
<PAGE>
EXHIBIT A
LIST OF LIMITED PARTNERS
<TABLE>
<CAPTION>
ADDRESS OF RESIDENCE
(IF AN INDIVIDUAL) OR
EXECUTIVE OFFICES SOCIAL SECURITY
NAME (IF AN ENTITY) OR TAX ID NUMBER CLASS A UNITS
- --------------------------- ------------------------- ----------------- -------------
<S> <C> <C> <C>
Safeguard Scientifics, Inc. 800 The Safeguard Building 51-0291171 252,387
435 Devon Park Drive
Wayne, PA 19087
The Nichols Company 16 Campus Boulevard 23-2415327 2,742
Newtown Square, PA 19073
Brian F. Belcher 829 Juniper Drive ###-##-#### 7,245
Lafayette Hill, PA 19444
Jack R. Loew 1090 New Street ###-##-#### 1,245
West Chester, PA 19382
Craig C. Hough 1740 Hunter Circle ###-##-#### 1,245
West Chester, PA 19380
Gary C. Bender 46 Heron Hill ###-##-#### 1,434
Downingtown, PA 19335
Werner A. Fricker 708 McKean Road ###-##-#### 6,830
Ambler, PA 19002
Brandywine Holdings I, Inc. 16 Campus Boulevard 23-2856456 5
Newtown Square, PA 19073
Brandywine Realty Trust 16 Campus Boulevard 23-2413352 163,399
Newtown Square, PA 19073
</TABLE>
LIST OF GENERAL PARTNERS
<TABLE>
<CAPTION>
NAME ADDRESS TAX ID NUMBER GP UNITS
- --------------------------- ------------------------- ----------------- -------------
<S> <C> <C> <C>
Brandywine Realty Trust 16 Campus Boulevard 23-2413352 23,172,642
Newtown Square, PA 19073
</TABLE>
A-1
<PAGE>
EXHIBIT B
LIST OF CONTRIBUTED ASSETS
PART I: CONTRIBUTIONS OF INTERESTS IN WITMER PARTNERSHIP
<TABLE>
<CAPTION>
ASSETS CONTRIBUTED
TO PARTNERSHIP BY
CLASS A NUMBER OF CLASS A
LIMITED PARTNER UNITS OF
NAME OF CLASS A AS INITIAL PARTNERSHIP ISSUED DATE OF
LIMITED PARTNER CAPITAL CONTRIBUTION IN EXCHANGE CONTRIBUTION
- --------------------- --------------------- ----------------------- ------------------
<S> <C> <C> <C>
Brian F. Belcher 497 Class A Units of 5,893 August 22, 1996
Witmer Partnership
Jack R. Loew 105 Class A Units of 1,245 August 22, 1996
Witmer Partnership
Craig C. Hough 105 Class A Units of 1,245 August 22, 1996
Witmer Partnership
RDC Institute, Inc. 243 Class A Units of 2,881 August 22, 1996
Witmer Partnership
Gary C. Bender 121 Class A Units of 1,434 August 22, 1996
Witmer Partnership
Lotz Designers 1,803 Class A Units of 21,380 August 22, 1996
Engineers and Witmer Partnership
Constructors, Inc.
Werner A. Fricker 576 Class A Units of 6,830 August 22, 1996
Witmer Partnership
</TABLE>
B-1
<PAGE>
<TABLE>
<CAPTION>
ASSETS CONTRIBUTED
TO PARTNERSHIP BY
CLASS A NUMBER OF CLASS A
LIMITED PARTNER UNITS OF
NAME OF CLASS A AS INITIAL PARTNERSHIP ISSUED DATE OF
LIMITED PARTNER CAPITAL CONTRIBUTION IN EXCHANGE CONTRIBUTION
- --------------------- --------------------- ----------------------- ------------------
<S> <C> <C> <C>
The Nichols Company 14,577 Class A Units 253,168* August 22, 1996
of Witmer Partnership
and Promissory Note of
Witmer Operating
Partnership I, L.P. to
The Nichols Company in
the outstanding principal
amount of $1,201,746.
- ------------------------------------------------------------------------------------------------
TOTAL CLASS A UNITS 293,076 August 22, 1996
ISSUED
</TABLE>
* Includes 72,833 units issued in exchange for a note from Witmer Partnership,
as maker, to The Nichols Company, as payee, dated November 21, 1995, in the
original principal amount of $1,201,746.
B-2
<PAGE>
PART II: CONTRIBUTIONS OF INTERESTS IN TITLE HOLDING PARTNERSHIPS THAT OWN
CERTAIN PROPERTIES
<TABLE>
<CAPTION>
ASSETS CONTRIBUTED NUMBER OF
TO PARTNERSHIP BY CLASS A UNITS OF
NAME OF CLASS A CLASS A LIMITED PARTNER PARTNERSHIP ISSUED DATE OF
LIMITED PARTNER AS INITIAL CAPITAL CONTRIBUTION IN EXCHANGE CONTRIBUTION
- --------------------- -------------------------------- -------------------- ----------------
<S> <C> <C> <C>
The Nichols Company -- 87% Capital and 97% Profits 11,064 August 22, 1996
Limited Partnership interest in
C/N Oaklands Limited
Partnership III
-- 87% Capital and 97% Profits 34,217 August 22, 1996
Limited Partnership interest in
Iron Run Limited Partnership V
-- 82% Capital and 92% Profits 22,183 August 22, 1996
Limited Partnership interest in
C/N Iron Run Limited
Partnership III
- ---------------------------------------------------------------------------------------------------------
C/N Oaklands III, Inc. -- 2% Capital and 2% Profits 254 August 22, 1996
General Partnership interest in
C/N Oaklands Limited
Partnership III*
- ---------------------------------------------------------------------------------------------------------
Iron Run V, Inc. -- 2% Capital and 2% Profits 786 August 22, 1996
General Partnership interest in
Iron Run Limited Partnership V**
- ---------------------------------------------------------------------------------------------------------
</TABLE>
B-3
<PAGE>
<TABLE>
<CAPTION>
ASSETS CONTRIBUTED NUMBER OF
TO PARTNERSHIP BY CLASS A UNITS OF
NAME OF CLASS A CLASS A LIMITED PARTNER PARTNERSHIP ISSUED DATE OF
LIMITED PARTNER AS INITIAL CAPITAL CONTRIBUTION IN EXCHANGE CONTRIBUTION
- --------------------- -------------------------------- -------------------- ----------------
<S> <C> <C> <C>
C/N Iron Run III, Inc. -- 2% Capital and 2% Profits 541 August 22, 1996
General Partnership interest
in C/N Iron Run Limited
Partnership III
- ---------------------------------------------------------------------------------------------------------
Brian F. Belcher -- 5% Capital and 5% Profits 1,352 August 22, 1996
Limited Partnership interest
in C/N Iron Run Limited
Partnership III
- ---------------------------------------------------------------------------------------------------------
TOTAL CLASS A UNITS 70,397 August 22, 1996
ISSUED
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* On August 22, 1996, this general partnership interest was assigned to a
wholly-owned qualified REIT subsidiary of the General Partner called "BRT
Holding II, Inc." As of November 18, 1997, BRT Holding II, Inc. transferred
this general partnership interest to Brandywine Realty Trust which, in turn,
contributed such interest to the Partnership.
** On August 22, 1996, this general partnership interest was assigned to a
wholly-owned qualified REIT subsidiary of the General Partner called "BRT
Holding III, Inc." As of November 18, 1997, BRT Holding III, Inc.
transferred this general partnership interest to Brandywine Realty Trust
which, in turn, contributed such interest to the Partnership.
B-4
<PAGE>
PART III: CONTRIBUTIONS OF CERTAIN PROPERTIES
<TABLE>
<CAPTION>
ASSETS CONTRIBUTED TO
PARTNERSHIP BY CLASS A
LIMITED PARTNER AS NUMBER OF CLASS A
NAME OF CLASS A INITIAL CAPITAL UNITS ISSUED IN DATE OF
LIMITED PARTNER CONTRIBUTION EXCHANGE CONTRIBUTION
- ----------------------------------- ----------------------------------- -------------------- ------------------
<S> <C> <C> <C>
Safeguard Scientifics, Inc. Fee title to 2240/2250 Butler Pike 35,258 August 22, 1996
Plymouth Meeting, PA
Fee title to 140 West Germantown 171 August 22, 1996
Pike Plymouth Meeting, PA
Fee title to 2260 Butler Pike 14,207 August 22, 1996
Plymouth Meeting,PA
Fee title to 7310 Tilghman Street 14,951 August 22, 1996
Allentown, PA
Fee title to 110 Summit Drive 25,958 August 22, 1996
Exton, PA
- --------------------------------------------------------------------------------------------------------------------
Safeguard Scientifics, Inc. Fee title to 650 Dresher Road, 14,545 August 22, 1996
Horsham, PA
87% Capital and 99% Profits Limited 25,679 August 22, 1996
Partnership Interest in C/N Leedom
Limited Partnership II
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
B-5
<PAGE>
<TABLE>
<CAPTION>
ASSETS CONTRIBUTED TO
PARTNERSHIP BY CLASS A
LIMITED PARTNER AS NUMBER OF CLASS A
NAME OF CLASS A INITIAL CAPITAL UNITS ISSUED IN DATE OF
LIMITED PARTNER CONTRIBUTION EXCHANGE CONTRIBUTION
- ----------------------------------- ----------------------------------- -------------------- ------------------
<S> <C> <C> <C>
C/N Leedom II, Inc. 2% Capital and 2% Profits General 590 August 22, 1996
Partnership Interest in C/N Leedom
Limited Partnership II
- --------------------------------------------------------------------------------------------------------------------
TOTAL CLASS A UNITS ISSUED 131,359 August 22, 1996
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
B-6
<PAGE>
PART IV: CONTRIBUTIONS BY BRANDYWINE REALTY TRUST
<TABLE>
<CAPTION>
ASSETS CONTRIBUTED TO
PARTNERSHIP AS CAPITAL DATE OF
NAME OF PARTNER CONTRIBUTION NUMBER OF GP UNITS CONTRIBUTION
- ------------------------------- ------------------------------- ----------------------- ------------------------
<S> <C> <C> <C>
Brandywine Realty Trust 49% Capital and 97% Profits 533,333 August 22, 1996
interest in Brandywine Realty
Partners
- --------------------------------------------------------------------------------------------------------------------
Brandywine Realty Trust The SSI Ownership Interest (as 238,606 August 22, 1996
defined in Brandywine Realty
Trust's Proxy Statement for its
August 22, 1996 Shareholders
meeting)
- --------------------------------------------------------------------------------------------------------------------
Brandywine Realty Trust $1,000 cash and furniture, 61 August 22, 1996
fixtures and equipment
- --------------------------------------------------------------------------------------------------------------------
Brandywine Realty Trust Proceeds of Share issuance 1,606,060 December 2, 1996
- --------------------------------------------------------------------------------------------------------------------
Brandywine Realty Trust Proceeds of Share issuance 5,345,454 December 2, 1996
- --------------------------------------------------------------------------------------------------------------------
Brandywine Realty Trust Proceeds of Share issuance 600,000 December 13, 1996
- --------------------------------------------------------------------------------------------------------------------
Brandywine Realty Trust Proceeds of Share issuance 2,200,000 March 4, 1997
- --------------------------------------------------------------------------------------------------------------------
Brandywine Realty Trust Proceeds of Share issuance 175,500 March 17, 1997
- --------------------------------------------------------------------------------------------------------------------
Brandywine Realty Trust Proceeds of Share issuance 10,000,000 July 28, 1997
- --------------------------------------------------------------------------------------------------------------------
Brandywine Realty Trust Proceeds of Share issuance 1,500,000 August 20, 1997
- --------------------------------------------------------------------------------------------------------------------
Brandywine Realty Trust 21% Capital and 1% Profits 85,400 August 23, 1997
interest in Brandywine Realty
Partners
- --------------------------------------------------------------------------------------------------------------------
Brandywine Realty Trust Proceeds of Share issuance 786,840 September 16, 1997
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
B-7
<PAGE>
<TABLE>
<CAPTION>
ASSETS CONTRIBUTED TO
PARTNERSHIP AS CAPITAL DATE OF
NAME OF PARTNER CONTRIBUTION NUMBER OF GP UNITS CONTRIBUTION
- ------------------------------- ------------------------------- ----------------------- ------------------------
<S> <C> <C> <C>
Brandywine Realty Trust Assignment of income, gain, 101,388 November 18, 1997
profits, losses and cash flow
from LibertyView Building
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
B-8
<PAGE>
EXHIBIT C
LIST OF APPLICABLE MORTGAGE INDEBTEDNESS
ENCUMBERING CERTAIN PROPERTIES
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME OF LIMITED CLASS A UNITS
PARTNERS ENTITLED ISSUABLE UPON
OUTSTANDING TO RECEIVE REALIZATION OF
PROPERTY ENCUMBERED BY VALUE IN PRINCIPAL AMOUNT OF CLASS A UNITS DISCOUNT TO
APPLICABLE MORTGAGE BRT BALANCE AS NET EQUITY UPON REALIZATION SUCH LIMITED
INDEBTEDNESS MERGER OF 8/22/96 LENDER IN PROPERTY OF DISCOUNT PARTNER
- ------------------------- ------------ ------------ --------- ----------- ----------------- --------------
<C> <C> <C> <S> <C> <C> <C>
7310 Tilghman Street $2,782,000 $2,535,297 Pennsylvania State $246,703 Safeguard Scientifics, 100%
Employees' Inc.
Retirement System
486 Thomas Jones Way (1) $6,645,000 $6,435,156 First Union $209,844 The Nichols Company 100%
468 Creamery Way (1) National Bank
6575 Snowdrift Road $3,000,000 $2,351,067 First Union $648,933 The Nichols Company 100%
National Bank
</TABLE>
- ------------------------
(1) Both of these Properties secure a single loan. As of 8/22/96, the
outstanding principal balance of this loan was $6,435,156.
C-1
<PAGE>
EXHIBIT D
LIST OF RETAINED INTERESTS
<TABLE>
<CAPTION>
NUMBER OF
NAME OF CLASS A UNITS
NAME OF TITLE HOLDING PARTNER OWNING ISSUABLE TO ACQUIRE
PARTNERSHIP/PROPERTIES OWNED AMOUNT OF RETAINED INTEREST RETAINED INTEREST RETAINED INTEREST
- ------------------------------------ ----------------------------------- ------------------- -------------------
<S> <C> <C> <C>
C/N Oaklands Limited Partnership III 1% Profits and 11% Capital Interest The Nichols Company 1,399
- -486 Thomas Jones Way
- -468 Creamery Way
Iron Run Limited Partnership V 1% Profits and 11% Capital Interest The Nichols Company 4,326
- -6575 Snowdrift Road
C/N Iron Run Limited Partnership III 1% Profits and 11% Capital Interest The Nichols Company 2,976
- -7248 Tilghman Street
C/N Leedom Limited Partnership II 1% Profits and 11% Capital Interest Safeguard Scientifics, 3,246
- -120 West Germantown Pike Inc.
C/N Oaklands Limited Partnership I 1% Profits and 11% Capital Interest The Nichols Company 2,177
- -456 Creamery Way
Newtech IV Limited Partnership 1% Profits and 11% Capital Interest The Nichols Company 6,075
- -18 Campus Boulevard
Newtech III Limited Partnership 1% Profits and 11% Capital Interest The Nichols Company 1,744
- -16 Campus Boulevard
LC/N Keith Valley Limited Partnership 1% Profits and 11% Capital Interest The Nichols Company 6,067
- -500 Enterprise Road
LC/N Horsham Limited Partnership 1% Profits and 11% Capital Interest The Nichols Company 12,826
- -One Progress Road
Nichols Lansdale Limited 1% Profits and 11% Capital Interest The Nichols Company 3,486
Partnership III
- -1510 Gehman Road
TOTAL CLASS A UNITS 44,322
------
------
</TABLE>
D-1
<PAGE>
Schedule I
Notice of Redemption
The undersigned Limited Partner hereby irrevocably requests
Brandywine Operating Partnership, L.P., a Delaware limited partnership (the
"Partnership") to redeem _______________ Partnership Units in the Partnership
in accordance with the terms of the Amended and Restated Agreement of Limited
Partnership of the Partnership and the Redemption Right referred to therein;
and the undersigned Limited Partnership irrevocably (i) surrenders such
Partnership Units and all right, title and interest therein; and (ii) directs
that the Cash Amount or GP Shares Amount (as determined by the General
Partner) deliverable upon exercise of the Redemption Right be delivered to
the address specified below, and if Common Shares are to be delivered, such
Common Shares be registered or placed in the name(s) and at the address(es)
specified below. The undersigned hereby represents, warrants, and certifies
that the undersigned (a) has marketable and unencumbered title to such
Partnership Units, free and clear of the rights or interests of any other
person or entity; (b) has the full right, power, and authority to request
such redemption and surrender such Partnership Units as provided herein; and
(c) has obtained the consent or approval of all persons or entities, if any,
having the right to consent or approve such redemption and surrender of
Units. The undersigned Limited Partner further agrees that, in the event
that any state or local property tax is payable as a result of the transfer
of its Partnership Units to the Partnership or the General Partner, the
undersigned Limited Partner shall assume and pay such transfer tax.
Dated:___________________
Name of Limited Partner: _______________________________
Please Print
_______________________________
(Signature of Limited Partner)
_______________________________
(Street Address)
_______________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
________________________________
If Common Shares are to be issued, issue to:
Name: ________________________
Please insert social security number: __________________
<PAGE>
AGREEMENT
This Agreement is entered into as of the 18th day of November, 1997
by and among Brandywine Realty Trust, a Maryland real estate investment trust
("BRT"), Brandywine Operating Partnership, L.P., a Delaware limited
partnership ("BOP"), Brandywine Holdings, I, Inc., a Pennsylvania corporation
("BH I"), Brandywine Holdings II, Inc., a Pennsylvania corporation ("BH II"),
Brandywine Holdings III, Inc., a Pennsylvania corporation ("BH III") and
Brandywine Witmer, LLC, a Pennsylvania limited liability company ("BRT
Witmer").
Background
The parties are entering into this Agreement in order to effect the
following: (i) the assignment by BH I of its entire partnership interest (the
"Witmer Interest") interest in Witmer Operating Partnership I, L.P., a
Delaware limited partnership, to BRT Witmer and the assumption by BRT Witmer
of all liabilities of BH I; (ii) the assignment by BH II of its entire
partnership interest (the "C/N Interest") in C/N Oaklands Limited Partnership
III, a Pennsylvania limited Partnership ("C/N"), to BRT and the contribution
by BRT of the C/N Interest to BOP in exchange for certain modifications to
the Agreement of Limited Partnership of BOP (the "Partnership Agreement");
(iii) the assignment by BH III of its entire partnership interest (the "Iron
Run Interest") in Iron Run Limited Partnership V, a Pennsylvania limited
Partnership ("Iron Run"), to BRT and the contribution by BRT of the Iron Run
Interest to BOP; (iv) the assignment by BRT of its rights to all income,
gain, profits, losses and cash flow from the LibertyView Building
("LibertyView") to BOP in exchange for the issuance to BRT of 101,388 units
of general partnership interest ("GP Units") in BOP.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
1. BH I hereby sells, assigns and transfers the Witmer Interest to
BRT Witmer, and BRT Witmer hereby assumes all liabilities of BH I accrued
through the date hereof.
2. BH II hereby sells, assigns and transfers all of its assets,
whether tangible or intangible, to BRT, including without limitation, the C/N
Interest, and BRT hereby assumes any and all liabilities of BH II.
3. BH III hereby sells, assigns and transfers all of its assets,
whether tangible or intangible, to BRT, including without limitation, the
Iron Run Interest, and BRT hereby assumes any and all liabilities of BH III.
4. BRT hereby contributes to the capital of BOP the C/N Interest
and the Iron Run Interest and, in consideration for such contribution, the
partners of BOP have, concurrently with the execution and delivery of this
Agreement, agreed to amendments to the Partnership
<PAGE>
Agreement that eliminate the provisions in clause (ii) of Section 6.9 and in
clause (ii) of Section 7.5 of the Partnership Agreement providing for special
distributions and special allocations, respectively, on account of the
ownership by BH II and BH III of the C/N Interest and the Iron Run Interest.
The agreements of limited partnership of each of C/N and Iron Run will be
amended to reflect the admission of BOP as the new general partner in each of
C/N and Iron Run.
5. BRT hereby assigns to BOP, as a capital contribution, its
rights to all income, gain, profits, losses and cash flow from LibertyView in
exchange for the issuance by BOP to BRT of 101,388 GP Units.
6. The parties acknowledge that BRT intends to cause each of BH II
and BH III, which are wholly-owned subsidiaries of BRT, to liquidate and
dissolve following the execution and delivery of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date set forth above.
BRANDYWINE REALTY TRUST
By: /s/ Gerard H. Sweeney
------------------------------------------
Title: President and Chief Executive Officer
BRANDYWINE OPERATING
PARTNERSHIP, L.P.
By: BRANDYWINE REALTY TRUST, as
general partner
By: /s/ Gerard H. Sweeney
---------------------------------------
Name:
Title: President and Chief Executive
Officer
BRANDYWINE HOLDINGS I, INC.
By: /s/ Gerard H. Sweeney
---------------------------------------------
Name:
Title: President and Chief Executive
Officer
[EXECUTIONS CONTINUED]
<PAGE>
BRANDYWINE HOLDINGS II, INC.
By: /s/ Gerard H. Sweeney
---------------------------------------------
Name:
Title: President and Chief Executive
Officer
BRANDYWINE HOLDINGS III, INC.
By: /s/ Gerard H. Sweeney
---------------------------------------------
Name:
Title: President and Chief Executive
Officer
BRANDYWINE WITMER, LLC
By: Brandywine Operating Partnership. L.P., its
sole member, By Brandywine Realty Trust, its
general partner
By: /s/ Gerard H. Sweeney
---------------------------------------------
Name:
Title: President and Chief Executive
Officer
<PAGE>
PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS
1. IDENTIFICATION OF PARTIES.
-------------------------
THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS
(this "Agreement") is entered into as of December 4, 1997, by and between
BRANDYWINE REALTY TRUST, a Maryland real estate investment trust
("Purchaser"), and TCW REALTY FUND IV PENNSYLVANIA TRUST, a Pennsylvania
business trust ("Seller").
2. DESCRIPTION OF THE PROPERTY.
---------------------------
Seller agrees to sell, assign and convey to Purchaser, and Purchaser
agrees to purchase from Seller, all of Seller's right, title and interest in
and to the following:
(a) That certain real property located at 111-121 Presidential
Boulevard, Lower Merion Township, County of Montgomery, Commonwealth of
Pennsylvania, more particularly described on Exhibit A attached hereto and
incorporated herein by this reference (the "Land"), together with any
improvements located thereon (the "Improvements");
(b) All of Seller's interest as lessor in all leases covering the
Land and Improvements (said leases, together with any and all amendments,
modifications or supplements thereto, are hereinafter referred to
collectively as the "Leases" and are identified on the Schedule of Leases
attached hereto as Exhibit B);
(c) All rights, privileges, easements and appurtenances to 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, rights-of-way and other appurtenances used or
connected with the beneficial use or enjoyment of the Land and the
Improvements (the Land, the Improvements and all such easements and
appurtenances (including, without limitation, Seller's interest as lessor
under the Leases) are sometimes collectively hereinafter referred to as the
"Real Property");
(d) All personal property and fixtures (if any) owned by Seller and
located on the Real Property (the "Personal Property"); and
(e) All non-exclusive trademarks and trade names (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
Seller's interest (if any) in and to any service contracts, guarantees,
licenses, approvals, certificates, permits and warranties relating to the
-1-
<PAGE>
Property, to the extent assignable (collectively, the "Intangible
Property"). (The Real Property, the Personal Property, the Trade Names and
the Intangible Property are sometimes collectively hereinafter referred to
as the "Property").
3. THE PURCHASE PRICE.
------------------
The purchase price for the Property is Twenty-Six Million Seven
Hundred Fifty Thousand and no/100s Dollars ($26,750,00.00) (the "Purchase
Price") and shall be paid to Seller by Purchaser at the Closing (as that
term is defined in Section 14 below) as follows:
(a) Within one (1) business day after execution of this Agreement by
all parties, Purchaser shall deposit in escrow with Commonwealth Land Title
Insurance Company ("Escrow Company") an initial earnest money deposit in
immediately available funds in the amount of Five Hundred Thousand and
no/100s Dollars ($500,000.00) (the "Initial Deposit").
(b) On the same day as the expiration of the Due Diligence Period (as
defined in Section 5(a) below), Purchaser shall deposit in escrow with
Escrow Company an additional earnest money deposit in immediately available
funds in the amount of Five Hundred Thousand and no/100s Dollars
($500,000.00) (the "Additional Deposit"). The Initial Deposit and the
Additional Deposit are sometimes hereinafter collectively referred to as
the "Deposit." The Deposit paid by Purchaser pursuant to the terms hereof
shall be held by Escrow Company in an interest bearing account insured by
the federal government in an institution as directed by Purchaser and
reasonably acceptable to Seller. If the purchase and sale of the Property
is consummated as contemplated hereunder, the Deposit plus all interest
accrued thereon shall be paid to Seller and credited against the Purchase
Price. If the purchase and sale of the Property is not consummated because
of the failure of any Purchaser's Condition Precedent (as defined in
Section 9 below) or any other reason except for a default under this
Agreement on the part of Purchaser, the Deposit plus all interest accrued
thereon shall be immediately refunded to Purchaser. If the purchase and
sale of the Property is not consummated because of a default under this
Agreement on the part of Purchaser, the Deposit plus all interest accrued
thereon shall be paid to and retained by Seller pursuant to Section 17(b)
below.
(b) The balance of the Purchase Price over and above the amounts paid
by or credited to Purchaser pursuant to Sections 3(a) and (b) above shall
be paid to Seller by wire transfer of immediately available funds at the
Closing, plus or minus all prorations as provided herein.
-2-
<PAGE>
4. TITLE.
-----
(a) Seller ordered from Commonwealth Land Title Insurance Company
("Title Company") a title commitment pertaining to the Real Property (the
"Commitment"), together with copies of all documents relating to the title
exceptions referred to in such Commitment. The Commitment, together with
copies of all documents relating to the title exceptions referred to in
such Commitment, has been delivered to Purchaser.
(b) In the event that Purchaser elects to do so, Purchaser may obtain
an updated survey of the Real Property (the "Survey") prior to the Closing.
A copy of such Survey shall be promptly delivered to Seller and Title
Company. The Survey shall be sufficient to enable Title Company to update
the Commitment to: (i) delete the standard survey exception, (ii) add any
new title exceptions which are revealed by said Survey and an inspection of
the Real Property, and (iii) enable Title Company at the Closing to issue
an owner's policy of title insurance (with mechanic's lien coverage), and
shall be certified to Seller, Purchaser and Title Company. The Survey
shall be at Purchaser's sole cost and expense.
(c) As soon as possible after the execution of this Agreement,
Purchaser shall confer with the Title Company and attempt to resolve title
matters which Purchaser might otherwise disapprove. No later than three
(3) days prior to the expiration of the Due Diligence Period, Purchaser
shall notify Seller ("Purchaser's Disapproval Notice") in writing of any
title exceptions identified in the Commitment which Purchaser reasonably
disapproves. Any exception not disapproved in writing no later than three
(3) days prior to the expiration of the Due Diligence Period shall be
deemed approved by Purchaser, and shall constitute a "Permitted Exception"
hereunder. Purchaser and Seller agree that (i) all non-delinquent property
taxes and assessments, (ii) the rights of the tenants under the Leases,
(iii) all conditions, covenants, restrictions and easements of record which
do not unreasonably interfere with the current use of the Property, and
(iv) all matters created by or on behalf of 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." Within four (4) days after receipt of
Purchaser's Disapproval Notice, Seller shall notify Purchaser in writing of
any disapproved title exceptions 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 and Escrow Company within two (2) business 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.
If 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 and
Seller each
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shall be responsible for one-half of any title or escrow cancellation fees
("Cancellation Fees").
5. DUE DILIGENCE INSPECTIONS.
-------------------------
(a) As used in this Agreement, the term "Due Diligence Period" shall
mean the period from the date hereof until 5:00 p.m. Los Angeles time on
December 4, 1997. During the Due Diligence Period, and with reasonable
advance notice to Seller, Purchaser, its agents and representatives shall
be entitled to enter onto the Real Property during reasonable business
hours (subject to the rights of tenants in possession) to review the tenant
files, perform inspections and tests of the Property and the structural and
mechanical systems within any Improvements; provided, however, that in no
event shall (i) such inspections or tests 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 drill or bore on or through
the surface of the Property without Seller's prior written consent, which
consent may be given or withheld in Seller's sole and absolute discretion.
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,
and shall cause each of its contractors and agents to maintain (and shall
deliver to Seller evidence thereof), at Purchaser's sole cost and expense,
general liability insurance, from an insurer reasonably acceptable to
Seller, in the amount of One Million Dollars ($1,000,000) combined single
limit for personal injury and property damage per occurrence, such policies
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. Purchaser agrees to promptly
deliver to Seller copies of all reports, studies and results of tests and
investigations obtained or conducted by Purchaser with respect to the
Property.
(b) Purchaser agrees to keep the Property free from all liens and to
indemnify, defend, and hold harmless Seller, and Seller's officers,
directors, shareholders, beneficiaries, members, partners, agents,
employees and attorneys, and their respective successors and assigns, from
and against all claims, actions, losses, liabilities, damages, costs and
expenses (including, but not limited to, attorneys' fees and costs)
incurred, suffered by, or claimed against Seller by reason of any damage to
the Property or injury to persons caused by Purchaser and/or its agents,
employees or contractors in exercising its rights under this Section 5.
This indemnity shall survive the Closing or any termination of this
Agreement.
(c) Seller shall deliver within three (3) days after execution of
this Agreement (or has previously delivered) to Purchaser copies of the
documents listed in Exhibit C relating to the Property (to the extent the
same are in Seller's possession or control),
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subject to the confidentiality provisions of this Agreement, and the terms
of an Acknowledgment and Disclaimer in the form attached hereto as Annex 1,
which Purchaser shall execute and deliver to Seller together with
Purchaser's executed copy of this Agreement. Purchaser acknowledges and
agrees that the foregoing deliveries will be made by Seller to accommodate
and facilitate Purchaser's investigations relating to the Property, and
that, except as expressly set forth herein, Seller makes no representations
or warranties of any kind regarding the accuracy or thoroughness of the
information contained in the materials delivered to Purchaser.
(d) During the Due Diligence Period and with reasonable advance
notice to Seller, Purchaser, its agents and representatives shall be
entitled to inspect, during Seller's regular business hours, any other
material documents relating to the Property (if any) in Seller's possession
(provided, however, that, except as expressly set forth herein, Seller
makes no representations or warranties of any kind regarding the accuracy
or thoroughness of the information contained in such documents), excluding,
however, Seller's internal appraisals and economic evaluations of the
Property and reports regarding the Property prepared by Seller, Trust
Company of the West, Westmark Realty Advisors L.L.C. and/or TCW Realty
Advisors solely for internal use or for the information of the investors in
Seller.
(e) Purchaser may at any time during the Due Diligence Period
terminate this Agreement in its sole and absolute discretion, by sending to
Seller and Escrow Company written notice indicating Purchaser's election to
so terminate the Agreement. If Purchaser terminates this Agreement during
the Due Diligence Period, the Deposit, plus all interest accrued thereon,
shall be immediately refunded to Purchaser; provided, however, that
Purchaser and Seller each shall be responsible for one-half of any
Cancellation Fees. Purchaser's failure to terminate this Agreement prior
to the expiration of the Due Diligence Period in accordance with the
provisions of this Section 5 shall be deemed approval of the Property and
the matters covered by Purchaser's investigations and inspections thereof
and the only remaining contingencies to Purchaser's obligation to
consummate the transaction contemplated herein shall be Purchaser's
Conditions Precedent as set forth in Section 9(a) below.
6. REPRESENTATIONS AND WARRANTIES OF SELLER.
----------------------------------------
Seller represents and warrants to Purchaser that the following matters
are true and correct as of the execution of this Agreement and will also be true
and correct as of the Closing:
(a) Seller is a business trust, duly organized, validly existing and
in good standing under the laws of the Commonwealth of Pennsylvania.
(b) This Agreement is, and all the documents executed by Seller which
are to be delivered to Purchaser at the Closing will be, duly authorized,
executed, and delivered
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by Seller, and is and will be legal, valid, and binding obligations of
Seller enforceable against Seller in accordance with their respective terms
(except to the extent that such enforcement may be limited by applicable
bankruptcy, insolvency, moratorium and other principles relating to or
limiting the right of contracting parties generally), and does not and will
not violate any provisions of any agreement to which Seller is a party or
to which it is subject.
(c) Except as set forth in the materials delivered to Purchaser
pursuant to Section 5 above or as otherwise disclosed in writing by Seller
to Purchaser prior to the end of the Due Diligence Period, to Seller's
actual knowledge, there are no pending legal proceedings or administrative
actions of any kind or character adversely affecting the Property or
Seller's interest therein.
(d) Except as set forth in the materials delivered to Purchaser
pursuant to Section 5 above, or as otherwise disclosed in writing by Seller
to Purchaser prior to the end of the Due Diligence Period, Seller has
received no written notice from any city, county, state or other government
authority of any violation of any statute, ordinance, regulation, or
administrative or judicial order or holding, whether or not appearing in
public records, with respect to the Property, which violation has not been
corrected.
(e) Except as set forth in the materials delivered to Purchaser
pursuant to Section 5 above, or as otherwise disclosed in writing by Seller
to Purchaser prior to the end of the Due Diligence Period, Seller has
received no written notice from any city, county, state or other government
authority (i) of any order or directive requiring any work of repair,
maintenance or improvement be performed on the Property, or (ii) relating
to defects in the Improvements or relating to noncompliance with any
applicable building code or restriction that has not been corrected, or
relating to any threat of impending condemnation.
(f) Except as set forth in the materials delivered to Purchaser
pursuant to Section 5 above, or as otherwise disclosed in writing by Seller
to Purchaser prior to the end of the Due Diligence Period, Seller has
received no written notice that (i) 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 or industrial
hygiene (collectively, "Environmental Laws"), which violation has not been
corrected, or (ii) past or current tenants of all or any portion of the
Property have owned, used, generated, manufactured, stored, handled,
released or disposed of any hazardous or toxic substances on the Property
in violation of applicable Environmental Laws. Notwithstanding the
foregoing representations and warranties, the acts, if any, of Seller's
past or current tenants shall not be imputed to Seller.
(g) To Seller's actual knowledge, and except as set forth in the
tenant estoppel certificates delivered to Purchaser pursuant to Section
9(a) below or as otherwise
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<PAGE>
specifically disclosed in writing to Purchaser prior to the end of the Due
Diligence Period, (i) the Leases are in full force and effect and have not
been modified, and (ii) there is no current default in the performance of
the obligations of any party under the Leases. Except as disclosed in the
Commitment, there are no outstanding assignments by Seller of Seller's
interest in the Leases. To Seller's actual knowledge, there are no other
leases, service contracts, maintenance agreements or other agreements with
respect to the Property other than those delivered to Purchaser pursuant to
Section 5 hereof.
(h) Exhibit K attached hereto is a complete list of all existing
service, equipment, supply, maintenance and management contracts (including
the current property management agreement and exclusive brokerage or
leasing agreements, which agreements shall be terminated as of the Closing)
with respect to or affecting the Property. Unless otherwise directed by
Purchaser in writing prior to the expiration of the Due Diligence Period
all such other contracts shall not be terminated by the Seller as of the
Closing.
(i) There is no condemnation or eminent domain proceeding pending
with regard to any part of the Property. Seller has received no written
notice from any city, county, state or other government authority relating
to any threat of impending condemnation.
(j) To Seller's actual knowledge, all documentary information
required to be delivered by Seller to Purchaser under this Agreement shall
be true and complete copies of the documents required to be delivered.
(k) There are no employees of Selling working at the Property.
Trammel Crow manages the Property pursuant to an agreement with the Seller
which shall be terminated as of the Closing.
(l) Seller has not granted any person a right of first refusal, right
of first offer, option to purchase or other purchase right with respect to
any of the Property.
(m) Except as set forth in Exhibit L attached hereto or as otherwise
disclosed in writing by Seller to Purchaser prior to the end of the Due
Diligence Period, to Seller's actual knowledge, there are no leasing
commissions, fees or other compensation payable to any broker, leasing
agent or other similar third party with respect to any of the Leases (other
than those that may become due and payable upon the exercise of any option,
extension or renewal of any of the tenants under the Leases, which
commissions, fees or other compensation, to the extent of Seller's actual
knowledge thereof, are also disclosed on Exhibit L). Except as set forth
in Exhibit L attached hereto or as otherwise disclosed in writing by Seller
to Purchaser prior to the end of the Due Diligence Period, to Seller's
actual knowledge, there are no outstanding tenant improvement costs or
allowances which the landlord is responsible for with respect to any of the
Leases.
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<PAGE>
(n) To Seller's actual knowledge, the rent roll attached hereto as
Exhibit M is true, correct and complete in all material respects. The rent
roll which Seller shall deliver to Purchaser at the Closing shall, to
Seller's actual knowledge, be true, correct and complete in all material
respects.
As used in this Agreement, the phrase "to Seller's actual
knowledge" or words of similar import shall mean the actual (and not
constructive or imputed) knowledge, without independent investigation
or inquiry, of Joseph Markling and Pamela Muller (and Seller
represents that Joseph Markling is the individual with primary
responsibility for the sale of the Property, and that Pamela Muller is
the individual with the primary responsibility for overseeing the
management and operation of the Property). The express
representations and warranties made in this Agreement shall not merge
into any instrument or conveyance delivered at the Closing; provided,
however, that any action, suit or proceeding with respect to the
truth, accuracy or completeness of such representations and warranties
shall be commenced and served, if at all, on or before the date which
is six (6) months after the date of the Closing and, if not commenced
and served on or before such date, thereafter shall be void and of no
force or effect. Seller shall have no liability with respect to any
of the foregoing representations and warranties if, prior to the
Closing, Purchaser actually discovers or otherwise learns of
information (from whatever source, including, without limitation, the
tenant estoppel certificates delivered pursuant to Section 9(a) 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 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. Purchaser shall be deemed to have actually discovered or
otherwise learned information which was (i) disclosed in writing to
Purchaser by Seller or Seller's agents and employees, (ii) contained
within the tenant estoppel certificates delivered pursuant to Section
9(a) below, (iii) obtained by Purchaser as a result of Purchaser's due
diligence tests, investigations and inspections of the Property,
and/or (iv) delivered to Purchaser pursuant to Section 5.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER.
------------------------------------------------------
Purchaser represents and warrants to Seller that the following matters
are true and correct as of the execution of this Agreement and will also be true
and correct as of the Closing:
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<PAGE>
(a) Purchaser is a real estate investment trust, duly formed, validly
existing and in good standing under the laws of the State of Maryland.
(b) This Agreement is, and all the documents executed by Purchaser
which are to be delivered to Seller at the Closing will be, duly
authorized, executed, and delivered by Purchaser, and is and will be legal,
valid, and binding obligations of Purchaser enforceable against Purchaser
in accordance with their respective terms (except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency, moratorium
and other principles relating to or limiting the right of contracting
parties generally), and does not and will not violate any provisions of any
agreement to which Purchaser is a party or to which it is subject.
(c) That (i) prior to the Closing, Purchaser will have had the
opportunity to investigate all physical and economic aspects of the
Property and to make all inspections and investigations of the Property
which Purchaser deems necessary or desirable to protect its interests in
acquiring the Property, including, without limitation, review of the Leases
(and the rights of the tenants thereunder), building permits, certificates
of occupancy, environmental audits and assessments, toxic reports, surveys,
investigation of land use and development rights, development restrictions
and conditions that are or may be imposed by governmental agencies,
agreements with associations affecting or concerning the Property, the
condition of title, soils and geological reports, engineering and
structural tests, insurance contracts, contracts for work in progress,
marketing studies, cost-to-complete studies, governmental agreements and
approvals, architectural plans and site plans, and (ii) except as otherwise
expressly set forth in this Agreement, neither Seller, nor anyone acting
for or on behalf of Seller, has made any representation, warranty, promise
or statement, express or implied, to Purchaser, or to anyone acting for or
on behalf of Purchaser, concerning the Property or the condition, use or
development thereof. Purchaser further represents and warrants that, in
entering into this Agreement, Purchaser has not relied on any
representation, warranty, promise or statement, express or implied, of
Seller, or anyone acting for or on behalf of Seller, other than as
expressly set forth in this Agreement, and that all matters concerning the
Property have been or shall be independently verified by Purchaser prior to
the Closing, and that Purchaser shall purchase the Property on Purchaser's
own prior investigation and examination of the Property (or Purchaser's
election not to do so); AND THAT, AS A MATERIAL INDUCEMENT TO THE EXECUTION
AND DELIVERY OF THIS AGREEMENT BY
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<PAGE>
SELLER, PURCHASER IS PURCHASING THE PROPERTY IN AN "AS IS" PHYSICAL
CONDITION AND IN AN "AS IS" STATE OF REPAIR, WITH ALL FAULTS. Except as
may be set forth in this Agreement, Purchaser waives, and Seller disclaims,
all warranties of any type or kind whatsoever with respect to the Property,
whether express or implied, including, by way of description but not
limitation, those of fitness for a particular purpose and use.
Notwithstanding anything to the contrary herein, Purchaser and Seller
acknowledge that any written disclosures made by Seller prior to the
Closing shall constitute notice to Purchaser of the matter disclosed, and
Seller shall have no further liability thereafter if Purchaser thereafter
consummates the transaction contemplated hereby.
(d) Neither Purchaser nor Brandywine Operating Partnership, L.P.
("BOP"), is an employee benefit plan (a "Plan") subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or Section
4975 of the Internal Revenue Code of 1986, as amended (the "Code"), nor a
person or entity acting, directly or indirectly, on behalf of any Plan or
using the assets of any Plan to acquire the Property, Purchaser and BOP are
not a "party in interest" (as that term is defined in Section 3(14) of
ERISA) with respect to any Plan that is an investor in Seller (as
identified in Exhibit D attached to this Agreement), and Purchaser's or
BOP's acquisition of the Property will not constitute or result in a
prohibited transaction under Section 406 of ERISA or Section 4975 of the
Code.
(e) It is expressly acknowledged by Purchaser that no financing for
this transaction shall be provided by Seller.
8. CONFIDENTIALITY.
---------------
Except as required by law, Purchaser agrees that it shall keep
confidential the information contained in the materials delivered or provided
for inspection by Seller pursuant to Section 5 above and shall not disclose such
information to any third parties, except that Purchaser shall have the right to
provide such information to its lenders, consultants, attorneys and prospective
investors in connection with Purchaser's acquisition of the Property (provided
that Purchaser shall instruct the aforesaid parties to maintain the
confidentiality of such information). If the transaction contemplated by this
Agreement is not consummated for any reason, Purchaser promptly shall return to
Seller, and instruct its representatives, consultants, attorneys, and
prospective investors to return to Seller, all copies and originals of
information and materials previously provided for inspection by Seller to
Purchaser. The provisions of this Section 8 shall survive any termination of
this Agreement. This Section 8 shall cease to apply to
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<PAGE>
Purchaser upon the Closing of the purchase and sale contemplated by this
Agreement.
9. CONDITIONS PRECEDENT TO CLOSING.
-------------------------------
(a) The following shall be conditions precedent to Purchaser's
obligation to consummate the purchase and sale transaction contemplated
herein (the "Purchaser's Conditions Precedent"):
(i) Purchaser shall not have terminated this Agreement in
accordance with Section 4, Section 5, Section 16(a) or Section 16(b)
of this Agreement within the time periods described in said Sections.
(ii) Title Company shall stand ready to issue, at the Closing, an
owner's policy of title insurance on the standard owner's form issued
in the Commonwealth of Pennsylvania (the "Title Policy"), insuring
Purchaser's interest in the Real Property, dated the day of the
Closing, with liability in the amount of the Purchase Price, subject
only to the standard exclusions from coverage and the Permitted
Exceptions.
(iii) Purchaser shall have received and reasonably approved,
prior to the Closing, executed estoppel certificates substantially in
the form of Exhibit C hereto from tenants occupying at least eighty
percent (80%) of the leasable space in the Improvements which is
leased as of the date of this Agreement, provided, however, that if
the form of estoppel certificate attached hereto as Exhibit C requests
information in addition to or different than that required to be given
pursuant to a tenant's Lease, this condition will be satisfied for
such tenant(s) if such tenant(s) executes an estoppel certificate in
the form required pursuant to its Lease. If any of the executed
estoppel certificates including, without limitation, those used to
satisfy the percentage requirement set forth in the preceding
sentence, contains new information which is adverse to Purchaser and
which information was not previously disclosed to Purchaser or
delivered to Purchaser pursuant to Section 5 above, Purchaser shall
have the right to terminate this Agreement and the Deposit, plus all
interest accrued thereon, shall be immediately refunded to Purchaser.
If Seller is unable to obtain an estoppel certificate from any tenant,
then, in lieu thereof, Seller shall provide to Purchaser a certificate
pertaining to that tenant covering the same matters that would have
been set forth in the
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<PAGE>
tenant's estoppel certificate (and if, after the Closing, Seller
delivers to Purchaser a tenant estoppel certificate from a tenant for
whom Seller executed a Seller's certification at the Closing, then
Seller thereafter shall be released from said certification). Subject
to the preceding sentence, Seller's liability in connection with any
Seller's certificate shall not merge into any instrument or conveyance
delivered at the Closing; provided, however, that any action, suit or
proceeding with respect to the truth, accuracy or completeness of such
certificate shall be commenced and served, if at all, on or before the
date which is six months (6) months after the date of the Closing and,
if not commenced and served on or before such date, thereafter shall
be void and of no force or effect.
(iv) There shall be no material breach of any of Seller's
representations, warranties or covenants set forth in Section 6 and
Section 10, as of the Closing.
(v) Seller shall have delivered to the Escrow Company the items
described in Section 11.
The conditions set forth in this Section 9(a) are solely for the benefit of
Purchaser and may be waived only by Purchaser. Purchaser shall, at all
times prior to the termination of this Agreement, have the right to waive
any of these conditions.
(b) The following shall be conditions precedent to Seller's
obligation to consummate the purchase and sale transaction contemplated
herein (the "Seller's Conditions Precedent"):
(i) Purchaser shall not have terminated this Agreement in
accordance with Section 4, Section 5, Section 16(a) or Section 16(b)
of this Agreement within the time periods described in said Sections.
(ii) Purchaser shall have delivered to Escrow Company, prior to
the Closing, for disbursement as directed hereunder, all cash or other
immediately available funds due from Purchaser in accordance with this
Agreement.
(iii) There shall be no material breach of any of Purchaser's
representations, warranties or covenants set forth in Section 5 and
Section 7, as of the Closing.
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<PAGE>
(iv) Purchaser shall have delivered to Escrow Company the items
described in Section 12.
(v) On or before five (5) business days after the execution of
this Agreement, Seller shall have obtained final approval of the
transaction contemplated by this Agreement from Seller's Investment
Committee. If Seller notifies Purchaser in writing that it has not
received said approval or if Seller fails to notify Purchaser of said
approval, this Agreement shall be null and void and the parties shall
have no further obligations or liabilities hereunder except that (i)
any money or documents in escrow shall be returned to the party
depositing the same and (ii) Seller shall be responsible for any
Cancellation Fees and Purchaser's obligation to restore the Property
under Section 5(a), Purchaser's indemnification obligations under
Section 5(b), and Purchaser's confidentiality obligations under
Section 8 shall survive such termination.
(vi) Seller shall have received a fully executed letter in the
form attached hereto as Exhibit D from the broker(s) identified in
Section 18 below.
The conditions set forth in this Section 9(b) are solely for the benefit of
Seller and may be waived only by Seller. Seller shall, at all times prior
to the termination of this Agreement, have the right to waive any of these
conditions.
10. COVENANTS OF SELLER.
-------------------
Seller covenants with Purchaser, as follows:
(a) After the date hereof and prior to the Closing, no part of the
Property, or any interest therein, will be sold, encumbered or otherwise
transferred without Purchaser's consent.
(b) After the date hereof and prior to the Closing, Seller shall not
enter into any new Leases, or amend, modify or extend any existing Leases,
in any case without the prior written consent of Purchaser (which consent
shall not be unreasonably withheld or delayed). If Purchaser consents to
any such new Lease, or to the amendment, modification or extension of any
existing Lease, Purchaser shall be solely responsible for the payment of
all leasing commissions in connection therewith and any tenant improvement
costs or allowance, move-in allowance and any other payment to the tenant
thereunder (whether coming due prior to the Closing
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(if the transaction contemplated by this Agreement closes, in which case
any such amount shall be payable to Seller at the Closing), or coming due
after the Closing). The preceding sentence shall not apply in the event
that the transaction contemplated by this Agreement is not consummated.
Purchaser and Seller agree to allocation of responsibility for the leasing
commissions and the tenant improvement costs or allowances as summarized on
Exhibit L; provided, however, the transaction contemplated by this
Agreement is consummated.
(c) Until the Closing, Seller shall keep the Property insured against
fire, vandalism and other loss, damage and destruction, provided, however,
that Seller's insurance policies shall not be assigned to Purchaser at the
Closing, and Purchaser shall be obligated to obtain its own insurance
coverage from and after the Closing.
(d) Until the Closing, Seller shall operate and maintain the Property
in the manner being operated and maintained on the date of this Agreement.
(e) Except as otherwise agreed or provided herein, Seller shall be
responsible for the payment of contractors, subcontractors or materialmen
retained by Seller to perform work or provide services or materials
relating to the period prior to the Closing.
11. SELLER'S CLOSING DELIVERIES.
---------------------------
At least one (1) business day prior to the Closing, Seller shall
deliver or cause to be delivered to Escrow Company the following:
(a) A Special Warranty Deed executed by Seller, in the form of
Exhibit E attached hereto, conveying the Real Property to Purchaser free
and clear of all claims, liens and encumbrances except the Permitted
Exceptions and matters arising by or through Purchaser (the "Special
Warranty Deed").
(b) A Bill of Sale executed by Seller, in the form of Exhibit F
attached hereto, conveying to the Purchaser title to the Personal Property,
if any (the "Bill of Sale").
(c) An affidavit in the form of Exhibit G attached hereto, certifying
that Seller is not a "foreign person" within the meaning of Section
1445(f)(3) of the Code (the "Certificate of Non-Foreign Status").
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(d) A General Assignment executed by Seller, in the form of Exhibit H
attached hereto, assigning to Purchaser the approved service contracts and
any warranties, guaranties and indemnities relating to the Property, to the
extent that such items are assignable (the "General Assignment").
(e) An Assignment of Leases executed by Seller, in the form of
Exhibit I attached hereto, assigning to Purchaser all of Seller's interest
under the Leases (the "Assignment of Leases").
(f) Any other documents, instruments or agreements reasonably
necessary to effectuate the transaction contemplated by this Agreement.
12. PURCHASER'S CLOSING DELIVERIES.
------------------------------
At least one (1) business day prior to the Closing, Purchaser shall
deliver to Escrow Company:
(a) The balance of the Purchase Price, together with such other sums
as Escrow Company shall require to pay Purchaser's share of the Closing
costs, prorations, reimbursements and adjustments as set forth in Sections
13 and 15 herein, in immediately available funds.
(b) An executed counterpart of the General Assignment and the
Assignment of Leases, whereby Purchaser shall assume the obligations
relating to the matters set forth in such documents.
(c) Any other documents, instruments or agreements reasonably
necessary to effectuate the transaction contemplated by this Agreement.
13. PRORATIONS AND ADJUSTMENTS.
--------------------------
(a) The following shall be prorated and adjusted between Seller and
Purchaser as of the day of the Closing, except as otherwise specified:
(i) General real estate, personal property and ad valorem taxes
and assessments, and any improvement or other bonds encumbering the
Property, for the current tax year for the Property.
(ii) Utility charges, if any, and such other items that are
customarily prorated in transactions of this nature shall be ratably
prorated.
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(iii) Rent and other charges under the Leases (other than
Delinquent Rents (as hereinafter defined)). Rents and other charges
under the Leases which are 30 days or more past due as of the Closing
("Delinquent Rents") shall not be prorated, and rents and other
amounts received by Purchaser or Seller after the Closing from a
tenant owing such Delinquent Rents shall be applied (A) first, to
Purchaser's actual out-of-pocket costs of collection incurred with
respect to such tenant; (B) second, to rents due from such tenant for
the month in which such payment is received by Purchaser; (C) third,
to rents attributable to any period after the Closing which are past
due on the date of receipt; (D) fourth, to Delinquent Rents as of the
Closing (and Purchaser promptly shall remit such amounts to Seller);
and (E) finally, to Seller's costs of collection incurred with respect
to such tenant prior to the Closing. Purchaser agrees that it shall
use commercially reasonable efforts to collect any such 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). Seller may pursue
a tenant after the Closing for collection of Delinquent Rents but
Seller shall not have the right to institute any action for unlawful
detainer or eviction or termination of the Lease against such tenant.
(iv) The amount of all unapplied security deposits under the
Leases shall be credited to Purchaser; provided, however, that if any
tenant security deposit is in the form of a letter of credit,
promissory note or similar instrument, Seller shall use its best
efforts to cause such letter of credit, promissory note or other
instrument to be assigned and transferred to Purchaser no later than
sixty (60) days after the Closing, and there shall be no credit
against the Purchase Price at the Closing with respect to any such
tenant security deposit.
(b) 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.
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(c) The amount of such prorations shall be initially performed by
Seller and Purchaser at Closing but shall be subject to adjustment in cash
after the Closing outside of escrow 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 (except with respect to property taxes, which shall be adjusted
within sixty (60) days after the tax bills for the applicable period are
received). Without limiting the generality of the foregoing, Seller and
Purchaser agree that:
(i) with respect to any year-end reconciliations of reimbursable
expenses under the Leases, Seller and Purchaser shall cooperate to
complete such reconciliations as soon as possible after the Closing,
with Seller responsible for amounts owing to tenants under the Leases,
and entitled to amounts payable by tenants under the Leases (as the
case may be), with respect to periods prior to the Closing, and with
Purchaser responsible for amounts owing to tenants under the Leases,
and entitled to amounts payable by tenants under the Leases (as the
case may be), with respect to periods from and after the Closing (and,
with respect to any such amounts payable to Seller, Purchaser agrees
that it shall use commercially reasonable efforts to collect such
amounts, provided, however, that Purchaser shall have no obligation to
institute legal proceedings, including an action for unlawful
detainer, against a tenant owing any such amounts);
(ii) with respect to any property tax appeals or reassessments
filed by Seller for tax years prior to the year in which the Closing
occurs, Seller shall be entitled to the full amount of any refund or
rebate resulting therefrom (subject to any requirement under the
Leases to pay to the tenants thereunder a share of any such refund or
rebate, which shall be Seller's sole obligation), and with respect to
any property tax appeals or reassessments filed by Seller for the tax
year in which the Closing occurs, Seller and Purchaser shall share the
amount of any rebate or refund resulting therefrom (after first paying
to Seller all costs and expenses incurred by Seller in pursuing such
appeal or reassessment) in proportion to their respective periods of
ownership of the Property for such tax year (with Seller and Purchaser
each obligated for any amount of such refund or rebate required to be
paid to the tenants under the Leases for its respective period of
ownership of the Property for such tax year); and
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(iii) in no event will there be any proration of insurance
premiums under Seller's existing policies of insurance relating to the
Property, and Purchaser acknowledges and agrees that none of Seller's
insurance policies (or any proceeds payable thereunder, except as
expressly provided for in Section 16 below) will be assigned to
Purchaser at the Closing, and Purchaser shall be solely obligated to
obtain any and all insurance that it deems necessary or desirable.
(d) Except as set forth in this Section 13, 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 this Section 13 shall survive the Closing.
14. CLOSING.
Notwithstanding anything to the contrary contained in this Agreement,
the purchase and sale contemplated herein shall close (the "Closing") on such
specific date and time mutually agreed to by the parties, but in no event later
than December 5, 1997. As used herein, the term "Closing" means the date and
time that Escrow Company (i) delivers Seller's Special Warranty Deed to
Purchaser and (ii) Escrow Company commences to wire transfer to Seller the
Purchase Price less Seller's share of the closing costs, reimbursements and
prorations provided for in this Agreement.
15. CLOSING COSTS.
-------------
Seller shall pay fifty percent (50%) of any documentary transfer tax
due in connection with the consummation of the transaction contemplated herein,
the cost of title curative endorsements which Seller elects to obtain pursuant
to Section 4 above, and fifty percent (50%) of all other escrow and closing
costs. Purchaser shall pay fifty percent (50%) of any documentary transfer tax
due in connection with the consummation of the transaction contemplated herein,
all costs and expenses incurred in connection with obtaining any financing for
the purchase of the Property, including title, escrow, documentation and
appraisal costs relating thereto, the premium for the Title Policy, any
additional title insurance premium payable in connection with Purchaser
obtaining any lender's policy of title insurance, the cost of any title
endorsements which are not title curative endorsements which Seller elects to
obtain pursuant to Section 4 above, the fee for recording the Special Warranty
Deed, and fifty percent (50%) of all other escrow and closing costs. Each party
shall bear the expense of its own counsel. Unless otherwise specified herein,
if the sale of the Property
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contemplated hereunder does not occur because of a default on the part of
Purchaser, all Cancellation Fees shall be paid by Purchaser; if the sale of the
Property does not occur because of a default on the part of Seller, all
Cancellation Fees shall be paid by Seller.
16. RISK OF LOSS.
------------
(a) If prior to the Closing, the Improvements, or any part thereof,
are materially damaged (as set forth in Section 16(d)), Purchaser shall
have the right, exercisable by giving written notice to Seller within ten
(10) days after receiving written notice of such damage or destruction (but
in any event prior to the Closing), either (i) to terminate this Agreement,
in which case neither party shall have any further rights or obligations
hereunder (except as may be expressly provided to the contrary elsewhere in
this Agreement), and any money (including, without limitation, the Deposit
and all interest accrued thereon) or documents in escrow shall be returned
to the party depositing the same and Purchaser and Seller each shall be
responsible for one-half of any Cancellation Fees, or (ii) to accept the
Property in its then condition and to proceed with the Closing without any
abatement or reduction in the Purchase Price and receive an assignment of
all of Seller's right to any insurance proceeds payable by reason of such
damage or destruction. A failure by Purchaser to notify Seller in writing
within such ten (10) day period shall be deemed an election to proceed
under clause (ii) above. If Purchaser elects (or is deemed to elect) to
proceed under clause (ii) above, Seller shall not compromise, settle or
adjust any claims to such proceeds without Purchaser's prior written
consent.
(b) If prior to the Closing, all or any material portion (as set
forth in Section 16(d)) of the Property is subject to a taking by public
authority, Purchaser shall have the right, exercisable by giving written
notice to Seller within ten (10) days after receiving written notice of
such taking (but in any event prior to the Closing), either (i) to
terminate this Agreement, in which case neither party shall have any
further rights or obligations hereunder (except as may be expressly
provided to the contrary elsewhere in this Agreement), and any money
(including, without limitation, the Deposit and all interest accrued
thereon) or documents in escrow shall be returned to the party depositing
the same, and Purchaser and Seller each shall be responsible for one-half
of any Cancellation Fees, or (ii) to accept the Property in its then
condition, without any abatement or reduction in the Purchase Price, and
receive an assignment of all of Seller's rights to any condemnation award
payable by reason of such taking. A failure by Purchaser to notify Seller
in writing within such ten (10) day
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period shall be deemed an election to proceed under clause (ii) above. If
Purchaser elects (or is deemed to elect) to proceed under clause (ii)
above, Seller shall not compromise, settle or adjust any claims to such
award without Purchaser's prior written consent. As used in this Section
16, "taking" shall mean any transfer of the Property or any portion thereof
to a governmental entity or other party with appropriate authority, by
exercise of the power of eminent domain.
(c) If prior to the Closing, any non-material portion of the Property
is damaged or subject to a taking, Purchaser shall accept the Property in
its then condition (without any abatement or reduction in the Purchase
Price) and proceed with the Closing, in which case Purchaser shall be
entitled to an assignment of all of Seller's rights to any insurance
proceeds or any award in connection with such taking, as the case may be.
If any such non-material damage or taking occurs, Seller shall not
compromise, settle or adjust any claims to such insurance proceeds or such
award, as the case may be, without Purchaser's prior written consent.
(d) For the purpose of this Section 16, damage to the Property or a
taking of a portion thereof shall be deemed to involve a material portion
thereof if the reasonably estimated cost of restoration or repair of such
damage or the amount of the condemnation award with respect to such taking
shall exceed Three Hundred Fifty Thousand and no/100s Dollars
($350,000.00).
(e) Seller agrees to give Purchaser notice of any taking, damage or
destruction of the Property promptly after Seller obtains knowledge
thereof.
17. DEFAULT.
-------
(a) In the event that, prior to the Closing, Purchaser discovers or
learns of information (from whatever source, including, without limitation,
the tenant estoppel certificate delivered pursuant to Section 10(a) below,
as a result of Purchaser's due diligence tests, investigations and
inspections of the Property, by disclosure from Seller or Seller's agents
and employees or otherwise) that contradicts any of the representations and
warranties of Seller contained herein, or renders any of such
representations and warranties untrue or incorrect, Purchaser shall have
the right, exercisable by giving written notice to Seller within five (5)
days after receiving notice of such information (but in any event prior to
the Closing), either (i) to terminate this Agreement, in which case neither
party shall have any further rights or obligations hereunder (except as may
be
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expressly provided to the contrary elsewhere in this Agreement), and any
money (including, without limitation, the Deposit and all interest accrued
thereon) or documents in escrow shall be returned to the party depositing
the same and Seller shall be responsible for any Cancellation Fees, or
(ii) to accept the Property notwithstanding such information and
nevertheless consummate the transaction contemplated by this Agreement, in
which event thereafter Seller shall have no liability with respect to such
information and/or any of such representations and warranties contradicted
or made untrue or incorrect thereby. In the event, prior to the Closing,
Seller defaults in any other manner under this Agreement, Purchaser shall
have the right, exercisable by giving written notice to Seller within five
(5) days after the date Purchaser learns of such default (but in any event
prior to the Closing), either (i) to terminate this Agreement, in which
case neither party shall have any further rights or obligations hereunder
(except as may be expressly provided to the contrary elsewhere in this
Agreement), and any money (including, without limitation, the Deposit and
all interest accrued thereon) or documents in escrow shall be returned to
the party depositing the same and Seller shall be responsible for any
Cancellation Fees, or (ii) to accept the Property notwithstanding such
default by waiving such default and nevertheless consummating the
transaction contemplated by this Agreement, in which event thereafter
Seller shall have no liability with respect to such default. In the event
Seller's default consists of Seller's refusal or failure to convey the
Property, Purchaser's sole remedy shall be to elect either (i) to bring an
action for specific performance; provided, however, that in any such
action, Purchaser shall not be entitled to any monetary damages, or (ii) to
terminate this Agreement, in which case neither party shall have any
further rights or obligations hereunder (except as may be expressly
provided to the contrary elsewhere in this Agreement), and any money
(including, without limitation, the Deposit and all interest accrued
thereon) or documents in escrow shall be returned to the party depositing
the same and Seller shall be responsible for any Cancellation Fees. In the
event of any breach or default by Seller, which occurs or which Purchaser
first discovers after the Closing, Purchaser shall be limited to recovering
its actual damages but not any consequential damages.
(b) IF PURCHASER FAILS TO CLOSE THE PURCHASE OF THE PROPERTY FOR ANY
REASON OTHER THAN SELLER'S DEFAULT OR FAILURE OF A PURCHASER'S CONDITION
PRECEDENT, THE DEPOSIT, PLUS ANY INTEREST ACCRUED THEREON, SHALL BE PAID TO
AND RETAINED BY SELLER AS
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LIQUIDATED DAMAGES. THE AMOUNT PAID TO AND RETAINED BY SELLER AS
LIQUIDATED DAMAGES SHALL BE SELLER'S SOLE REMEDY IF PURCHASER FAILS TO
CLOSE THE PURCHASE OF THE PROPERTY. THE PARTIES HERETO EXPRESSLY AGREE AND
ACKNOWLEDGE THAT SELLER'S ACTUAL DAMAGES IN THE EVENT OF A DEFAULT BY
PURCHASER WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO ASCERTAIN AND
THAT THE AMOUNT OF THE DEPOSIT PLUS ANY INTEREST ACCRUED THEREON REPRESENTS
THE PARTIES' REASONABLE ESTIMATE OF SUCH DAMAGES. NOTWITHSTANDING ANYTHING
TO THE CONTRARY CONTAINED IN THIS SECTION 17(b), SELLER AND PURCHASER AGREE
THAT THIS LIQUIDATED DAMAGES PROVISION IS NOT INTENDED AND SHOULD NOT BE
DEEMED OR CONSTRUED TO LIMIT IN ANY WAY PURCHASER'S INDEMNITY OBLIGATIONS
UNDER SECTIONS 5 AND 18.
SELLER'S INITIALS: ____ PURCHASER'S INITIALS: ____
(c) Notwithstanding anything to the contrary contained in this
Agreement other than Section 20(v), Sellers' maximum liability under this
Agreement shall not exceed One Million and no/100s Dollars ($1,000,000.00).
(d) Any action, suit or proceeding brought by Purchaser against
Seller under this Agreement shall be commenced and served, if at all, on or
before the date which is six (6) months after the date of the Closing and,
if not commenced and served on or before such date, thereafter shall be
void and of no force or effect.
18. BROKER'S COMMISSION.
-------------------
Purchaser and Seller each represents and warrants to the other that no
brokerage commission, finder's fee or other compensation is due or payable with
respect to the transaction contemplated hereby other than a commission to be
paid to CB Commercial Real Estate Group, Inc. pursuant to a separate agreement
with Seller, which shall be paid by Seller only upon the Closing of the purchase
and sale contemplated hereby. Purchaser shall indemnify, defend, and hold
Seller harmless from and against any losses, damages, costs and expenses
(including, but not limited to, attorneys' fees and costs) incurred by Seller by
reason of any breach or inaccuracy of the Purchaser's representations and
warranties contained in this Section 18. Seller shall indemnify, defend, and
hold Purchaser harmless from and
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against any losses, damages, costs and expenses (including, but not limited to,
attorneys' fees and costs) incurred by Purchaser by reason of any breach or
inaccuracy of Seller's representations and warranties contained in this Section
18. The provisions of this Section 18 shall survive the Closing.
19. ESCROW.
------
(a) 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 Company. This Agreement, together
with such further instructions, if any, as the parties shall provide to
Escrow Company by written agreement, shall constitute the escrow
instructions. If any requirements relating to the duties or obligations of
Escrow Company hereunder are not acceptable to Escrow Company, or if Escrow
Company requires additional 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.
(b) Deposits into Escrow. Seller shall make its deposits into escrow
in accordance with Section 11. Purchaser shall make its deposits into
escrow in accordance with Section 12. Escrow Company is authorized to
close the escrow only if and when: (i) Escrow Company has received all
items to be delivered by Seller and Purchaser pursuant to Sections 11 and
12; and (ii) Title Company can and will issue the Title Policy concurrently
with the Closing.
(c) Close of Escrow. Provided that Escrow Company shall not have
received written notice in a timely manner from Purchaser or Seller of the
failure of any condition to the Closing or of the termination of the
escrow, and if and when Purchaser and Seller have deposited into escrow the
matters required by this Agreement and Title Company can and will issue the
Title Policy concurrently with the Closing, Escrow Company shall:
(i) Deliver to Purchaser: (1) the Special Warranty Deed; (2)
the Bill of Sale; (3) the Certificate of Non-Foreign Status; (4) the
General Assignment; and (5) the Assignment of Leases. After the Closing,
Escrow Company shall cause the Special Warranty Deed to be recorded in the
Official Records of the County of Montgomery, Commonwealth of
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Pennsylvania and immediately upon recording deliver to Purchaser a conformed
copy of the Special Warranty Deed
(ii) Deliver to Seller: the Purchase Price, after satisfying the
Closing costs, prorations and adjustments and any broker commission to be
paid by Seller pursuant to Sections 13, 15 and 18, respectively.
(iii) Deliver to Purchaser: any funds deposited by
Purchaser, and any interest earned thereon, in excess of the amount
required to be paid by Purchaser hereunder.
(iv) Deliver the Title Policy issued by Title Company to
Purchaser.
(d) Real Estate Reporting Person. Escrow Company is 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 Company shall so
provide. Upon the consummation of the transaction contemplated by this
Agreement, Escrow Company shall file Form 1099 information return and send
the statement to Seller as required under the aforementioned statute and
regulation.
20. MISCELLANEOUS.
------------
(a)This Agreement is executed and delivered by Stanton Zarrow and
Joseph Markling (the "Trustees") not personally but solely as trustees
under and pursuant to that certain Declaration of Trust of TCW Realty Fund
IV Pennsylvania Trust dated as of May 10, 1991, amended. Notwithstanding
anything to the contrary set forth herein, it is expressly understood and
agreed by and between the parties hereto (i) that each of the covenants,
undertakings, obligations, representations, warranties and agreements
herein made on the part of Trustees, while in form purporting to be the
covenants, undertakings, obligations, representations, warranties and
agreements of Trustees, are nevertheless each and every one of them made
and intended not as personal covenants, undertakings, obligations,
representations, warranties and agreements of Trustees for the purpose or
with the intent of binding Trustees personally, but are instead made and
intended for the purpose of binding only the assets of TCW Realty Fund IV
Pennsylvania Trust; (ii) that no personal liability or personal
responsibility is assumed or shall at any time be asserted or enforceable
against Trustees on account of this Agreement or on account of any
covenants, undertakings, obligations, representations, warranties
agreements
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contained in this Agreement, either express or implied, all such personal
liability or personal responsibility (if any) being expressly waived and
released; and (iii) Purchaser agrees to look solely to the assets of TCW
Realty Fund IV Pennsylvania Trust for the enforcement of any claims against
Trustees arising pursuant to this Agreement.
(b) Each individual and entity executing this Agreement represents
and warrants that he, she or it has the capacity set forth on the signature
pages hereof with full power and authority to bind the party on whose
behalf he, she or it is executing this Agreement to the terms hereof.
(c) This Agreement is the entire Agreement between the parties hereto
with respect to the subject matter hereof and supersedes all prior
agreements and understandings, whether oral or written, between the parties
with respect to the matters contained in this Agreement. Any waiver,
modification, consent or acquiescence with respect to any provision of this
Agreement shall be set forth in writing and duly executed by or in behalf
of the party to be bound thereby. No waiver by any party of any breach
hereunder shall be deemed a waiver of any other or subsequent breach.
(d) This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which when taken
together shall constitute one and the same instrument. The signature page
of any counterpart may be detached therefrom without impairing the legal
effect of the signature(s) thereon provided such signature page is attached
to any other counterpart identical thereto except having additional
signature pages executed by other parties to this Agreement attached
thereto.
(e) Time is of the essence in the performance of and compliance with
each of the provisions and conditions of this Agreement.
(f) Any communication, notice or demand of any kind whatsoever which
either party may be required or may desire to give to or serve upon the
other shall be in writing and delivered by personal service (including
express or courier service), by electronic communication, whether by telex,
telegram or telecopy (if confirmed in writing sent by registered or
certified mail, postage prepaid, return receipt requested), or by overnight
courier or registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:
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Purchaser: Brandywine Realty Trust
16 Campus Boulevard, Suite 150
Newton Square, Pennsylvania 19073
Attention: Gerard H. Sweeney &
Brad Molotsky, Esq.
Telephone: (610) 325-5600
Telecopy: (610) 325-5622
With a copy to: Pepper, Hamilton & Scheetz
3000 Two Logan Square
Eighteenth and Arch Streets
Philadelphia, PA 19103-2799
Attention: Eric Stern, Esq.
Telephone: (215) 981-4475
Telecopy: (215) 981-4750
Seller: TCW Realty Fund IV Pennsylvania Trust
c/o Westmark Realty Advisors L.L.C.
865 South Figueroa Street
Suite 3500
Los Angeles, California 90017-2543
Attention: Joseph Markling & Kevin Corbett,
Esq.
Telephone: (213) 683-4200
Telecopy: (213) 683-4201
TCW Realty Fund IV Pennsylvania Trust
c/o Westmark Realty Advisors L.L.C.
140 East 45th Street
40th Floor
New York, New York 10017
Attention: Pamela Muller
Telephone: (212) 986-7404
Telecopy: (212) 983-1954
With a copy to: Mayer, Brown & Platt
350 South Grand Avenue
25th Floor
Los Angeles, California 90071-1503
Attention: Brian Aronson, Esq.
Telephone: (213) 229-5151
Telecopy: (213) 625-0248
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Escrow Company: Commonwealth Land Title Company
1700 Market Street
Philadelphia, Pennsylvania 19073
Attention: M. Gordon Daniels
Telephone: (215) 241-1081
Telecopy: (215) 241-1641
Title Company: Commonwealth Land Title Company
888 West Sixth Street
Los Angeles, California 90017
Attention: Mr. Donald Hallman
Telephone: (213) 627-7070, ext. 106
Telecopy: (213) 627-8722
With a copy to: Commonwealth Land Title Company
1700 Market Street
Philadelphia, Pennsylvania 19073
Attention: M. Gordon Daniels
Telephone: (215) 241-1081
Telecopy: (215) 241-1641
Any party may change its address for notice by written notice given to the
other in the manner provided in this Section. Any such communication,
notice or demand shall be deemed to have been duly given or served on the
date personally served, if by personal service, on the date of confirmed
dispatch, if by electronic communication, or three (3) days after being
placed in the U.S. Mail, if mailed.
(g) The parties agree to execute such instructions to Escrow Company
and Title Company and such other instruments and to do such further acts as
may be reasonably necessary to carry out the provisions of this Agreement.
(h) The making, execution and delivery of this Agreement by the
parties hereto has been induced by no representations, statements,
warranties or agreements other than those expressly set forth herein.
(i) Wherever possible, each provision of this Agreement shall be
interpreted in such a manner as to be valid under applicable law, but, if
any provision of this Agreement shall be invalid or prohibited thereunder,
such invalidity or prohibition shall be construed as if such invalid or
prohibited provision had not been inserted herein and shall not affect the
remainder of such provision or the remaining provisions of this Agreement.
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(j) The language in all parts of this Agreement shall be in all cases
construed simply according to its fair meaning and not strictly for or
against any of the parties hereto. Section headings of this Agreement are
solely for convenience of reference and shall not govern the interpretation
of any of the provisions of this Agreement. References to "Sections" are
to Sections of this Agreement, unless otherwise specifically provided.
(k) This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania.
(l) If any action is brought by either party against the other party,
relating to or arising out of this Agreement, the transaction described
herein or the enforcement hereof, the prevailing party shall be entitled to
recover from the other party reasonable attorneys' fees, costs and expenses
incurred in connection with the prosecution or defense of such action. For
purposes of this Agreement, the term "attorneys' fees" or "attorneys' fees
and costs" shall mean the fees and expenses of counsel to the parties
hereto, which may include printing, photostating, duplicating and other
expenses, air freight charges, and fees billed for law clerks, paralegals
and other persons not admitted to the bar but performing services under the
supervision of an attorney, and the costs and fees incurred in connection
with the enforcement or collection of any judgment obtained in any such
proceeding. The provisions of this Section 20(l) shall survive the entry
of any judgment, and shall not merge, or be deemed to have merged, into any
judgment.
(m) This Agreement shall be binding upon and inure to the benefit of
each of the parties hereto and to their respective transferees, successors,
and assigns. Neither this Agreement nor any of the rights or obligations
of Seller or Purchaser hereunder shall be transferred or assigned by Seller
or Purchaser without the prior written consent of the non-assigning party;
provided, that, after written notice to Seller, Purchaser may assign its
rights under this Agreement to Brandywine Operating Partnership, L.P. (an
"Approved Designee"), provided, however, in no event shall Purchaser be
released from any liability hereunder as a result of such assignment.
(n) Exhibits A through M, inclusive, and Annex I attached hereto are
incorporated herein by reference.
(o) Notwithstanding anything to the contrary contained herein, this
Agreement shall not be deemed or construed to make the parties hereto
partners or joint venturers, or to render either party liable for any of
the debts or obligations of the other, it being the intention of the
parties to merely
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create the relationship of Seller and Purchaser with respect to the
Property to be conveyed as contemplated hereby.
(p) This Agreement shall not be recorded or filed in the 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.
(q) Each party agrees that, except as otherwise set forth in this
Agreement or provided by law or unless compelled by an order of a court, it
shall keep the contents of this Agreement and any information related to
the transaction contemplated hereby confidential (except that Purchaser may
disclose such matters in accordance with the provisions of Section 8 above)
and further agrees to refrain from generating or participating in any
publicity statement, press release, or other public notice regarding this
transaction without the prior written consent of the other party unless
required under applicable law or by a court order. The provisions of this
Section 20(q) shall survive the Closing or any termination of this
Agreement and shall not be merged into any instrument or conveyance
delivered at the Closing.
(r) 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 escrow; 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.
(s) If any of the dates specified in this Agreement shall fall on a
Saturday, a Sunday, or a holiday, then the date of such action shall be
deemed to be extended to the next business day.
(t) At Purchaser's request, upon prior arrangement with Seller, at
any time during reasonable business hours within six (6) months after the
Closing, Seller shall, at Purchaser's expense, provide to Purchaser's
designated independent auditor, access to the books and records of the
Property, regarding the period for which Purchaser is required by
applicable rules or regulations of the Securities Exchange Commission to
have audited financial statements prepared with respect to the Property, to
the extent that such books, records and related information are in the
Seller's possession or control and relate to the period during which Seller
held title to the Property; provided however, such books and records shall
not include Seller's internal appraisals and economic evaluations of the
Property and reports regarding the Property prepared by Seller, Westmark
Realty Advisors L.L.C. and/or TCW Realty Advisors solely for internal use
or for the information of the investors in Seller, and Seller shall not be
deemed to make any representations or
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warranties of any kind regarding the accuracy or thoroughness of such books
and records.
(u) 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 thereto, 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 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.
(v) Seller shall indemnify, defend and save and hold harmless
Purchaser from any actual loss, cost, liability or expense (including,
without limitation, reasonable counsel fees) incurred, paid or suffered by
Purchaser arising out of or by reason of any claim made against Purchaser
or the Property by the Pennsylvania Department of Revenue or by any other
state taxing or employment authorities asserting any claims or possible
claims against Seller for unpaid taxes, penalties, interest or court costs
due the Commonwealth of Pennsylvania or its political subdivisions by
Seller. The preceding sentence shall only apply to claims and/or matters
relating to the period prior to the Closing. Section 20(v) shall
specifically survive the Closing hereunder and Seller's obligations under
this Section 20(v) shall not be limited by any other limitation of Seller's
liability hereunder.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the date first above
written.
SELLER: TCW REALTY FUND IV PENNSYLVANIA TRUST,
a Pennsylvania business trust
By:/s/ Joseph Markling
-------------------
Joseph Markling
not individually but solely as trustee
under Declaration of Trust dated
as of 5/10/91, as amended
By:/s/ Stanton Zarrow
------------------
Stanton Zarrow
not individually but solely as trustee
under Declaration of Trust dated
as of 5/10/91, as amended
PURCHASER: BRANDYWINE REALTY TRUST,
a Maryland real estate investment
By:/s/ Gerard H. Sweeney
---------------------
Name: Gerard H. Sweeney
Its: President & CEO
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<PAGE>
Exhibit 10.4
500 SCARBOROUGH DRIVE
AGREEMENT
THIS AGREEMENT is made and entered into as of the 5th day of
December, 1997 by and among English Creek Partners #2, Limited Partnership,
a New Jersey limited partnership having its principal office at Scarborough
Properties, 20 East Clementon Road, Suite 201, Gibbsboro, New Jersey 08026
("English Creek"), R. Randle Scarborough, the general partner ("RRS"),
Raymond Perkins ("RP") and Steven L. Shapiro ("Shapiro"), the limited
partners of English Creek (collectively, the "English Creek Partners"),
Brandywine Realty Trust, a Maryland real estate investment trust (the
"Trust"), and Brandywine Operating Partnership, L.P., a Delaware limited
partnership or its nominee, having an address at Newtown Square Corporate
Campus, 16 Campus Boulevard, Suite 150, Newtown Square, Pennsylvania 19073
(the "Partnership").
RECITALS
A. English Creek is the owner of a certain tract of land being
comprised of one (1) parcel of property, being Lot 54 of Block 1602, together
with the building and improvements thereon, including one office building
approximately 44,750 square feet, commonly known as 500 Scarborough Drive,
Egg Harbor, New Jersey as more fully described on Exhibit "A" attached
hereto; and
B. English Creek desires and hereby agrees to sell or contribute, and
the Partnership desires and hereby agrees to acquire or accept, all of
English Creek's right, title and interest in and to the Property (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", 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.
"Closing" shall have the meaning ascribed to that term in
Paragraph 4 hereof. The date upon which the Closing actually occurs shall be
the "Closing Date."
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"Common Shares" shall mean the common shares of beneficial
interest, par value $.01 per share, of the Trust.
"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
Property, to the extent assignable by English Creek, all as described in
Exhibit "B" attached hereto and made a part hereof.
"Deposit" shall mean the Deposit delivered by the Partnership
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
December 9, 1997.
"Effective Date" shall mean the date on which this Agreement
has been fully executed and delivered by all parties hereto to each other.
"Escrow Terms" shall mean the escrow agreement to be entered
into of even date herewith between the Escrow Company, English Creek and the
Partnership.
"Escrow Agent" shall mean Commonwealth Land Title Insurance
Company, 1700 Market Street, Philadelphia, Pennsylvania 19103.
"Improvements" shall mean those certain buildings and other
improvements constructed and located on the Land as described on Exhibit "A".
"Land" shall mean that certain parcel of real property located
at 1007 English Creek Road, Voorhees, New Jersey.
"Leases" shall mean those certain leases (and guarantees
thereof, if any) listed on Exhibit "C" attached hereto and made a part
hereof, or hereafter entered into by English Creek, 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 Property.
"Permitted Exceptions" shall mean with respect to any of the
Real Property (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 "D" to this Agreement, (iv) special assessments which become a lien
on any of the Real Property on or after the Closing Date, and (v) such other
title matters existing on the Closing Date which are accepted or deemed
accepted by the Partnership pursuant to Paragraph 5 hereof; and (vii) the
rights of Tenants of any of the Real Property pursuant to the Leases for all
or any portion of any of the Real Property.
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"Personal Property" shall (except as specifically excluded on
Exhibit "E" hereto) mean all of English Creek's right, title and interest in
and to the tangible personal property including, without limitation, artwork,
furniture, furnishings, equipment, machinery and fixed and movable fixtures,
together with all component and replacement parts, owned by English Creek,
situated on any of the Real Property on the Closing Date, and all artwork,
renderings, flags, awnings and trade dress; all architects', engineers',
surveyors' and other real estate 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 English Creek's possession and are not
proprietary in nature, and all building names and English Creek's rights, if
any, in and to the name "500 Scarborough Drive."
"Property" shall mean the Real Property and such of the
Contracts, Leases, Licenses, Personal Property and other rights, titles,
interests and obligations which pertain to the Real Property and are intended
to be contributed, conveyed, sold or otherwise transferred to the Partnership
by English Creek pursuant to this Agreement.
"Real Property" shall mean the Land and the Improvements.
"Tenants" shall mean the tenants under the Leases.
"Trust" shall mean Brandywine Realty Trust, a Maryland real
estate investment trust, the sole general partner of the Partnership.
"Underlying Shares" shall mean the Common Shares issuable upon
the conversion or redemption of, or otherwise pursuant to, the Units issuable
hereunder.
2. Acquisition Of The Property. On the Closing Date, and subject
to the terms and conditions set forth in this Agreement, English Creek shall
sell or contribute, at English Creek's sole discretion, assign, transfer and
convey to the Partnership and the Partnership shall purchase or accept, as
the case may be, from English Creek the following:
(a) All right, title and interest of English Creek in and to
all of the Real Property;
(b) All right, title and interest of English Creek, 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 English Creek, if any, in
any easements, covenants, rights of way, privileges, hereditaments and other
rights appurtenant to any of the Real Property;
(d) to the extent assignable to the Partnership and approved
by the Partnership, all right, title and interest of English Creek in and to
the Contracts and the Licenses relating to any of the Real Property;
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(e) all right, title and interest of English Creek in and to
the Leases; and
(f) all right, title and interest of English Creek in and to
the Personal Property.
3. Consideration And Time Of Payment. The consideration (the
"Consideration") to be received by English Creek from the Partnership in
exchange for the Property shall be Six Million One Hundred Fifty Thousand
Dollars ($6,150,000) less the amount of principal and accrued interest
secured by a mortgage on the Property if and to the extent such principal and
accrued interest is not repaid at the Closing, as adjusted pursuant to
Paragraph 7 of this Agreement which shall be paid to English Creek in the
following manner:
(a) On the Effective Date, the Partnership shall deliver a
check, subject to collection, in the amount of Twenty Thousand Dollars
($20,000) to the Escrow Agent, which check shall be payable to the order of
the Escrow Agent and shall be held and disbursed pursuant to the Escrow
Terms. Thereafter, within two (2) business days following the Due Diligence
Expiration Date, the Partnership shall deliver a check, subject to
collection, in the amount of Ten Thousand Dollars ($10,000) to the Escrow
Agent, which check shall be payable to the order of the Escrow Agent and
shall be held and disbursed pursuant to the Escrow Terms. In the event that
English Creek elects, pursuant to subparagraph (c) below, to receive all of
the Consideration in Units in exchange for the contribution of the Property,
the Escrow Agent shall release the Deposit to the Partnership at the Closing.
(b) The balance of the Consideration shall be paid to English
Creek at the Closing by wire transfer of immediately available funds to an
account designated by English Creek.
(c) In lieu of receiving the Consideration pursuant to
subparagraphs (a) and (b) above, English Creek may elect, at its option, to
receive all or a portion of the Consideration in the form of Class A Units of
Limited Partnership Interest ("Units") in the Partnership in exchange for the
contribution to the Partnership of all or a portion, as the case may be, of
the Property (such amount being estimated as approximately $1,610,000 worth
of Units (i.e., 92% of $1,750,000 the remainder of $6,150,000 - $4,400,000)).
English Creek may make such election by providing the Partnership written
notice no later than thirty (30) days prior to the Closing Date. Such
election notice shall state the dollar amount of the Consideration to be
received in Units. The number of Units issuable in satisfaction of the
applicable portion of the Consideration that English Creek elects to be so
received shall be computed by dividing the aggregate dollar amount of such
applicable portion of the Consideration by the Computed Market Price. The
term "Computed Market Price" shall mean the average closing price for the
Common Shares as reported by the New York Stock Exchange (the "NYSE") for the
ten (10) trading day period immediately preceding the Due Diligence
Termination Date. The distributions declared by the Partnership in respect
of the Class A Units issuable pursuant to this Agreement during the initial
calendar quarter in which the Closing occurs shall be pro-rated by the
Partnership based on the number of days the Class A Units are outstanding
during such quarter. For example, if the Class A Units issuable pursuant to
this Agreement are issued on December 1, 1997, each of such
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Class A Units shall be entitled to receive an amount equal to one-third of
the amount of the distribution payable to a Class A Unit that was outstanding
during the full quarter.
(d) The transaction contemplated by this Agreement is
conditioned upon the closing of the sale of the other properties identified
on Exhibit "F" attached hereto (the "Other Properties"), so that no one or
more of the Other Properties and the Property hereunder may be sold without
all of the Property being sold unless expressly provided for in writing by
the parties hereto and in any event the Deposit hereunder and thereunder
shall be deemed a single deposit for the entire transaction.
4. Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall be held on or before December 12, 1997, on a
mutually agreed date determined by English Creek and the Partnership, at the
offices of the Partnership, Plaza 1000 at Main Street, Suite 400, Voorhees,
New Jersey, commencing at 10:00 a.m., time being of the essence.
5. Title And Conveyance Of The Property.
(a) At Closing, title to the Real Property shall be insurable
at regular rates by Commonwealth Land 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 Property is not insurable as aforesaid, the Partnership's sole right and
remedy shall be as set forth in Paragraph 5(b) below.
(b) (i) The Partnership has applied 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 the
Partnership, upon recording of the Deeds (as hereinafter defined) for each of
the Real Property, an owner's policy of title insurance as above specified
("Title Policy"). Said Commitments shall agree to insure the proposed title
of the Partnership to each of the Real Property subject only to the Permitted
Exceptions and such other title exceptions as the Partnership 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 the Partnership objects to such additional title exceptions
(the "Title Defects"), the Partnership shall notify English Creek of such
Title Defects with sufficient specificity to enable English Creek to respond.
The Partnership's notice of any Title Defects shall be given in writing to
English Creek no later than the date which is five (5) business days prior to
the Due Diligence Termination Date, together with the Commitments and copies
of all matters of record raised therein as exceptions thereto, after which
the Partnership shall be deemed to have waived any and all Title Defects not
so raised, except for Title Defects which are disclosed to the Partnership in
continuations of title issued subsequent to the issuance of the Commitments,
unless the Partnership fails to object to same in writing within three (3)
business days after the Partnership's receipt of the continuation of title in
which the same is disclosed, in which case the Partnership will be deemed to
have waived such additional Title Defects. English Creek shall have the
right, but not the obligation (except as otherwise specifically provided), to
cure such Title Defects and, if English Creek elects to attempt to cure the
Title Defects but has
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not cured same on or before the Closing Date, then the Closing Date may be
extended by English Creek at its sole option for up to thirty (30) days to
enable English Creek to effect such cure.
(ii) In the event that either (a) English Creek is unable
to convey title in accordance with the terms of this Agreement, (b) English
Creek elects not to cure or cause the removal of any exception to title,
except as required in subparagraph (iii) below, or (c) if English Creek is
unable to satisfy any other conditions to the Partnership's obligations under
this Agreement, then (except as otherwise specifically provided in
subparagraph (iii) below) the sole liability of English Creek shall be to (A)
direct the Escrow Agent to return the Deposit to the Partnership and (B)
reimburse the Partnership 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 the Partnership to update the existing
surveys (collectively "the Partnership's Reasonable Costs"), and upon such
payments being made, this Agreement shall be deemed canceled 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 the Partnership shall have no rights of action against English Creek in
law or in equity, for damages or, except for the purpose of enforcing English
Creek's contractual obligations under subparagraph (iii) below, for specific
performance. Notwithstanding the foregoing, the Partnership shall have the
right to waive any conditions to the Partnership's obligations hereunder, in
which event English Creek shall make the deliveries provided for herein to
the Partnership to the extent that English Creek is able so to do, and there
shall be no reduction in the Consideration in such event.
(iii) Notwithstanding the provisions of the foregoing
paragraph, if the condition of title to the Real Property at the Closing is
other than that which the Partnership is required or agrees to accept
hereunder solely by reason of any mortgages or other monetary liens
(hereinafter referred to as "Liens") which can be satisfied or remedied by
the payment of a liquidated amount of money not to exceed the Purchase Price,
English Creek shall not have the right to cancel this Agreement and English
Creek 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.
(iv) Notwithstanding anything to the contrary contained in
this Agreement, English Creek 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 subparagraph (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) The Partnership expressly understands, acknowledges and
agrees that any failure by the Partnership to notify English Creek in writing
of any Title Defects on or before the expiration of the Due Diligence, shall
for all purposes be deemed to be an acceptance by the Partnership of such
Title Defects as if they were one or more of the Permitted Exceptions.
(d) At Closing, English Creek will convey fee simple title to
the Real Property by a Bargain and Sale Deed with covenant against grantor's
acts (the "Deed"), subject in
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all cases to the Permitted Exceptions, in the forms attached hereto and made
a part hereof as Exhibit "G".
(e) At Closing, English Creek will transfer all of its right,
title and interest in and to the Personal Property to the Partnership by
executing a Bill of Sale ("Bill of Sale") in the form attached hereto and
made a part hereof as Exhibit "H".
(f) At Closing, English Creek will assign all of English
Creek's right, title, and interest, and the Partnership shall assume all of
the obligations from and after the Closing Date, in, to and under the Leases,
Licenses and the Contracts for the Property, by executing an Assignment and
Assumption Agreement in the form attached hereto and made a part hereof as
Exhibit "I" (the "Assignments").
6. Closing Documents.
(a) At the Closing, as a condition of the Partnership's
obligation to close hereunder, English Creek shall deliver or cause to be
delivered the following:
(i) The Deed, executed by English Creek, covering the
Real Property (and separate quitclaim deeds to the Real Property utilizing
new ALTA survey descriptions, if requested);
(ii) The Bills of Sale executed by English Creek covering
the Personal Property;
(iii) The Assignments, executed by English Creek;
(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 English Creek;
(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 English Creek;
(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 English Creek;
(vii) Written notice from English Creek or English
Creek's managing agent to each Tenant in form reasonably satisfactory to the
Partnership stating that the Real Property have been sold to the Partnership
and that tenant security deposits (if any) in English Creek's possession have
been transferred to the Partnership and directing the Tenants to make future
rental payments to the Partnership at the address designated by the
Partnership;
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(viii) Non-foreign person certification in the form
attached hereto as Exhibit "J";
(ix) All building records and Tenant lease files with
respect to the Real Property which are in the possession of English Creek;
(x) Each bill of current real estate taxes, sewer charges
and assessments, water charges and other utilities and to the extent in
English Creek'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 English Creek or any property manager controlled by English
Creek;
(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 English Creek to enable the Title Insurer to issue the
Commitments described in Paragraph 5(b)(i). The Partnership shall require
affirmative endorsements against mechanic's liens, consistent with English
Creek's obligations under Paragraph 5(b)(iii), above;
(xiii) A letter, from the New Jersey Department of
Environmental Protection or its successor ("NJDEP") 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 Real Property (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
English Creek to be correct and complete as of Closing Date;
(xvi) Proof as to the due authorization and execution
by English Creek of the documents executed and delivered by English Creek;
(xvii) Such affidavits of title or other certifications
as shall be required by the Title Company to insure the Partnership's title
to the Property as set forth in Section 3, and to provide affirmative
endorsements (a) against mechanic's liens, (b) insuring against any violation
of existing covenants, conditions or restrictions, and insuring that future
violation will not result in forfeiture of title, (c) insuring that all
foundations in place as of the date of such policy are within the lot lines
and applicable set back lines, (d) insuring that the buildings and structures
on the Property do not encroach onto adjoining land or onto any
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easements, (e) insuring that confirming that there are no encroachments of
improvements from adjoining land onto the Property (f) removing any
exceptions for matters which an accurate survey would disclose, and (g)
providing affirmative insurance with respect to such other matters as the
Partnership or its lender shall specify;
(xviii) A Registration Rights Agreement in the form
attached hereto as Exhibit "K" executed by English Creek and the English
Creek Partners;
(xix) The closing certificate required pursuant to
Paragraph 9;
(xx) An executed three year lease from Lockheed Martin
(approximately 15,000 rentable square feet) at $17.00 per rentable square
foot plus electric on the Partnership's standard form of lease. In addition
, English Creek shall remain solely responsible for all tenant improvements,
leasing commissions and renovation charges associated with such space. If
English Creek is able to procure a rental rate of greater than $17.00 for at
least a three year term, the Partnership shall pay the leasing commission of
George Mintz, the procuring broker, at Closing;
(xxi) An executed counterpart to the Agreement of
Limited Partnership of the Partnership (the "Partnership Agreement") signed
by each of the English Creek Limited Partners;
(xxii) An executed Tax Indemnity Agreement in the form
attached hereto as Exhibit "L"; and
(xxiii) An executed Investor Questionnaire in the form
attached hereto as Exhibit "M".
(xxiv) An executed $1,500,000 Guaranty in favor of the
Partnership in the form attached hereto as Exhibit "N".
(b) At the Closing, as a condition of English Creek's
obligation to close hereunder, the Partnership shall deliver or cause to be
delivered the following:
(i) The balance of the Consideration (in immediately
available funds or Units in accordance with Paragraph 3);
(ii) The Assignments, executed by the Partnership;
(iii) An agreement by the Partnership not to sell the
Property for four years, including an indemnity for the Partnership's breach
thereof;
(iv) A Registration Rights Agreement in the form attached
hereto as Exhibit "K" and the Tax Indemnity in the form of Exhibit "L"
executed by the Trust; and
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(v) The closing certificate required pursuant to
Paragraph 9.
7. Prorations And Closing Costs. All matters involving prorations
or adjustments to be made to the Consideration 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 the Partnership to be treated as the owner of the
Property, 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 Property 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 English Creek's insurance premiums or assignment of English
Creek's insurance policies and English Creek shall be entitled to cancel all
of its existing policies as of the Closing Date. The Partnership 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 the
Property and allocable to the period prior to the Closing Date shall be
determined and paid by English Creek before Closing, if possible, or shall be
paid promptly thereafter by English Creek or adjusted between the Partnership
and English Creek immediately after the same have been determined. The
Partnership and English Creek shall to the extent necessary enter into an
agreement to such effect at Closing. English Creek shall attempt to have all
utility meters read as of the Closing Date. English Creek shall further
attempt to obtain from the provider of same, all other service statements and
bills of account adjusted as of the Closing Date. English Creek shall be
entitled to refunds of all deposits, if any, paid by English Creek or English
Creek's predecessor-in-interest prior to Closing and held by entities
providing such service, or, at English Creek's option, English Creek shall
transfer all of English Creek's right, title and interest in and to such
deposits to the Partnership at Closing and shall receive a full credit for
the amount of such deposits. All Contracts and other obligations in
connection with the Property, 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 Property on or before the Closing Date and are not
payable in installments shall be paid by English Creek. Special assessments
which have been filed as a lien against any of the Real Property, 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 the Partnership. Special
assessments which are or may be pending, but which have not become a lien on
the Real Property as of the Closing Date, and special assessments which are
filed as a lien after the Closing Date, shall be assumed and paid by the
Partnership.
(c) English Creek shall pay the cost of State and County
transfer taxes or stamps imposed in connection with the recordation of the
Deeds for the Real Property. The Partnership 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
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desired by the Partnership. The Partnership agrees to pay the expense of the
legal fees of its own counsel. The cost of all of the Partnership's Due
Diligence Activities (as defined below) shall be borne solely by the
Partnership.
(d) Any base, minimum or similar rents under the Leases
collected by English Creek for a rental period or portion thereof from or
after the Closing Date shall be credited to the Partnership at Closing on a
per diem basis. In addition, any security deposits held by English Creek 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 the Partnership at Closing at English Creek's
option. If any tenant is in arrears in the payment of rent or additional
rent on the Closing Date, rents received from such tenant ninety (90) days
after the Closing Date shall be applied in the following order of priority:
(a) to the Partnership, so long as such tenant is in arrears for current or
prior rent arising after Closing, then (b) to English Creek for all rent in
arrears prior to the Closing Date; and then (c) to the Partnership with no
further claim by English Creek thereto. Except as herein provided, the
Partnership is not under any obligation to collect rents in arrears for the
benefit of English Creek. Any rents which are delinquent or otherwise not
paid at the time of Closing, and collected by the Partnership or English
Creek within ninety (90) days after Closing shall be apportioned as aforesaid
and the portion to which English Creek is entitled shall be promptly remitted
by the Partnership to English Creek. English Creek shall have no claim to
rents collected ninety (90) days after the Closing Date. English Creek
retains the right to pursue its remedies against Tenants after Closing for
any delinquent rents or other amounts owed to English Creek (other than
proceedings to evict Tenant or terminate its lease). The Partnership shall
not enter into any agreement pursuant to which any sums owed to English Creek
in respect of any Lease for periods prior to the Closing are reduced,
modified or waived. The Partnership's obligations to collect rent arrearages
shall be limited to commercially reasonable efforts, and the Partnership
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 English Creek without contribution by, or
reimbursement from, the Partnership. At Closing, the Partnership shall pay
or reimburse English Creek 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. The
Partnership 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 the Partnership'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. English Creek
shall be responsible for the costs of, and shall pay or perform prior to
Closing 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 English Creek for all Leases (including all amendments, renewals
and modifications thereof)
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entered into on or before the date of this Agreement for any of the Real
Property. The Partnership shall assume, pay or reimburse (as applicable)
English Creek on the Closing Date for 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 all costs of tenant
improvements and allowances incurred by or on behalf of English Creek 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 Property, provided the same were approved by the Partnership or
are otherwise permitted as set forth in Paragraph 15(e) hereof and provided
that such costs are set forth on Exhibit "C" hereto.
(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 English Creek.
(g) English Creek shall be solely responsible for the payment
of any "roll back taxes" assessed or imposed upon any of the Real Property
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 otherwise, which relate to any
period prior to the Closing Date, and English Creek agrees to indemnify,
defend and save the Partnership harmless (including attorneys' fees) from and
against any claim for such taxes.
(h) Miscellaneous income including, without limitation,
telephone and vending machine income, if any, shall be prorated as of the
Closing Date.
(i) All of the provisions of this Paragraph 7 and English
Creek's and the Partnership's respective rights and obligations hereunder
shall survive the Closing.
8. Possession Of Property.
(a) English Creek shall deliver possession to the Real
Property to the Partnership on the Closing Date, subject only to the
Permitted Exceptions.
(b) the Partnership shall assume, by execution of the
Assignments, all of English Creek's obligations in, to and under the
Contracts, the Licenses and Leases. Notwithstanding the foregoing, the
Partnership shall not assume management, leasing or brokerage agreements
provided, however, that the Partnership shall remain liable for leasing
commissions as set forth in Paragraph 7(e), above.
(c) All of the provisions of this Paragraph 8 and English
Creek's and the Partnership's respective rights and obligations hereunder
shall survive the Closing.
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9. Representations Of English Creek, The English Creek Limited
Partners and The Partnership.
(a) English Creek hereby represents and warrants, as follows,
all of which shall be true and correct at, and as of, the Effective Date:
(1) English Creek is a limited partnership duly
organized and validly existing under the laws of the State of New Jersey, and
is in good standing in such state.
(2) English Creek 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 English Creek pursuant hereto when delivered will
constitute, the legal, valid and binding obligations of English Creek,
enforceable against English Creek 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 English Creek's knowledge, threatened against or
relating to English Creek or its Property which might materially and
adversely affect English Creek or its Property or which questions the
validity of this Agreement or any action taken or to be taken by English
Creek pursuant hereto. English Creek shall remain responsible to defend, and
shall indemnify and hold the Partnership harmless from and against all
liability, cost and expense relating to the litigation identified in on
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 English Creek's limited liability agreement or any other
material agreement, instrument or lease to which English Creek 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 English Creek's possession or control, have
been or will be delivered, or made available, to the Partnership 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 English Creek in connection with the ownership and
operation of the Property (the "Personal Property Leases"); (iv) Licenses;
(v) surveys; (vi) title reports; (vii) engineering reports; and (viii)
environmental reports.
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(6) To the best of English Creek's knowledge, (i)
all of the Leases, Contracts and Personal Property Leases and Licenses, are
in full force and effect, (ii) there has been no action or failure to act by
English Creek 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) English Creek has not
received from any other party written notice with respect to the condition of
the Property or the use or repair of the same or of any alleged default by
English Creek under any such Lease, or Personal Property Lease or License.
Except as set forth on Exhibit "P", 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 the Partnership, the Contracts shall not be terminated
by English Creek 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. The Partnership shall
assume all Contracts not terminated at Closing pursuant to the Assignment.
(7) English Creek shall indemnify and hold the
Partnership harmless of, from and against any and all claims and liabilities
arising out of the employment of any individuals by English Creek and its
affiliates, whether as employees or independent contractors. As of the
Closing, there are and shall be no liens against the Real Property 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 the Partnership after the Closing. The
Partnership shall be under no obligation to assume any of English Creek's
employees, it being English Creek's sole responsibility and obligation to
provide severance arrangements, if any, for all such employees. This
Paragraph shall survive Closing.
(8) To English Creek'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 English Creek's actual knowledge, there are no special or
general assessments currently affecting or pending against the Real Property
or any portion thereof.
(9) English Creek has not been served with written
notice that it has been named as a party in any litigation, administrative
proceeding or investigation naming English Creek 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. English Creek has not received any summons,
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citation, directive, letter or other written communication, from any
governmental or quasi-governmental authority concerning any intentional or
unintentional action or omission on English Creek'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 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 Property, and a current rent roll certified by
English Creek, will be delivered to the Partnership upon execution of this
Agreement.
(11) English Creek 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 English Creek
and related to the ownership or operation of the Property (collectively, the
"Permits"), and there is no pending or, to the actual knowledge or English
Creek, threatened proceeding which could result in the revocation or
cancellation of, or inability of English Creek to renew, any Permit.
(12) To the best of English Creek's knowledge, except
as set forth in Exhibit "Q" attached hereto and made a part hereof, all
management fees, leasing commissions and tenant improvement allowances are
fully paid, there are no brokerage commissions owing by English Creek with
respect to any of the Leases or otherwise related to the Property which have
not been paid, and there are no ongoing commission or leasing fee obligations.
(13) English Creek has received no written notice
from any insurance company which has issued a policy with respect to the
Property 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 English Creek will
promptly notify the Partnership of any such notice or requirement if such
notice is received prior to the Closing.
(14) English Creek is not a "foreign person" and will
deliver to the Partnership, 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) English Creek has not received written notice
from any governmental agency or authority of outstanding material violations
issued by governmental authorities having jurisdiction over the Real Property.
(16) Except as may be set forth in a Lease as
specifically noted on Exhibit "C", there are no options, rights of first
refusal or conditional sales agreements regarding the purchase and sale of
the Real Property.
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(17) There are no oral or written leases or rights of
occupancy or grants or claims of right, title or interest in any portion of
the Property other than the leases (the "Leases") listed on the rent roll
attached hereto as Exhibit "C". No tenant has advised English Creek that
English Creek is in default under any of the Leases, or asserted any claim or
basis for any claim for free or reduced rent or right of set off against the
landlord or the rent under the Leases, and English Creek and its agent have
no actual knowledge of any default or any event which has taken place which,
with the passage of time, or the delivery of notice, or both, could become an
event of default. English Creek has the sole right to collect rents under
the Leases, and neither such right nor any of the Leases has been assigned,
pledged, hypothecated or otherwise encumbered by English Creek except as
additional collateral for the existing mortgage upon the Property which shall
be satisfied at or before Closing. No holder of any such collateral
assignment has asserted or exercised any of its right to collect such rents.
Each of the Leases is valid and subsisting and in full force and effect, the
tenant is in actual possession in the normal course, and the rents set forth
in Exhibit "C" are the actual rents, income and charges being collected by
English Creek under the Leases. Except for the Lockheed Martin fit-out
requirement under the applicable lease, for which English Creek will remain
obligated post-Closing to complete, all obligations of English Creek which
it is required to complete pursuant to any Lease (or any unsigned lease
proposal or lease amendment) has been completed as of this date or shall be
completed as of Closing, and all costs therefore have been or shall be paid
by English Creek, and all of English Creek's work has or shall have been
accepted by the Tenant without exception on or before Closing, other than
routine punch list items, which items shall remain the responsibility of
English Creek following Closing, and which obligation shall expressly survive
Closing. The amount of each security deposit contains, where required by law
or otherwise applicable, interest which has accrued in accordance with law.
No tenant of the Property under any of the Leases has, and shall not at
Closing have, prepaid any rent under any of the Leases for more than one (1)
month. Except as otherwise set forth on Exhibit "C", no security deposits by
tenants have heretofore been returned or applied to charges against the
tenants.
(18) To the best of English Creek's knowledge, the
Property and the continued operation and use thereof comply with all
applicable requirements of federal, state and local law, and all applicable
requirements of governmental bodies or agencies having jurisdiction thereof,
no portion of the Property lies within a flood hazard area, flood plain or
wetland; and there are no outstanding notices of any violations issued by
governmental authority having jurisdiction over the Property.
(19) To the best of English Creek's knowledge, no
Hazardous Substances (defined below) and no Hazardous Wastes (defined below)
are present on the Property including, without limitation, asbestos,
flammable substances, explosives, radioactive materials, hazardous wastes,
toxic substances, pollutants, pollution, contaminant, polychlorinated
byphenyls ("PCBs"), urea formaldehyde foam insulation, radon, corrosive,
irritant, biologically infectious materials, petroleum product, garbage,
refuse, sludge, hazardous or waste materials, and there has been no use of
the Property that may, under any federal, state or local environmental
statute, ordinance or regulation, require, at any time, any closure or
cessation of the use or occupancy of the Property and/or impose, at any time,
upon the owner of the Property any clean-up or other monetary obligation.
English Creek hereby indemnifies and holds
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the Partnership harmless of, from and against any and all liability, loss or
damage suffered or incurred as a result of a claim, demand, cost or judgment
in favor of a third party, including, without limitation, any governmental
authority, arising from the deposit, storage, disposal, burial, dumping,
injecting, spilling, leaking, or other placement or release in or on the
Property of Hazardous Substances or Wastes during English Creek's period of
ownership. To the best of English Creek's knowledge, neither the Property
nor any portion thereof, have been identified on the federal CERLIS, the
National Priorities List (40 C.F.R. Part 300, App. B) or any state or local
list of potential hazardous waste disposal sites or as an industrial
establishment. English Creek has conducted a complete and thorough inspection
and test of the underground storage tanks located on the Property, if any,
and English Creek has confirmed that, to the best of its knowledge, the
results thereof show compliance with all requirements of the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. Sections 6901 et seq. and
all other applicable federal, state and local laws, and English Creek has
taken all other necessary and appropriate action to comply fully therewith.
(20) To the best of English Creek's knowledge, all
adequate utilities, useable public sanitary and storm sewers, public water
facilities, electric facilities and, if any, gas facilities (collectively,
the "Utilities"), are installed in, and are duly connected to, the Real
Property, the sanitary sewer system has been dedicated to and accepted by the
Municipal Utilities Authority, and can be used without charge except the
normal and usual metered utility charges and water and sewer charges. All
Utilities required for the operation of the Property either enter the
Property through adjoining public streets or, if they pass through adjoining
public land, do so in accordance with valid public easements or private
easements which will inure to the benefit of the Partnership at no cost to
the owner of the Property. All of said Utilities are installed and operating
and all installation, connection and "tap-in" charges have been paid for in
full.
(21) No work has been performed or is in progress
at, and no materials have been furnished to the Property which, though not
presently the subject of, might give rise to construction, mechanic's,
materialmen's, municipal or other liens against the Property or any portion
thereof, except that for which full and complete releases have been obtained.
If any lien for any such work is filed before or after Closing, English Creek
shall promptly discharge the same.
(22) To the best of English Creek's knowledge, none
of the artwork being a part of the Personal Property was prepared on a "work
for hire" basis and none of the artwork was commissioned after 1991.
(23) To the best of English Creek's knowledge,
all applicable charges, fees and assessments (including condominium fees, to
the extent applicable) and any and all other sums due under declarations,
cross-easements and like agreements to which the Property or any portion
thereof may be subject, have been paid, and no special assessments thereunder
are pending, there is no constituted Board of Directors for the Property or
the development and all consents and approvals required to be obtained under
any such declarations, cross-easements and like agreements have been obtained
pursuant to the requirements of such
17
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documentation and English Creek shall pay for all 1997 retension basin
charges due to the adjacent Shopping Center under that certain Declaration
dated ________________, 19__.
(24) To the best of English Creek's knowledge,
all debts, liabilities, and obligations of English Creek arising out of the
construction, ownership, and operation of the Property including, but not
limited to, construction costs, salaries, taxes, accounts payable and the
like, have been paid as they became due and payable and shall continue to be
so paid from the date hereof until the Closing Date.
(b) Each of English Creek, RRS, RP and Shapiro, on its own
behalf, hereby represents and warrants as follows, all of which shall be true
and correct on, and as of, the Effective Date:
(1) That it has received a copy of the Trust's
Annual Report on Form 10-K, as amended, for the fiscal year ended December
31, 1996, the Trust's Quarterly Reports on Form 10-Q, as amended, for the
fiscal quarters ended March 31, 1997, June 30, 1997 and September 30, 1997,
and all Current Reports on Form 8-K filed by the Trust during fiscal 1997,
the Trust's proxy statement for its annual meeting of shareholders held on
May 12, 1997 and a copy of the Partnership Agreement;
(2) That the Units and the Underlying Shares
(collectively, the "Securities"), are being acquired for its own account
without a view to public distribution or resale and that it has no contract,
undertaking, agreement or arrangement to sell or otherwise transfer or
dispose of any Securities or any portion thereof to any other person (other
than from English Creek to the English Creek Limited Partners);
(3) That it understands that the Securities have not
been registered under the Securities Act or the securities laws of any state,
and, as a result thereof, the Securities are "restricted securities" as
defined in Rule 144 under the Securities Act of 1933, as amended (the
"Securities Act"), and are subject to substantial restrictions on transfer;
(4) That it understands that the certificates
evidencing the Securities shall bear a legend indicating that such Securities
have not been registered under the Securities Act or any applicable state
securities laws and the transferability thereof is subject to compliance with
the Securities Act and applicable state securities laws;
(5) That it will not sell or otherwise transfer or
dispose of any Securities or any portion thereof unless the Securities are
registered under the Securities Act and any applicable state securities laws
or it obtains an opinion of counsel which is satisfactory to the Partnership
or the Trust, as appropriate, that the Securities may be sold in reliance on
an exemption from such registration requirements, and that the Securities and
certificates evidencing the same will bear a legend reflecting such
restrictions;
(6) That it understands that (i) except as expressly
set forth in the Registration Rights Agreement attached hereto as Exhibit
"K", neither the Partnership nor the Trust has any obligation or intention to
register the Securities for resale under
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<PAGE>
any federal or state securities laws and (ii) it therefore may be precluded
from selling or otherwise transferring or disposing of any Securities or any
portion thereof for an indefinite period of time or at any particular time;
(7) That in determining to acquire the Securities,
it has relied solely upon its independent investigation, including the advice
of its legal counsel and accountants or other financial and tax advisers or
English Creek representatives and has, during the course of discussions
concerning the acquisition of the Securities, been offered the opportunity to
ask such questions and inspect such documents concerning the Partnership and
the Trust and their respective businesses and affairs as it has requested so
as to more fully understand the nature of the investment and to verify the
accuracy of the information supplied;
(8) THAT IT UNDERSTANDS THAT THE ACQUISITION OF THE
SECURITIES INVOLVES A HIGH DEGREE OF RISK, and that it can bear the economic
risk of the acquisition of the Securities, including the total loss of its
investment;
(9) That (i) it has adequate means of providing for
its current needs and financial contingencies, (ii) it has no need for
liquidity in this investment, (iii) it has no debts or other obligations, and
cannot reasonably foresee any other circumstances, that are likely in the
future to require it to dispose of the Securities, (iv) all its investments
in and commitments to non-liquid investments are, and after its acquisition
of the Securities will be, reasonable in relation to its net worth and
current needs, and (v) it was not formed for the specific purpose of making
an investment in the Securities;
(10) That it understands that no federal or state
agency has approved or disapproved the Securities, passed upon or endorsed
the merits of the offering of the Securities hereunder, or made any finding
or determination as to the fairness of the Securities for investment; and
(11) That it understands that the Securities are
being offered and distributed in reliance on specific exemptions from the
registration requirements of federal and state securities laws and that each
of the Partnership and the Trust is relying upon the truth and accuracy of
the representations, warranties, agreements, acknowledgments and
understandings set forth herein in order to determine the applicability of
such exemption and the suitability of English Creek and the English Creek
Limited Partners to acquire the Securities. In this regard it understands
that Common Shares will only be issued upon the conversion or redemption of,
or otherwise pursuant to, the Units, if an exemption from the registration
requirements of the Securities Act is then available for such issuance;
(12) It is an accredited investor, as defined in Rule
501(a) of Regulation D adopted under the Securities Act.
(c) It is agreed and understood that the Partnership intends
to perform its own due diligence, investigation and analysis in connection
with the transaction contemplated by this Agreement. If and to the extent
that the Partnership determines prior to the Due Diligence
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Termination Date that any or all of the representations and warranties made
in this Agreement by English Creek or the English Creek Limited Partners
shall be untrue as a result of such due diligence, investigation or analysis,
the Partnership 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 Partnership has now or hereafter acquires prior to the Due
Diligence Termination Date actual knowledge that one or more of the
representations and warranties of English Creek or the English Creek Limited
Partners are not true, no such fact or circumstance known to the Partnership
shall be made the basis of a claim by the Partnership of a breach of
representation or warranty by English Creek or a Member, as the case may be.
(d) Notwithstanding anything to the contrary contained in this
Agreement, in the event any representation, agreement or undertaking made by
English Creek or the English Creek Limited Partners in this Agreement shall
prove to be false and the cost or expense incurred or likely to be incurred
by the Partnership as a result thereof shall not exceed $50,000 in the
aggregate, such misrepresentation, agreement or undertaking shall be deemed
"immaterial" and shall not give rise to any right of the Partnership 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 the Partnership
hereby waives all its rights, claims and remedies relating thereto. The
Partnership's sole remedy in the event any representation, agreement or
undertaking of English Creek or the English Creek Limited Partners which is
discovered by the Partnership at or prior to the Closing herein shall prove
to be false and the cost or expense incurred or likely to be incurred by the
Partnership as a result thereof exceeds $50,000 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 the Partnership, and thereupon
the Partnership shall receive a refund of the Deposit, and English Creek
shall reimburse the Partnership for the Partnership's Reasonable Costs and
Due Diligence Costs. To the extent the Partnership has actual 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, the
Partnership hereby waives all of its rights, claims and remedies relating
thereto.
(e) The Partnership and the Trust hereby represent and warrant
as follows, all of which shall be true and correct at, and as of, the
Effective Date:
(1) The Partnership is a limited partnership duly formed
and validly existing under the laws of the State of Delaware, and is in good
standing with the State of Delaware. The Trust 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.
(2) Subject to Paragraph 9(e)(5), below, the Partnership
and the Trust have all necessary power and authority to enter into this
Agreement, to perform their 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
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instruments to be delivered by the Partnership and the Trust pursuant hereto
when delivered will constitute, the legal, valid and binding obligations of
the Partnership and the Trust, enforceable against the Partnership and the
Trust in accordance with their respective terms.
(3) Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will (a) violate any
provision of any organizational document of the Partnership or the Trust, 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 the Partnership or the Trust is a party.
(4) There is no litigation, proceeding or action pending,
or, to the best of the Partnership's or the Trust's knowledge, threatened
against or relating to the Partnership or the Trust which might materially
and adversely affect the ability of the Partnership or the Trust to
consummate the transactions contemplated hereby or which questions the
validity of this Agreement or any action taken or to be taken by the
Partnership or the Trust pursuant hereto.
(5) The execution and delivery of this Agreement shall
have been approved by the Board of Trustees of the Trust on or prior to the
Due Diligence Termination Date and no further action shall thereupon be
required on the part of the Partnership or the Trust to consummate the
transaction contemplated hereby. The signatories for the Partnership and the
Trust are authorized and empowered to bind the Partnership and the Trust to
this Agreement and all transactions contemplated herein.
(6) Except as otherwise set forth in Paragraph 9(e)(5)
above, in connection with the listing application with the NYSE pursuant to
Paragraph 17(d) and the registration of the Underlying Shares pursuant to the
Registration Rights Agreement attached hereto as Exhibit "K" and as required
by any applicable state securities or "blue sky" laws, 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 Trust or the Partnership.
(7) The Partnership has sufficient funds available to
consummate the transactions contemplated by this Agreement, without the
necessity of third-party financing other than other than the Partnership's
existing revolving credit facility administered by Nationsbank, N.A. The
Partnership and the Trust acknowledge that their obligations hereunder are
not conditioned upon any third party financing or capital infusion by another
party.
(8) The Securities, upon issuance, if any, will be duly
and validly issued, fully-paid and non-assessable.
(9) The information contained in the Trust's Annual
Report on 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
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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.
(f) As to any representation or warranty made in this
Agreement which is qualified as being to the best knowledge of the
Partnership or English Creek, 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.
The Partnership or English Creek 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.
(g) All of the representations and warranties set forth in
this Paragraph 9 shall be deemed renewed by English Creek, the English Creek
Limited Partners and the Partnership 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), and all such
representations shall survive for a period of one year from the Closing.
10. Access To The Property.
(a) The Partnership and/or its agents and representatives,
during normal business hours and after reasonable advance notice to English
Creek, may enter upon any of the Real Property from time to time prior to the
Closing Date, accompanied by an agent of English Creek, for purposes of
conducting such inspections, investigations and/or studies as the Partnership
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 ("the Partnership's
Due Diligence Activities"). The Partnership's access to the Real Property
shall be subject to the rights of the Tenants of any of the Real Property,
who shall not be unreasonably disturbed during any such inspection by the
Partnership. The Partnership shall not engage in any activity in or about
the Real Property which directly or indirectly violates the terms of any
governmental or quasi-governmental statute, rule, regulation, order or
practice. The Partnership shall not make any physical changes to any of the
Real Property, except for test borings and soil samplings which shall be
performed only by licensed engineers reasonably acceptable to English Creek
and only after three (3) business days' prior notice to English Creek. The
Partnership may contact any governmental or quasi-governmental authorities
concerning the Property without the prior written approval of English Creek.
English Creek shall have the opportunity to observe any and all action taken
by the Partnership or its representatives, consultants, agents, etc. pursuant
to this Paragraph 10. All information set forth in any document which
English Creek has granted to the Partnership 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 the Partnership violates its obligations
under this Paragraph 10(a) or in the event of any physical damage to any of
the Real Property or any Personal Property resulting, directly or indirectly,
from the exercise by the Partnership of its rights under this Paragraph
10(a), the Partnership hereby agrees to restore the Real Property and
Personal Property to their respective
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conditions prior to incurring such damage. The Partnership hereby agrees to
indemnify, defend and hold harmless English Creek from and against all
physical damage to any of the Real Property and Personal Property, personal
injury and/or any other claims or liability which may occur as a result of
the Partnership's (or the Partnership's agents, employees, invitees or
licensees) entry or activities upon any of the Real Property. The provisions
of this Paragraph 10(a) shall survive Closing or other termination of this
Agreement.
(b) The Partnership, or any of the Partnership's consultants
performing physical tests on the Real Property shall maintain public
liability insurance policies (naming English Creek as an additional named
insured with respect to any liability occurring on the Real Property), with
combined single limit coverage of at least $1,000,000, insuring against
claims arising as a result of the inspections of the Partnership, its agents,
employees or such contractors at any of the Real Property. A certificate of
insurance evidencing the foregoing coverage shall be delivered to English
Creek prior to the Partnership's or any of the Partnership's consultants'
entry on to any of the Real Property.
(c) In the event Closing does not occur or this Agreement is
terminated, the Partnership shall promptly return to English Creek any
documents obtained from English Creek or English Creek's agents and deliver
to English Creek, without charge, copies of all written test results,
studies, reports and similar materials obtained by or on behalf of the
Partnership relating to any of the Real Property.
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, the
Partnership 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 the Property with
zoning, licensing and all other governmental requirements, Leases for any of
the Real Property, operating statements pertaining to the Property and all
other aspects and conditions of the Property which the Partnership may decide
to review (collectively, "the Partnership's Due Diligence Activities"), all
as the Partnership shall deem appropriate). In connection with the
Partnership's Due Diligence Activities, English Creek has delivered or will
deliver to the Partnership various documents, reports and materials
(collectively, the "English Creek Due Diligence Materials"). THE PARTNERSHIP
UNDERSTANDS AND HEREBY ACKNOWLEDGES AND AGREES THAT THE ENGLISH CREEK DUE
DILIGENCE MATERIALS ARE BEING DELIVERED TO THE PARTNERSHIP WITHOUT ANY
REPRESENTATION OR WARRANTY WHATSOEVER BY ENGLISH CREEK OR BY THE PREPARER OF
SUCH ENGLISH CREEK 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 the Partnership's Due Diligence
Activities or otherwise, the Partnership 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
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by written notice delivered to and received by English Creek 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
Partnership, 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) English Creek shall obtain, prior to the Closing the
Non-Applicability Letter from the NJDEP or its successor. In furtherance of
the foregoing, English Creek shall apply for the Non-Applicability Letter
promptly after the Effective Date, and shall pursue the same diligently and
in good faith.
(d) The Partnership agrees to prepare and forward to English
Creek, at the Partnership's sole cost and expense, certificates (the
"Estoppel Certificates") for execution by the Tenants which shall, at the
Partnership'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 "R". English Creek
agrees to deliver the Estoppel Certificates to the Tenants promptly after the
Partnership'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 the
Partnership's obligations hereunder that, at or prior to Closing, Estoppel
Certificates shall have been obtained from at least 75% of the Tenants at
each Property, including those identified on Exhibit "S" 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, if an estoppel in the Required Form is not obtained
from an Identified Tenant, English Creek may, in lieu thereof, deliver its
certificate containing the information set forth on the Required Form, which
certificate shall serve as English Creek'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 the Partnership'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.
12. Condemnation. English Creek covenants and warrants that
English Creek has not received any written notice of any condemnation
proceeding or other proceeding in the nature of eminent domain in connection
with the Real Property, 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
Property is commenced, English Creek agrees promptly to notify the
Partnership thereof. In the event of a material taking of one or more Real
Property or commencement of proceedings in connection with such a taking, the
Partnership 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 Consideration and at Closing English Creek shall assign to the
Partnership, without recourse, all condemnation proceeds paid or payable with
respect thereto; or (y)
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terminate this Agreement with respect to the Property 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 Property, and at Closing, the
Partnership shall pay to English Creek the aggregate of the Allocated Prices
for the remaining Real Property. Provided the Partnership shall have waived
its right to terminate this Agreement with respect to the Real Property so
taken, as provided above, English Creek shall not, from and after the Due
Diligence Termination Date, settle or adjust any claims relating to a
condemnation without the Partnership's prior approval, which shall not be
unreasonably withheld or delayed.
13. Damage By Fire Or Other Casualty.
(a) English Creek shall promptly notify the Partnership of
damage to the Improvements occurring by reason of casualty during the period
between the Effective Date and the Closing Date. English Creek shall timely
notify any insurance companies with respect to any damage and shall promptly
submit claims for such damage. Provided the Partnership shall have waived
its right to terminate this Agreement with respect to the Real Property so
damaged, as provided below, English Creek shall not, from and after the Due
Diligence Termination Date, settle or adjust any claims relating to a
casualty without the Partnership'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
Property so damaged, an amount equal to or less than ten percent (10%) of the
Consideration allocated for such Real Property, there shall be no abatement
or adjustment in the Consideration and, provided the loss or damage is a
covered loss under English Creek's insurance policy, the Partnership shall be
required to purchase all of the Real Property in accordance with the terms of
this Agreement and, at Closing, English Creek shall assign to the
Partnership, without recourse, all insurance claims and proceeds with respect
thereto (less sums theretofore expended, if any, by English Creek for
emergency repairs or barricades) and English Creek shall credit the
Partnership at Closing with the amount of any applicable deductible. English
Creek shall have no liability or obligation with respect to the condition of
any of the Real Property 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 Property is an amount which is greater than ten percent
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(10%) of the Consideration allocated for the applicable Real Property, the
Partnership may, at its sole option, (x) proceed to Closing as provided in
this Paragraph 13(b) without an abatement of the Consideration and at Closing
English Creek shall assign to the Partnership, without recourse, all
insurance claims and proceeds with respect thereto (less sums theretofore
expended, if any, by English Creek for emergency repairs or barricades) and
English Creek shall credit the Partnership at Closing with the amount of any
applicable deductible; or (y) terminate this Agreement with respect to the
Property which have suffered damage to the Improvements by fire or other
casualty in an amount which exceeds ten percent (10%) of the Consideration
allocated 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
Property, and at Closing, the Partnership shall pay to English Creek the
aggregate of the Considerations for the remaining Real Property. The
Partnership 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 Property for which this Agreement has been terminated.
14. Default.
(a) If the Partnership shall default in its obligations to pay
the Consideration and complete Closing in accordance with the terms of this
Agreement, then, as English Creek's sole and exclusive remedy therefor,
English Creek shall be entitled to retain the Deposit as liquidated and
agreed upon damages for the losses and injuries which English Creek shall
have sustained and suffered as a result of the Partnership's default, and
thereupon this Agreement and the Partnership'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 Property from sale
to the general public at a time when other parties would be interested in
purchasing such Real Property, that English Creek 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.
(b) If English Creek shall default in its obligation to
deliver any of the Deeds or other items described in Paragraph 5 hereof, upon
the Partnership's (i) tender of the full Consideration and (ii) compliance
with all of the material terms and conditions of this Agreement, the
Partnership shall have the sole option of terminating this Agreement and
receiving the return of the Deposit, together with payment by English Creek
of (A) the Partnership's Reasonable Costs, and (B) the Partnership's actual,
documented out-of-pocket costs and expenses incurred in connection with its
Due Diligence Activity, not to exceed Fifteen Thousand Dollars ($15,000)
("Due Diligence Costs") for the Property and the Other Properties or (Y) to
seek specific performance of English Creek's obligation to convey the Real
Property in accordance with this Agreement. If the Partnership elects to
terminate this Agreement, upon payment of the sums described above, English
Creek shall be released and relieved of any further liability and this
Agreement shall thereupon be null and void. Except as expressly set forth
above, the Partnership hereby waives any right which the Partnership may have
to any lis pendens or other lien or encumbrance against any of the Real
Property, 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 the Partnership'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 English Creek to perform its
obligations under this Agreement.
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15. Operations Prior To Closing.
(a) English Creek agrees to operate the Property between the
Effective Date and the Closing Date in the same general manner as English
Creek has operated the Property 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) English Creek shall comply with all of the obligations of
landlord under the Leases and all other agreements and contractual
arrangements affecting the Real Property by which English Creek is bound or
to which the Real Property, or any of them, are subject, and which will be
binding upon the Partnership or a lien upon such Real Property, after the
Closing.
(c) English Creek shall notify the Partnership promptly of
English Creek's receipt of any notice from any party alleging that English
Creek is in default of its obligations under any of the Leases or any Permit
or agreement affecting the Real Property, or any portion or portions thereof.
(d) No contract for or on behalf of or affecting the Real
Property shall be negotiated or entered into which cannot be terminated by
English Creek 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 the Partnership,
which the Partnership agrees it shall not unreasonably withhold, condition or
delay, English Creek shall not enter into any new leases for any portion of
the Real Property. Any new lease shall be on the Partnership's customary
form (which may vary to reflect customary negotiated revisions thereto), or
such other form which is reasonably acceptable to the Partnership. Further,
except with the prior written consent of the Partnership, which the
Partnership agrees it shall not unreasonably withhold, condition or delay, or
as set forth above, English Creek 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) English Creek shall not make or permit to be made any
capital improvements or additions to the Real Property, or any portion
thereof, without the prior written consent of the Partnership, except those
made by English Creek pursuant to the express requirements of this Agreement,
those made by tenants pursuant to the right to do so under their Leases, or
by English Creek if required by applicable law or ordinance, or as required
under any Lease.
(g) English Creek shall timely bill all tenants for all rent
billable under Leases, and use commercially reasonable efforts to collect any
rent in arrears.
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(h) English Creek shall notify the Partnership of any tax
assessment disputes (pending or threatened) prior to Closing, and from and
after the Due Diligence Expiration Date, English Creek 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 the Partnership'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 English Creek, and all refunds relating to any
year subsequent to the year in which Closing occurs shall be the sole
property of the Partnership. Each party agrees to promptly remit to the
other any refund received by it which is the property of the other.
(i) English Creek shall notify the Partnership 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 Property, 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
Property, or any portion thereof;
(iii) Notice of any actual or threatened litigation
against English Creek or affecting or relating to the Real Property, or any
portion thereof which may materially and adversely affect the Real Property
or English Creek's ability to consummate the transactions contemplated by
this Agreement; or
(iv) Vacancy of any demised Property by a tenant, other
than in accordance with a scheduled lease termination.
16. PROPERTY CONVEYED "AS-IS, WHERE IS". IT IS UNDERSTOOD AND
AGREED THAT, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT,
ENGLISH CREEK 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
PROPERTY, 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 PROPERTY
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INCLUDING, WITHOUT LIMITATION: (I) THE VALUE, CONDITION, MERCHANTABILITY,
MARKETABILITY, PROFITABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR USE OR
PURPOSE OF ANY OF THE PROPERTY, (II) THE MANNER OR QUALITY OF THE
CONSTRUCTION OR MATERIALS INCORPORATED INTO ANY OF THE PROPERTY AND (III) THE
MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF ANY OF THE PROPERTY.
THE PARTNERSHIP AGREES THAT WITH RESPECT TO THE PROPERTY, THE PARTNERSHIP HAS
NOT RELIED UPON AND WILL NOT RELY UPON, EITHER DIRECTLY OR INDIRECTLY, ANY
REPRESENTATION OR WARRANTY OF ENGLISH CREEK OR ANY AGENT OF ENGLISH CREEK NOT
EXPRESSLY SET FORTH IN THIS AGREEMENT. THE PARTNERSHIP REPRESENTS THAT IT IS
A KNOWLEDGEABLE THE PARTNERSHIP OF REAL ESTATE AND THAT IT IS RELYING SOLELY
ON ITS OWN EXPERTISE AND THAT OF THE PARTNERSHIP'S CONSULTANTS, AND THE
REPRESENTATIONS AND WARRANTIES OF ENGLISH CREEK CONTAINED IN THIS AGREEMENT,
SUBJECT, HOWEVER, TO THE LIMITATIONS CONTAINED HEREIN UPON SUCH
REPRESENTATIONS AND WARRANTIES, AND THAT ENGLISH CREEK HAS OR SHALL HAVE
AFFORDED THE PARTNERSHIP WITH A FULL AND COMPLETE OPPORTUNITY TO MAKE ITS OWN
INDEPENDENT INVESTIGATION OF THE PROPERTY 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 THE PARTNERSHIP'S INSPECTIONS AND
INVESTIGATIONS. THE PARTNERSHIP ACKNOWLEDGES AND AGREES THAT, UPON CLOSING,
ENGLISH CREEK SHALL SELL AND CONVEY TO THE PARTNERSHIP AND THE PARTNERSHIP
SHALL ACCEPT THE PROPERTY "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 PROPERTY BY
ENGLISH CREEK, ANY AGENT OF ENGLISH CREEK OR ANY THIRD PARTY. THE
PARTNERSHIP EXPRESSLY AGREES THAT THE TERMS AND CONDITIONS OF THIS PARAGRAPH
16 SHALL EXPRESSLY SURVIVE THE CLOSING AND NOT MERGE THEREIN AND ENGLISH
CREEK IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN
STATEMENTS, REPRESENTATIONS, OR INFORMATION PERTAINING TO ANY OF THE PROPERTY
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. Conditions Precedent to Closing.
The obligations of the Partnership hereunder are subject to the
fulfillment of the following conditions prior to or on the Closing Date (any
one of which may be waived in whole or in part by the Partnership at or prior
to the Closing) and in the event any of the conditions are not complied with,
the Partnership may terminate this Agreement by notifying the English Creek
and Escrow Agent and thereupon shall be returned the Deposit and thereafter
this Agreement shall be null and void:
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(a) Correctness of Warranties and Representations. The
warranties and representations made by English Creek and the English Creek
Limited Partners in this Agreement shall be true and correct on the Closing
Date as though such representations and warranties were made on the Closing
Date (except for changes in the Leases permitted under the terms of this
Agreement).
(b) Compliance with Terms and Conditions. English Creek shall
have performed and complied with all of the terms and conditions required by
this Agreement, including, without limitation, the delivery of all required
documents pursuant to Paragraph 6(a), to be performed and complied with by it
prior to or on the Closing Date.
(c) The Partnership's Satisfaction with Inspection. The
Partnership shall have notified English Creek of the Partnership's
satisfaction with the inspection performed under Paragraph 11 of this
Agreement, or shall fail to notify English Creek on or before the Due
Diligence Expiration Date, of the Partnership's dissatisfaction with the
results of such review.
(d) Exchange Approval. On or prior to the Closing Date, the
Underlying Shares shall have been approved for listing with the NYSE, upon
official notice of issuance.
(e) Shareholder Approval. The Partnership shall have received
confirmation that the issuance of the Securities will not require approval of
the Trust's security holders under the rules of the NYSE.
(f) 9.8% Limitation. The number of Underlying Shares shall
not exceed that number that is equal to 9.8% of the number of outstanding
Common Shares of the Trust.
(g) Issuance of the Units. The issuance of the Units, if any,
shall be (i) exempt from the registration requirements of the Securities Act
and (ii) either exempt from, or registered pursuant to, any applicable state
securities or "blue sky" registration requirements.
18. Brokers.
(a) English Creek and the Partnership each represent to the
other that neither English Creek nor the Partnership has dealt with any real
estate broker, dealer or salesman in connection with the subject transaction.
(b) English Creek and the Partnership 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
English Creek and the Partnership set forth in Paragraph 18(a) hereof.
(c) The provisions of this Paragraph 18 shall survive Closing
hereunder, or any other termination of this Agreement.
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19. 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 English Creek or the Partnership shall have given notice as
herein provided):
If to the Partnership, addressed to:
Brandywine Operating Partnership, L.P.
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
Attn: Gerard H. Sweeney,
President and Chief Executive Officer
with a copy in each instance to:
Brad A. Molotsky, General Counsel
Brandywine Operating Partnership, L.P.
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
If to English Creek or Member, addressed to:
English Creek Partners #2,
Limited Partnership
20 E. Clementon Road, Suite 201
Gibbsboro, New Jersey 08026
Attention: R. Randle Scarborough
with a copy in each instance to:
Kelly Young, Esquire
20 East Clementon Road, Suite 202
Gibbsboro, New Jersey 08026
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If to Escrow Agent, addressed to:
M. Gordon Daniels, Esquire
Commonwealth Land Title Insurance Company
1700 Market Street
Philadelphia, Pennsylvania 19103
or to such-other address or addresses and to the attention of such other
person or persons as any of the parties may notify the other in accordance
with the provisions of this Agreement. 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
delivery) by the party to whom such notice is sent. Notices by the parties
may be given on their behalf by their respective attorneys.
20. Successors And Assigns. Except to a subsidiary or related
party, the Partnership may not assign this Agreement or any rights herein or
any portion hereof without the prior written consent of English Creek, 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 the Partnership to
the Trust or a subsidiary of 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.
21. 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.
22. 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.
23. 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.
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24. Captions And Recitals. The captions contained herein are not a
part of this Agreement and are included solely for the convenience of the
parties.
25. Entire Agreement. This Agreement and the Exhibits and
Schedules attached hereto 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.
26. 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.
(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.
27. 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 the Trust, and the Partnership's
agents, consultants, counsel and representatives in connection with the
Partnership's Due Diligence Activities and financing purposes, unless the
Trust is advised by its counsel that applicable securities laws and
regulations require. In addition, the Partnership covenants that if it
undertakes any investigation of the Property, it shall conduct such
investigation of the Property as described herein and with the degree of
confidentiality as the Partnership would apply with respect to its own
proprietary information. Notwithstanding the foregoing, at any time after
expiration of the Due Diligence Period, the Partnership 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.
33
<PAGE>
28. Limitation Of Liability. No recourse shall be had for any
obligation of the Partnership of the 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, partner, officer or employee of 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 English Creek and all parties claiming by, through or under
English Creek.
Except for breaches of the representations or warranties as stated
in Section 9 or 18 herein which shall be full recourse obligations to the
general partners of English Creek, no recourse shall be had for any
obligation of English Creek 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
limited partner, general partner or employee of English Creek 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 Partnership and all parties claiming by, through or under the
Partnership.
29. SEC Reporting Requirements. For the period of time commencing
on the date hereof and continuing through the first anniversary of the
Closing Date, English Creek shall, from time to time, upon reasonable advance
written notice from the Partnership, provide the Trust and its
representatives, with access to all financial and other information then in
English Creek's possession pertaining to the period of English Creek's
ownership and operation of the Real Property, which information is relevant
and reasonably necessary, in the opinion of the Trust's outside, third party
accountants (the "Accountants"), to enable the Trust 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 Trust; and (c) any registration statement, report or
disclosure statement filed with the Commission by, or on behalf of the Trust.
English Creek shall deliver to the Trust's accountants a representation
letter (the "Letter"), in the form annexed hereto as Exhibit "T", provided
that the Partnership (and any assignee or designee acquiring title to the
Real Property) shall indemnify and hold English Creek harmless from and
against any claim, damage, loss or liability including, without limitation,
legal fees incurred by English Creek in investigating, defending against or
settling any such matter and the amount of any such settlement to which
English Creek 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 Partnership
acknowledges that English Creek 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.
34
<PAGE>
31. No Recordation. The Partnership 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 32 shall
constitute an immediate default by the Partnership under this Agreement.
32. Tender. Formal tender of an executed deed and purchase money
is hereby waived by the Partnership.
33. Further Assurances. After the Closing, English Creek shall
execute, acknowledge and deliver, for no further consideration, all
assignments, transfers, deeds and other documents as the Partnership may
reasonably request to vest in the Partnership and perfect the Partnership's
right, title and interest in and to the Property.
34. Jury Trial Waiver. THE PARTNERSHIP AND ENGLISH CREEK 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 ENGLISH
CREEK HAS NO OBLIGATION TO EXECUTE THIS AGREEMENT.
36. Indemnification.
Without limitation of any other English Creek indemnity
obligations set forth herein, from and after the Closing Date, English Creek
shall indemnify, defend and save and hold harmless the Partnership and the
Trust, and their respective partners, trustees, directors, officers and
employees, of, from and against any and all loss, cost, expense, damage,
claim, and liability, including reasonable attorney's fees and court costs,
including, without limitation, attorney's fees and costs associated with the
enforcement of English Creek's indemnification obligations for all claims
brought within one year of such Closing (hereinafter collectively, "Losses")
which the Partnership or the Trust may suffer or incur, resulting from,
relating to, or arising in whole or in part, from or out of (i) any
misrepresentation or breach of a representation or warranty by English Creek
contained in this Agreement; (ii) any failure to fulfill any covenant or
agreement of English Creek contained in this Agreement; (iii) all litigation
set forth in this Agreement and on Exhibits hereto; (iv) any and all actions,
suits, investigations, proceedings, demands, assessments, audits, judgments,
and/or claims arising out of or relating to any of the foregoing.
35
<PAGE>
Promptly after receipt by the Partnership or the Trust of
written notice of the commencement of any suit, audit, demand, judgment,
action, investigation or proceeding (a "Third Party Action") or promptly
after the Partnership or the Trust incurs a Loss or has knowledge of the
existence of a Loss, the Partnership or the Trust, as the case may be, will,
if a claim with respect thereto is to be made against English Creek due to
English Creek's obligation to provide indemnification hereunder, give English
Creek written notice of such Loss or the commencement of any Third Party
Action; provided, however, that the failure to provide such notice within a
reasonable period of time shall not relieve English Creek of any of its
obligations hereunder. Promptly after receiving such notice, English Creek
will, upon notice to the Partnership or the Trust, as the case may be, have
the right to assume and control the defense and settlement of any such Third
Party Action at its own cost and expense; provided, however, that it shall be
a condition precedent to the exercise of such right by English Creek that
English Creek shall agree in writing that the Loss, or Third Party Action, as
the case may be, is properly within the scope of the indemnification
obligation and that as between the parties, English Creek shall be
responsible to satisfy and discharge such Third Party Action. English Creek
shall not enter into any resolution or other compromise of a Third Party
Action without obtaining the complete release of the Partnership or the
Trust, as appropriate, for any liability to all claimants under or pursuant
to such Third Party Action. The Partnership or the Trust, as the case may
be, shall have the right to participate in any such defense, contest or other
protective action at its own cost and expense.
Notwithstanding the foregoing, the Partnership or the Trust, as the
case may be, shall have the right to assume and control the defense and
settlement of a Third Party Action (a) if such action includes claims for
equitable relief which, if determined adversely to the Partnership or the
Trust, as the case may be, could reasonably be expected to interfere with its
intended business operations or damage its business reputation or (b) if
English Creek fails to do so in a timely manner. In any circumstances in
which the Partnership or the Trust, as the case may be, undertakes to control
the Third Party Action as provided in this paragraph, it shall (i) not enter
into any resolution or other compromise involving monetary damages without
obtaining the prior written consent of English Creek provided that such
written consent may not be withheld if it would interfere with the
Partnership's or the Trust's, as the case may be, business operation and (ii)
keep English Creek informed on an ongoing basis of the status of such Third
Party Action and shall deliver to English Creek, copies of all documents
related to the Third Party Action reasonably requested by English Creek. The
Partnership or the Trust, as the case may be, shall act to assure that all
attorneys' fees and expenses incurred in connection therewith are reasonable.
36
<PAGE>
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.
ENGLISH CREEK PARTNERS
#2, LIMITED PARTNERSHIP
By: /s/ R. Randle Scarborough
------------------------------
R. Randle Scarborough, its
authorized general partner
/s/ Raymond Perkins
------------------------------
Raymond Perkins
/s/ Steven L. Shapiro
------------------------------
Steven L. Shapiro
BRANDYWINE OPERATING PARTNERSHIP, L.P.
By: BRANDYWINE REALTY TRUST, its sole
general partner
By: /s/ Gerard H. Sweeney
------------------------------
Name: Gerard H. Sweeney
Title: President & CEO
BRANDYWINE REALTY TRUST
By: /s/ Gerard H. Sweeney
------------------------------
Name: Gerard H. Sweeney
Title: President & CEO
EXECUTIONS CONTINUED
37
<PAGE>
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
Commonwealth Land Title Insurance Company:
By: /s/ M. Gordon Daniels
----------------------
M. Gordon Daniels
38
<PAGE>
EXECUTION
500 SCARBOROUGH DRIVE
AGREEMENT
AMONG
ENGLISH CREEK PARTNERS #2, LIMITED PARTNERSHIP,
R. RANDLE SCARBOROUGH, RAYMOND PERKINS AND STEVEN L. SHAPIRO
BRANDYWINE OPERATING PARTNERSHIP, L.P.
AND
BRANDYWINE REALTY TRUST
Dated as of December 5, 1997
<PAGE>
LIST OF EXHIBITS
Exhibit A Description of Land
Exhibit B List of Contracts
Exhibit C Certified Rent Roll
Exhibit D Permitted Exceptions
Exhibit E Excluded Personal Property
Exhibit F The Other Properties
Exhibit G Form of Deed
Exhibit H Bill of Sale
Exhibit I Form of Assignment(s)
Exhibit J Form of Non-Foreign Person Certification
Exhibit K Registration Rights Agreement
Exhibit L Tax Indemnity Agreement
Exhibit M Investor Questionnaire
Exhibit N $1,500,000 Guaranty
Exhibit O Pending Litigation
Exhibit P Contracts Not Terminable with 30 days Notice
Exhibit Q Outstanding Brokerage Commissions and TI
Commission to George Mintz & Co. to be paid and Closing;
T/I under the Martin-Marietta Lease to be paid by Seller
Exhibit R Form of Estoppel Certificate
Exhibit S Identified Tenants
Exhibit T Representation Letter
<PAGE>
Exhibit 10.5
1007 LAUREL OAK ROAD
AGREEMENT
THIS AGREEMENT is made and entered into as of the 5th day of
December, 1997 by and among Laurel Oak Road, L.L.C., a New Jersey limited
liability corporation having its principal office at Scarborough Properties,
20 East Clementon Road, Suite 201, Gibbsboro, New Jersey 08026 ("Laurel
Oak"), Sean Scarborough ("SS") and R. Randle Scarborough ("RRS"), the members
of Laurel Oak (together, the "Members"), BRANDYWINE REALTY TRUST, a Maryland
real estate investment trust (the "Trust"), and BRANDYWINE OPERATING
PARTNERSHIP, L.P., a Delaware limited partnership or its nominee, having an
address at Newtown Square Corporate Campus, 16 Campus Boulevard, Suite 150,
Newtown Square, Pennsylvania 19073 (the "Partnership").
RECITALS
A. Laurel Oak is the owner of a certain tract of land being comprised
of two (2) parcels of property, being Lot 70 of Block 195.01 (formerly Lots
70 and 71), together with the building and improvements thereon, containing
approximately 78,205 rentable square feet, commonly known as 1007 Laurel Oak
Road, Voorhees, New Jersey as more fully described on Exhibit "A" attached
hereto; and
B. Laurel Oak desires and hereby agrees to sell or contribute, and the
Partnership desires and hereby agrees to acquire or accept, all of Laurel
Oak's right, title and interest in and to the Property (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", 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.
"Closing" shall have the meaning ascribed to that term in
Paragraph 4 hereof. The date upon which the Closing actually occurs shall be
the "Closing Date."
<PAGE>
"Common Shares" shall mean the common shares of beneficial
interest, par value $.01 per share, of the Trust.
"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
Property, to the extent assignable by Laurel Oak, all as described in Exhibit
"B" attached hereto and made a part hereof.
"Deposit" shall mean the Deposit delivered by the Partnership
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
December 9, 1997.
"Effective Date" shall mean the date on which this Agreement
has been fully executed and delivered by all parties hereto to each other.
"Escrow Agent" shall mean Commonwealth Land Title Insurance
Company, 1700 Market Street, Philadelphia, Pennsylvania 19103.
"Escrow Terms" shall mean the escrow agreement to be entered of
even date herewith between the Escrow Agent, Laurel Oak and the Partnership.
"Improvements" shall mean those certain buildings and other
improvements constructed and located on the Land as described on Exhibit "A".
"Land" shall mean that certain parcel of real property located
at 1007 Laurel Oak Road, Voorhees, New Jersey.
"Leases" shall mean those certain leases (and guarantees
thereof, if any) listed on Exhibit "C" attached hereto and made a part
hereof, or hereafter entered into by Laurel Oak, 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 Property.
"Permitted Exceptions" shall mean with respect to any of the
Real Property (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 "D" to this Agreement, (iv) special assessments which become a lien
on any of the Real Property on or after the Closing Date, and (v) such other
title matters existing on the Closing Date which are accepted or deemed
accepted by the Partnership pursuant to Paragraph 5 hereof; and (vii) the
rights of Tenants of any of the Real Property pursuant to the Leases for all
or any portion of any of the Real Property.
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<PAGE>
"Personal Property" shall (except as specifically excluded on
Exhibit "E" hereto) mean all of Laurel Oak'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 Laurel Oak, situated on
any of the Real Property on the Closing Date, and all artwork, renderings,
flags, awnings and trade dress; all architects', engineers', surveyors' and
other real estate 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 Laurel Oak's possession and are not proprietary in
nature, and all building names and Laurel Oak's rights, if any, in and to the
name "1007 Laurel Oak Road."
"Property" shall mean the Real Property and such of the
Contracts, Leases, Licenses, Personal Property and other rights, titles,
interests and obligations which pertain to the Real Property and are intended
to be contributed, conveyed, sold or otherwise transferred to the Partnership
by Laurel Oak pursuant to this Agreement.
"Real Property" shall mean the Land and the Improvements.
"Tenants" shall mean the tenants under the Leases.
"Trust" shall mean Brandywine Realty Trust, a Maryland real
estate investment trust, the sole general partner of the Partnership.
"Underlying Shares" shall mean the Common Shares issuable upon
the conversion or redemption of, or otherwise pursuant to, the Units issuable
hereunder.
2. Acquisition Of The Property. On the Closing Date, and subject
to the terms and conditions set forth in this Agreement, Laurel Oak shall
sell or contribute, at Laurel Oak's sole discretion, assign, transfer and
convey to the Partnership and the Partnership shall purchase or accept, as
the case may be, from Laurel Oak the following:
(a) All right, title and interest of Laurel Oak in and to all
of the Real Property;
(b) All right, title and interest of Laurel Oak, 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 Laurel Oak, if any, in
any easements, covenants, rights of way, privileges, hereditaments and other
rights appurtenant to any of the Real Property;
(d) to the extent assignable to the Partnership and approved
by the Partnership, all right, title and interest of Laurel Oak in and to the
Contracts and the Licenses relating to any of the Real Property;
-3-
<PAGE>
(e) all right, title and interest of Laurel Oak in and to the
Leases; and
(f) all right, title and interest of Laurel Oak in and to the
Personal Property.
3. Consideration And Time Of Payment. The consideration (the
"Consideration") to be received by Laurel Oak from the Partnership in
exchange for the Property shall be Six Million One Hundred Thousand Dollars
($6,100,000) less the amount of principal and accrued interest secured by a
mortgage on the Property if and to the extent such principal and accrued
interest is not repaid at the Closing, as adjusted pursuant to Paragraph 7 of
this Agreement which shall be paid to Laurel Oak in the following manner:
(a) On the Effective Date, the Partnership shall deliver a
check, subject to collection, in the amount of Twenty Thousand Dollars
($20,000) to the Escrow Agent, which check shall be payable to the order of
the Escrow Agent and shall be held and disbursed pursuant to the Escrow
Terms. Thereafter, within two (2) business days following the Due Diligence
Expiration Date, the Partnership shall deliver a check, subject to
collection, in the amount of Ten Thousand Dollars ($10,000) to the Escrow
Agent, which check shall be payable to the order of the Escrow Agent and
shall be held and disbursed pursuant to the Escrow Terms. In the event that
Laurel Oak elects, pursuant to subparagraph (c) below, to receive all of the
Consideration in Units in exchange for the contribution of the Property, the
Escrow Agent shall release the Deposit to the Partnership at the Closing.
(b) The balance of the Consideration shall be paid to Laurel
Oak at the Closing by wire transfer of immediately available funds to an
account designated by Laurel Oak.
(c) In lieu of receiving the Consideration pursuant to
subparagraphs (a) and (b) above, Laurel Oak may elect, at its option, to
receive all or a portion of the Consideration in the form of Class A Units of
Limited Partnership Interest ("Units") in the Partnership in exchange for the
contribution to the Partnership of all or a portion, as the case may be, of
the Property (such amount being estimated as approximately $1,530,000 worth
of units (i.e., $6,100,000 - $4,570,000). Laurel Oak may make such election
by providing the Partnership written notice no later than thirty (30) days
prior to the Closing Date. Such election notice shall state the dollar
amount of the Consideration to be received in Units. The number of Units
issuable in satisfaction of the applicable portion of the Consideration that
Laurel Oak elects to be so received shall be computed by dividing the
aggregate dollar amount of such applicable portion of the Consideration by
the Computed Market Price. The term "Computed Market Price" shall mean the
average closing price for the Common Shares as reported by the New York Stock
Exchange (the "NYSE") for the ten (10) trading day period immediately
preceding the Due Diligence Termination Date. The distributions declared by
the Partnership in respect of the Class A Units issuable pursuant to this
Agreement during the initial calendar quarter in which the Closing occurs
shall be pro-rated by the Partnership based on the number of days the Class A
Units are outstanding during such quarter. For example, if the Class A Units
issuable pursuant to this Agreement are issued on December 1, 1997, each of
such Class A Units shall be entitled to receive an amount equal to one-third
of the amount of the distribution payable to a Class A Unit that was
outstanding during the full quarter.
-4-
<PAGE>
(d) The transaction contemplated by this Agreement is
conditioned upon the closing of the sale of the other properties identified
on Exhibit "F" attached hereto (the "Other Properties"), so that no one or
more of the Other Properties and the Property hereunder may be sold without
all of the Property being sold unless expressly provided for in writing by
the parties hereto and in any event the Deposit hereunder and thereunder
shall be deemed a single deposit for the entire transaction.
4. Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall be held on or before December 12, 1997, but
in any event no later than fifteen (15) days next following the Due Diligence
Termination Date, at the offices of the Partnership, Plaza 1000 at Main
Street, Suite 400, Voorhees, New Jersey, commencing at 10:00 a.m., time being
of the essence.
5. Title And Conveyance Of The Property.
(a) At Closing, title to the Real Property shall be insurable
at regular rates by Commonwealth Land 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 Property is not insurable as aforesaid, the Partnership's sole right and
remedy shall be as set forth in Paragraph 5(b) below.
(b) (i) The Partnership has applied 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 the
Partnership, upon recording of the Deeds (as hereinafter defined) for each of
the Real Property, an owner's policy of title insurance as above specified
("Title Policy"). Said Commitments shall agree to insure the proposed title
of the Partnership to each of the Real Property subject only to the Permitted
Exceptions and such other title exceptions as the Partnership 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 the Partnership objects to such additional title exceptions
(the "Title Defects"), the Partnership shall notify Laurel Oak of such Title
Defects with sufficient specificity to enable Laurel Oak to respond. The
Partnership's notice of any Title Defects shall be given in writing to Laurel
Oak no later than the date which is five (5) business days prior to the Due
Diligence Termination Date, together with the Commitments and copies of all
matters of record raised therein as exceptions thereto, after which the
Partnership shall be deemed to have waived any and all Title Defects not so
raised, except for Title Defects which are disclosed to the Partnership in
continuations of title issued subsequent to the issuance of the Commitments,
unless the Partnership fails to object to same in writing within three (3)
business days after the Partnership's receipt of the continuation of title in
which the same is disclosed, in which case the Partnership will be deemed to
have waived such additional Title Defects. Laurel Oak shall have the right,
but not the obligation (except as otherwise specifically provided), to cure
such Title Defects and, if Laurel Oak 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 Laurel Oak at its sole option for up to
thirty (30) days to enable Laurel Oak to effect such cure.
-5-
<PAGE>
(ii) In the event that either (a) Laurel Oak is unable to
convey title in accordance with the terms of this Agreement, (b) Laurel Oak
elects not to cure or cause the removal of any exception to title, except as
required in subparagraph (iii) below, or (c) if Laurel Oak is unable to
satisfy any other conditions to the Partnership's obligations under this
Agreement, then (except as otherwise specifically provided in subparagraph
(iii) below) the sole liability of Laurel Oak shall be to (A) direct the
Escrow Agent to return the Deposit to the Partnership and (B) reimburse the
Partnership 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 the Partnership to update the existing surveys
(collectively "the Partnership's Reasonable Costs"), and upon such payments
being made, this Agreement shall be deemed canceled 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
the Partnership shall have no rights of action against Laurel Oak in law or
in equity, for damages or, except for the purpose of enforcing Laurel Oak's
contractual obligations under subparagraph (iii) below, for specific
performance. Notwithstanding the foregoing, the Partnership shall have the
right to waive any conditions to the Partnership's obligations hereunder, in
which event Laurel Oak shall make the deliveries provided for herein to the
Partnership to the extent that Laurel Oak is able so to do, and there shall
be no reduction in the Consideration in such event.
(iii) Notwithstanding the provisions of the foregoing
paragraph, if the condition of title to the Real Property at the Closing is
other than that which the Partnership is required or agrees to accept
hereunder solely by reason of any mortgages or other monetary liens
(hereinafter referred to as "Liens") which can be satisfied or remedied by
the payment of a liquidated amount of money not to exceed the Purchase Price,
Laurel Oak shall not have the right to cancel this Agreement and Laurel Oak
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.
(iv) Notwithstanding anything to the contrary contained in
this Agreement, Laurel Oak 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 subparagraph (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) The Partnership expressly understands, acknowledges and
agrees that any failure by the Partnership to notify Laurel Oak in writing of
any Title Defects on or before the expiration of the Due Diligence, shall for
all purposes be deemed to be an acceptance by the Partnership of such Title
Defects as if they were one or more of the Permitted Exceptions.
(d) At Closing, Laurel Oak will convey fee simple title to the
Real Property by a Bargain and Sale Deed with covenant against grantor's acts
(the "Deed"), subject in all cases to the Permitted Exceptions, in the forms
attached hereto and made a part hereof as Exhibit "G".
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(e) At Closing, Laurel Oak will transfer all of its right,
title and interest in and to the Personal Property to the Partnership by
executing a Bill of Sale ("Bill of Sale") in the form attached hereto and
made a part hereof as Exhibit "H".
(f) At Closing, Laurel Oak will assign all of Laurel Oak's
right, title, and interest, and the Partnership shall assume all of the
obligations from and after the Closing Date, in, to and under the Leases,
Licenses and the Contracts for the Property, by executing an Assignment and
Assumption Agreement in the form attached hereto and made a part hereof as
Exhibit "I" (the "Assignments").
6. Closing Documents.
(a) At the Closing, as a condition of the Partnership's
obligation to close hereunder, Laurel Oak shall deliver or cause to be
delivered the following:
(i) The Deed, executed by Laurel Oak, covering the Real
Property (and separate quitclaim deeds to the Real Property utilizing new
ALTA survey descriptions, if requested);
(ii) The Bills of Sale executed by Laurel Oak covering the
Personal Property;
(iii) The Assignments, executed by Laurel Oak;
(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 Laurel Oak;
(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 Laurel Oak;
(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 Laurel Oak;
(vii) Written notice from Laurel Oak or Laurel Oak's
managing agent to each Tenant in form reasonably satisfactory to the
Partnership stating that the Real Property have been sold to the Partnership
and that tenant security deposits (if any) in Laurel Oak's possession have
been transferred to the Partnership and directing the Tenants to make future
rental payments to the Partnership at the address designated by the
Partnership;
(viii) Non-foreign person certification in the form
attached hereto as Exhibit "J";
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(ix) All building records and Tenant lease files with
respect to the Real Property which are in the possession of Laurel Oak;
(x) Each bill of current real estate taxes, sewer charges
and assessments, water charges and other utilities and to the extent in
Laurel Oak'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 Laurel Oak or any property manager controlled by Laurel Oak;
(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 Laurel Oak to enable the Title Insurer to issue the Commitments
described in Paragraph 5(b)(i). The Partnership shall require affirmative
endorsements against mechanic's liens, consistent with Laurel Oak's
obligations under Paragraph 5(b)(iii), above;
(xiii) A letter, from the New Jersey Department of
Environmental Protection or its successor ("NJDEP") 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 Real Property (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
Laurel Oak to be correct and complete as of Closing Date;
(xvi) Proof as to the due authorization and execution
by Laurel Oak of the documents executed and delivered by Laurel Oak;
(xvii) Such affidavits of title or other certifications
as shall be required by the Title Company to insure the Partnership's title
to the Property as set forth in Section 3, and to provide affirmative
endorsements (a) against mechanic's liens, (b) insuring against any violation
of existing covenants, conditions or restrictions, and insuring that future
violation will not result in forfeiture of title, (c) insuring that all
foundations in place as of the date of such policy are within the lot lines
and applicable set back lines, (d) insuring that the buildings and structures
on the Property do not encroach onto adjoining land or onto any easements,
(e) insuring that confirming that there are no encroachments of improvements
from adjoining land onto the Property (f) removing any exceptions for matters
which an accurate survey would disclose, and (g) providing affirmative
insurance with respect to such other matters as the Partnership or its lender
shall specify;
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(xviii) A Registration Rights Agreement in the form
attached hereto as Exhibit "K" executed by Laurel Oak and the Members;
(xix) The closing certificate required pursuant to
this Agreement;
(xx) An executed counterpart to the Agreement of Limited
Partnership of the Partnership (the "Partnership Agreement") signed by each
of the Members;
(xxi) An executed Tax Indemnity Agreement in the form
of Exhibit "L" attached hereto;
(xiii) An executed $350,000 Guaranty by M. Sean
Scarborough in the form of Exhibit "M" attached hereto; and
(xxiii) An executed Investors Questionnaire in the form
attached hereto as Exhibit "N".
(b) At the Closing, as a condition of Laurel Oak's obligation
to close hereunder, the Partnership shall deliver or cause to be delivered
the following:
(i) The balance of the Consideration (in immediately
available funds or Units in accordance with Paragraph 3);
(ii) A replacement Maintenance Bond or Letter of Credit in
the amount of $80,491.14 benefitting Voorhees Township, New Jersey;
(iii) The Assignments, executed by the Partnership;
(iv) An agreement by the Partnership not to sell the
Property for four years, including an indemnity for the Partnership's breach
thereof;
(v) A Registration Rights Agreement in the form attached
hereto as Exhibit "K" and Tax Indemnity in the form of Exhibit "L" executed
by the Trust; and
(vi) The closing certificate required pursuant to
Paragraph 9.
7. Prorations And Closing Costs. All matters involving prorations
or adjustments to be made to the Consideration 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 the Partnership to be treated as the owner of the
Property, 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 Property 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
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Date, taxes will be prorated on the basis of the most recently ascertainable
tax bill. There shall be no proration of Laurel Oak's insurance premiums or
assignment of Laurel Oak's insurance policies and Laurel Oak shall be
entitled to cancel all of its existing policies as of the Closing Date. The
Partnership 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 the Property and allocable to the period prior to
the Closing Date shall be determined and paid by Laurel Oak before Closing,
if possible, or shall be paid promptly thereafter by Laurel Oak or adjusted
between the Partnership and Laurel Oak immediately after the same have been
determined. The Partnership and Laurel Oak shall to the extent necessary
enter into an agreement to such effect at Closing. Laurel Oak shall attempt
to have all utility meters read as of the Closing Date. Laurel Oak shall
further attempt to obtain from the provider of same, all other service
statements and bills of account adjusted as of the Closing Date. Laurel Oak
shall be entitled to refunds of all deposits, if any, paid by Laurel Oak or
Laurel Oak's predecessor-in-interest prior to Closing and held by entities
providing such service, or, at Laurel Oak's option, Laurel Oak shall transfer
all of Laurel Oak's right, title and interest in and to such deposits to the
Partnership at Closing and shall receive a full credit for the amount of such
deposits. All Contracts and other obligations in connection with the
Property, 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 Property on or before the Closing Date and are not
payable in installments shall be paid by Laurel Oak. Special assessments
which have been filed as a lien against any of the Real Property, 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 the Partnership. Special
assessments which are or may be pending, but which have not become a lien on
the Real Property as of the Closing Date, and special assessments which are
filed as a lien after the Closing Date, shall be assumed and paid by the
Partnership.
(c) Laurel Oak shall pay the cost of State and County transfer
taxes or stamps imposed in connection with the recordation of the Deeds for
the Real Property. The Partnership 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
the Partnership. The Partnership agrees to pay the expense of the legal fees
of its own counsel. The cost of all of the Partnership's Due Diligence
Activities (as defined below) shall be borne solely by the Partnership.
(d) Any base, minimum or similar rents under the Leases
collected by Laurel Oak for a rental period or portion thereof from or after
the Closing Date shall be credited to the Partnership at Closing on a per
diem basis. In addition, any security deposits held by Laurel Oak 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 the Partnership at Closing at Laurel Oak's option.
If any tenant is in arrears in the payment of rent or additional rent on the
Closing Date, rents received from such tenant ninety (90) days after the
Closing Date shall be applied in the following order of priority: (a) to the
Partnership, so long as
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such tenant is in arrears for current or prior rent arising after Closing,
then (b) to Laurel Oak for all rent in arrears prior to the Closing Date; and
then (c) to the Partnership with no further claim by Laurel Oak thereto.
Except as herein provided, the Partnership is not under any obligation to
collect rents in arrears for the benefit of Laurel Oak. Any rents which are
delinquent or otherwise not paid at the time of Closing, and collected by the
Partnership or Laurel Oak within ninety (90) days after Closing shall be
apportioned as aforesaid and the portion to which Laurel Oak is entitled
shall be promptly remitted by the Partnership to Laurel Oak. Laurel Oak
shall have no claim to rents collected ninety (90) days after the Closing
Date. Laurel Oak retains the right to pursue its remedies against Tenants
after Closing for any delinquent rents or other amounts owed to Laurel Oak
(other than proceedings to evict Tenant or terminate its lease). The
Partnership shall not enter into any agreement pursuant to which any sums
owed to Laurel Oak in respect of any Lease for periods prior to the Closing
are reduced, modified or waived. The Partnership's obligations to collect
rent arrearages shall be limited to commercially reasonable efforts, and the
Partnership 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 Laurel Oak without contribution by, or reimbursement
from, the Partnership. At Closing, the Partnership shall pay or reimburse
Laurel Oak 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. The Partnership
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
the Partnership'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. Laurel Oak shall be responsible
for the costs of, and shall pay or perform prior to Closing 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 Laurel
Oak 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 Property. The Partnership shall assume, pay or reimburse (as
applicable) Laurel Oak on the Closing Date for 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 all costs of
tenant improvements and allowances incurred by or on behalf of Laurel Oak 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 Property, provided the same were approved by the Partnership or
are otherwise permitted as set forth in Paragraph 15(e) hereof and provided
that such costs are set forth on Exhibit "C" hereto.
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(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 Laurel Oak.
(g) Laurel Oak shall be solely responsible for the payment of
any "roll back taxes" assessed or imposed upon any of the Real Property 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 otherwise, which relate to any period prior
to the Closing Date, and Laurel Oak agrees to indemnify, defend and save the
Partnership harmless (including attorneys' fees) from and against any claim
for such taxes.
(h) Miscellaneous income including, without limitation,
telephone and vending machine income, if any, shall be prorated as of the
Closing Date.
(i) All of the provisions of this Paragraph 7 and Laurel Oak's
and the Partnership's respective rights and obligations hereunder shall
survive the Closing.
8. Possession Of Property.
(a) Laurel Oak shall deliver possession to the Real Property
to the Partnership on the Closing Date, subject only to the Permitted
Exceptions.
(b) the Partnership shall assume, by execution of the
Assignments, all of Laurel Oak's obligations in, to and under the Contracts,
the Licenses and Leases. Notwithstanding the foregoing, the Partnership
shall not assume management, leasing or brokerage agreements provided,
however, that the Partnership shall remain liable for leasing commissions as
set forth in Paragraph 7(e), above.
(c) All of the provisions of this Paragraph 8 and Laurel Oak's
and the Partnership's respective rights and obligations hereunder shall
survive the Closing.
9. Representations Of Laurel Oak, the Members and the Partnership.
(a) Laurel Oak hereby represents and warrants, as follows, all
of which shall be true and correct at, and as of, the Effective Date:
(1) Laurel Oak is a limited liability company duly
organized and validly existing under the laws of the State of New Jersey, and
is in good standing in such state.
(2) Laurel Oak 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 Laurel Oak pursuant
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hereto when delivered will constitute, the legal, valid and binding
obligations of Laurel Oak, enforceable against Laurel Oak 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 Laurel Oak's knowledge, threatened against or
relating to Laurel Oak or its Property which might materially and adversely
affect Laurel Oak or its Property or which questions the validity of this
Agreement or any action taken or to be taken by Laurel Oak pursuant hereto.
Laurel Oak shall remain responsible to defend, and shall indemnify and hold
the Partnership harmless from and against all liability, cost and expense
relating to the litigation identified in on 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 Laurel Oak's limited liability agreement or any other
material agreement, instrument or lease to which Laurel Oak 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 Laurel Oak's possession or control, have
been or will be delivered, or made available, to the Partnership 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 Laurel Oak in connection with the ownership and
operation of the Property (the "Personal Property Leases"); (iv) Licenses;
(v) surveys; (vi) title reports; (vii) engineering reports; and (viii)
environmental reports.
(6) To the best of Laurel Oak's knowledge, (i) all
of the Leases, Contracts and Personal Property Leases and Licenses, are in
full force and effect, (ii) there has been no action or failure to act by
Laurel Oak 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) Laurel Oak has not
received from any other party written notice with respect to the condition of
the Property or the use or repair of the same or of any alleged default by
Laurel Oak under any such Lease, or Personal Property Lease or License.
Except as set forth on Exhibit "P", 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 the Partnership, the Contracts shall not be terminated
by Laurel Oak 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. The Partnership shall
assume all Contracts not terminated at Closing pursuant to the Assignment.
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(7) Laurel Oak shall indemnify and hold the
Partnership harmless of, from and against any and all claims and liabilities
arising out of the employment of any individuals by Laurel Oak and its
affiliates, whether as employees or independent contractors. As of the
Closing, there are and shall be no liens against the Real Property 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 the Partnership after the Closing. The
Partnership shall be under no obligation to assume any of Laurel Oak's
employees, it being Laurel Oak's sole responsibility and obligation to
provide severance arrangements, if any, for all such employees. This
Paragraph shall survive Closing.
(8) To Laurel Oak'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 Laurel Oak's actual knowledge, there are no special or
general assessments currently affecting or pending against the Real Property
or any portion thereof.
(9) Laurel Oak has not been served with written
notice that it has been named as a party in any litigation, administrative
proceeding or investigation naming Laurel Oak 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. Laurel
Oak 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 Laurel
Oak'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 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 Property, and a current rent roll certified by
Laurel Oak, will be delivered to the Partnership upon execution of this
Agreement.
(11) Laurel Oak 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 Laurel Oak and
related to the ownership or operation of the Property (collectively, the
"Permits"), and there is no pending or, to the actual knowledge or Laurel
Oak, threatened
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proceeding which could result in the revocation or cancellation of, or
inability of Laurel Oak to renew, any Permit.
(12) To the best of Laurel Oak's knowledge, except as
set forth in Exhibit "Q" attached hereto and made a part hereof, all
management fees, leasing commissions and tenant improvement allowances are
fully paid, there are no brokerage commissions owing by Laurel Oak with
respect to any of the Leases or otherwise related to the Property which have
not been paid, and there are no ongoing commission or leasing fee obligations.
(13) Laurel Oak has received no written notice from
any insurance company which has issued a policy with respect to the Property
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 Laurel Oak will promptly
notify the Partnership of any such notice or requirement if such notice is
received prior to the Closing.
(14) Laurel Oak is not a "foreign person" and will
deliver to the Partnership, 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) Laurel Oak has not received written notice from
any governmental agency or authority of outstanding material violations
issued by governmental authorities having jurisdiction over the Real Property.
(16) Except as may be set forth in a Lease as
specifically noted on Exhibit "C", there are no options, rights of first
refusal or conditional sales agreements regarding the purchase and sale of
the Real Property.
(17) There are no oral or written leases or rights of
occupancy or grants or claims of right, title or interest in any portion of
the Property other than the leases (the "Leases") listed on the rent roll
attached hereto as Exhibit "C". No tenant has advised Laurel Oak that Laurel
Oak is in default under any of the Leases, or asserted any claim or basis for
any claim for free or reduced rent or right of setoff against the landlord or
the rent under the Leases, and Laurel Oak and its agent have no actual
knowledge of any default or any event which has taken place which, with the
passage of time, or the delivery of notice, or both, could become an event of
default. Laurel Oak has the sole right to collect rents under the Leases,
and neither such right nor any of the Leases has been assigned, pledged,
hypothecated or otherwise encumbered by Laurel Oak except as additional
collateral for the existing mortgage upon the Property which shall be
satisfied at or before Closing. No holder of any such collateral assignment
has asserted or exercised any of its right to collect such rents. Each of
the Leases is valid and subsisting and in full force and effect, the tenant
is in actual possession in the normal course, and the rents set forth in
Exhibit "C" are the actual rents, income and charges being collected by
Laurel Oak under the Leases. Any tenant improvements which Laurel Oak is
obligated to complete pursuant to any Lease (or any unsigned lease proposal
or lease amendment) has been completed as of this date or shall be completed
as of Closing, and all costs therefore
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have been or shall be paid by Laurel Oak, and all of Laurel Oak's work has or
shall have been accepted by the Tenant without exception on or before
Closing, other than routine punch list items, which items shall remain the
responsibility of Laurel Oak following Closing, and which obligation shall
expressly survive Closing. The amount of each security deposit contains,
where required by law or otherwise applicable, interest which has accrued in
accordance with law. No tenant of the Property under any of the Leases has,
and shall not at Closing have, prepaid any rent under any of the Leases for
more than one (1) month. Except as otherwise set forth on Exhibit "C", no
security deposits by tenants have heretofore been returned or applied to
charges against the tenants.
(18) To the best of Laurel Oak's knowledge, the
Property and the continued operation and use thereof comply with all
applicable requirements of federal, state and local law, and all applicable
requirements of governmental bodies or agencies having jurisdiction thereof,
no portion of the Property lies within a flood hazard area, flood plain or
wetland; and there are no outstanding notices of any violations issued by
governmental authority having jurisdiction over the Property.
(19) To the best of Laurel Oak's knowledge, no
Hazardous Substances (defined below) and no Hazardous Wastes (defined below)
are present on the Property including, without limitation, asbestos,
flammable substances, explosives, radioactive materials, hazardous wastes,
toxic substances, pollutants, pollution, contaminant, polychlorinated
byphenyls ("PCBs"), urea formaldehyde foam insulation, radon, corrosive,
irritant, biologically infectious materials, petroleum product, garbage,
refuse, sludge, hazardous or waste materials, and there has been no use of
the Property that may, under any federal, state or local environmental
statute, ordinance or regulation, require, at any time, any closure or
cessation of the use or occupancy of the Property and/or impose, at any time,
upon the owner of the Property any clean-up or other monetary obligation.
Laurel Oak hereby indemnifies and holds the Partnership harmless of, from and
against any and all liability, loss or damage suffered or incurred as a
result of a claim, demand, cost or judgment in favor of a third party,
including, without limitation, any governmental authority, arising from the
deposit, storage, disposal, burial, dumping, injecting, spilling, leaking, or
other placement or release in or on the Property of Hazardous Substances or
Wastes during Laurel Oak's period of ownership. To the best of Laurel Oak's
knowledge, neither the Property nor any portion thereof, have been identified
on the federal CERLIS, the National Priorities List (40 C.F.R. Part 300, App.
B) or any state or local list of potential hazardous waste disposal sites or
as an industrial establishment. Laurel Oak has conducted a complete and
thorough inspection and test of the underground storage tanks located on the
Property, if any, and Laurel Oak has confirmed that, to the best of its
knowledge, the results thereof show compliance with all requirements of the
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. Sections 6901 et
seq. and all other applicable federal, state and local laws, and Laurel Oak
has taken all other necessary and appropriate action to comply fully
therewith.
(20) To the best of Laurel Oak's knowledge, all
adequate utilities, useable public sanitary and storm sewers, public water
facilities, electric facilities and, if any, gas facilities (collectively,
the "Utilities"), are installed in, and are duly connected to, the Real
Property, the sanitary sewer system has been dedicated to, and accepted by,
the Municipal
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Utilities Authority, and can be used without charge except the normal and
usual metered utility charges and water and sewer charges. All Utilities
required for the operation of the Property either enter the Property through
adjoining public streets or, if they pass through adjoining public land, do
so in accordance with valid public easements or private easements which will
inure to the benefit of the Partnership at no cost to the owner of the
Property. All of said Utilities are installed and operating and all
installation, connection and "tap-in" charges have been paid for in full.
(21) No work has been performed or is in progress at,
and no materials have been furnished to the Property which, though not
presently the subject of, might give rise to construction, mechanic's,
materialmen's, municipal or other liens against the Property or any portion
thereof, except that for which full and complete releases have been obtained.
If any lien for any such work is filed before or after Closing, Laurel Oak
shall promptly discharge the same.
(22) To the best of Laurel Oak's knowledge, none of
the artwork being a part of the Personal Property was prepared on a "work for
hire" basis and none of the artwork was commissioned after 1991.
(23) To the best of Laurel Oak's knowledge, all
applicable charges, fees and assessments (including condominium fees, to the
extent applicable) and any and all other sums due under declarations,
cross-easements and like agreements to which the Property or any portion
thereof may be subject, have been paid, and no special assessments thereunder
are pending, there is no constituted Board of Directors for the Laurel Oak
complex, no fees due to such Board, and all consents and approvals required
to be obtained under any such declarations, cross-easements and like
agreements have been obtained pursuant to the requirements of such
documentation.
(24) To the best of Laurel Oak's knowledge, all
debts, liabilities, and obligations of Laurel Oak arising out of the
construction, ownership, and operation of the Property including, but not
limited to, construction costs, salaries, taxes, accounts payable and the
like, have been paid as they became due and payable and shall continue to be
so paid from the date hereof until the Closing Date.
(b) Each of Laurel Oak, SS and RRS, on its own behalf, hereby
represents and warrants as follows, all of which shall be true and correct
on, and as of, the Effective Date:
(1) That it has received a copy of the Trust's
Annual Report on Form 10-K, as amended, for the fiscal year ended December
31, 1996, the Trust's Quarterly Reports on Form 10-Q, as amended, for the
fiscal quarters ended March 31, 1997, June 30, 1997 and September 30, 1997,
and all Current Reports on Form 8-K filed by the Trust during fiscal 1997,
the Trust's proxy statement for its annual meeting of shareholders held on
May 12, 1997 and a copy of the Partnership Agreement;
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(2) That the Units and the Underlying Shares
(collectively, the "Securities"), are being acquired for its own account
without a view to public distribution or resale and that it has no contract,
undertaking, agreement or arrangement to sell or otherwise transfer or
dispose of any Securities or any portion thereof to any other person (other
than from Laurel Oak to the Members);
(3) That it understands that the Securities have not
been registered under the Securities Act or the securities laws of any state,
and, as a result thereof, the Securities are "restricted securities" as
defined in Rule 144 under the Securities Act of 1933, as amended (the
"Securities Act"), and are subject to substantial restrictions on transfer;
(4) That it understands that the certificates
evidencing the Securities shall bear a legend indicating that such Securities
have not been registered under the Securities Act or any applicable state
securities laws and the transferability thereof is subject to compliance with
the Securities Act and applicable state securities laws;
(5) That it will not sell or otherwise transfer or
dispose of any Securities or any portion thereof unless the Securities are
registered under the Securities Act and any applicable state securities laws
or it obtains an opinion of counsel which is satisfactory to the Partnership
or the Trust, as appropriate, that the Securities may be sold in reliance on
an exemption from such registration requirements, and that the Securities and
certificates evidencing the same will bear a legend reflecting such
restrictions;
(6) That it understands that (i) except as expressly
set forth in the Registration Rights Agreement attached hereto as Exhibit
"K", neither the Partnership nor the Trust has any obligation or intention to
register the Securities for resale under any federal or state securities laws
and (ii) it therefore may be precluded from selling or otherwise transferring
or disposing of any Securities or any portion thereof for an indefinite
period of time or at any particular time;
(7) That in determining to acquire the Securities,
it has relied solely upon its independent investigation, including the advice
of its legal counsel and accountants or other financial and tax advisers or
Laurel Oak representatives and has, during the course of discussions
concerning the acquisition of the Securities, been offered the opportunity to
ask such questions and inspect such documents concerning the Partnership and
the Trust and their respective businesses and affairs as it has requested so
as to more fully understand the nature of the investment and to verify the
accuracy of the information supplied;
(8) THAT IT UNDERSTANDS THAT THE ACQUISITION OF THE
SECURITIES INVOLVES A HIGH DEGREE OF RISK, and that it can bear the economic
risk of the acquisition of the Securities, including the total loss of its
investment;
(9) That (i) it has adequate means of providing for
its current needs and financial contingencies, (ii) it has no need for
liquidity in this investment, (iii) it has no debts or other obligations, and
cannot reasonably foresee any other circumstances, that
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are likely in the future to require it to dispose of the Securities, (iv) all
its investments in and commitments to non-liquid investments are, and after
its acquisition of the Securities will be, reasonable in relation to its net
worth and current needs, and (v) it was not formed for the specific purpose
of making an investment in the Securities;
(10) That it understands that no federal or state
agency has approved or disapproved the Securities, passed upon or endorsed
the merits of the offering of the Securities hereunder, or made any finding
or determination as to the fairness of the Securities for investment; and
(11) That it understands that the Securities are
being offered and distributed in reliance on specific exemptions from the
registration requirements of federal and state securities laws and that each
of the Partnership and the Trust is relying upon the truth and accuracy of
the representations, warranties, agreements, acknowledgments and
understandings set forth herein in order to determine the applicability of
such exemption and the suitability of Laurel Oak and the Members to acquire
the Securities. In this regard, it understands that Common Shares will only
be issued upon the conversion or redemption of, or otherwise pursuant to, the
Units, if an exception from the registration requirements of the Securities
Act is then available for such issuance;
(12) It is an accredited investor, as defined in Rule
501(a) of Regulation D adopted under the Securities Act.
(c) It is agreed and understood that the Partnership intends
to perform its own due diligence, investigation and analysis in connection
with the transaction contemplated by this Agreement. If and to the extent
that the Partnership determines prior to the Due Diligence Termination Date
that any or all of the representations and warranties made in this Agreement
by Laurel Oak or the Members shall be untrue as a result of such due
diligence, investigation or analysis, the Partnership 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 Partnership
has now or hereafter acquires prior to the Due Diligence Termination Date
actual knowledge that one or more of the representations and warranties of
Laurel Oak or the Members are not true, no such fact or circumstance known to
the Partnership shall be made the basis of a claim by the Partnership of a
breach of representation or warranty by Laurel Oak or a Member, as the case
may be.
(d) Notwithstanding anything to the contrary contained in this
Agreement, in the event any representation, agreement or undertaking made by
Laurel Oak or the Members in this Agreement shall prove to be false and the
cost or expense incurred or likely to be incurred by the Partnership as a
result thereof shall not exceed $50,000 in the aggregate, such
misrepresentation, agreement or undertaking shall be deemed "immaterial" and
shall not give rise to any right of the Partnership 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 the Partnership hereby waives all
its rights, claims and remedies relating thereto. The Partnership's sole
remedy in the event any representation, agreement or undertaking of Laurel
Oak or the Members which is
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discovered by the Partnership at or prior to the Closing herein shall prove
to be false and the cost or expense incurred or likely to be incurred by the
Partnership as a result thereof exceeds $50,000 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 the Partnership, and thereupon
the Partnership shall receive a refund of the Deposit, and Laurel Oak shall
reimburse the Partnership for the Partnership's Reasonable Costs and Due
Diligence Costs. To the extent the Partnership has actual 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, the Partnership
hereby waives all of its rights, claims and remedies relating thereto.
(e) The Partnership and the Trust hereby represent and warrant
as follows, all of which shall be true and correct at, and as of, the
Effective Date:
(1) The Partnership is a limited partnership duly formed
and validly existing under the laws of the State of Delaware, and is in good
standing with the State of Delaware. The Trust 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.
(2) Subject to Paragraph 9(e)(5), below, the Partnership
and the Trust have all necessary power and authority to enter into this
Agreement, to perform their 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 the Partnership and the
Trust pursuant hereto when delivered will constitute, the legal, valid and
binding obligations of the Partnership and the Trust, enforceable against the
Partnership and the Trust in accordance with their respective terms.
(3) Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will (a) violate any
provision of any organizational document of the Partnership or the Trust, 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 the Partnership or the Trust is a party.
(4) There is no litigation, proceeding or action pending,
or, to the best of the Partnership's or the Trust's knowledge, threatened
against or relating to the Partnership or the Trust which might materially
and adversely affect the ability of the Partnership or the Trust to
consummate the transactions contemplated hereby or which questions the
validity of this Agreement or any action taken or to be taken by the
Partnership or the Trust pursuant hereto.
(5) The execution and delivery of this Agreement shall
have been approved by the Board of Trustees of the Trust on or prior to the
Due Diligence Termination Date and no further action shall thereupon be
required on the part of the Partnership
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or the Trust to consummate the transaction contemplated hereby. The
signatories for the Partnership and the Trust are authorized and empowered to
bind the Partnership and the Trust to this Agreement and all transactions
contemplated herein.
(6) Except as otherwise set forth in Paragraph 9(e)(5)
above, in connection with the listing application with the NYSE pursuant to
Paragraph 17(d) and the registration of the Underlying Shares pursuant to the
Registration Rights Agreement attached hereto as Exhibit "K" and as required
by any applicable state securities or "blue sky laws", 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 Trust or the Partnership.
(7) The Partnership has sufficient funds available to
consummate the transactions contemplated by this Agreement, without the
necessity of third-party financing other than other than the Partnership's
existing revolving credit facility administered by Nationsbank, N.A. The
Partnership and the Trust acknowledge that their obligations hereunder are
not conditioned upon any third party financing or capital infusion by another
party.
(8) The Securities, upon issuance, if any, will be duly
and validly issued, fully-paid and non-assessable.
(9) The information contained in the Trust's Annual
Report on 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.
(f) As to any representation or warranty made in this
Agreement which is qualified as being to the best knowledge of the
Partnership or Laurel Oak, 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. The
Partnership or Laurel Oak 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.
(g) Each of the representations and warranties set forth in
this Paragraph 9 shall be deemed renewed by Laurel Oak, the Members and the
Partnership, as the case may be, 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), and all such
representations shall survive for a period of one year from the Closing.
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10. Access To The Property.
(a) The Partnership and/or its agents and representatives,
during normal business hours and after reasonable advance notice to Laurel
Oak, may enter upon any of the Real Property from time to time prior to the
Closing Date, accompanied by an agent of Laurel Oak, for purposes of
conducting such inspections, investigations and/or studies as the Partnership
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 ("the Partnership's
Due Diligence Activities"). The Partnership's access to the Real Property
shall be subject to the rights of the Tenants of any of the Real Property,
who shall not be unreasonably disturbed during any such inspection by the
Partnership. The Partnership shall not engage in any activity in or about
the Real Property which directly or indirectly violates the terms of any
governmental or quasi-governmental statute, rule, regulation, order or
practice. The Partnership shall not make any physical changes to any of the
Real Property, except for test borings and soil samplings which shall be
performed only by licensed engineers reasonably acceptable to Laurel Oak and
only after three (3) business days' prior notice to Laurel Oak. The
Partnership may contact any governmental or quasi-governmental authorities
concerning the Property without the prior written approval of Laurel Oak.
Laurel Oak shall have the opportunity to observe any and all action taken by
the Partnership or its representatives, consultants, agents, etc. pursuant to
this Paragraph 10. All information set forth in any document which Laurel
Oak has granted to the Partnership 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 the Partnership violates its obligations under
this Paragraph 10(a) or in the event of any physical damage to any of the
Real Property or any Personal Property resulting, directly or indirectly,
from the exercise by the Partnership of its rights under this Paragraph
10(a), the Partnership hereby agrees to restore the Real Property and
Personal Property to their respective conditions prior to incurring such
damage. The Partnership hereby agrees to indemnify, defend and hold harmless
Laurel Oak from and against all physical damage to any of the Real Property
and Personal Property, personal injury and/or any other claims or liability
which may occur as a result of the Partnership's (or the Partnership's
agents, employees, invitees or licensees) entry or activities upon any of the
Real Property. The provisions of this Paragraph 10(a) shall survive Closing
or other termination of this Agreement.
(b) The Partnership, or any of the Partnership's consultants
performing physical tests on the Real Property shall maintain public
liability insurance policies (naming Laurel Oak as an additional named
insured with respect to any liability occurring on the Real Property), with
combined single limit coverage of at least $1,000,000, insuring against
claims arising as a result of the inspections of the Partnership, its agents,
employees or such contractors at any of the Real Property. A certificate of
insurance evidencing the foregoing coverage shall be delivered to Laurel Oak
prior to the Partnership's or any of the Partnership's consultants' entry on
to any of the Real Property.
(c) In the event Closing does not occur or this Agreement is
terminated, the Partnership shall promptly return to Laurel Oak any documents
obtained from Laurel Oak or Laurel Oak's agents and deliver to Laurel Oak,
without charge, copies of all
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written test results, studies, reports and similar materials obtained by or
on behalf of the Partnership relating to any of the Real Property.
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, the
Partnership 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 the Property with
zoning, licensing and all other governmental requirements, Leases for any of
the Real Property, operating statements pertaining to the Property and all
other aspects and conditions of the Property which the Partnership may decide
to review (collectively, "the Partnership's Due Diligence Activities"), all
as the Partnership shall deem appropriate). In connection with the
Partnership's Due Diligence Activities, Laurel Oak has delivered or will
deliver to the Partnership various documents, reports and materials
(collectively, the "Laurel Oak Due Diligence Materials"). THE PARTNERSHIP
UNDERSTANDS AND HEREBY ACKNOWLEDGES AND AGREES THAT THE LAUREL OAK DUE
DILIGENCE MATERIALS ARE BEING DELIVERED TO THE PARTNERSHIP WITHOUT ANY
REPRESENTATION OR WARRANTY WHATSOEVER BY LAUREL OAK OR BY THE PREPARER OF
SUCH LAUREL OAK 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 the Partnership's Due Diligence
Activities or otherwise, the Partnership 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 Laurel Oak 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 Partnership, 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) Laurel Oak shall obtain, prior to the Closing the
Non-Applicability Letter from the NJDEP or its successor. In furtherance of
the foregoing, Laurel Oak shall apply for the Non-Applicability Letter
promptly after the Effective Date, and shall pursue the same diligently and
in good faith.
(d) The Partnership agrees to prepare and forward to Laurel
Oak, at the Partnership's sole cost and expense, certificates (the "Estoppel
Certificates") for execution by the Tenants which shall, at the Partnership'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 "R". Laurel Oak agrees to deliver the Estoppel
Certificates to the Tenants promptly after the Partnership's written election
as to the form to be used (which election shall be made not
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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 the Partnership's
obligations hereunder that, at or prior to Closing, Estoppel Certificates
shall have been obtained from at least 75% of the Tenants at each Property,
including those identified on Exhibit "S" 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, if an estoppel in the Required Form is not obtained from an
Identified Tenant, Laurel Oak may, in lieu thereof, deliver its certificate
containing the information set forth on the Required Form, which certificate
shall serve as Laurel Oak'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 the Partnership'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.
12. Condemnation. Laurel Oak covenants and warrants that Laurel
Oak has not received any written notice of any condemnation proceeding or
other proceeding in the nature of eminent domain in connection with the Real
Property, 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 Property is
commenced, Laurel Oak agrees promptly to notify the Partnership thereof. In
the event of a material taking of one or more Real Property or commencement
of proceedings in connection with such a taking, the Partnership 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 Consideration and
at Closing Laurel Oak shall assign to the Partnership, without recourse, all
condemnation proceeds paid or payable with respect thereto; or (y) terminate
this Agreement with respect to the Property 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 Property, and at Closing, the
Partnership shall pay to Laurel Oak the aggregate of the Allocated Prices for
the remaining Real Property. Provided the Partnership shall have waived its
right to terminate this Agreement with respect to the Real Property so taken,
as provided above, Laurel Oak shall not, from and after the Due Diligence
Termination Date, settle or adjust any claims relating to a condemnation
without the Partnership's prior approval, which shall not be unreasonably
withheld or delayed.
13. Damage By Fire Or Other Casualty.
(a) Laurel Oak shall promptly notify the Partnership of damage
to the Improvements occurring by reason of casualty during the period between
the Effective Date and the Closing Date. Laurel Oak shall timely notify any
insurance companies with respect to any damage and shall promptly submit
claims for such damage. Provided the Partnership shall have waived its right
to terminate this Agreement with respect to the Real Property so damaged, as
provided below, Laurel Oak shall not, from and after the Due Diligence
Termination Date, settle
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or adjust any claims relating to a casualty without the Partnership'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
Property so damaged, an amount equal to or less than ten percent (10%) of the
Consideration allocated for such Real Property, there shall be no abatement
or adjustment in the Consideration and, provided the loss or damage is a
covered loss under Laurel Oak's insurance policy, the Partnership shall be
required to purchase all of the Real Property in accordance with the terms of
this Agreement and, at Closing, Laurel Oak shall assign to the Partnership,
without recourse, all insurance claims and proceeds with respect thereto
(less sums theretofore expended, if any, by Laurel Oak for emergency repairs
or barricades) and Laurel Oak shall credit the Partnership at Closing with
the amount of any applicable deductible. Laurel Oak shall have no liability
or obligation with respect to the condition of any of the Real Property 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 Property is an
amount which is greater than ten percent (10%) of the Consideration allocated
for the applicable Real Property, the Partnership may, at its sole option,
(x) proceed to Closing as provided in this Paragraph 13(b) without an
abatement of the Consideration and at Closing Laurel Oak shall assign to the
Partnership, without recourse, all insurance claims and proceeds with respect
thereto (less sums theretofore expended, if any, by Laurel Oak for emergency
repairs or barricades) and Laurel Oak shall credit the Partnership at Closing
with the amount of any applicable deductible; or (y) terminate this Agreement
with respect to the Property which have suffered damage to the Improvements
by fire or other casualty in an amount which exceeds ten percent (10%) of the
Consideration allocated 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 Property, and at Closing, the Partnership shall pay to Laurel
Oak the aggregate of the Considerations for the remaining Real Property. The
Partnership 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 Property for which this Agreement has been terminated.
14. Default.
(a) If the Partnership shall default in its obligations to pay
the Consideration and complete Closing in accordance with the terms of this
Agreement, then, as Laurel Oak's sole and exclusive remedy therefor, Laurel
Oak shall be entitled to retain the Deposit as liquidated and agreed upon
damages for the losses and injuries which Laurel Oak shall have sustained and
suffered as a result of the Partnership's default, and thereupon this
Agreement and the Partnership'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
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understanding that by reason of the withdrawal of the Real Property from sale
to the general public at a time when other parties would be interested in
purchasing such Real Property, that Laurel Oak 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.
(b) If Laurel Oak shall default in its obligation to deliver
any of the Deeds or other items described in Paragraph 5 hereof, upon the
Partnership's (i) tender of the full Consideration and (ii) compliance with
all of the material terms and conditions of this Agreement, the Partnership
shall have the sole option of terminating this Agreement and receiving the
return of the Deposit, together with payment by Laurel Oak of (A) the
Partnership's Reasonable Costs, and (B) the Partnership's actual, documented
out-of-pocket costs and expenses incurred in connection with its Due
Diligence Activity, not to exceed Fifteen Thousand Dollars ($15,000) ("Due
Diligence Costs") for the Property and the Other Properties or (Y) to seek
specific performance of Laurel Oak's obligation to convey the Real Property
in accordance with this Agreement. If the Partnership elects to terminate
this Agreement, upon payment of the sums described above, Laurel Oak shall be
released and relieved of any further liability and this Agreement shall
thereupon be null and void. Except as expressly set forth above, the
Partnership hereby waives any right which the Partnership may have to any lis
pendens or other lien or encumbrance against any of the Real Property,
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 the Partnership'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 Laurel Oak to perform its obligations under this
Agreement.
15. Operations Prior To Closing.
(a) Laurel Oak agrees to operate the Property between the
Effective Date and the Closing Date in the same general manner as Laurel Oak
has operated the Property 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) Laurel Oak shall comply with all of the obligations of
landlord under the Leases and all other agreements and contractual
arrangements affecting the Real Property by which Laurel Oak is bound or to
which the Real Property, or any of them, are subject, and which will be
binding upon the Partnership or a lien upon such Real Property, after the
Closing.
(c) Laurel Oak shall notify the Partnership promptly of Laurel
Oak's receipt of any notice from any party alleging that Laurel Oak is in
default of its obligations under any of the Leases or any Permit or agreement
affecting the Real Property, or any portion or portions thereof.
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(d) No contract for or on behalf of or affecting the Real
Property shall be negotiated or entered into which cannot be terminated by
Laurel Oak 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 the Partnership,
which the Partnership agrees it shall not unreasonably withhold, condition or
delay, Laurel Oak shall not enter into any new leases for any portion of the
Real Property. Any new lease shall be on the Partnership's customary form
(which may vary to reflect customary negotiated revisions thereto), or such
other form which is reasonably acceptable to the Partnership. Further,
except with the prior written consent of the Partnership, which the
Partnership agrees it shall not unreasonably withhold, condition or delay, or
as set forth above, Laurel Oak 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) Laurel Oak shall not make or permit to be made any capital
improvements or additions to the Real Property, or any portion thereof,
without the prior written consent of the Partnership, except those made by
Laurel Oak pursuant to the express requirements of this Agreement, those made
by tenants pursuant to the right to do so under their Leases, or by Laurel
Oak if required by applicable law or ordinance, or as required under any
Lease.
(g) Laurel Oak shall timely bill all tenants for all rent
billable under Leases, and use commercially reasonable efforts to collect any
rent in arrears.
(h) Laurel Oak shall notify the Partnership of any tax
assessment disputes (pending or threatened) prior to Closing, and from and
after the Due Diligence Expiration Date, Laurel Oak 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 the Partnership'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 Laurel Oak, and all refunds relating to any
year subsequent to the year in which Closing occurs shall be the sole
property of the Partnership. Each party agrees to promptly remit to the
other any refund received by it which is the property of the other.
(i) Laurel Oak shall notify the Partnership promptly of the
occurrence of any of the following:
(i) Receipt of notice from any governmental or
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quasi-governmental agency or authority or insurance underwriter relating to
the condition, use or occupancy of the Real Property, 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
Property, or any portion thereof;
(iii) Notice of any actual or threatened litigation
against Laurel Oak or affecting or relating to the Real Property, or any
portion thereof which may materially and adversely affect the Real Property
or Laurel Oak's ability to consummate the transactions contemplated by this
Agreement; or
(iv) Vacancy of any demised Property by a tenant, other
than in accordance with a scheduled lease termination.
16. PROPERTY CONVEYED "AS-IS, WHERE IS". IT IS UNDERSTOOD AND
AGREED THAT, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT,
LAUREL OAK 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
PROPERTY, 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 PROPERTY INCLUDING,
WITHOUT LIMITATION: (I) THE VALUE, CONDITION, MERCHANTABILITY, MARKETABILITY,
PROFITABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE OF ANY
OF THE PROPERTY, (II) THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS
INCORPORATED INTO ANY OF THE PROPERTY AND (III) THE MANNER, QUALITY, STATE OF
REPAIR OR LACK OF REPAIR OF ANY OF THE PROPERTY. THE PARTNERSHIP AGREES THAT
WITH RESPECT TO THE PROPERTY, THE PARTNERSHIP HAS NOT RELIED UPON AND WILL
NOT RELY UPON, EITHER DIRECTLY OR INDIRECTLY, ANY REPRESENTATION OR WARRANTY
OF LAUREL OAK OR ANY AGENT OF LAUREL OAK NOT EXPRESSLY SET FORTH IN THIS
AGREEMENT. THE PARTNERSHIP REPRESENTS THAT IT IS A KNOWLEDGEABLE THE
PARTNERSHIP OF REAL ESTATE AND THAT IT IS RELYING SOLELY ON ITS OWN EXPERTISE
AND THAT OF THE PARTNERSHIP'S CONSULTANTS, AND THE REPRESENTATIONS AND
WARRANTIES OF LAUREL OAK CONTAINED IN THIS AGREEMENT, SUBJECT, HOWEVER, TO
THE LIMITATIONS CONTAINED HEREIN UPON SUCH REPRESENTATIONS AND WARRANTIES,
AND THAT LAUREL OAK HAS OR SHALL HAVE AFFORDED THE PARTNERSHIP WITH A FULL
AND COMPLETE OPPORTUNITY TO MAKE ITS OWN INDEPENDENT INVESTIGATION OF THE
PROPERTY AND ALL MATTERS PERTAINING THERETO INCLUDING, BUT NOT
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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 THE PARTNERSHIP'S INSPECTIONS AND INVESTIGATIONS. THE
PARTNERSHIP ACKNOWLEDGES AND AGREES THAT, UPON CLOSING, LAUREL OAK SHALL SELL
AND CONVEY TO THE PARTNERSHIP AND THE PARTNERSHIP SHALL ACCEPT THE PROPERTY
"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 PROPERTY BY LAUREL OAK, ANY AGENT OF
LAUREL OAK OR ANY THIRD PARTY. THE PARTNERSHIP EXPRESSLY AGREES THAT THE
TERMS AND CONDITIONS OF THIS PARAGRAPH 16 SHALL EXPRESSLY SURVIVE THE CLOSING
AND NOT MERGE THEREIN AND LAUREL OAK IS NOT LIABLE OR BOUND IN ANY MANNER BY
ANY VERBAL OR WRITTEN STATEMENTS, REPRESENTATIONS, OR INFORMATION PERTAINING
TO ANY OF THE PROPERTY 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. Conditions Precedent to Closing.
The obligations of the Partnership hereunder are subject to the
fulfillment of the following conditions prior to or on the Closing Date (any
one of which may be waived in whole or in part by the Partnership at or prior
to the Closing) and in the event any of the conditions are not complied with,
the Partnership may terminate this Agreement by notifying the Laurel Oak and
Escrow Agent and thereupon shall be returned the Deposit and thereafter this
Agreement shall be null and void:
(a) Correctness of Warranties and Representations. The
warranties and representations made by Laurel Oak and the Members in this
Agreement shall be true and correct on the Closing Date as though such
representations and warranties were made on the Closing Date (except for
changes in the Leases permitted under the terms of this Agreement).
(b) Compliance with Terms and Conditions. Laurel Oak shall
have performed and complied with all of the terms and conditions required by
this Agreement, including, without limitation, the delivery of all required
documents pursuant to Paragraph 6(a), to be performed and complied with by it
prior to or on the Closing Date.
(c) The Partnership's Satisfaction with Inspection. The
Partnership shall have notified Laurel Oak of the Partnership's satisfaction
with the inspection performed under Paragraph 11 of this Agreement, or shall
fail to notify Laurel Oak on or before the Due Diligence Expiration Date, of
the Partnership's dissatisfaction with the results of such review.
(d) Exchange Approval. On or prior to the Closing Date, the
Underlying Shares shall have been approved for listing with the NYSE, upon
official notice of issuance.
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(e) Shareholder Approval. The Partnership shall have received
confirmation that the issuance of the Securities will not require approval of
the Trust's security holders under the rules of the NYSE.
(f) 9.8% Limitation. The number of Underlying Shares shall
not exceed that number that is equal to 9.8% of the number of outstanding
Common Shares of the Trust.
(g) Issuance of the Units. The issuance of the Units, if any,
shall be (i) exempt from the registration requirements of the Securities Act
and (ii) either exempt from, or registered pursuant to, any applicable state
securities or "blue sky" registration requirements.
18. Brokers.
(a) Laurel Oak and the Partnership each represent to the other
that neither Laurel Oak nor the Partnership has dealt with any real estate
broker, dealer or salesman in connection with the subject transaction.
(b) Laurel Oak and the Partnership 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 Laurel Oak
and the Partnership set forth in Paragraph 18(a) hereof.
(c) The provisions of this Paragraph 18 shall survive Closing
hereunder, or any other termination of this Agreement.
19. 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 Laurel Oak or the Partnership shall have given notice as
herein provided):
If to the Partnership, addressed to:
Brandywine Operating Partnership, L.P.
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
Attn: Gerard H. Sweeney,
President and Chief Executive Officer
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with a copy in each instance to:
Brad A. Molotsky, General Counsel
Brandywine Operating Partnership, L.P.
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
If to Laurel Oak or Member, addressed to:
Laurel Oak Road, L.L.C.
20 E. Clementon Road, Suite 201
Gibbsboro, NJ 08026
Attention: R. Randle Scarborough
with a copy in each instance to:
Kelly Young, Esquire
20 East Clementon Road, Suite 202
Gibbsboro, NJ 08026
If to Escrow Agent, addressed to:
M. Gordon Daniels, Esquire
Commonwealth Land Title Insurance Company
1700 Market Street
Philadelphia, PA 19103
or to such other address or addresses and to the attention of such other
person or persons as any of the parties may notify the other in accordance
with the provisions of this Agreement. 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
delivery) by the party to whom such notice is sent. Notices by the parties
may be given on their behalf by their respective attorneys.
20. Successors And Assigns. Except to a subsidiary or related
party, the Partnership may not assign this Agreement or any rights herein or
any portion hereof without the prior written consent of Laurel Oak, 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 the Partnership to
the Trust or a subsidiary of 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.
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<PAGE>
21. 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.
22. 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.
23. 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.
24. Captions And Recitals. The captions contained herein are not a
part of this Agreement and are included solely for the convenience of the
parties.
25. Entire Agreement. This Agreement and the Exhibits and
Schedules attached hereto 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.
26. 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.
(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.
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27. 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 the Trust, and the Partnership's
agents, consultants, counsel and representatives in connection with the
Partnership's Due Diligence Activities and financing purposes, unless the
Trust is advised by its counsel that applicable securities laws and
regulations require. In addition, the Partnership covenants that if it
undertakes any investigation of the Property, it shall conduct such
investigation of the Property as described herein and with the degree of
confidentiality as the Partnership would apply with respect to its own
proprietary information. Notwithstanding the foregoing, at any time after
expiration of the Due Diligence Period, the Partnership 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.
28. Limitation Of Liability. No recourse shall be had for any
obligation of the Partnership of the 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, partner, officer or employee of 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 Laurel Oak and all parties claiming by, through or under Laurel
Oak.
Except for breaches of the representations and warranties set forth
in Section 9 and 18 herein which shall be full recourse obligations of the
members of Laurel Oak, no recourse shall be had for any obligation of Laurel
Oak 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 member or employee of
Laurel Oak 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 Partnership and all parties
claiming by, through or under the Partnership.
29. SEC Reporting Requirements. For the period of time commencing
on the date hereof and continuing through the first anniversary of the
Closing Date, Laurel Oak shall, from time to time, upon reasonable advance
written notice from the Partnership, provide the Trust and its
representatives, with access to all financial and other information then in
Laurel Oak's possession pertaining to the period of Laurel Oak's ownership
and operation of the Real Property, which information is relevant and
reasonably necessary, in the opinion of the Trust's outside, third party
accountants (the "Accountants"), to enable the Trust 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 Trust; and (c) any registration statement, report or
disclosure statement filed with the Commission by, or on behalf of the Trust.
Laurel Oak shall deliver to the Trust's accountants a representation letter
(the "Letter"), in the form annexed hereto as Exhibit "T", provided that the
Partnership (and any assignee or designee acquiring title to the Real
Property) shall indemnify and hold Laurel Oak harmless from and against any
claim, damage, loss or liability including, without limitation, legal fees
incurred by Laurel Oak in investigating, defending against or settling any
such matter and the amount of any
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such settlement to which Laurel Oak 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 Partnership acknowledges that Laurel Oak 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.
31. No Recordation. The Partnership 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 the Partnership under this Agreement.
32. Tender. Formal tender of an executed deed and purchase money
is hereby waived by the Partnership.
33. Further Assurances. After the Closing, Laurel Oak shall
execute, acknowledge and deliver, for no further consideration, all
assignments, transfers, deeds and other documents as the Partnership may
reasonably request to vest in the Partnership and perfect the Partnership's
right, title and interest in and to the Property.
34. Jury Trial Waiver. THE PARTNERSHIP AND LAUREL OAK 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 LAUREL OAK
HAS NO OBLIGATION TO EXECUTE THIS AGREEMENT.
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36. Indemnification.
Without limitation of any other Laurel Oak indemnity
obligations set forth herein, from and after the Closing Date, Laurel Oak
shall indemnify, defend and save and hold harmless the Partnership and the
Trust, and their respective partners, trustees, directors, officers and
employees, of, from and against any and all loss, cost, expense, damage,
claim, and liability, including reasonable attorney's fees and court costs,
including, without limitation, attorney's fees and costs associated with the
enforcement of Laurel Oak's indemnification obligations for all claims
brought within one year of such Closing (hereinafter collectively, "Losses")
which the Partnership or the Trust may suffer or incur, resulting from,
relating to, or arising in whole or in part, from or out of (i) any
misrepresentation or breach of a representation or warranty by Laurel Oak
contained in this Agreement; (ii) any failure to fulfill any covenant or
agreement of Laurel Oak contained in this Agreement; (iii) all litigation set
forth in this Agreement and on Exhibits hereto; (iv) any and all actions,
suits, investigations, proceedings, demands, assessments, audits, judgments,
and/or claims arising out of or relating to any of the foregoing.
Promptly after receipt by the Partnership or the Trust of
written notice of the commencement of any suit, audit, demand, judgment,
action, investigation or proceeding (a "Third Party Action") or promptly
after the Partnership or the Trust incurs a Loss or has knowledge of the
existence of a Loss, the Partnership or the Trust, as the case may be, will,
if a claim with respect thereto is to be made against Laurel Oak due to
Laurel Oak's obligation to provide indemnification hereunder, give Laurel Oak
written notice of such Loss or the commencement of any Third Party Action;
provided, however, that the failure to provide such notice within a
reasonable period of time shall not relieve Laurel Oak of any of its
obligations hereunder. Promptly after receiving such notice, Laurel Oak
will, upon notice to the Partnership or the Trust, as the case may be, have
the right to assume and control the defense and settlement of any such Third
Party Action at its own cost and expense; provided, however, that it shall be
a condition precedent to the exercise of such right by Laurel Oak that Laurel
Oak shall agree in writing that the Loss, or Third Party Action, as the case
may be, is properly within the scope of the indemnification obligation and
that as between the parties, Laurel Oak shall be responsible to satisfy and
discharge such Third Party Action. Laurel Oak shall not enter into any
resolution or other compromise of a Third Party Action without obtaining the
complete release of the Partnership or the Trust, as appropriate, for any
liability to all claimants under or pursuant to such Third Party Action. The
Partnership or the Trust, as the case may be, shall have the right to
participate in any such defense, contest or other protective action at its
own cost and expense.
Notwithstanding the foregoing, the Partnership or the Trust, as the
case may be, shall have the right to assume and control the defense and
settlement of a Third Party Action (a) if such action includes claims for
equitable relief which, if determined adversely to the Partnership or the
Trust, as the case may be, could reasonably be expected to interfere with its
intended business operations or damage its business reputation or (b) if
Laurel Oak fails to do so in a timely manner. In any circumstances in which
the Partnership or the Trust, as the case may be, undertakes to control the
Third Party Action as provided in this paragraph, it shall (i) not enter into
any resolution or other compromise involving monetary damages without
obtaining the prior written consent of Laurel Oak provided that such written
consent may not be withheld if it would interfere with the Partnership's or
the Trust's, as the case may be, business operation and
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(ii) keep Laurel Oak informed on an ongoing basis of the status of such Third
Party Action and shall deliver to Laurel Oak, copies of all documents related
to the Third Party Action reasonably requested by Laurel Oak. The
Partnership or the Trust, as the case may be, shall act to assure that all
attorneys' fees and expenses incurred in connection therewith are reasonable.
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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.
LAUREL OAK:
LAUREL OAK ROAD, L.L.C.
By: /s/Sean Scarborough
------------------------------------
Sean Scarborough, authorized
member
By: /s/R. Randle Scarborough
------------------------------------
R. Randle Scarborough, authorized
member
/s/Sean Scarborough
---------------------------------------
Sean Scarborough
/s/R. Randle Scarborough
---------------------------------------
R. Randle Scarborough
THE PARTNERSHIP:
BRANDYWINE OPERATING PARTNERSHIP, L.P.
By: BRANDYWINE REALTY TRUST, its sole
general partner
By: /s/Gerard H. Sweeney
------------------------------------
Name: Gerard H. Sweeney
Title: President & CEO
[EXECUTIONS CONTINUED]
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THE TRUST:
BRANDYWINE REALTY 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
Commonwealth Land Title Insurance Company:
By: /s/M. Gordon Daniels
------------------------------------
M. Gordon Daniels
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EXECUTION
1007 LAUREL OAK ROAD
AGREEMENT
AMONG
LAUREL OAK ROAD, L.L.C.,
SEAN SCARBOROUGH,
R. RANDLE SCARBOROUGH,
BRANDYWINE REALTY TRUST
AND
BRANDYWINE OPERATING PARTNERSHIP, L.P.
Dated as of December 5, 1997
<PAGE>
LIST OF EXHIBITS
Exhibit A - Description of Land
Exhibit B - List of Contracts
Exhibit C - Certified Rent Roll
Exhibit D - Permitted Exceptions
Exhibit E - Excluded Personal Property
Exhibit F - The Other Properties
Exhibit G - Form of Deed
Exhibit H - Bill of Sale
Exhibit I - Form of Assignment(s)
Exhibit J - Form of Non-Foreign Person Certification
Exhibit K - Registration Rights Agreement
Exhibit L - Tax Indemnity Agreement
Exhibit M - $350,000 Guaranty
Exhibit N - Investor's Questionnaire
Exhibit O - Pending Litigation
Exhibit P - Contracts Not Terminable with 30 days Notice
Exhibit Q - Outstanding Brokerage Commissions and TI
Exhibit R - Form of Estoppel Certificate
Exhibit S - Identified Tenants
Exhibit T - Representation Letter
<PAGE>
Exhibit 10.6
1, 2, 4, 5, 7, 10 FOSTER AVENUE, 6 EAST CLEMENTON DRIVE
AND 5 UNITED STATES AVENUE
AGREEMENT
THIS AGREEMENT is made and entered into as of the 5th day of December,
1997 by and among the PWCCW, a New Jersey general partnership having its
principal office at Scarborough Properties, 20 East Clementon Road, Suite 201,
Gibbsboro, New Jersey 08026 ("PWCCW"), Robert K. Scarborough ("RKS") and the
Paint Works Management Corporation ("PWMC"), the general partners of PWCCW
(collectively, the "PWCCW Partners"), Brandywine Realty Trust, a Maryland real
estate investment trust (the "Trust"), and Brandywine Operating Partnership,
L.P., a Delaware limited partnership or its nominee, having an address at
Newtown Square Corporate Campus, 16 Campus Boulevard, Suite 150, Newtown Square,
Pennsylvania 19073 (the "Partnership").
RECITALS
A. PWCCW is the owner of a certain tract of land being comprised of 12
parcels of property, being Lot 1.07, Block 19.01 known as 1 Foster Avenue, Lot
3.05, Block 8.01 known as 2 Foster Avenue, Lot 3.04, Block 8.01 being 4 Foster
Avenue, part of Lot 1.07, Block 19.01 being 5 Foster Avenue, Lot 1.01, Block
19.01 being 7 Foster Avenue, Lot 3.03, Block 8.01 being 10 Foster Avenue and 6
East Clementon Road, Lot 3.01, Block 8.01 being 5 United States Avenue and
Silver Lake, Lot 16.05, Block 7.04, being a parking lot on the North side of
Gibbsboro Road, and Lots 1, 2 and 3, Block 19.01, being the vacant property
south of 1 Foster Avenue, together with the buildings and improvements thereon,
including one office building containing approximately 24,800 square feet,
commonly known as 1 Foster Avenue, one office building containing approximately
50,761 square feet commonly known as 2 Foster Avenue, one office building
containing approximately 23,400 square feet commonly known as 4 Foster Avenue,
one office building containing approximately 2,000 square feet commonly known as
5 Foster Avenue, one office building containing approximately 19,225 square feet
commonly known as 7 Foster Avenue, one office building containing approximately
25,119 square feet commonly known as 10 Foster Avenue, one office building
containing approximately 66,500 square feet commonly known as 6 East Clementon
Road and historical smoke stacks and catering tent commonly known as 5 United
States Avenue, Gibbsboro, New Jersey as more fully described on Exhibit A
attached hereto; and
B. PWCCW desires and hereby agrees to sell or contribute, and the
Partnership desires and hereby agrees to acquire or accept, all of PWCCW 's
right, title and interest in and to the Property (as hereinafter defined),
subject to and on the terms and conditions hereinafter set forth.
<PAGE>
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", 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.
"Closing" shall have the meaning ascribed to that term in
Paragraph 4 hereof. The date upon which the Closing actually occurs shall be
the "Closing Date."
"Common Shares" shall mean the common shares of beneficial
interest, par value $.01 per share, of the Trust.
"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 Property, to the extent
assignable by PWCCW, all as described in Exhibit "B" attached hereto and made a
part hereof.
"Deposit" shall mean the Deposit delivered by the Partnership 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
December 9, 1997.
"Effective Date" shall mean the date on which this Agreement has
been fully executed and delivered by all parties hereto to each other.
"Environmental Claim" shall mean any written or oral demand,
directive, administrative order, claim, suit, action, expense (including
consequential damages and counsel fees), cause of action, investigation or
notice by any person or entity alleging actual or potential liability
(including, without limitation, potential or actual liability for investigatory
costs, cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries, or penalties).
"Environmental Laws" shall mean all federal, state and local laws
and regulations relating to pollution or protection of human health or the
environment (including,
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without limitation, ambient air, surface water, ground water, land surface or
subsurface strata), including, without limitation, the New Jersey Spill
Compensation and Control Act, N.J.S.A. 58:10-23.11, et seq., the Water
Pollution Control Act, N.J.S.A. 58:10A-1, et seq., the New Jersey Solid Waste
Management Act, N.J.S.A. 13:1E-1, et seq., the New Jersey Industrial Sites
Recover Act, N.J.S.A. 13:1K-6, et seq., Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA"), 42 U.S.C.A. Sections 9601, et
seq., the Resource Conversation and Recovery Act ("RCRA"), 42 U.S.C.A.
Sections 6901, et seq., the Clean Water Act, 33 U.S.C.A. Sections 1251, et
seq., the Clean Air Act 42 U.S.C.A. Sections 7401, et seq., and laws and
regulations relating to emissions, spills, leaks, discharges, releases or
threatened releases of Materials of Environmental Concern, or otherwise
relating to the manufacture, possession, distribution, use, treatment,
storgage, disposal, transport or handling of Materials of Environmental
Concern.
"Escrow Terms" shall mean the escrow agreement to be entered into
of even date herewith between the Escrow Company, PWCCW and the Partnership.
"Escrow Agent" shall mean Commonwealth Land Title Insurance
Company, 1700 Market Street, Philadelphia, Pennsylvania 19103.
"Improvements" shall mean those certain buildings and other
improvements constructed and located on the Land as described on Exhibit "A".
"Land" shall mean that certain parcel of real property located at
1, 2, 4, 5, 7 and 10 Foster Avenue, 6 East Clementon Road and 5 United States
Avenue and the parking lots appurtenant thereto and Silver Lake, Gibbsboro, New
Jersey, being Lot 1.07, Block 19.01, Lot 3.04, Block 8.01, Lot 3.05, Block 8.01,
Lot 1.07, Block 19.01, Lot 1.01, Block 19.01, Lots 3.03, 3.06 and 3.01, Block
8.01, Lots 1, 2 and 3, Block 19.01 and Lot 16.05, Block 7.04.
"Leases" shall mean those certain leases (and guarantees thereof,
if any) listed on Exhibit "C" attached hereto and made a part hereof, or
hereafter entered into by PWCCW, 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 Property.
"Materials of Environmental Concern" shall mean any toxic,
reactive, corrosive, carcinogenic, flammable or hazardous pollutant or other
substance, including, but not limited to, any "hazardous substance," or
"hazardous waste," as defined in Environmental Laws, petroleum and petroleum
products, natural gas or synthetic gas, material that is a source, special
nuclear or by-product material, as defined by the Atomic Energy Act of 1954, 42
U.S.C.A. Sections 3011 et seq., and the regulations promulgated thereto and
"hazardous chemical," as defined in 29 C.F.R. Part 1910.
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"Permitted Exceptions" shall mean with respect to any of the Real
Property (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 "D" to this
Agreement, (iv) special assessments which become a lien on any of the Real
Property on or after the Closing Date, and (v) such other title matters existing
on the Closing Date which are accepted or deemed accepted by the Partnership
pursuant to Paragraph 5 hereof; and (vii) the rights of Tenants of any of the
Real Property pursuant to the Leases for all or any portion of any of the Real
Property.
"Personal Property" shall (except as specifically excluded on
Exhibit "E" hereto) mean all of PWCCW's right, title and interest in and to the
tangible personal property including, without limitation, furniture, artwork,
furnishings, equipment, machinery and fixed and movable fixtures, together with
all component and replacement parts, owned by PWCCW, situated on any of the Real
Property on the Closing Date, and all artwork, renderings, flags, awnings and
trade dress; all architects', engineers', surveyors' and other real estate
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
PWCCW's possession and are not proprietary in nature, and all building names and
PWCCW's rights, if any, in and to the name "500 Scarborough Drive."
"Property" shall mean the Real Property and such of the
Contracts, Leases, Licenses, Personal Property and other rights, titles,
interests and obligations which pertain to the Real Property and are intended to
be contributed, conveyed, sold or otherwise transferred to the Partnership by
PWCCW pursuant to this Agreement.
"Real Property" shall mean the Land and the Improvements.
"Tenants" shall mean the tenants under the Leases.
"Trust" shall mean Brandywine Realty Trust, a Maryland real
estate investment trust, the sole general partner of the Partnership.
"Underlying Shares" shall mean the Common Shares issuable upon
the conversion or redemption of, or otherwise pursuant to, the Units issuable
hereunder.
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2. Acquisition Of The Property. On the Closing Date, and subject to
the terms and conditions set forth in this Agreement, PWCCW shall sell or
contribute, at PWCCW's sole discretion, assign, transfer and convey to the
Partnership and the Partnership shall purchase or accept, as the case may be,
from PWCCW the following:
(a) All right, title and interest of PWCCW in and to all of the
Real Property;
(b) All right, title and interest of PWCCW, 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 PWCCW, if any, in any
easements, covenants, rights of way, privileges, hereditaments and other rights
appurtenant to any of the Real Property;
(d) to the extent assignable to the Partnership and approved by
the Partnership, all right, title and interest of PWCCW in and to the Contracts
and the Licenses relating to any of the Real Property;
(e) all right, title and interest of PWCCW in and to the Leases;
and
(f) all right, title and interest of PWCCW in and to the
Personal Property.
3. Consideration And Time Of Payment. The consideration (the
"Consideration") to be received by PWCCW from the Partnership in exchange for
the Property shall be Six Million Seven Hundred Fifty Thousand Dollars
($6,750,000), the net amount remaining after deducting $1,850,000 (the amount of
principal and accrued interest secured by a mortgage on the Property being
paid-off at the Closing) from the contribution price of Eight Million Six
Hundred Thousand Dollars ($8,600,000), as adjusted pursuant to Paragraph 7 of
this Agreement which shall be paid to PWCCW in the following manner:
(a) On the Effective Date, the Partnership shall deliver a
check, subject to collection, in the amount of Twenty Thousand Dollars ($20,000)
to the Escrow Agent, which check shall be payable to the order of the Escrow
Agent and shall be held and disbursed pursuant to the Escrow Terms. Thereafter,
within two (2) business days following the Due Diligence Expiration Date, the
Partnership shall deliver a check, subject to collection, in the amount of Ten
Thousand Dollars ($10,000) to the Escrow Agent, which check shall be payable to
the order of the Escrow Agent and shall be held and disbursed pursuant to the
Escrow Terms. In the event that PWCCW elects, pursuant to subparagraph (c)
below, to receive all of the Consideration in Units in exchange for the
contribution of the Property, the Escrow Agent shall release the Deposit to the
Partnership at the Closing.
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(b) The balance of the Consideration shall be paid to PWCCW at
the Closing by wire transfer of immediately available funds to an account
designated by PWCCW.
(c) In lieu of receiving the Consideration pursuant to
subparagraphs (a) and (b) above, PWCCW may elect, at its option, to receive all
or a portion of the Consideration in the form of Class A Units of Limited
Partnership Interest ("Units") in the Partnership in exchange for the
contribution to the Partnership of all or a portion, as the case may be, of the
Property. PWCCW may make such election by providing the Partnership written
notice no later than thirty (30) days prior to the Closing Date. Such election
notice shall state the dollar amount of the Consideration to be received in
Units. The number of Units issuable in satisfaction of the applicable portion
of the Consideration that PWCCW elects to be so received shall be computed by
dividing the aggregate dollar amount of such applicable portion of the
Consideration by the Computed Market Price. The term "Computed Market Price"
shall mean the average closing price for the Common Shares as reported by the
New York Stock Exchange (the "NYSE") for the ten (10) trading day period
immediately preceding the Due Diligence Termination Date. The distributions
declared by the Partnership in respect of the Class A Units issuable pursuant to
this Agreement during the initial calendar quarter in which the Closing occurs
shall be pro-rated by the Partnership based on the number of days the Class A
Units are outstanding during such quarter. For example, if the Class A Units
issuable pursuant to this Agreement are issued on December 1, 1997, each of such
Class A Units shall be entitled to receive an amount equal to one-third of the
amount of the distribution payable to a Class A Unit that was outstanding during
the full quarter.
(d) The transaction contemplated by this Agreement is
conditioned upon the closing of the sale of the other properties identified on
Exhibit "F" attached hereto (the "Other Properties"), so that no one or more of
the Other Properties and the Property hereunder may be sold without all of the
Property being sold unless expressly provided for in writing by the parties
hereto and in any event the Deposit hereunder and thereunder shall be deemed a
single deposit for the entire transaction.
4. Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall be held on or before December 12, 1997, on a
mutually agreed date determined by PWCCW and the Partnership, at the offices of
the Partnership, Plaza 1000 at Main Street, Suite 400, Voorhees, New Jersey,
commencing at 10:00 a.m., time being of the essence.
5. Title And Conveyance Of The Property.
(a) At Closing, title to the Real Property shall be insurable at
regular rates by Commonwealth Land 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
Property is not insurable as aforesaid, the Partnership's sole right and remedy
shall be as set forth in Paragraph 5(b) below.
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(b) (i) The Partnership has applied 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 the
Partnership, upon recording of the Deeds (as hereinafter defined) for each of
the Real Property, an owner's policy of title insurance as above specified
("Title Policy"). Said Commitments shall agree to insure the proposed title of
the Partnership to each of the Real Property subject only to the Permitted
Exceptions and such other title exceptions as the Partnership 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 the Partnership objects to such additional title exceptions (the
"Title Defects"), the Partnership shall notify PWCCW of such Title Defects with
sufficient specificity to enable PWCCW to respond. The Partnership's notice of
any Title Defects shall be given in writing to PWCCW no later than the date
which is five (5) business days prior to the Due Diligence Termination Date,
together with the Commitments and copies of all matters of record raised therein
as exceptions thereto, after which the Partnership shall be deemed to have
waived any and all Title Defects not so raised, except for Title Defects which
are disclosed to the Partnership in continuations of title issued subsequent to
the issuance of the Commitments, unless the Partnership fails to object to same
in writing within three (3) business days after the Partnership's receipt of the
continuation of title in which the same is disclosed, in which case the
Partnership will be deemed to have waived such additional Title Defects. PWCCW
shall have the right, but not the obligation (except as otherwise specifically
provided), to cure such Title Defects and, if PWCCW 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 PWCCW at its sole option for up to thirty (30)
days to enable PWCCW to effect such cure.
(ii) In the event that either (a) PWCCW is unable to convey
title in accordance with the terms of this Agreement, (b) PWCCW elects not to
cure or cause the removal of any exception to title, except as required in
subparagraph (iii) below, or (c) if PWCCW is unable to satisfy any other
conditions to the Partnership's obligations under this Agreement, then (except
as otherwise specifically provided in subparagraph (iii) below) the sole
liability of PWCCW shall be to (A) direct the Escrow Agent to return the Deposit
to the Partnership and (B) reimburse the Partnership 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 the Partnership to
update the existing surveys (collectively "the Partnership's Reasonable Costs"),
and upon such payments being made, this Agreement shall be deemed canceled 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 the Partnership shall have no rights of action against PWCCW
in law or in equity, for damages or, except for the purpose of enforcing PWCCW's
contractual obligations under subparagraph (iii) below, for specific
performance. Notwithstanding the foregoing, the Partnership shall have the
right to waive any conditions to the Partnership's obligations hereunder, in
which event PWCCW shall make the deliveries provided for herein to the
Partnership to the extent that PWCCW is able so to do, and there shall be no
reduction in the Consideration in such event.
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(iii) Notwithstanding the provisions of the foregoing
paragraph, if the condition of title to the Real Property at the Closing is
other than that which the Partnership is required or agrees to accept hereunder
solely by reason of any mortgages or other monetary liens (hereinafter referred
to as "Liens") which can be satisfied or remedied by the payment of a liquidated
amount of money not to exceed the Purchase Price, PWCCW shall not have the right
to cancel this Agreement and PWCCW 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.
(iv) Notwithstanding anything to the contrary contained in
this Agreement, PWCCW 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 subparagraph (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) The Partnership expressly understands, acknowledges and
agrees that any failure by the Partnership to notify PWCCW in writing of any
Title Defects on or before the expiration of the Due Diligence, shall for all
purposes be deemed to be an acceptance by the Partnership of such Title Defects
as if they were one or more of the Permitted Exceptions.
(d) At Closing, PWCCW will convey fee simple title to the Real
Property by a Bargain and Sale Deed with covenant against grantor's acts (the
"Deed"), subject in all cases to the Permitted Exceptions, in the forms attached
hereto and made a part hereof as Exhibit "G".
(e) At Closing, PWCCW will transfer all of its right, title and
interest in and to the Personal Property to the Partnership by executing a Bill
of Sale ("Bill of Sale") in the form attached hereto and made a part hereof as
Exhibit "H".
(f) At Closing, PWCCW will assign all of PWCCW's right, title,
and interest, and the Partnership shall assume all of the obligations from and
after the Closing Date, in, to and under the Leases, Licenses and the Contracts
for the Property, by executing an Assignment and Assumption Agreement in the
form attached hereto and made a part hereof as Exhibit "I" (the "Assignments").
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6. Closing Documents.
(a) At the Closing, as a condition of the Partnership's
obligation to close hereunder, PWCCW shall deliver or cause to be delivered the
following:
(i) The Deed, executed by PWCCW, covering the Real Property
(and separate quitclaim deeds to the Real Property utilizing new ALTA survey
descriptions, if requested);
(ii) The Bills of Sale executed by PWCCW covering the
Personal Property;
(iii) The Assignments, executed by PWCCW;
(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 PWCCW;
(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 PWCCW;
(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 PWCCW;
(vii) Written notice from PWCCW or PWCCW's managing
agent to each Tenant in form reasonably satisfactory to the Partnership stating
that the Real Property have been sold to the Partnership and that tenant
security deposits (if any) in PWCCW's possession have been transferred to the
Partnership and directing the Tenants to make future rental payments to the
Partnership at the address designated by the Partnership;
(viii) Non-foreign person certification in the form
attached hereto as Exhibit "J";
(ix) All building records and Tenant lease files with
respect to the Real Property which are in the possession of PWCCW;
(x) Each bill of current real estate taxes, sewer charges
and assessments, water charges and other utilities and to the extent in PWCCW'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);
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(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
PWCCW or any property manager controlled by PWCCW;
(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 PWCCW to enable the Title Insurer to issue the Commitments
described in Paragraph 5(b)(i). The Partnership shall require affirmative
endorsements against mechanic's liens, consistent with PWCCW's obligations under
Paragraph 5(b)(iii), above;
(xiii) A letter, from the New Jersey Department of
Environmental Protection or its successor ("NJDEP") (A) 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 Real Property (the "Non-Applicability Letter") and (B)
granting a covenant not to sue the Partnership by the NJDEP in the form attached
hereto as Exhibit "K";
(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 PWCCW
to be correct and complete as of Closing Date;
(xvi) Proof as to the due authorization and execution by
PWCCW of the documents executed and delivered by PWCCW;
(xvii) Such affidavits of title or other certifications
as shall be required by the Title Company to insure the Partnership's title to
the Property as set forth in Section 3, and to provide affirmative endorsements
(a) against mechanic's liens, (b) insuring against any violation of existing
covenants, conditions or restrictions, and insuring that future violation will
not result in forfeiture of title, (c) insuring that all foundations in place as
of the date of such policy are within the lot lines and applicable set back
lines, (d) insuring that the buildings and structures on the Property do not
encroach onto adjoining land or onto any easements, (e) insuring that confirming
that there are no encroachments of improvements from adjoining land onto the
Property (f) removing any exceptions for matters which an accurate survey would
disclose, and (g) providing affirmative insurance with respect to such other
matters as the Partnership or its lender shall specify;
(xviii) A Registration Rights Agreement in the form
attached hereto as Exhibit "L" executed by PWCCW and the PWCCW Partners;
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(xix) The closing certificate required pursuant to
Paragraph 9;
(xx) An executed counterpart to the Agreement of Limited
Partnership of the Partnership (the "Partnership Agreement") signed by each of
the PWCCW Partners;
(xxi) An executed Tax Indemnity Agreement in the form
attached hereto as Exhibit "M";
(xxii) An executed Investor Questionnaire in the form
attached hereto as Exhibit "N"; and
(xxiii) An executed Guaranty in favor of the Partnership
in the form attached as Exhibit "O".
(b) At the Closing, as a condition of PWCCW's obligation to
close hereunder, the Partnership shall deliver or cause to be delivered the
following:
(i) The balance of the Consideration (in immediately
available funds or Units in accordance with Paragraph 3);
(ii) The Assignments, executed by the Partnership;
(iii) An agreement by the Partnership not to sell the
Property for four years, including an indemnity for the Partnership's breach
thereof;
(iv) A Registration Rights Agreement in the form attached
hereto as Exhibit "L" executed by the Trust and a Tax Indemnity Agreement in the
form attached hereto as Exhibit "M"; and
(v) The closing certificate required pursuant to Paragraph
9.
7. Prorations And Closing Costs. All matters involving prorations
or adjustments to be made to the Consideration 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 the Partnership to be treated as the owner of the Property, 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 Property 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
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be no proration of PWCCW's insurance premiums or assignment of PWCCW's insurance
policies and PWCCW shall be entitled to cancel all of its existing policies as
of the Closing Date. The Partnership 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 the Property and allocable to the period
prior to the Closing Date shall be determined and paid by PWCCW before Closing,
if possible, or shall be paid promptly thereafter by PWCCW or adjusted between
the Partnership and PWCCW immediately after the same have been determined. The
Partnership and PWCCW shall to the extent necessary enter into an agreement to
such effect at Closing. PWCCW shall attempt to have all utility meters read as
of the Closing Date. PWCCW shall further attempt to obtain from the provider of
same, all other service statements and bills of account adjusted as of the
Closing Date. PWCCW shall be entitled to refunds of all deposits, if any, paid
by PWCCW or PWCCW's predecessor-in-interest prior to Closing and held by
entities providing such service, or, at PWCCW's option, PWCCW shall transfer all
of PWCCW's right, title and interest in and to such deposits to the Partnership
at Closing and shall receive a full credit for the amount of such deposits. All
Contracts and other obligations in connection with the Property, 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 Property on or before the Closing Date and are not payable in
installments shall be paid by PWCCW. Special assessments which have been filed
as a lien against any of the Real Property, 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 the Partnership. Special assessments which are
or may be pending, but which have not become a lien on the Real Property as of
the Closing Date, and special assessments which are filed as a lien after the
Closing Date, shall be assumed and paid by the Partnership.
(c) PWCCW shall pay the cost of State and County transfer
taxes or stamps imposed in connection with the recordation of the Deeds for
the Real Property. The Partnership 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
the Partnership. The Partnership agrees to pay the expense of the legal fees
of its own counsel. The cost of all of the Partnership's Due Diligence
Activities (as defined below) shall be borne solely by the Partnership.
(d) Any base, minimum or similar rents under the Leases
collected by PWCCW for a rental period or portion thereof from or after the
Closing Date shall be credited to the Partnership at Closing on a per diem
basis. In addition, any security deposits held by PWCCW 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 the Partnership at Closing at PWCCW's option. If any tenant is in arrears in
the payment of rent or additional rent on the Closing Date, rents received from
such tenant ninety (90) days after the
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Closing Date shall be applied in the following order of priority: (a) to the
Partnership, so long as such tenant is in arrears for current or prior rent
arising after Closing, then (b) to PWCCW for all rent in arrears prior to the
Closing Date; and then (c) to the Partnership with no further claim by PWCCW
thereto. Except as herein provided, the Partnership is not under any obligation
to collect rents in arrears for the benefit of PWCCW. Any rents which are
delinquent or otherwise not paid at the time of Closing, and collected by the
Partnership or PWCCW within ninety (90) days after Closing shall be apportioned
as aforesaid and the portion to which PWCCW is entitled shall be promptly
remitted by the Partnership to PWCCW. PWCCW shall have no claim to rents
collected ninety (90) days after the Closing Date. PWCCW retains the right to
pursue its remedies against Tenants after Closing for any delinquent rents or
other amounts owed to PWCCW (other than proceedings to evict Tenant or terminate
its lease). The Partnership shall not enter into any agreement pursuant to
which any sums owed to PWCCW in respect of any Lease for periods prior to the
Closing are reduced, modified or waived. The Partnership's obligations to
collect rent arrearages shall be limited to commercially reasonable efforts, and
the Partnership 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 PWCCW without contribution by, or reimbursement from,
the Partnership. At Closing, the Partnership shall pay or reimburse PWCCW 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. The Partnership 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 the Partnership'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. PWCCW shall be
responsible for the costs of, and shall pay or perform prior to Closing 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
PWCCW 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 Property. The Partnership shall assume, pay or reimburse (as applicable)
PWCCW on the Closing Date for 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 all costs of tenant improvements
and allowances incurred by or on behalf of PWCCW 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 Property,
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provided the same were approved by the Partnership or are otherwise permitted as
set forth in Paragraph 15(e) hereof and provided that such costs are set forth
on Exhibit "C" hereto.
(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
PWCCW.
(g) PWCCW shall be solely responsible for the payment of any
"roll back taxes" assessed or imposed upon any of the Real Property 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 otherwise, which relate to any period prior to the
Closing Date, and PWCCW agrees to indemnify, defend and save the Partnership
harmless (including attorneys' fees) from and against any claim for such taxes.
(h) Miscellaneous income including, without limitation,
telephone and vending machine income, if any, shall be prorated as of the
Closing Date.
(i) All of the provisions of this Paragraph 7 and PWCCW's and
the Partnership's respective rights and obligations hereunder shall survive the
Closing.
8. Possession Of Property.
(a) PWCCW shall deliver possession to the Real Property to the
Partnership on the Closing Date, subject only to the Permitted Exceptions.
(b) the Partnership shall assume, by execution of the
Assignments, all of PWCCW's obligations in, to and under the Contracts, the
Licenses and Leases. Notwithstanding the foregoing, the Partnership shall not
assume management, leasing or brokerage agreements provided, however, that the
Partnership shall remain liable for leasing commissions as set forth in
Paragraph 7(e), above.
(c) All of the provisions of this Paragraph 8 and PWCCW's and
the Partnership's respective rights and obligations hereunder shall survive the
Closing.
9. Representations Of PWCCW, The PWCCW Partners and The Partnership.
(a) PWCCW hereby represents and warrants, as follows, all of
which shall be true and correct at, and as of, the Effective Date:
(1) PWCCW is a general partnership duly organized and
validly existing under the laws of the State of New Jersey, and is in good
standing in such state.
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(2) PWCCW 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 PWCCW
pursuant hereto when delivered will constitute, the legal, valid and binding
obligations of PWCCW, enforceable against PWCCW in accordance with their
respective terms.
(3) Except as set forth in Exhibit "P" attached hereto
and made a part hereof, there is no litigation, proceeding or action pending or,
to the best of PWCCW's knowledge, threatened against or relating to PWCCW or its
Property which might materially and adversely affect PWCCW or its Property or
which questions the validity of this Agreement or any action taken or to be
taken by PWCCW pursuant hereto. PWCCW shall remain responsible to defend, and
shall indemnify and hold the Partnership harmless from and against all
liability, cost and expense relating to the litigation identified in on Exhibit
"P", 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 PWCCW's limited liability agreement or any other material agreement,
instrument or lease to which PWCCW 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 PWCCW's possession or control, have been or
will be delivered, or made available, to the Partnership 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 PWCCW in connection with the ownership and operation of the
Property (the "Personal Property Leases"); (iv) Licenses; (v) surveys;
(vi) title reports; (vii) engineering reports; and (viii) environmental reports.
(6) To the best of PWCCW's knowledge, (i) all of the
Leases, Contracts and Personal Property Leases and Licenses, are in full force
and effect, (ii) there has been no action or failure to act by PWCCW 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) PWCCW has not received from any other party written notice
with respect to the condition of the Property or the use or repair of the same
or of any alleged default by PWCCW under any such Lease, or Personal Property
Lease or License. Except as set forth on Exhibit "Q", each of the Contracts is
terminable at will without penalty or cancellation fee upon
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no more than thirty (30) days prior written notice but, except as hereinafter
expressly provided, unless otherwise directed by the Partnership, the Contracts
shall not be terminated by PWCCW 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. The
Partnership shall assume all Contracts not terminated at Closing pursuant to the
Assignment.
(7) PWCCW shall indemnify and hold the Partnership
harmless of, from and against any and all claims and liabilities arising out of
the employment of any individuals by PWCCW and its affiliates, whether as
employees or independent contractors. As of the Closing, there are and shall be
no liens against the Real Property 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 the
Partnership after the Closing. The Partnership shall be under no obligation to
assume any of PWCCW's employees, it being PWCCW's sole responsibility and
obligation to provide severance arrangements, if any, for all such employees.
This Paragraph shall survive Closing.
(8) To PWCCW'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
PWCCW's actual knowledge, there are no special or general assessments currently
affecting or pending against the Real Property or any portion thereof.
(9) Except as set forth on Exhibit "P", PWCCW has not
been served with written notice that it has been named as a party in any
litigation, administrative proceeding or investigation naming PWCCW 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. PWCCW 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
PWCCW'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 in any way to the generation, storage,
transport, treatment or disposal of Hazardous Substances or Hazardous Wastes.
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(10) True and correct copies of the income and expense
statements for the Property, and a current rent roll certified by PWCCW, will be
delivered to the Partnership upon execution of this Agreement.
(11) PWCCW 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 PWCCW and related to the ownership or
operation of the Property (collectively, the "Permits"), and there is no pending
or, to the actual knowledge or PWCCW, threatened proceeding which could result
in the revocation or cancellation of, or inability of PWCCW to renew, any
Permit.
(12) To the best of PWCCW's knowledge, except as set
forth in Exhibit "R" attached hereto and made a part hereof, all management
fees, leasing commissions and tenant improvement allowances are fully paid,
there are no brokerage commissions owing by PWCCW with respect to any of the
Leases or otherwise related to the Property which have not been paid, and there
are no ongoing commission or leasing fee obligations.
(13) PWCCW has received no written notice from any
insurance company which has issued a policy with respect to the Property 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 PWCCW will promptly notify the
Partnership of any such notice or requirement if such notice is received prior
to the Closing.
(14) PWCCW is not a "foreign person" and will deliver
to the Partnership, 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) PWCCW has not received written notice from any
governmental agency or authority of outstanding material violations issued by
governmental authorities having jurisdiction over the Real Property.
(16) Except as may be set forth in a Lease as
specifically noted on Exhibit "C", there are no options, rights of first refusal
or conditional sales agreements regarding the purchase and sale of the Real
Property.
(17) There are no oral or written leases or rights of
occupancy or grants or claims of right, title or interest in any portion of the
Property other than the leases (the "Leases") listed on the rent roll attached
hereto as Exhibit "C". No tenant has advised PWCCW that PWCCW is in default
under any of the Leases, or asserted any claim or basis for any claim for free
or reduced rent or right of set off against the landlord or the rent
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under the Leases, and PWCCW and its agent have no actual knowledge of any
default or any event which has taken place which, with the passage of time, or
the delivery of notice, or both, could become an event of default. PWCCW has
the sole right to collect rents under the Leases, and neither such right nor any
of the Leases has been assigned, pledged, hypothecated or otherwise encumbered
by PWCCW except as additional collateral for the existing mortgage upon the
Property which shall be satisfied at or before Closing. No holder of any such
collateral assignment has asserted or exercised any of its right to collect such
rents. Each of the Leases is valid and subsisting and in full force and effect,
the tenant is in actual possession in the normal course, and the rents set forth
in Exhibit "C" are the actual rents, income and charges being collected by PWCCW
under the Leases. Except for the Lockheed Martin fit-out requirement under the
applicable lease, for which PWCCW will remain obligated post-Closing to
complete, all obligations of PWCCW which it is required to complete pursuant to
any Lease (or any unsigned lease proposal or lease amendment) has been completed
as of this date or shall be completed as of Closing, and all costs therefore
have been or shall be paid by PWCCW, and all of PWCCW's work has or shall have
been accepted by the Tenant without exception on or before Closing, other than
routine punch list items, which items shall remain the responsibility of PWCCW
following Closing, and which obligation shall expressly survive Closing. The
amount of each security deposit contains, where required by law or otherwise
applicable, interest which has accrued in accordance with law. No tenant of the
Property under any of the Leases has, and shall not at Closing have, prepaid any
rent under any of the Leases for more than one (1) month. Except as otherwise
set forth on Exhibit "C", no security deposits by tenants have heretofore been
returned or applied to charges against the tenants.
(18) To the best of PWCCW's knowledge, the Property and
the continued operation and use thereof comply with all applicable requirements
of federal, state and local law, and all applicable requirements of governmental
bodies or agencies having jurisdiction thereof, no portion of the Property lies
within a flood hazard area, flood plain or wetland; and there are no outstanding
notices of any violations issued by governmental authority having jurisdiction
over the Property.
(19) Except as specifically set forth on the
environmental reports of Dames & Moore and Weston, a copy of which is attached
hereto as Exhibit "S-1" , or on the list of environmental conditions set forth
on Exhibit "S-2" attached hereto or the Administrative Consent Orders attached
as Exhibit "S-3", to the best of PWCCW's knowledge, no Hazardous Substances
(defined below) and no Hazardous Wastes (defined below) are present on the
Property including, without limitation, asbestos, flammable substances,
explosives, radioactive materials, hazardous wastes, toxic substances,
pollutants, pollution, contaminant, polychlorinated byphenyls ("PCBs"), urea
formaldehyde foam insulation, radon, corrosive, irritant, biologically
infectious materials, petroleum product, garbage, refuse, sludge, hazardous or
waste materials, and there has been no use of the Property that may, under any
federal, state or local environmental statute, ordinance or regulation, require,
at any time, any closure or cessation of the use or occupancy of the Property
and/or impose, at any time, upon the owner of the Property any clean-up or other
monetary obligation. PWCCW hereby indemnifies and holds the
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Partnership harmless of, from and against any and all liability, loss or damage
suffered or incurred as a result of a claim, demand, cost or judgment in favor
of a third party, including, without limitation, any governmental authority,
arising from the deposit, storage, disposal, burial, dumping, injecting,
spilling, leaking, or other placement or release in or on the Property of
Hazardous Substances or Wastes during PWCCW's period of ownership. To the best
of PWCCW's knowledge, neither the Property nor any portion thereof, have been
identified on the federal CERLIS, the National Priorities List (40 C.F.R. Part
300, App. B) or any state or local list of potential hazardous waste disposal
sites or as an industrial establishment. PWCCW has conducted a complete and
thorough inspection and test of the underground storage tanks located on the
Property, if any, and PWCCW has confirmed that, to the best of its knowledge,
the results thereof show compliance with all requirements of the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. Sections 6901 et seq. and all
other applicable federal, state and local laws, and PWCCW has taken all other
necessary and appropriate action to comply fully therewith.
(20) To the best of PWCCW's knowledge, except for 1,
2 and 5 Foster Avenue which are each serviced by a septic system, all adequate
utilities, useable public sanitary and storm sewers, public water facilities,
electric facilities and, if any, gas facilities (collectively, the "Utilities"),
are installed in, and are duly connected to, the Real Property, and can be used
without charge except the normal and usual metered utility charges and water and
sewer charges. All Utilities required for the operation of the Property either
enter the Property through adjoining public streets or, if they pass through
adjoining public land, do so in accordance with valid public easements or
private easements which will inure to the benefit of the Partnership at no cost
to the owner of the Property. All of said Utilities are installed and operating
and all installation, connection and "tap-in" charges have been paid for in
full.
(21) No work has been performed or is in progress at,
and no materials have been furnished to the Property which, though not presently
the subject of, might give rise to construction, mechanic's, materialmen's,
municipal or other liens against the Property or any portion thereof, except
that for which full and complete releases have been obtained. If any lien for
any such work is filed before or after Closing, PWCCW shall promptly discharge
the same.
(22) To the best of PWCCW's knowledge, none of the
artwork being a part of the Personal Property was prepared on a "work for hire"
basis and none of the artwork was commissioned after 1991.
(23) To the best of PWCCW's knowledge, all applicable
charges, fees and assessments (including condominium fees, to the extent
applicable) and any and all other sums due under declarations, cross-easements
and like agreements to which the Property or any portion thereof may be subject,
have been paid, and no special assessments thereunder are pending, and all
consents and approvals required to be obtained under any such declarations,
cross-easements and like agreements have been obtained pursuant to the
requirements of such documentation.
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<PAGE>
(24) To the best of PWCCW's knowledge, all debts,
liabilities, and obligations of PWCCW arising out of the construction,
ownership, and operation of the Property including, but not limited to,
construction costs, salaries, taxes, accounts payable and the like, have been
paid as they became due and payable and shall continue to be so paid from the
date hereof until the Closing Date.
(b) Each of PWCCW, RKS and PWMC, on its own behalf, hereby
represents and warrants as follows, all of which shall be true and correct on,
and as of, the Effective Date:
(1) That it has received a copy of the Trust's Annual
Report on Form 10-K, as amended, for the fiscal year ended December 31, 1996,
the Trust's Quarterly Reports on Form 10-Q, as amended, for the fiscal quarters
ended March 31, 1997, June 30, 1997 and September 30, 1997, and all Current
Reports on Form 8-K filed by the Trust during fiscal 1997, the Trust's proxy
statement for its annual meeting of shareholders held on May 12, 1997 and a copy
of the Partnership Agreement;
(2) That the Units and the Underlying Shares
(collectively, the "Securities"), are being acquired for its own account without
a view to public distribution or resale and that it has no contract,
undertaking, agreement or arrangement to sell or otherwise transfer or dispose
of any Securities or any portion thereof to any other person (other than from
PWCCW to the PWCCW Partners);
(3) That it understands that the Securities have not
been registered under the Securities Act or the securities laws of any state,
and, as a result thereof, the Securities are "restricted securities" as defined
in Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"),
and are subject to substantial restrictions on transfer;
(4) That it understands that the certificates
evidencing the Securities shall bear a legend indicating that such Securities
have not been registered under the Securities Act or any applicable state
securities laws and the transferability thereof is subject to compliance with
the Securities Act and applicable state securities laws;
(5) That it will not sell or otherwise transfer or
dispose of any Securities or any portion thereof unless the Securities are
registered under the Securities Act and any applicable state securities laws or
it obtains an opinion of counsel which is satisfactory to the Partnership or the
Trust, as appropriate, that the Securities may be sold in reliance on an
exemption from such registration requirements, and that the Securities and
certificates evidencing the same will bear a legend reflecting such
restrictions;
(6) That it understands that (i) except as expressly
set forth in the Registration Rights Agreement attached hereto as Exhibit "L",
neither the Partnership
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nor the Trust has any obligation or intention to register the Securities for
resale under any federal or state securities laws and (ii) it therefore may be
precluded from selling or otherwise transferring or disposing of any Securities
or any portion thereof for an indefinite period of time or at any particular
time;
(7) That in determining to acquire the Securities, it
has relied solely upon its independent investigation, including the advice of
its legal counsel and accountants or other financial and tax advisers or PWCCW
representatives and has, during the course of discussions concerning the
acquisition of the Securities, been offered the opportunity to ask such
questions and inspect such documents concerning the Partnership and the Trust
and their respective businesses and affairs as it has requested so as to more
fully understand the nature of the investment and to verify the accuracy of the
information supplied;
(8) THAT IT UNDERSTANDS THAT THE ACQUISITION OF THE
SECURITIES INVOLVES A HIGH DEGREE OF RISK, and that it can bear the economic
risk of the acquisition of the Securities, including the total loss of its
investment;
(9) That (i) it has adequate means of providing for
its current needs and financial contingencies, (ii) it has no need for liquidity
in this investment, (iii) it has no debts or other obligations, and cannot
reasonably foresee any other circumstances, that are likely in the future to
require it to dispose of the Securities, (iv) all its investments in and
commitments to non-liquid investments are, and after its acquisition of the
Securities will be, reasonable in relation to its net worth and current needs,
and (v) it was not formed for the specific purpose of making an investment in
the Securities;
(10) That it understands that no federal or state
agency has approved or disapproved the Securities, passed upon or endorsed the
merits of the offering of the Securities hereunder, or made any finding or
determination as to the fairness of the Securities for investment; and
(11) That it understands that the Securities are being
offered and distributed in reliance on specific exemptions from the registration
requirements of federal and state securities laws and that each of the
Partnership and the Trust is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings set
forth herein in order to determine the applicability of such exemption and the
suitability of PWCCW and the PWCCW Partners to acquire the Securities. In this
regard it understands that Common Shares will only be issued upon the conversion
or redemption of, or otherwise pursuant to, the Units, if an exemption from the
registration requirements of the Securities Act is then available for such
issuance;
(12) It is an accredited investor, as defined in Rule
501(a) of Regulation D adopted under the Securities Act.
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(c) It is agreed and understood that the Partnership intends to
perform its own due diligence, investigation and analysis in connection with the
transaction contemplated by this Agreement. If and to the extent that the
Partnership determines prior to the Due Diligence Termination Date that any or
all of the representations and warranties made in this Agreement by PWCCW or the
PWCCW Partners shall be untrue as a result of such due diligence, investigation
or analysis, the Partnership 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 Partnership has now or hereafter acquires
prior to the Due Diligence Termination Date actual knowledge that one or more of
the representations and warranties of PWCCW or the PWCCW Partners are not true,
no such fact or circumstance known to the Partnership shall be made the basis of
a claim by the Partnership of a breach of representation or warranty by PWCCW or
a Member, as the case may be.
(d) Notwithstanding anything to the contrary contained in this
Agreement, in the event any representation, agreement or undertaking made by
PWCCW or the PWCCW Partners in this Agreement shall prove to be false and the
cost or expense incurred or likely to be incurred by the Partnership as a result
thereof shall not exceed $50,000 in the aggregate, such misrepresentation,
agreement or undertaking shall be deemed "immaterial" and shall not give rise to
any right of the Partnership 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 the Partnership hereby waives all its rights, claims and
remedies relating thereto. The Partnership's sole remedy in the event any
representation, agreement or undertaking of PWCCW or the PWCCW Partners which is
discovered by the Partnership at or prior to the Closing herein shall prove to
be false and the cost or expense incurred or likely to be incurred by the
Partnership as a result thereof exceeds $50,000 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 the Partnership, and thereupon the
Partnership shall receive a refund of the Deposit, and PWCCW shall reimburse the
Partnership for the Partnership's Reasonable Costs and Due Diligence Costs. To
the extent the Partnership has actual 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, the Partnership hereby waives all of
its rights, claims and remedies relating thereto.
(e) The Partnership and the Trust hereby represent and warrant
as follows, all of which shall be true and correct at, and as of, the Effective
Date:
(1) The Partnership is a limited partnership duly formed
and validly existing under the laws of the State of Delaware, and is in good
standing with the State of Delaware. The Trust 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.
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<PAGE>
(2) Subject to Paragraph 9(e)(5), below, the Partnership
and the Trust have all necessary power and authority to enter into this
Agreement, to perform their 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 the Partnership and the Trust
pursuant hereto when delivered will constitute, the legal, valid and binding
obligations of the Partnership and the Trust, enforceable against the
Partnership and the Trust in accordance with their respective terms.
(3) Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will (a) violate any
provision of any organizational document of the Partnership or the Trust, 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
the Partnership or the Trust is a party.
(4) There is no litigation, proceeding or action pending,
or, to the best of the Partnership's or the Trust's knowledge, threatened
against or relating to the Partnership or the Trust which might materially and
adversely affect the ability of the Partnership or the Trust to consummate the
transactions contemplated hereby or which questions the validity of this
Agreement or any action taken or to be taken by the Partnership or the Trust
pursuant hereto.
(5) The execution and delivery of this Agreement shall have
been approved by the Board of Trustees of the Trust on or prior to the Due
Diligence Termination Date and no further action shall thereupon be required on
the part of the Partnership or the Trust to consummate the transaction
contemplated hereby. The signatories for the Partnership and the Trust are
authorized and empowered to bind the Partnership and the Trust to this Agreement
and all transactions contemplated herein.
(6) Except as otherwise set forth in Paragraph 9(e)(5)
above, in connection with the listing application with the NYSE pursuant to
Paragraph 17(d) and the registration of the Underlying Shares pursuant to the
Registration Rights Agreement attached hereto as Exhibit "L" and as required by
any applicable state securities or "blue sky" laws, 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 Trust or the Partnership.
(7) The Partnership has sufficient funds available to
consummate the transactions contemplated by this Agreement, without the
necessity of third-party financing other than other than the Partnership's
existing revolving credit facility administered by Nationsbank, N.A. The
Partnership and the Trust acknowledge that their
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obligations hereunder are not conditioned upon any third party financing or
capital infusion by another party.
(8) The Securities, upon issuance, if any, will be duly and
validly issued, fully-paid and non-assessable.
(9) The information contained in the Trust's Annual Report
on 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.
(f) As to any representation or warranty made in this Agreement
which is qualified as being to the best knowledge of the Partnership or PWCCW,
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. The Partnership or PWCCW 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.
(g) All of the representations and warranties set forth in this
Paragraph 9 shall be deemed renewed by PWCCW, the PWCCW Partners and the
Partnership 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), and all such representations shall survive for a period of one year
from the Closing.
10. Access To The Property.
(a) The Partnership and/or its agents and representatives,
during normal business hours and after reasonable advance notice to PWCCW, may
enter upon any of the Real Property from time to time prior to the Closing Date,
accompanied by an agent of PWCCW, for purposes of conducting such inspections,
investigations and/or studies as the Partnership 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 ("the Partnership's Due Diligence Activities"). The
Partnership's access to the Real Property shall be subject to the rights of the
Tenants of any of the Real Property, who shall not be unreasonably disturbed
during any such inspection by the Partnership. The Partnership shall not engage
in any activity in or about the Real Property which directly or indirectly
violates the terms of any governmental or quasi-governmental statute, rule,
regulation, order or practice. The Partnership shall not make any physical
changes to any of the Real
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Property, except for test borings and soil samplings which shall be performed
only by licensed engineers reasonably acceptable to PWCCW and only after three
(3) business days' prior notice to PWCCW. The Partnership may contact any
governmental or quasi-governmental authorities concerning the Property without
the prior written approval of PWCCW. PWCCW shall have the opportunity to
observe any and all action taken by the Partnership or its representatives,
consultants, agents, etc. pursuant to this Paragraph 10. All information set
forth in any document which PWCCW has granted to the Partnership 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 the Partnership violates its
obligations under this Paragraph 10(a) or in the event of any physical damage to
any of the Real Property or any Personal Property resulting, directly or
indirectly, from the exercise by the Partnership of its rights under this
Paragraph 10(a), the Partnership hereby agrees to restore the Real Property and
Personal Property to their respective conditions prior to incurring such damage.
The Partnership hereby agrees to indemnify, defend and hold harmless PWCCW from
and against all physical damage to any of the Real Property and Personal
Property, personal injury and/or any other claims or liability which may occur
as a result of the Partnership's (or the Partnership's agents, employees,
invitees or licensees) entry or activities upon any of the Real Property. The
provisions of this Paragraph 10(a) shall survive Closing or other termination of
this Agreement.
(b) The Partnership, or any of the Partnership's consultants
performing physical tests on the Real Property shall maintain public liability
insurance policies (naming PWCCW as an additional named insured with respect to
any liability occurring on the Real Property), with combined single limit
coverage of at least $1,000,000, insuring against claims arising as a result of
the inspections of the Partnership, its agents, employees or such contractors at
any of the Real Property. A certificate of insurance evidencing the foregoing
coverage shall be delivered to PWCCW prior to the Partnership's or any of the
Partnership's consultants' entry on to any of the Real Property.
(c) In the event Closing does not occur or this Agreement is
terminated, the Partnership shall promptly return to PWCCW any documents
obtained from PWCCW or PWCCW's agents and deliver to PWCCW, without charge,
copies of all written test results, studies, reports and similar materials
obtained by or on behalf of the Partnership relating to any of the Real
Property.
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, the
Partnership 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 the Property with zoning,
licensing and all other governmental requirements, Leases for any of the Real
Property, operating statements pertaining to the Property and all other aspects
and conditions of the Property which the
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Partnership may decide to review (collectively, "the Partnership's Due Diligence
Activities"), all as the Partnership shall deem appropriate). In connection
with the Partnership's Due Diligence Activities, PWCCW has delivered or will
deliver to the Partnership various documents, reports and materials
(collectively, the "PWCCW Due Diligence Materials"). THE PARTNERSHIP
UNDERSTANDS AND HEREBY ACKNOWLEDGES AND AGREES THAT THE PWCCW DUE DILIGENCE
MATERIALS ARE BEING DELIVERED TO THE PARTNERSHIP WITHOUT ANY REPRESENTATION OR
WARRANTY WHATSOEVER BY PWCCW OR BY THE PREPARER OF SUCH PWCCW 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 the Partnership's Due Diligence
Activities or otherwise, the Partnership 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 PWCCW 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 Partnership, 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) PWCCW shall obtain, prior to the Closing the
Non-Applicability Letter and the NJDEP Letter from the NJDEP or its successor.
In furtherance of the foregoing, PWCCW shall apply for the Non-Applicability
Letter promptly after the Effective Date, and shall pursue the same diligently
and in good faith.
(d) The Partnership agrees to prepare and forward to PWCCW, at
the Partnership's sole cost and expense, certificates (the "Estoppel
Certificates") for execution by the Tenants which shall, at the Partnership'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 "T". PWCCW agrees to deliver the Estoppel Certificates to the
Tenants promptly after the Partnership'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 the Partnership's obligations hereunder that, at or prior to Closing,
Estoppel Certificates shall have been obtained from at least 75% of the Tenants
at each Property, including those identified on Exhibit "U" 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, if an estoppel in the Required Form is not obtained from an
Identified Tenant, PWCCW may, in lieu thereof, deliver its certificate
containing the information set forth on the Required Form, which certificate
shall
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serve as PWCCW'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 the Partnership'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.
12. Condemnation. PWCCW covenants and warrants that PWCCW has not
received any written notice of any condemnation proceeding or other proceeding
in the nature of eminent domain in connection with the Real Property, 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 Property is commenced, PWCCW agrees promptly to
notify the Partnership thereof. In the event of a material taking of one or
more Real Property or commencement of proceedings in connection with such a
taking, the Partnership 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 Consideration and at Closing PWCCW shall assign to the
Partnership, without recourse, all condemnation proceeds paid or payable with
respect thereto; or (y) terminate this Agreement with respect to the Property 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 Property, and
at Closing, the Partnership shall pay to PWCCW the aggregate of the Allocated
Prices for the remaining Real Property. Provided the Partnership shall have
waived its right to terminate this Agreement with respect to the Real Property
so taken, as provided above, PWCCW shall not, from and after the Due Diligence
Termination Date, settle or adjust any claims relating to a condemnation without
the Partnership's prior approval, which shall not be unreasonably withheld or
delayed.
13. Damage By Fire Or Other Casualty.
(a) PWCCW shall promptly notify the Partnership of damage to the
Improvements occurring by reason of casualty during the period between the
Effective Date and the Closing Date. PWCCW shall timely notify any insurance
companies with respect to any damage and shall promptly submit claims for such
damage. Provided the Partnership shall have waived its right to terminate this
Agreement with respect to the Real Property so damaged, as provided below, PWCCW
shall not, from and after the Due Diligence Termination Date, settle or adjust
any claims relating to a casualty without the Partnership'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
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Improvements, as determined by an independent adjuster is, with respect to any
of the Real Property so damaged, an amount equal to or less than ten percent
(10%) of the Consideration allocated for such Real Property, there shall be no
abatement or adjustment in the Consideration and, provided the loss or damage is
a covered loss under PWCCW's insurance policy, the Partnership shall be required
to purchase all of the Real Property in accordance with the terms of this
Agreement and, at Closing, PWCCW shall assign to the Partnership, without
recourse, all insurance claims and proceeds with respect thereto (less sums
theretofore expended, if any, by PWCCW for emergency repairs or barricades) and
PWCCW shall credit the Partnership at Closing with the amount of any applicable
deductible. PWCCW shall have no liability or obligation with respect to the
condition of any of the Real Property 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 Property is an amount which is greater than ten percent (10%) of the
Consideration allocated for the applicable Real Property, the Partnership may,
at its sole option, (x) proceed to Closing as provided in this Paragraph 13(b)
without an abatement of the Consideration and at Closing PWCCW shall assign to
the Partnership, without recourse, all insurance claims and proceeds with
respect thereto (less sums theretofore expended, if any, by PWCCW for emergency
repairs or barricades) and PWCCW shall credit the Partnership at Closing with
the amount of any applicable deductible; or (y) terminate this Agreement with
respect to the Property which have suffered damage to the Improvements by fire
or other casualty in an amount which exceeds ten percent (10%) of the
Consideration allocated 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
Property, and at Closing, the Partnership shall pay to PWCCW the aggregate of
the Considerations for the remaining Real Property. The Partnership 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 Property for which
this Agreement has been terminated.
14. Default.
(a) If the Partnership shall default in its obligations to pay
the Consideration and complete Closing in accordance with the terms of this
Agreement, then, as PWCCW's sole and exclusive remedy therefor, PWCCW shall be
entitled to retain the Deposit as liquidated and agreed upon damages for the
losses and injuries which PWCCW shall have sustained and suffered as a result of
the Partnership's default, and thereupon this Agreement and the Partnership'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 Property from sale to the general public at a time when other parties would
be interested in purchasing such Real Property, that PWCCW shall have sustained
damages which will be substantial, but will not be capable of determination with
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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.
(b) If PWCCW shall default in its obligation to deliver any of
the Deeds or other items described in Paragraph 5 hereof, upon the Partnership's
(i) tender of the full Consideration and (ii) compliance with all of the
material terms and conditions of this Agreement, the Partnership shall have the
sole option of terminating this Agreement and receiving the return of the
Deposit, together with payment by PWCCW of (A) the Partnership's Reasonable
Costs, and (B) the Partnership'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") for the entire
Paint Works Property and the Other Properties or (Y) to seek specific
performance of PWCCW's obligation to convey the Real Property in accordance with
this Agreement. If the Partnership elects to terminate this Agreement, upon
payment of the sums described above, PWCCW shall be released and relieved of any
further liability and this Agreement shall thereupon be null and void. Except
as expressly set forth above, the Partnership hereby waives any right which the
Partnership may have to any lis pendens or other lien or encumbrance against any
of the Real Property, 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 the Partnership'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 PWCCW to perform its obligations under this Agreement.
15. Operations Prior To Closing.
(a) PWCCW agrees to operate the Property between the Effective
Date and the Closing Date in the same general manner as PWCCW has operated the
Property 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) PWCCW shall comply with all of the obligations of landlord
under the Leases and all other agreements and contractual arrangements affecting
the Real Property by which PWCCW is bound or to which the Real Property, or any
of them, are subject, and which will be binding upon the Partnership or a lien
upon such Real Property, after the Closing.
(c) PWCCW shall notify the Partnership promptly of PWCCW's
receipt of any notice from any party alleging that PWCCW is in default of its
obligations under any of the Leases or any Permit or agreement affecting the
Real Property, or any portion or portions thereof.
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(d) No contract for or on behalf of or affecting the Real
Property shall be negotiated or entered into which cannot be terminated by PWCCW
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 the Partnership,
which the Partnership agrees it shall not unreasonably withhold, condition or
delay, PWCCW shall not enter into any new leases for any portion of the Real
Property. Any new lease shall be on the Partnership's customary form (which may
vary to reflect customary negotiated revisions thereto), or such other form
which is reasonably acceptable to the Partnership. Further, except with the
prior written consent of the Partnership, which the Partnership agrees it shall
not unreasonably withhold, condition or delay, or as set forth above, PWCCW
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) PWCCW shall not make or permit to be made any capital
improvements or additions to the Real Property, or any portion thereof, without
the prior written consent of the Partnership, except those made by PWCCW
pursuant to the express requirements of this Agreement, those made by tenants
pursuant to the right to do so under their Leases, or by PWCCW if required by
applicable law or ordinance, or as required under any Lease.
(g) PWCCW shall timely bill all tenants for all rent billable
under Leases, and use commercially reasonable efforts to collect any rent in
arrears.
(h) PWCCW shall notify the Partnership of any tax assessment
disputes (pending or threatened) prior to Closing, and from and after the Due
Diligence Expiration Date, PWCCW 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 the Partnership'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 PWCCW, and all refunds relating to any
year subsequent to the year in which Closing occurs shall be the sole property
of the Partnership. Each party agrees to promptly remit to the other any refund
received by it which is the property of the other.
(i) PWCCW shall notify the Partnership promptly of the
occurrence of any of the following:
(i) Receipt of notice from any governmental or
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quasi-governmental agency or authority or insurance underwriter relating to the
condition, use or occupancy of the Real Property, 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
Property, or any portion thereof;
(iii) Notice of any actual or threatened litigation
against PWCCW or affecting or relating to the Real Property, or any portion
thereof which may materially and adversely affect the Real Property or PWCCW's
ability to consummate the transactions contemplated by this Agreement; or
(iv) Vacancy of any demised Property by a tenant, other than
in accordance with a scheduled lease termination.
16. PROPERTY CONVEYED "AS-IS, WHERE IS". IT IS UNDERSTOOD AND AGREED
THAT, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT, PWCCW 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 PROPERTY, 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
PROPERTY INCLUDING, WITHOUT LIMITATION: (I) THE VALUE, CONDITION,
MERCHANTABILITY, MARKETABILITY, PROFITABILITY, SUITABILITY OR FITNESS FOR A
PARTICULAR USE OR PURPOSE OF ANY OF THE PROPERTY, (II) THE MANNER OR QUALITY OF
THE CONSTRUCTION OR MATERIALS INCORPORATED INTO ANY OF THE PROPERTY AND (III)
THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF ANY OF THE PROPERTY.
THE PARTNERSHIP AGREES THAT WITH RESPECT TO THE PROPERTY, THE PARTNERSHIP HAS
NOT RELIED UPON AND WILL NOT RELY UPON, EITHER DIRECTLY OR INDIRECTLY, ANY
REPRESENTATION OR WARRANTY OF PWCCW OR ANY AGENT OF PWCCW NOT EXPRESSLY SET
FORTH IN THIS AGREEMENT. THE PARTNERSHIP REPRESENTS THAT IT IS A KNOWLEDGEABLE
THE PARTNERSHIP OF REAL ESTATE AND THAT IT IS RELYING SOLELY ON ITS OWN
EXPERTISE AND THAT OF THE PARTNERSHIP'S CONSULTANTS, AND THE REPRESENTATIONS AND
WARRANTIES OF PWCCW CONTAINED IN THIS AGREEMENT, SUBJECT, HOWEVER, TO THE
LIMITATIONS CONTAINED HEREIN UPON SUCH REPRESENTATIONS AND WARRANTIES, AND THAT
PWCCW HAS OR SHALL HAVE AFFORDED THE PARTNERSHIP WITH A FULL
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AND COMPLETE OPPORTUNITY TO MAKE ITS OWN INDEPENDENT INVESTIGATION OF THE
PROPERTY 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 THE PARTNERSHIP'S
INSPECTIONS AND INVESTIGATIONS. THE PARTNERSHIP ACKNOWLEDGES AND AGREES THAT,
UPON CLOSING, PWCCW SHALL SELL AND CONVEY TO THE PARTNERSHIP AND THE PARTNERSHIP
SHALL ACCEPT THE PROPERTY "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 PROPERTY BY PWCCW, ANY AGENT OF
PWCCW OR ANY THIRD PARTY. THE PARTNERSHIP EXPRESSLY AGREES THAT THE TERMS AND
CONDITIONS OF THIS PARAGRAPH 16 SHALL EXPRESSLY SURVIVE THE CLOSING AND NOT
MERGE THEREIN AND PWCCW IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY VERBAL OR
WRITTEN STATEMENTS, REPRESENTATIONS, OR INFORMATION PERTAINING TO ANY OF THE
PROPERTY 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. Conditions Precedent to Closing.
The obligations of the Partnership hereunder are subject to the
fulfillment of the following conditions prior to or on the Closing Date (any one
of which may be waived in whole or in part by the Partnership at or prior to the
Closing) and in the event any of the conditions are not complied with, the
Partnership may terminate this Agreement by notifying the PWCCW and Escrow Agent
and thereupon shall be returned the Deposit and thereafter this Agreement shall
be null and void:
(a) Correctness of Warranties and Representations. The
warranties and representations made by PWCCW and the PWCCW Partners in this
Agreement shall be true and correct on the Closing Date as though such
representations and warranties were made on the Closing Date (except for changes
in the Leases permitted under the terms of this Agreement).
(b) Compliance with Terms and Conditions. PWCCW shall have
performed and complied with all of the terms and conditions required by this
Agreement, including, without limitation, the delivery of all required documents
pursuant to Paragraph 6(a), to be performed and complied with by it prior to or
on the Closing Date.
(c) The Partnership's Satisfaction with Inspection. The
Partnership shall have notified PWCCW of the Partnership's satisfaction with the
inspection performed under
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Paragraph 11 of this Agreement, or shall fail to notify PWCCW on or before the
Due Diligence Expiration Date, of the Partnership's dissatisfaction with the
results of such review.
(d) Exchange Approval. On or prior to the Closing Date, the
Underlying Shares shall have been approved for listing with the NYSE, upon
official notice of issuance.
(e) Shareholder Approval. The Partnership shall have received
confirmation that the issuance of the Securities will not require approval of
the Trust's security holders under the rules of the NYSE.
(f) 9.8% Limitation. The number of Underlying Shares shall not
exceed that number that is equal to 9.8% of the number of outstanding Common
Shares of the Trust.
(g) Issuance of the Units. The issuance of the Units, if any,
shall be (i) exempt from the registration requirements of the Securities Act and
(ii) either exempt from, or registered pursuant to, any applicable state
securities or "blue sky" registration requirements.
18. Brokers.
(a) PWCCW and the Partnership each represent to the other that
neither PWCCW nor the Partnership has dealt with any real estate broker, dealer
or salesman in connection with the subject transaction.
(b) PWCCW and the Partnership 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 PWCCW and the
Partnership set forth in Paragraph 18(a) hereof.
(c) The provisions of this Paragraph 18 shall survive Closing
hereunder, or any other termination of this Agreement.
19. 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 PWCCW or the
Partnership shall have given notice as herein provided):
If to the Partnership, addressed to:
Brandywine Operating Partnership, L.P.
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Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
Attn: Gerard H. Sweeney,
President and Chief Executive Officer
with a copy in each instance to:
Brad A. Molotsky, General Counsel
Brandywine Operating Partnership, L.P.
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
If to PWCCW or Member, addressed to:
Scarborough Properties
20 E. Clementon Road, Suite 201
Gibbsboro, New Jersey 08026
Attention: R. Randle Scarborough
with a copy in each instance to:
Kelly Young, Esquire
20 East Clementon Road, Suite 202
Gibbsboro, New Jersey 08026
If to Escrow Agent, addressed to:
M. Gordon Daniels, Esquire
Commonwealth Land Title Insurance Company
1700 Market Street
Philadelphia, Pennsylvania 19103
or to such-other address or addresses and to the attention of such other person
or persons as any of the parties may notify the other in accordance with the
provisions of this Agreement. 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 delivery) by the party
to whom such notice is sent. Notices by the parties may be given on their
behalf by their respective attorneys.
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20. Successors And Assigns. Except to a subsidiary or related party,
the Partnership may not assign this Agreement or any rights herein or any
portion hereof without the prior written consent of PWCCW, 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 the Partnership to the Trust or a
subsidiary of 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.
21. 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.
22. 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.
23. 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.
24. Captions And Recitals. The captions contained herein are not a
part of this Agreement and are included solely for the convenience of the
parties.
25. Entire Agreement. This Agreement and the Exhibits and Schedules
attached hereto 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.
26. 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.
(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
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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.
27. 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 the Trust, and the Partnership's agents, consultants,
counsel and representatives in connection with the Partnership's Due Diligence
Activities and financing purposes, unless the Trust is advised by its counsel
that applicable securities laws and regulations require. In addition, the
Partnership covenants that if it undertakes any investigation of the Property,
it shall conduct such investigation of the Property as described herein and with
the degree of confidentiality as the Partnership would apply with respect to its
own proprietary information. Notwithstanding the foregoing, at any time after
expiration of the Due Diligence Period, the Partnership 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.
28. Limitation Of Liability. No recourse shall be had for any
obligation of the Partnership of the 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, partner, officer or employee of 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 PWCCW and all parties claiming by, through or under PWCCW.
Except for breaches of obligations, representations or warranties
hereunder or under the environmental indemnity set forth in this Agreement which
shall be full recourse to the general partners and PWCCW, no recourse shall be
had for any obligation of PWCCW 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
limited partner, general partner or employee of PWCCW 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
Partnership and all parties claiming by, through or under the Partnership.
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29. SEC Reporting Requirements. For the period of time commencing on
the date hereof and continuing through the first anniversary of the Closing
Date, PWCCW shall, from time to time, upon reasonable advance written notice
from the Partnership, provide the Trust and its representatives, with access to
all financial and other information then in PWCCW's possession pertaining to the
period of PWCCW's ownership and operation of the Real Property, which
information is relevant and reasonably necessary, in the opinion of the Trust's
outside, third party accountants (the "Accountants"), to enable the Trust 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 Trust; and (c) any registration statement,
report or disclosure statement filed with the Commission by, or on behalf of the
Trust. PWCCW shall deliver to the Trust's accountants a representation letter
(the "Letter"), in the form annexed hereto as Exhibit "V", provided that the
Partnership (and any assignee or designee acquiring title to the Real Property)
shall indemnify and hold PWCCW harmless from and against any claim, damage, loss
or liability including, without limitation, legal fees incurred by PWCCW in
investigating, defending against or settling any such matter and the amount of
any such settlement to which PWCCW 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
Partnership acknowledges that PWCCW 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.
31. No Recordation. The Partnership 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 32 shall constitute an immediate
default by the Partnership under this Agreement.
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32. Tender. Formal tender of an executed deed and purchase money is
hereby waived by the Partnership.
33. Further Assurances. After the Closing, PWCCW shall execute,
acknowledge and deliver, for no further consideration, all assignments,
transfers, deeds and other documents as the Partnership may reasonably request
to vest in the Partnership and perfect the Partnership's right, title and
interest in and to the Property.
34. Jury Trial Waiver. THE PARTNERSHIP AND PWCCW 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 PWCCW HAS NO OBLIGATION TO
EXECUTE THIS AGREEMENT.
36. General Indemnification.
(a) Without limitation of any other PWCCW indemnity obligations
set forth herein, from and after the Closing Date, PWCCW shall indemnify, defend
and save and hold harmless the Partnership and the Trust, and their respective
partners, trustees, directors, officers and employees, of, from and against any
and all loss, cost, expense, damage, claim, and liability, including reasonable
attorney's fees and court costs, including, without limitation, attorney's fees
and costs associated with the enforcement of PWCCW's indemnification obligations
for all claims brought within one year of such Closing except for any
environmental claim which may be made at any time (hereinafter collectively,
"Losses") which the Partnership or the Trust may suffer or incur, resulting
from, relating to, or arising in whole or in part, from or out of (i) any
misrepresentation or breach of a representation or warranty by PWCCW contained
in this Agreement; (ii) any failure to fulfill any covenant or agreement of
PWCCW contained in this Agreement; (iii) all litigation and the environmental
condition of the Property hereto; (iv) any and all actions, suits,
investigations, proceedings, demands, assessments, audits, judgments, and/or
claims arising out of or relating to any of the foregoing.
(b) Promptly after receipt by the Partnership or the Trust of
written notice of the commencement of any suit, audit, demand, judgment, action,
investigation or proceeding (a "Third Party Action") or promptly after the
Partnership or the Trust incurs a Loss or has knowledge of the existence of a
Loss, the Partnership or the Trust, as the case may be, will, if a
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claim with respect thereto is to be made against PWCCW due to PWCCW's obligation
to provide indemnification hereunder, give PWCCW written notice of such Loss or
the commencement of any Third Party Action; provided, however, that the failure
to provide such notice within a reasonable period of time shall not relieve
PWCCW of any of its obligations hereunder. Promptly after receiving such
notice, PWCCW will, upon notice to the Partnership or the Trust, as the case may
be, have the right to assume and control the defense and settlement of any such
Third Party Action at its own cost and expense; provided, however, that it shall
be a condition precedent to the exercise of such right by PWCCW that PWCCW shall
agree in writing that the Loss, or Third Party Action, as the case may be, is
properly within the scope of the indemnification obligation and that as between
the parties, PWCCW shall be responsible to satisfy and discharge such Third
Party Action. PWCCW shall not enter into any resolution or other compromise of
a Third Party Action without obtaining the complete release of the Partnership
or the Trust, as appropriate, for any liability to all claimants under or
pursuant to such Third Party Action. The Partnership or the Trust, as the case
may be, shall have the right to participate in any such defense, contest or
other protective action at its own cost and expense.
(c) Notwithstanding the foregoing, the Partnership or the
Trust, as the case may be, shall have the right to assume and control the
defense and settlement of a Third Party Action (a) if such action includes
claims for equitable relief which, if determined adversely to the Partnership or
the Trust, as the case may be, could reasonably be expected to interfere with
its intended business operations or damage its business reputation or (b) if
PWCCW fails to do so in a timely manner. In any circumstances in which the
Partnership or the Trust, as the case may be, undertakes to control the Third
Party Action as provided in this paragraph, it shall (i) not enter into any
resolution or other compromise involving monetary damages without obtaining the
prior written consent of PWCCW provided that such written consent may not be
withheld if it would interfere with the Partnership's or the Trust's, as the
case may be, business operation and (ii) keep PWCCW informed on an ongoing basis
of the status of such Third Party Action and shall deliver to PWCCW, copies of
all documents related to the Third Party Action reasonably requested by PWCCW.
The Partnership or the Trust, as the case may be, shall act to assure that all
attorneys' fees and expenses incurred in connection therewith are reasonable.
37. Environmental Indemnification.
(a) Reference is made to a certain environmental investigation
currently being undertaken by Sherwin Williams Company ("Sherwin Williams")
pursuant to those certain directives and the administrative consent orders
entered into by and between the New Jersey Department of Environmental
Protection ("NJDEP") and Sherwin Williams, copies of which are attached hereto
(the "Administrative Consent Orders") concerning the premises known and
designated as Block 8.01, Lots 3.01, 3.03, 3.04, 3.05 and 3.06, and Block 19.01,
Lots 1, 1.01 and 1.07 (the "ACO Premises"). In the event Sherwin Williams fails
to comply with all applicable Administrative Consent Orders or fails to perform
all investigation and remediation required by NJDEP with respect to the ACO
Premises, then in that event Seller and Robert Scarborough shall perform all of
Sherman Williams' obligations relating to the ACO Premises arising under or in
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connection with the Administrative Consent Orders or under applicable
Environmental Laws, including without limitation, all investigation and
remediation required by NJDEP. Seller and Robert Scarborough shall correct all
environmental issues required because of the Administrative Consent Orders
concerning the ACO Premises in accordance with all Environmental Laws, and, in
connection therewith, Seller and Robert Scarborough shall have the right to
remediate any contamination in the most cost effective manner practicable under
the circumstances, including without limitation, employing engineering or
institutional controls, or both, a groundwater classification exception area or
well restriction area, so long as such method of remediation is reasonably
acceptable to Buyer and the NJDEP and shall not materially interfere with
Buyer's operation of the ACO Premises as a commercial office complex.
(b) Buyer shall cooperate with Seller and Robert Scarborough in
connection with all investigation and remediation undertaken by Seller or Robert
Scarborough, or both, by providing all information and signing all documentation
reasonably requested of Buyer with respect to Seller and Robert Scarborough
complying with their obligations under this Section.
(c) Seller and Robert Scarborough shall indemnify, defend and
hold Buyer harmless from and against any and all Environmental Claims relating
to or arising under the Administrative Consent Orders and the ACO Premises,
including without limitation, claims, liabilities, losses, damages, penalties
and costs, reasonable counsel, engineering and other professional and expert
fees, to the extent resulting from a breach by Seller and Robert Scarborough, in
their performance of the obligations imposed upon Seller and Robert Scarborough
under this Section. In no event, however, shall Seller or Robert Scarborough be
obligated to Buyer for consequential damages, including without limitation, lost
profits or lost opportunities, or both, nor shall they have any liability or
responsibility with respect to a spill, release or discharge of contaminants
occurring from and after Closing, unless such post-closing Environmental Claim,
spill, release or discharge shall be the result of any action undertaken or
omissions by Seller or Robert Scarborough in connection with the obligations
required under the Administrative Consent Orders. In the event Buyer desires to
make a claim against Seller or Robert Scarborough, or both, under this
indemnification, Seller shall give prompt notice to Seller and Robert
Scarborough in accordance with the procedures outlined in Section 26(b) above,
of the claim, including without limitation the details of the claim. Seller and
Robert Scarborough shall have the right to employ counsel of their choice which
is reasonably acceptable to Buyer, to undertake any defense with respect to any
action commenced, which may be the subject of this indemnification and Buyer
shall cooperate with Seller and Robert Scarborough in connection with the
defense of any such action, including without limitation, providing testimony at
deposition and trial and signing all documents reasonably requested by Seller or
Robert Scarborough, or both, in connection with the defense of such action.
Buyer shall not undertake to settle any action which may be the subject of this
indemnification unless and until Seller and Robert Scarborough shall have
consented to such request or have failed to satisfy their indemnification and
defense obligations imposed pursuant to this Section.
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(d) Buyer shall indemnify, defend and hold Seller and Robert
Scarborough harmless from and against any and all Environmental Claims,
liabilities, losses, damages, penalties and costs, reasonable counsel,
engineering and other professional and expert fees, to the extent resulting from
a spill, release or discharge of any contaminant occurring from and after the
closing of title (unless due to the actions of Seller or Robert Scarborough).
In no event, however, shall Buyer be obligated to Seller or Robert Scarborough,
or both, for consequential damages, including without limitation, lost profits
or lost opportunities, or both. In the event Seller or Robert Scarborough, or
both, desire to make a claim against Buyer under this indemnification, they
shall give prompt notice to Buyer of the claim pursuant to the notice provisions
outlined in Section 26(b) above, including without limitation the details of the
claim. Buyer shall have the right to employ counsel of its choice to undertake
any defense with respect to any action commenced, which may be the subject of
this indemnification and Seller and Robert Scarborough shall cooperate in
connection with the defense of any such action, including without limitation,
providing testimony at deposition and trial and signing all documents reasonably
requested by Buyer, in connection with the defense of such action. Neither
Seller nor Robert Scarborough shall undertake to settle any action which may be
the subject of this indemnification unless and until Buyer shall have failed to
satisfy its indemnification and defense obligations imposed pursuant to the this
paragraph.
(e) In addition to and not by way of limitation of the
foregoing, in the event that Materials of Environmental Concern have
historically, or in the future do, leach, migrate, spill, escape or are released
from the ACO Premises onto adjacent or appurtenant property of the Partnership
which is being acquired at Closing (a "Migratory Event"), PWCCW's and Robert
Scarborough's indemnification and remediation obligations hereunder shall extend
to and be applicable to such Migratory Event.
The obligations set forth in this Section 36(d) shall survive the
Closing of the transactions contemplated by the Agreement without any limitation
on time whatsoever.
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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.
PWCWW
By: THE PAINT WORKS MANAGEMENT
CORPORATION, its authorized
general partner
By: /s/Sean Scarborough
---------------------------------
Sean Scarborough, President
/s/Robert K. Scarborough
------------------------------------
Robert K. Scarborough, its authorized
general partner
BRANDYWINE OPERATING PARTNERSHIP, L.P.
By: BRANDYWINE REALTY TRUST, its sole general
partner
By: /s/Gerard H. Sweeney
--------------------------------
Name: Gerard H. Sweeney
Title: President & CEO
BRANDYWINE REALTY TRUST
By: /s/Gerard H. Sweeney
-------------------------------
Name: Gerard H. Sweeney
Title: President & CEO
EXECUTIONS CONTINUED
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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
Commonwealth Land Title Insurance Company:
By: /s/M. Gordon Daniels
------------------------------------
M. Gordon Daniels
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EXECUTION
1, 2, 4, 5, 7, 10 FOSTER AVENUE, 6 EAST CLEMENTON DRIVE
AND 5 UNITED STATES AVENUE
AGREEMENT
AMONG
PWCCW
ROBERT K. SCARBOROUGH AND THE PAINT WORKS MANAGEMENT CORPORATION,
BRANDYWINE OPERATING PARTNERSHIP, L.P.
AND
BRANDYWINE REALTY TRUST
Dated as of December 5, 1997
<PAGE>
LIST OF EXHIBITS
Exhibit A Description of Land
Exhibit B List of Contracts
Exhibit C Certified Rent Roll
Exhibit D Permitted Exceptions
Exhibit E Excluded Personal Property
Exhibit F The Other Properties
Exhibit G Form of Deed
Exhibit H Bill of Sale
Exhibit I Form of Assignment(s)
Exhibit J Form of Non-Foreign Person Certification
Exhibit K NJDEP Letter
Exhibit L Registration Rights Agreement
Exhibit M Tax Indemnity
Exhibit N Investor Questionnaire
Exhibit O Guaranty
Exhibit P Pending Litigation
Exhibit Q Contracts Not Terminable with 30 days Notice
Exhibit R Outstanding Brokerage Commissions and TI
Exhibit S-1 Environmental Report
Exhibit S-2 Environmental Conditions
Exhibit S-3 Administrative Consent Orders
Exhibit T Form of Estoppel Certificate
Exhibit U Identified Tenants
Exhibit V Representation Letter
<PAGE>
Exhibit 10.7
55 UNITED STATES AVENUE
AGREEMENT OF SALE
THIS AGREEMENT OF SALE is made and entered into as of the 5th day of
December, 1997 by and between PAINT WORKS CORPORATE ASSOCIATES-W, a New Jersey
general partnership having its principal office at Scarborough Properties, 20
East Clementon Road, Suite 201, Gibbsboro, New Jersey 08026 ("Seller") and
BRANDYWINE REALTY TRUST, a Maryland real estate investment trust or its nominee,
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 a certain tract of land being comprised of
Lots 4 and 5, Block 8.01, being 55 United States Avenue, Lot 1, Block 10 being
24 United States Avenue, Lot 2.01, Block 10 being 70 South Lakeview Drive, Lot
2.06, Block 10 being South United States Avenue, Lot 3.01, Block 10 being 30 E.
United States Avenue, Lot 3.02, Block 10 being 36 E. United States Avenue and
Lot 1, Block 11.02 being 70 South Lakeview Avenue, together with the buildings
and improvements thereon, including one office building containing approximately
142,000 square feet, all located in Gibbsboro, New Jersey as more fully
described on Exhibit A attached hereto; and
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 Property (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 Property, 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
December 9, 1997.
"Effective Date" shall mean the date on which this Agreement has
been fully executed and delivered by both parties hereto to each other.
"Escrow Agent" shall mean Commonwealth Land Title Insurance
Company, 1700 Market Street, Philadelphia, Pennsylvania 19103.
"Escrow Terms" shall mean the escrow agreement to be entered of
even date herewith between Title Company, Buyer and Seller.
"Improvements" shall mean those certain buildings and other
improvements constructed and located on the Land as described on Exhibit A.
"Land" shall mean that certain parcel of real property located at
55 United States Avenue and the parking lots being appurtenant thereto across
United States Avenue, Gibbsboro, New Jersey.
"Leases" shall mean those certain leases (and guarantees thereof,
if any) listed on Exhibit "C" 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 Property.
"Partnership" shall mean Brandywine Operating Partnership, L.P.,
a Delaware limited partnership whose sole general partner is Buyer.
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"Permitted Exceptions" shall mean with respect to any of the Real
Property (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 "D" to this
Agreement, (iv) special assessments which become a lien on any of the Real
Property on or after the Closing Date, and (v) 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 Property
pursuant to the Leases for all or any portion of any of the Real Property.
"Personal Property" shall (except as specifically excluded on
Exhibit "E" 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 Property on the Closing Date, and all artwork, renderings, flags, awnings
and trade dress; all architects', engineers', surveyors' and other real estate
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 "55 Unites States Avenue."
"Property" shall mean the Real Property and such of the
Contracts, Leases, Licenses, Personal Property and other rights, titles,
interests and obligations which pertain to the Real Property and are intended to
be conveyed, sold or otherwise transferred to Buyer by Seller pursuant to this
Agreement.
"Real Property" shall mean the Land and the Improvements.
"Tenants" shall mean the tenants under the Leases.
2. Acquisition Of The Property. 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 Property;
(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;
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(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 Property;
(d) to the extent assignable to Buyer and approved by Buyer, all
right, title and interest of Seller in and to the Contracts and the Licenses
relating to any of the Real Property;
(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 Property shall be Four
Million Three Hundred Thousand Dollars ($4,300,000), as adjusted pursuant to
Paragraph 7 of this Agreement, which shall be paid to Seller in the following
manner:
(a) Twenty Thousand Dollars ($20,000) (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. In addition thereto, by
delivery, within two (2) business days next following the Due Diligence
Expiration Date of Buyer's good check in the amount of $10,000.
(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
conditioned upon the closing of the sale of the other properties identified on
Exhibit "F" attached hereto (the "Other Properties"), so that no one or more of
the Other Properties and the Property hereunder may be sold without all of the
Property being sold unless expressly provided for in writing by the parties
hereto and in any event the Deposit hereunder and thereunder shall be deemed a
single deposit for the entire transaction.
4. Closing. The closing of the transaction contemplated by this
Agreement (the "Closing") shall be held on or before December 12, 1997, but in
any event no later than fifteen (15) days next following the Due Diligence
Expiration Date, at the offices of Brandywine Realty Trust, Plaza 1000 at Main
Street, Suite 400, Voorhees, New Jersey, commencing at 10:00 a.m., time being of
the essence.
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5. Title And Conveyance Of The Property.
(a) At Closing, title to the Real Property shall be insurable at
regular rates by Commonwealth Land 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
Property is not insurable as aforesaid, Buyer's sole right and remedy shall be
as set forth in paragraph 5(b) below.
(b) (i) Buyer has applied 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 Property, 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 Property
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 prior to the Due Diligence Termination Date, together
with 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 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 thirty (30) days to enable Seller to effect such cure.
(ii) 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
canceled 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
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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.
(iii) Notwithstanding the provisions of the foregoing
paragraph, if the condition of title to the Real Property at the Closing is
other than that which Buyer is required or agrees to accept hereunder solely by
reason of any mortgages or other monetary liens (hereinafter referred to as
"Liens") which can be satisfied or remedied by the payment of a liquidated
amount of money to the extent of the Purchase Price, 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.
(iv) 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 (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 the expiration of the Due Diligence, 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 Real
Property by a Bargain and Sale Deed with covenant against grantor's acts (the
"Deed"), subject in all cases to the Permitted Exceptions, in the forms attached
hereto and made a part hereof as Exhibit "G".
(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
"H".
(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 the
Property, by executing an Assignment and Assumption Agreement in the form
attached hereto and made a part hereof as Exhibit "I" (the "Assignments").
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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 Deed, executed by Seller, covering the Real
Property (and separate quitclaim deeds to the Real Property 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;
(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 Property 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 "J";
(ix) All building records and Tenant lease files with
respect to the Real Property 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);
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(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;
(xiii) A letter, from the New Jersey Department of
Environmental Protection or its successor ("NJDEP") 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 Real Property (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.
(xvii) Such affidavits of title or other certifications as
shall be required by the Title Company to insure Buyer's title to the Property
as set forth in Section 3, and to provide affirmative endorsements (a) against
mechanic's liens, (b) insuring against any violation of existing covenants,
conditions or restrictions, and insuring that future violation will not result
in forfeiture of title, (c) insuring that all foundations in place as of the
date of such policy are within the lot lines and applicable set back lines, (d)
insuring that the buildings and structures on the Property do not encroach onto
adjoining land or onto any easements, (e) insuring that confirming that there
are no encroachments of improvements from adjoining land onto the Property (f)
removing any exceptions for matters which an accurate survey would disclose, and
(g) providing affirmative insurance with respect to such other matters as Buyer
or its lender shall specify.
(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; and
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(ii) The Assignments, executed by Buyer.
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 Property, 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 Property 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 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 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 Property, 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 Property 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 Property 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 Property 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 stamps imposed in connection with the recordation of the Deeds for the 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.
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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. If any tenant is in arrears in the payment of rent
or additional rent on the Closing Date, rents received from such tenant ninety
(90) days after the Closing Date shall be applied in the following order of
priority: (a) to the Buyer, so long as such tenant is in arrears for current or
prior rent arising after Closing, then (b) to Seller for all rent in arrears
prior to the Closing Date; and then (c) to Buyer with no further claim by
Seller thereto. Except as herein provided, Buyer is not under any obligation to
collect rents in arrears for the benefit of Seller. Any rents which are
delinquent or otherwise not paid at the time of Closing, and collected by Buyer
or Seller within ninety (90) days after Closing shall be apportioned as
aforesaid and the portion to which Seller is entitled shall be promptly remitted
by Buyer to Seller. Seller shall have no claim to rents collected ninety (90)
days after the Closing Date. 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 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 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 Property. Buyer shall
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assume, pay or reimburse (as applicable) Seller on the Closing Date for 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 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 Property, provided the same were
approved by Buyer or are otherwise permitted as set forth in Paragraph 15(e)
hereof and provided that such costs are set forth on Exhibit "C" hereto. 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 Property 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 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.
8. Possession Of Property.
(a) Seller shall deliver possession to the 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) All of the provisions of this Paragraph 8 shall survive
Closing.
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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 general partnership duly organized and
validly existing under the laws of the State of New Jersey, and is in good
standing in such state.
(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 "K" 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 on Exhibit "K", 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 Property (the
"Personal Property Leases"); (iv) Licenses; (v) surveys; (vi) title reports;
(vii) engineering reports; and (viii) environmental reports.
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(6) To the best of Seller's knowledge, (i) all of the
Leases, Contracts and Personal Property Leases and Licenses, 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 Property or the use or repair of the same
or of any alleged default by Seller under any such Lease, or Personal Property
Lease or License. Except as set forth on Exhibit "L", 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 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 Property 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.
Buyer shall be under no obligation to assume any of Seller's employees, it being
Seller's sole responsibility and obligation to provide severance arrangements,
if any, for all such employees. 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 Property or any portion thereof.
(9) Except as set forth on Exhibit "M", 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
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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 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 Property, 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 Property (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 "N" attached hereto and made a part hereof, all management
fees, leasing commissions and tenant improvement allowances are fully paid,
there are no brokerage commissions owing by Seller with respect to any of the
Leases or otherwise related to the Property 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 Property 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 Property.
(16) Except as may be set forth in a Lease as
specifically noted on Schedule C, there are no options, rights of first refusal
or conditional sales agreements regarding the purchase and sale of the Real
Property.
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(17) There are no oral or written leases or rights of
occupancy or grants or claims of right, title or interest in any portion of the
Property other than the leases (the "Leases") listed on the rent roll attached
hereto as Exhibit "C". No tenant has advised Seller that Seller is in default
under any of the Leases, or asserted any claim or basis for any claim for free
or reduced rent or right of setoff against the landlord or the rent under the
Leases, and Seller and its agent have no actual knowledge of any default or any
event which has taken place which, with the passage of time, or the delivery of
notice, or both, could become an event of default. Seller has the sole right to
collect rents under the Leases, and neither such right nor any of the Leases has
been assigned, pledged, hypothecated or otherwise encumbered by Seller except as
additional collateral for the existing mortgage upon the Property which shall be
satisfied at or before Closing. No holder of any such collateral assignment has
asserted or exercised any of its right to collect such rents. Each of the
Leases is valid and subsisting and in full force and effect, the tenant is in
actual possession in the normal course, and the rents set forth in Exhibit "C"
are the actual rents, income and charges being collected by Seller under the
Leases. All obligations of Seller which it is required to complete pursuant to
any Lease (or any unsigned lease proposal or lease amendment) has been completed
as of this date or shall be completed as of Closing, and all costs therefore
have been or shall be paid by Seller, and all of Seller's work has or shall have
been accepted by the Tenant without exception on or before Closing, other than
routine punch list items, which items shall remain the responsibility of Seller
following Closing, and which obligation shall expressly survive Closing. The
amount of each security deposit contains, where required by law or otherwise
applicable, interest which has accrued in accordance with law. No tenant of the
Property under any of the Leases has, and shall not at Closing have, prepaid any
rent under any of the Leases for more than one (1) month. Except as otherwise
set forth on Exhibit "C", no security deposits by tenants have heretofore been
returned or applied to charges against the tenants.
(18) To the best of Seller's knowledge, the Property
and the continued operation and use thereof comply with all applicable
requirements of federal, state and local law, and all applicable requirements of
governmental bodies or agencies having jurisdiction thereof, no portion of the
Property lies within a flood hazard area, flood plain or wetland; and there are
no outstanding notices of any violations issued by governmental authority having
jurisdiction over the Property.
(19) To the best of Seller's knowledge, no Hazardous
Substances (defined below) and no Hazardous Wastes (defined below) are present
on the Property including, without limitation, asbestos, flammable substances,
explosives, radioactive materials, hazardous wastes, toxic substances,
pollutants, pollution, contaminant, polychlorinated bypheryls ("PCBs"), urea
formaldehyde foam insulation, radon, corrosive, irritant, biologically
infectious materials, petroleum product, garbage, refuse, sludge, hazardous or
waste materials, and there has been no use of the Property that may, under any
federal, state or local environmental statute, ordinance or regulation, require,
at any time, any closure or cessation of the use or occupancy of the Property
and/or impose, at any time, upon the owner of the Property any clean-up or other
monetary obligation. Seller hereby indemnifies and holds Buyer harmless
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of, from and against any and all liability, loss or damage suffered or incurred
as a result of a claim, demand, cost or judgment in favor of a third party,
including, without limitation, any governmental authority, arising from the
deposit, storage, disposal, burial, dumping, injecting, spilling, leaking, or
other placement or release in or on the Property of Hazardous Substances or
Wastes during Seller's period of ownership. To the best of Seller's knowledge,
neither the Property nor any portion thereof, have been identified on the
federal CERLIS, the National Priorities List (40 C.F.R. Part 300, App. B) or
any state or local list of potential hazardous waste disposal sites or as an
industrial establishment. Seller has conducted a complete and thorough
inspection and test of the underground storage tanks located on the Property, if
any, and Seller has confirmed that, to the best of its knowledge, the results
thereof show compliance with all requirements of the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C. Sections 6901 et seq. and all other applicable
federal, state and local laws, and Seller has taken all other necessary and
appropriate action to comply fully therewith.
(20) To the best of Seller's knowledge, all adequate
utilities, useable public sanitary and storm sewers, public water facilities,
electric facilities and, if any, gas facilities (collectively, the "Utilities"),
are installed in, and are duly connected to, the Real Property, and can be used
without charge except the normal and usual metered utility charges and water and
sewer charges. All Utilities required for the operation of the Property either
enter the Property through adjoining public streets or, if they pass through
adjoining public land, do so in accordance with valid public easements or
private easements which will inure to the benefit of Buyer at no cost to the
owner of the Property. All of said Utilities are installed and operating and
all installation, connection and "tap-in" charges have been paid for in full.
(21) No work has been performed or is in progress
at, and no materials have been furnished to the Property which, though not
presently the subject of, might give rise to construction, mechanic's,
materialmen's, municipal or other liens against the Property or any portion
thereof, except that for which full and complete releases have been obtained.
If any lien for any such work is filed before or after Closing, Seller shall
promptly discharge the same.
(22) To the best of Seller's knowledge, none of the
artwork being a part of the Personal Property was prepared on a "work for hire"
basis and none of the artwork was commissioned after 1991.
(23) To the best of Seller's knowledge, all
applicable charges, fees and assessments (including condominium fees, to the
extent applicable) and any and all other sums due under declarations,
cross-easements and like agreements to which the Property or any portion thereof
may be subject, have been paid, and no special assessments thereunder are
pending, and all consents and approvals required to be obtained under any such
declarations, cross-easements and like agreements have been obtained pursuant to
the requirements of such documentation.
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(24) To the best of Seller's knowledge, all debts,
liabilities, and obligations of Seller arising out of the construction,
ownership, and operation of the Property including, but not limited to,
construction costs, salaries, taxes, accounts payable and the like, have been
paid as they became due and payable and shall continue to be so paid from the
date hereof until the Closing Date.
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. 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 $50,000 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
$50,000 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 actual 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.
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(b) Buyer hereby represents and warrants as follows, all of
which shall be true and correct at, and as of, the date hereof:
(1) 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.
(2) 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.
(3) 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.
(4) 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.
(5) 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.
(6) 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.
(7) 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, N.A.
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Buyer acknowledges that its obligations hereunder are not conditioned upon any
third party financing or capital infusion by another party.
(8) 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), and all such representations
shall survive for a period of one year from the Closing.
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 Property 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 Property shall
be subject to the rights of the Tenants of any of the Real Property, who shall
not be unreasonably disturbed during any such inspection by Buyer. Buyer shall
not engage in any activity in or about the Real Property 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 Property, 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
Property 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 Property and Personal Property to their respective
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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 Property 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
Property. 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 Property shall maintain public liability insurance policies
(naming Seller as an additional named insured with respect to any liability
occurring on the Real Property), 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 Property. 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 Property.
(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 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 Property.
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 the Property with zoning, licensing and all other
governmental requirements, Leases for any of the Real Property, operating
statements pertaining to the Property and all other aspects and conditions of
the Property 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
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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 shall use its commercially reasonable efforts to
obtain a Non-Applicability Letter for the Land promptly after the Effective
Date, and shall pursue the same diligently and in good faith.
(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 "O". 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 at
least 75% of the Tenants at each Property, including those identified on Exhibit
"P" 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, 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.
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 Property, 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 Property is commenced, Seller agrees promptly to
notify Buyer thereof. In the event of a material taking of one or more Real
Property 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
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payable with respect thereto; or (y) terminate this Agreement with respect to
the Property 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 Property, and at Closing, Buyer shall pay to Seller the aggregate of the
Allocated Prices for the remaining Real Property. 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
Property so damaged, an amount equal to or less than ten percent (10%) of the
Purchase Price for such Real Property, there shall be no abatement or adjustment
in the Purchase Price 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
Property 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 Property 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 Property is an amount which is greater than ten
percent (10%) of the Purchase 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
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Agreement with respect to the Property which have suffered damage to the
Improvements by fire or other casualty in an amount which exceeds ten percent
(10%) of the Purchase 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 Property, and at Closing, Buyer shall pay to Seller the aggregate of the
Purchase Prices for the remaining Real Property. 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 Property 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 Property
from sale to the general public at a time when other parties would be interested
in purchasing such Real Property, 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.
(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") for the entire Paint Works Property and the Other Properties
or (Y) to seek specific performance of Seller's obligation to convey the Real
Property in accordance with this Agreement. If Buyer 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 Property, 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
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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 the Property between the Execution
Date and the Closing Date in the same general manner as Seller has operated the
Property 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 obligations of landlord
under the Leases and all other agreements and contractual arrangements affecting
the Real Property by which Seller is bound or to which the Real Property, 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 agreement affecting the Real Property,
or any portion or portions thereof.
(d) No contract for or on behalf of or affecting the Real
Property 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 Property. Any new lease
shall be on Buyer'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 Property, or any portion thereof, without
the prior written consent of Buyer, 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.
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(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.
(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 Property, 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
Property, or any portion thereof;
(iii) Notice of any actual or threatened litigation
against Seller or affecting or relating to the Real Property, or any portion
thereof which may materially and adversely affect the Real Property or Seller's
ability to consummate the transactions contemplated by this Agreement; and
(iv) Vacancy of any demised Property by a tenant, other than
in accordance with a scheduled lease termination.
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 Property, 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,
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FUNCTIONAL, ENVIRONMENTAL OR PHYSICAL CONDITION OF THE Property INCLUDING,
WITHOUT LIMITATION: (i) THE VALUE, CONDITION, MERCHANTABILITY, MARKETABILITY,
PROFITABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE OF ANY OF
THE PROPERTY, (ii) THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS
INCORPORATED INTO ANY OF THE Property AND (iii) THE MANNER, QUALITY, STATE OF
REPAIR OR LACK OF REPAIR OF ANY OF THE PROPERTY. BUYER AGREES THAT WITH RESPECT
TO THE PROPERTY, 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 BUYER 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 THE PROPERTY 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 THE PROPERTY "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
PROPERTY BY SELLER, ANY AGENT OF SELLER OR ANY THIRD PARTY. BUYER EXPRESSLY
AGREES THAT THE TERMS AND 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 PROPERTY 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.
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17. Conditions Precedent to Closing.
The obligations of Buyer hereunder are subject to the fulfillment of
the following conditions prior to or on the Closing Date (any one of which may
be waived in whole or in part by Buyer at or prior to the Closing) and in the
event any of the conditions are not complied with, Buyer may terminate this
Agreement by notifying the Seller and Escrow Agent and thereupon shall be
returned the Deposit and thereafter this Agreement shall be null and void:
(a) Correctness of Warranties and Representations. The
warranties and representations made by Seller in this Agreement shall be true
and correct on the Closing Date as though such representations and warranties
were made on the Closing Date (except for changes in the Leases permitted under
the terms of this Agreement).
(b) Compliance with Terms and Conditions. Seller shall have
performed and complied with all of the terms and conditions required by this
Agreement to be performed and complied with by it prior to or on the Closing
Date.
(c) Buyer's Satisfaction with Inspection. Buyer shall have
notified Seller of Buyer's satisfaction with the inspection performed under
Section 11 of this Agreement, or shall fail to notify Seller on or before the
Due Diligence Expiration Date, of Buyer's dissatisfaction with the results of
such review.
18. Brokers.
(a) Seller and Buyer each represent to the other that 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 18(a) hereof.
(c) The provisions of this Paragraph 18 shall survive Closing
hereunder, or any other termination of this Agreement.
19. 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):
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If to Buyer, addressed to:
Brandywine Operating Partnership, L.P.
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
Attn: Gerard H. Sweeney,
President and Chief Executive Officer
with a copy in each instance to:
Brad A. Molotsky, General Counsel
Brandywine Operating Partnership, L.P.
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
If to Seller, addressed to:
Paint Works Corporate Associates-H
20 E. Clementon Road, Suite 201
Gibbsboro, New Jersey 08026
Attention: R. Randle Scarborough
with a copy in each instance to:
Kelly Young, Esquire
20 East Clementon Road, Suite 202
Gibbsboro, New Jersey 08026
If to Escrow Agent, addressed to:
M. Gordon Daniels, Esquire
Commonwealth Land Title Insurance Company
1700 Market Street
Philadelphia, Pennsylvania 19103
or to such-other address or addresses and to the attention of such other person
or persons as any of the parties may notify the other in accordance with the
provisions of this Agreement. All such notices, requests and other
communications shall be deemed to have been sufficiently given for
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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 delivery)
by the party to whom such notice is sent. Notices by the parties may be given
on their behalf by their respective attorneys.
20. Successors And Assigns. Except to a subsidiary or related party,
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.
21. 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.
22. 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.
23. 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.
24. Captions And Recitals. The captions contained herein are not a
part of this Agreement and are included solely for the convenience of the
parties.
25. Entire Agreement. This Agreement and the Exhibits and Schedules
attached hereto 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.
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<PAGE>
26. 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.
(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.
27. 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 Property, it shall conduct such investigation of the Property 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.
28. Limitation Of Liability. No recourse shall be had for any
obligation of Brandywine Realty Trust or Brandywine Operating Partnership, L.P.
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 or Brandywine Operating Partnership, L.P., 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.
Except for a breach of the representations or warranties as stated
herein which shall be full recourse to the general partners of Seller, no
recourse shall be had for any obligation of Seller under this Agreement or under
any document executed in connection herewith or
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pursuant hereto, or for any claim based thereon or otherwise in respect thereof,
against any past, present or future partner or employee of Seller 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 Buyer and all parties claiming by, through or under Buyer.
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 Property, which
information is relevant and reasonably necessary, in the opinion of Buyer's
outside, third party accountants (the "Accountants"), to enable Buyer and its
Accountants to prepare financial statements in compliance with any or all of (a)
Rule 3-05 or 3-14 of Regulation S-X of the Securities and Exchange Commission
(the "Commission"), as applicable; (b) any other rule issued by the Commission
and applicable to Buyer; and (c) any registration statement, report or
disclosure statement filed with the Commission by, or on behalf of Buyer.
Seller shall deliver to Buyer's accountants a representation letter (the
"Letter"), in the form annexed hereto as Exhibit "Q", provided that Buyer (and
any assignee or designee acquiring title to the Real Property) 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.
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.
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<PAGE>
32. Tender. Formal tender of an executed deed and purchase money is
hereby waived by Buyer.
33. Further Assurances. After the Closing, 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.
36. Indemnification.
Without limitation of any other Seller indemnity obligations set forth
herein, from and after the Closing Date, Seller shall indemnify, defend and save
and hold harmless Buyer, and its respective trustees, directors, officers and
employees, of, from and against any and all loss, cost, expense, damage, claim,
and liability, including reasonable attorney's fees and court costs, including,
without limitation, attorney's fees and costs associated with the enforcement of
Seller's indemnification obligations for all claims brought within one year of
such Closing (hereinafter collectively, "Losses") which Buyer may suffer or
incur, resulting from, relating to, or arising in whole or in part, from or out
of (i) any misrepresentation or breach of a representation or warranty by Seller
contained in this Agreement; (ii) any failure to fulfill any covenant or
agreement of Seller contained in this Agreement; (iii) all litigation as set
forth in this Agreement and on Exhibits hereto; (iv) any and all actions, suits,
investigations, proceedings, demands, assessments, audits, judgments, and/or
claims arising out of or relating to any of the foregoing.
Promptly after receipt by Buyer of written notice of the commencement
of any suit, audit, demand, judgment, action, investigation or proceeding (a
"Third Party Action") or promptly after Buyer incurs a Loss or has knowledge of
the existence of a Loss, Buyer will, if a claim with respect thereto is to be
made against Seller due to Seller's obligation to provide indemnification
hereunder, give Seller written notice of such Loss or the commencement of any
Third Party Action; provided, however, that the failure to provide such notice
within a reasonable
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period of time shall not relieve Seller of any of its obligations hereunder.
Promptly after receiving such notice, Seller will, upon notice to Buyer, have
the right to assume and control the defense and settlement of any such Third
Party Action at its own cost and expense; provided, however, that it shall be a
condition precedent to the exercise of such right by Seller that Seller shall
agree in writing that the Loss, or Third Party Action, as the case may be, is
properly within the scope of the indemnification obligation and that as between
the parties, Seller shall be responsible to satisfy and discharge such Third
Party Action. Seller shall not enter into any resolution or other compromise of
a Third Party Action without obtaining the complete release of Buyer for any
liability to all claimants under or pursuant to such Third Party Action. Buyer
shall have the right to participate in any such defense, contest or other
protective action at its own cost and expense.
Notwithstanding the foregoing, Buyer shall have the right to assume
and control the defense and settlement of a Third Party Action (a) if such
action includes claims for equitable relief which, if determined adversely to
Buyer, could reasonably be expected to interfere with its intended business
operations or damage its business reputation or (b) if Seller fails to do so in
a timely manner. In any circumstances in which Buyer undertakes to control the
Third Party Action as provided in this paragraph, it shall (i) not enter into
any resolution or other compromise involving monetary damages without obtaining
the prior written consent of Seller provided that such written consent may not
be withheld if it would interfere with Buyer's business operation and (ii) keep
Seller informed on an ongoing basis of the status of such Third Party Action and
shall deliver to Seller, copies of all documents related to the Third Party
Action reasonably requested by Seller. Buyer shall act to assure that all
attorneys' fees and expenses incurred in connection therewith are reasonable.
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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:
PAINT WORKS CORPORATE
ASSOCIATES-W, a New Jersey general
partnership
By: /s/R. Randle Scarborough
------------------------------
R. Randle Scarborough, its
authorized general partner
By: /s/Robert K. Scarborough
------------------------------
Robert K. Scarborough, its
authorized managing general
partner
By: /s/Kevin D. Scarborough
------------------------------
Kevin D. Scarborough, its
authorized general partner
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
Commonwealth Land Title Insurance Company:
By: /s/M. Gordon Daniels
------------------------------
M. Gordon Daniels
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<PAGE>
55 UNITED STATES AVENUE
AGREEMENT OF SALE
Between
PAINT WORKS CORPORATE ASSOCIATES-W
and
BRANDYWINE REALTY TRUST
Dated as of December 5, 1997
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LIST OF EXHIBITS
Exhibit A Description of Land
Exhibit B List of Contracts
Exhibit C Certified Rent Roll
Exhibit D Permitted Exceptions
Exhibit E Excluded Personal Property
Exhibit F The Other Properties
Exhibit G Form of Deed
Exhibit H Bill of Sale
Exhibit I Form of Assignment(s)
Exhibit J Form of Non-Foreign Person Certification
Exhibit K Pending Litigation
Exhibit L Contracts Not Terminable with 30 days Notice
Exhibit M Environmental Notices
Exhibit N Outstanding Brokerage Commissions and TI
Exhibit O Form of Estoppel Certificate
Exhibit P Identified Tenants
Exhibit Q Representation Letter
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Exhibit 10.8
50 EAST CLEMENTON DRIVE
AGREEMENT OF SALE
THIS AGREEMENT OF SALE is made and entered into as of the 5th day of
December, 1997 by and between PAINT WORKS CORPORATE ASSOCIATES-H, a New Jersey
general partnership having its principal office at Scarborough Properties, 20
East Clementon Road, Suite 201, Gibbsboro, New Jersey 08026 ("Seller") and
BRANDYWINE REALTY TRUST, a Maryland real estate investment trust or its nominee,
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 a certain tract of land being comprised of one
(1) parcel of property, being Lot 2, Block 8.01 and Lot 19.05, Block 7.04,
together with the building and improvements thereon, including one bank building
containing approximately 3,910 net rentable square feet, commonly known as 50
East Clementon Road and the parking lot appurtenant thereto, Gibbsboro, New
Jersey as more fully described on Exhibit A-1 attached hereto; and
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
Property (as hereinafter defined), subject to and on the terms and conditions
hereinafter set forth. Seller also desires to grant and Buyer desires to
receive an Option to purchase the Option Land (as hereinafter defined).
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.
"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.
<PAGE>
"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 Property, 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
December 9, 1997.
"Effective Date" shall mean the date on which this Agreement has
been fully executed and delivered by both parties hereto to each other.
"Escrow Agent" shall mean Commonwealth Land Title Insurance
Company, 1700 Market Street, Philadelphia, Pennsylvania 19103.
"Escrow Terms" shall mean the escrow agreement to be entered of
even date herewith between Title Company, Buyer and Seller.
"Improvements" shall mean those certain buildings and other
improvements constructed and located on the Land as described on Exhibit A.
"Land" shall mean that certain parcel of real property located at
50 East Clementon Road, and the parking lot appurtenant thereto, Gibbsboro, New
Jersey.
"Leases" shall mean those certain leases (and guarantees thereof,
if any) listed on Exhibit "C" 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 Property.
"Parking Lot Site" means Lot 19.05, Block 7.04.
"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
Property (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 "D"
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to this Agreement, (iv) special assessments which become a lien on any of the
Real Property on or after the Closing Date, and (v) 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 Property pursuant to the Leases for all or any portion of any of the
Real Property.
"Personal Property" shall (except as specifically excluded on
Exhibit "E" 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 Property on the Closing Date, and all artwork, renderings, flags, awnings
and trade dress; all architects', engineers', surveyors' and other real estate
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 "50 East Clementon Road" and
"Silver Lake."
"Property" shall mean the Real Property and such of the
Contracts, Leases, Licenses, Personal Property and other rights, titles,
interests and obligations which pertain to the Real Property and are intended to
be conveyed, sold or otherwise transferred to Buyer by Seller pursuant to this
Agreement.
"Real Property" shall mean the Land, the Option Land and the
Improvements.
"Tenants" shall mean the tenants under the Leases.
2. Acquisition Of The Property. 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 Property;
(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 Property;
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(d) to the extent assignable to Buyer and approved by Buyer, all
right, title and interest of Seller in and to the Contracts and the Licenses
relating to any of the Real Property;
(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 Property shall be Three
Million Two Hundred Thousand Dollars ($3,200,000), as adjusted pursuant to
Paragraph 7 of this Agreement, which shall be paid to Seller in the following
manner:
(a) Twenty Thousand Dollars ($20,000) (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. In addition thereto, by
delivery, within two (2) business days next following the Due Diligence
Expiration Date of Buyer's good check in the amount of $10,000.
(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
conditioned upon the closing of the sale of the other properties identified on
Exhibit "F" attached hereto (the "Other Properties"), so that no one or more of
the Other Properties and the Property hereunder may be sold without all of the
Property being sold unless expressly provided for in writing by the parties
hereto and in any event the Deposit hereunder and thereunder shall be deemed a
single deposit for the entire transaction.
4. Closing. The closing of the transaction contemplated by this
Agreement (the "Closing") shall be held on or before December 12, 1997, but in
any event no later than fifteen (15) days next following the Due Diligence
Expiration Date, at the offices of Brandywine Realty Trust, Plaza 1000 at Main
Street, Suite 400, Voorhees, New Jersey, commencing at 10:00 a.m., time being of
the essence.
5. Title And Conveyance Of The Property.
(a) At Closing, title to the Real Property shall be insurable at
regular rates by Commonwealth Land 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
Property is not insurable as aforesaid, Buyer's sole right and remedy shall be
as set forth in paragraph 5(b) below.
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(b) (i) Buyer has applied 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 Property, 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 Property
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 prior to the Due Diligence Termination Date, together
with 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 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 thirty (30) days to enable Seller to effect such cure.
(ii) 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
canceled 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.
(iii) Notwithstanding the provisions of the foregoing
paragraph, if the condition of title to the Real Property at the Closing is
other than that which Buyer is required or agrees to accept hereunder solely by
reason of any mortgages or other monetary liens
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(hereinafter referred to as "Liens") which can be satisfied or remedied by
the payment of a liquidated amount of money to the extent of the Purchase
Price, 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.
(iv) 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 (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 the expiration of the Due Diligence, 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 Real
Property by a Bargain and Sale Deed with covenant against grantor's acts
(collectively, the "Deeds"), subject in all cases to the Permitted Exceptions,
in the forms attached hereto and made a part hereof as Exhibit "G".
(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
"H".
(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 the
Property, by executing an Assignment and Assumption Agreement in the form
attached hereto and made a part hereof as Exhibit "I" (the "Assignments").
(g) At least 3 days before Closing, Seller shall present Buyer
with Seller's proposed subdivision plan for the Property, dividing it into three
(3) parcels, one of which includes the Bank site, one of which includes a site
designed for conveyance to a restaurant use (the "Restaurant Site"), and one
designated as a lot for future development (the "Development Lot"). Seller
covenants and agrees to diligently prosecute the subdivision of the Property, as
approved by Buyer, at Seller's sole cost and expense (the "Proposed Subdivision
Plan"), so that final, unappealable approval is obtained on or before December
15, 1998.
Upon obtaining final unappealable subdivision approval, Seller
shall deliver a copy of said resolution to Buyer. Thereafter, Seller shall
diligently commence and complete construction of the approved Restaurant Site.
Upon ten (10) days written notice to
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Buyer after obtaining a final Certificate of Occupancy for the Restaurant,
Buyer shall convey the Restaurant Site to Seller or its nominee for $10.00
and other good and valuable consideration (including the hook-up of the
Restaurant Site to dedicated sanitary sewer). The deed to the Restaurant
Site shall contain a right of first refusal for the re-sale of the Restaurant
Site to Buyer pursuant to the terms and conditions fo a bona-fide, third
party written offer.
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 Deed, executed by Seller, covering the Real
Property (and separate quitclaim deeds to the Real Property 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;
(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 Property 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 "J";
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(ix) All building records and Tenant lease files with
respect to the Real Property 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;
(xiii) A letter, from the New Jersey Department of
Environmental Protection or its successor ("NJDEP") 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 Real Property (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.
(xvii) Such affidavits of title or other certifications as
shall be required by the Title Company to insure Buyer's title to the Property
as set forth in Section 3, and to provide affirmative endorsements (a) against
mechanic's liens, (b) insuring against any violation of existing covenants,
conditions or restrictions, and insuring that future violation will not result
in forfeiture of title, (c) insuring that all foundations in place as of the
date of such policy are within the lot lines and applicable set back lines, (d)
insuring that the buildings and structures on the Property do not encroach onto
adjoining land or onto any easements, (e) insuring that confirming that there
are no encroachments of improvements from adjoining land onto the Property (f)
removing any exceptions for matters which an accurate survey would
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disclose, and (g) providing affirmative insurance with respect to such other
matters as Buyer or its lender shall specify.
(xviii) A mutually agreed upon form of development
agreement for the Bank site, such agreement to be recorded at Closing in the
Clerk Office for Camden County.
(xix) A mutually agreed upon for of Covenants,
Conditions and Restrictions to be filed against and which shall bind the Bank
Site, the Development Site and the Restaurant Site.
(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; and
(ii) The Assignments, executed by Buyer.
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 Property, 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 Property 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 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 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.
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All Contracts and other obligations in connection with the Property, 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 Property 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 Property 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 Property 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 stamps imposed in connection with the recordation of the Deeds for the
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. If any tenant is in arrears in the payment of rent
or additional rent on the Closing Date, rents received from such tenant ninety
(90) days after the Closing Date shall be applied in the following order of
priority: (a) to the Buyer, so long as such tenant is in arrears for current or
prior rent arising after Closing, then (b) to Seller for all rent in arrears
prior to the Closing Date; and then (c) to Buyer with no further claim by Seller
thereto. Except as herein provided, Buyer is not under any obligation to
collect rents in arrears for the benefit of Seller. Any rents which are
delinquent or otherwise not paid at the time of Closing, and collected by Buyer
or Seller within ninety (90) days after Closing shall be apportioned as
aforesaid and the portion to which Seller is entitled shall be promptly remitted
by Buyer to Seller. Seller shall have no claim to rents collected ninety (90)
days after the Closing Date. 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
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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 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 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
Property. Buyer shall assume, pay or reimburse (as applicable) Seller on the
Closing Date for 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 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 Property, provided
the same were approved by Buyer or are otherwise permitted as set forth in
Paragraph 15(e) hereof and provided that such costs are set forth on Exhibit
"C" hereto. 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 Property 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 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.
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8. Possession Of Property.
(a) Seller shall deliver possession to the 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) 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 general partnership duly organized and
validly existing under the laws of the State of New Jersey, and is in good
standing in such state.
(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 "K" 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 on Exhibit "K", 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 limited liability
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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 Property (the
"Personal Property Leases"); (iv) Licenses; (v) surveys; (vi) title reports;
(vii) engineering reports; and (viii) environmental reports.
(6) To the best of Seller's knowledge, (i) all of the
Leases, Contracts and Personal Property Leases and Licenses, 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 Property or the use or repair of the same
or of any alleged default by Seller under any such Lease, or Personal Property
Lease or License. Except as set forth on Exhibit "L", 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 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 Property 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.
Buyer shall be under no obligation to assume any of Seller's employees, it being
Seller's sole responsibility and obligation to provide severance arrangements,
if any, for all such employees. 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 Property or any portion thereof.
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(9) Except as set forth on Exhibit "M", 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 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 Property, 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 Property (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 "N" attached hereto and made a part hereof, all management
fees, leasing commissions and tenant improvement allowances are fully paid,
there are no brokerage commissions owing by Seller with respect to any of the
Leases or otherwise related to the Property 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 Property 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.
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(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 Property.
(16) Except as may be set forth in a Lease as
specifically noted on Exhibit "C", there are no options, rights of first refusal
or conditional sales agreements regarding the purchase and sale of the Real
Property.
(17) There are no oral or written leases or rights of
occupancy or grants or claims of right, title or interest in any portion of the
Property other than the leases (the "Leases") listed on the rent roll attached
hereto as Exhibit "C". No tenant has advised Seller that Seller is in default
under any of the Leases, or asserted any claim or basis for any claim for free
or reduced rent or right of setoff against the landlord or the rent under the
Leases, and Seller and its agent have no actual knowledge of any default or any
event which has taken place which, with the passage of time, or the delivery of
notice, or both, could become an event of default. Seller has the sole right to
collect rents under the Leases, and neither such right nor any of the Leases has
been assigned, pledged, hypothecated or otherwise encumbered by Seller except as
additional collateral for the existing mortgage upon the Property which shall be
satisfied at or before Closing. No holder of any such collateral assignment has
asserted or exercised any of its right to collect such rents. Each of the
Leases is valid and subsisting and in full force and effect, the tenant is in
actual possession in the normal course, and the rents set forth in Exhibit "C"
are the actual rents, income and charges being collected by Seller under the
Leases. All obligations of Seller which it is required to complete pursuant to
any Lease (or any unsigned lease proposal or lease amendment) has been completed
as of this date or shall be completed as of Closing, and all costs therefore
have been or shall be paid by Seller, and all of Seller's work has or shall have
been accepted by the Tenant without exception on or before Closing, other than
routine punch list items, which items shall remain the responsibility of Seller
following Closing, and which obligation shall expressly survive Closing. The
amount of each security deposit contains, where required by law or otherwise
applicable, interest which has accrued in accordance with law. No tenant of the
Property under any of the Leases has, and shall not at Closing have, prepaid any
rent under any of the Leases for more than one (1) month. Except as otherwise
set forth on Exhibit "C", no security deposits by tenants have heretofore been
returned or applied to charges against the tenants.
(18) To the best of Seller's knowledge, the Property
and the continued operation and use thereof comply with all applicable
requirements of federal, state and local law, and all applicable requirements of
governmental bodies or agencies having jurisdiction thereof, no portion of the
Property lies within a flood hazard area, flood plain or
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wetland; and there are no outstanding notices of any violations issued by
governmental authority having jurisdiction over the Property.
(19) To the best of Seller's knowledge, no Hazardous
Substances (defined below) and no Hazardous Wastes (defined below) are present
on the Property including, without limitation, asbestos, flammable substances,
explosives, radioactive materials, hazardous wastes, toxic substances,
pollutants, pollution, contaminant, polychlorinated bypheryls ("PCBs"), urea
formaldehyde foam insulation, radon, corrosive, irritant, biologically
infectious materials, petroleum product, garbage, refuse, sludge, hazardous or
waste materials, and there has been no use of the Property that may, under any
federal, state or local environmental statute, ordinance or regulation, require,
at any time, any closure or cessation of the use or occupancy of the Property
and/or impose, at any time, upon the owner of the Property any clean-up or other
monetary obligation. Seller hereby indemnifies and holds Buyer harmless of,
from and against any and all liability, loss or damage suffered or incurred as a
result of a claim, demand, cost or judgment in favor of a third party,
including, without limitation, any governmental authority, arising from the
deposit, storage, disposal, burial, dumping, injecting, spilling, leaking, or
other placement or release in or on the Property of Hazardous Substances or
Wastes during Seller's period of ownership. To the best of Seller's knowledge,
neither the Property nor any portion thereof, have been identified on the
federal CERLIS, the National Priorities List (40 C.F.R. Part 300, App. B) or
any state or local list of potential hazardous waste disposal sites or as an
industrial establishment. Seller has conducted a complete and thorough
inspection and test of the underground storage tanks located on the Property, if
any, and Seller has confirmed that, to the best of its knowledge, the results
thereof show compliance with all requirements of the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C. Sections 6901 et seq. and all other applicable
federal, state and local laws, and Seller has taken all other necessary and
appropriate action to comply fully therewith.
(20) To the best of Seller's knowledge, except for
sanitary sewer which shall be hooked up to the publically dedicated system for
the Bank Site by Seller at no additional cost to Buyer on or before December 31,
1998, all adequate utilities, useable public sanitary and storm sewers, public
water facilities, electric facilities and, if any, gas facilities (collectively,
the "Utilities"), are installed in, and are duly connected to, the Real
Property, and can be used without charge except the normal and usual metered
utility charges and water and sewer charges. All Utilities required for the
operation of the Property either enter the Property through adjoining public
streets or, if they pass through adjoining public land, do so in accordance with
valid public easements or private easements which will inure to the benefit of
Buyer at no cost to the owner of the Property. All of said Utilities are
installed and operating and all installation, connection and "tap-in" charges
have been paid for in full. If Buyer develops the Development Site or the
Parking Lot Site as an office building within twenty (20) years from the
Closing, Buyer shall pay Seller a sanitary sewer tap-in fee of $15,000 per site
as such sites are developed.
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(21) No work has been performed or is in progress
at, and no materials have been furnished to the Property which, though not
presently the subject of, might give rise to construction, mechanic's,
materialmen's, municipal or other liens against the Property or any portion
thereof, except that for which full and complete releases have been obtained.
If any lien for any such work is filed before or after Closing, Seller shall
promptly discharge the same.
(22) To the best of Seller's knowledge, none of the
artwork being a part of the Personal Property was prepared on a "work for hire"
basis and none of the artwork was commissioned after 1991.
(23) To the best of Seller's knowledge, all
applicable charges, fees and assessments (including condominium fees, to the
extent applicable) and any and all other sums due under declarations,
cross-easements and like agreements to which the Property or any portion thereof
may be subject, have been paid, and no special assessments thereunder are
pending, and all consents and approvals required to be obtained under any such
declarations, cross-easements and like agreements have been obtained pursuant to
the requirements of such documentation.
(24) To the best of Seller's knowledge, all debts,
liabilities, and obligations of Seller arising out of the construction,
ownership, and operation of the Property including, but not limited to,
construction costs, salaries, taxes, accounts payable and the like, have been
paid as they became due and payable and shall continue to be so paid from the
date hereof until the Closing Date.
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. 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 $50,000 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
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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 $50,000 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 actual 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:
(1) 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.
(2) 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.
(3) 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.
(4) There is no litigation, proceeding or action
pending, or, to the best of Buyer's knowledge, threatened against or relating to
Buyer which might
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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.
(5) 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.
(6) 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.
(7) 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, N.A. Buyer acknowledges that its
obligations hereunder are not conditioned upon any third party financing or
capital infusion by another party.
(8) 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), and all such representations
shall survive for a period of one year from the Closing.
10. Access To The Property.
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(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 Property 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 Property shall
be subject to the rights of the Tenants of any of the Real Property, who shall
not be unreasonably disturbed during any such inspection by Buyer. Buyer shall
not engage in any activity in or about the Real Property 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 Property, 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
Property 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 Property 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 Property 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
Property. 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 Property shall maintain public liability insurance policies
(naming Seller as an additional named insured with respect to any liability
occurring on the Real Property), 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 Property. 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 Property.
(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 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 Property.
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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 the Property with zoning, licensing and all other
governmental requirements, Leases for any of the Real Property, operating
statements pertaining to the Property and all other aspects and conditions of
the Property 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 shall obtain, prior to the Closing a
Non-Applicability Letter from the NJDEP.
(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 "O". 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 at
least 75% of the Tenants
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at each Property, including those identified on Exhibit "P" 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, 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.
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 Property, 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 Property is commenced, Seller agrees promptly to
notify Buyer thereof. In the event of a material taking of one or more Real
Property 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 the Property 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 Property, and at Closing, Buyer shall pay to Seller
the aggregate of the Allocated Prices for the remaining Real Property. 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.
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(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
Property so damaged, an amount equal to or less than ten percent (10%) of the
Purchase Price for such Real Property, there shall be no abatement or adjustment
in the Purchase Price 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
Property 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 Property 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 Property is an amount which is greater than ten
percent (10%) of the Purchase 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 the
Property which have suffered damage to the Improvements by fire or other
casualty in an amount which exceeds ten percent (10%) of the Purchase 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 Property, and at Closing,
Buyer shall pay to Seller the aggregate of the Purchase Prices for the remaining
Real Property. 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 Property 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 Property
from sale to the general public at a time when other parties would be interested
in purchasing such Real Property, that Seller shall have sustained damages which
will be
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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.
(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 for the
entire Paint Works Property) ("Due Diligence Costs") for the Property and the
Other Properties or (Y) to seek specific performance of Seller's obligation to
convey the Real Property in accordance with this Agreement. If Buyer 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 Property, 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 the Property between the Execution
Date and the Closing Date in the same general manner as Seller has operated the
Property 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 obligations of landlord
under the Leases and all other agreements and contractual arrangements affecting
the Real Property by which Seller is bound or to which the Real Property, 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 agreement affecting the Real Property,
or any portion or portions thereof.
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(d) No contract for or on behalf of or affecting the Real
Property 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 Property. Any new lease
shall be on Buyer'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 Property, or any portion thereof, without
the prior written consent of Buyer, 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.
(i) Seller shall notify Buyer promptly of the occurrence of any
of the following:
(i) Receipt of notice from any governmental or
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quasi-governmental agency or authority or insurance underwriter relating to the
condition, use or occupancy of the Real Property, 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
Property, or any portion thereof;
(iii) Notice of any actual or threatened litigation
against Seller or affecting or relating to the Real Property, or any portion
thereof which may materially and adversely affect the Real Property or Seller's
ability to consummate the transactions contemplated by this Agreement; and
(iv) Vacancy of any demised Property by a tenant, other than
in accordance with a scheduled lease termination.
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 PROPERTY, 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
PROPERTY INCLUDING, WITHOUT LIMITATION: (i) THE VALUE, CONDITION,
MERCHANTABILITY, MARKETABILITY, PROFITABILITY, SUITABILITY OR FITNESS FOR A
PARTICULAR USE OR PURPOSE OF ANY OF THE PROPERTY, (ii) THE MANNER OR QUALITY OF
THE CONSTRUCTION OR MATERIALS INCORPORATED INTO ANY OF THE PROPERTY AND (iii)
THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF ANY OF THE PROPERTY.
BUYER AGREES THAT WITH RESPECT TO THE PROPERTY, 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 BUYER 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 THE PROPERTY
AND ALL MATTERS PERTAINING THERETO
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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 THE PROPERTY "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 PROPERTY BY SELLER, ANY AGENT OF SELLER OR ANY THIRD PARTY. BUYER
EXPRESSLY AGREES THAT THE TERMS AND 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 PROPERTY 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. Conditions Precedent to Closing.
The obligations of Buyer hereunder are subject to the fulfillment of
the following conditions prior to or on the Closing Date (any one of which may
be waived in whole or in part by Buyer at or prior to the Closing) and in the
event any of the conditions are not complied with, Buyer may terminate this
Agreement by notifying the Seller and Escrow Agent and thereupon shall be
returned the Deposit and thereafter this Agreement shall be null and void:
(a) Correctness of Warranties and Representations. The
warranties and representations made by Seller in this Agreement shall be true
and correct on the Closing Date as though such representations and warranties
were made on the Closing Date (except for changes in the Leases permitted under
the terms of this Agreement).
(b) Compliance with Terms and Conditions. Seller shall have
performed and complied with all of the terms and conditions required by this
Agreement to be performed and complied with by it prior to or on the Closing
Date.
(c) Buyer's Satisfaction with Inspection. Buyer shall have
notified Seller of Buyer's satisfaction with the inspection performed under
Section 11 of this Agreement, or shall fail to notify Seller on or before the
Due Diligence Expiration Date, of Buyer's dissatisfaction with the results of
such review.
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<PAGE>
18. Brokers.
(a) Seller and Buyer each represent to the other that 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 18(a) hereof.
(c) The provisions of this Paragraph 18 shall survive Closing
hereunder, or any other termination of this Agreement.
19. 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 to Buyer, addressed to:
Brandywine Operating Partnership, L.P.
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
Attn: Gerard H. Sweeney,
President and Chief Executive Officer
with a copy in each instance to:
Brad A. Molotsky, General Counsel
Brandywine Operating Partnership, L.P.
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
If to Seller, addressed to:
Paint Works Corporate Associates-H
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<PAGE>
20 E. Clementon Road, Suite 201
Gibbsboro, New Jersey 08026
Attention: R. Randle Scarborough
with a copy in each instance to:
Kelly Young, Esquire
20 East Clementon Road, Suite 202
Gibbsboro, New Jersey 08026
If to Escrow Agent, addressed to:
M. Gordon Daniels, Esquire
Commonwealth Land Title Insurance Company
1700 Market Street
Philadelphia, Pennsylvania 19103
or to such-other address or addresses and to the attention of such other person
or persons as any of the parties may notify the other in accordance with the
provisions of this Agreement. 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 delivery) by the party
to whom such notice is sent. Notices by the parties may be given on their
behalf by their respective attorneys.
20. Successors And Assigns. Except to a subsidiary or related party,
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.
21. 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.
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<PAGE>
22. 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.
23. 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.
24. Captions And Recitals. The captions contained herein are not a
part of this Agreement and are included solely for the convenience of the
parties.
25. Entire Agreement. This Agreement and the Exhibits and Schedules
attached hereto 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.
26. 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.
(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.
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<PAGE>
27. 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 Property, it shall conduct such investigation of the Property 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.
28. Limitation Of Liability. No recourse shall be had for any
obligation of Brandywine Realty Trust or Brandywine Operating Partnership, L.P.
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 or Brandywine Operating Partnership, L.P., 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.
Except for breaches of the obligations, representations and warranties
set forth in Section 9 and 18 hereunder which shall be full recourse obligations
to the general partners of Seller, no recourse shall be had for any obligation
of Seller 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 officer, director or
employee of Seller 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 Buyer and all parties claiming by, through
or under Buyer.
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 Property, which
information is relevant and reasonably necessary, in the opinion of Buyer's
outside, third party accountants (the "Accountants"), to enable Buyer and its
Accountants to prepare financial statements in compliance with any or all of (a)
Rule 3-05 or 3-14 of Regulation S-X of the Securities and Exchange Commission
(the "Commission"), as applicable; (b) any other rule issued by the Commission
and applicable to Buyer; and -C- any registration statement, report or
disclosure statement filed with the Commission by, or on behalf of Buyer.
Seller shall deliver to Buyer's accountants a representation letter (the
"Letter"), in the form annexed hereto as Exhibit "Q", provided that Buyer (and
any assignee or designee acquiring title to the Real Property) shall
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<PAGE>
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.
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. Formal tender of an executed deed and purchase money is
hereby waived by Buyer.
33. Further Assurances. After the Closing, 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.
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<PAGE>
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.
36. Indemnification.
Without limitation of any other Seller indemnity obligations set forth
herein, from and after the Closing Date, Seller shall indemnify, defend and save
and hold harmless Buyer, and its respective trustees, directors, officers and
employees, of, from and against any and all loss, cost, expense, damage, claim,
and liability, including reasonable attorney's fees and court costs, including,
without limitation, attorney's fees and costs associated with the enforcement of
Seller's indemnification obligations for all claims brought within one year of
such Closing (hereinafter collectively, "Losses") which Buyer may suffer or
incur, resulting from, relating to, or arising in whole or in part, from or out
of (i) any misrepresentation or breach of a representation or warranty by Seller
contained in this Agreement; (ii) any failure to fulfill any covenant or
agreement of Seller contained in this Agreement; (iii) all litigation set forth
in this Agreement and on Exhibits hereto; (iv) any and all actions, suits,
investigations, proceedings, demands, assessments, audits, judgments, and/or
claims arising out of or relating to any of the foregoing.
Promptly after receipt by Buyer of written notice of the commencement
of any suit, audit, demand, judgment, action, investigation or proceeding (a
"Third Party Action") or promptly after Buyer incurs a Loss or has knowledge of
the existence of a Loss, Buyer will, if a claim with respect thereto is to be
made against Seller due to Seller's obligation to provide indemnification
hereunder, give Seller written notice of such Loss or the commencement of any
Third Party Action; provided, however, that the failure to provide such notice
within a reasonable period of time shall not relieve Seller of any of its
obligations hereunder. Promptly after receiving such notice, Seller will, upon
notice to Buyer, have the right to assume and control the defense and settlement
of any such Third Party Action at its own cost and expense; provided, however,
that it shall be a condition precedent to the exercise of such right by Seller
that Seller shall agree in writing that the Loss, or Third Party Action, as the
case may be, is properly within the scope of the indemnification obligation and
that as between the parties, Seller shall be responsible to satisfy and
discharge such Third Party Action. Seller shall not enter into any resolution
or other compromise of a Third Party Action without obtaining the complete
release of Buyer for any liability to all claimants under or pursuant to such
Third Party Action. Buyer shall have the right to participate in any such
defense, contest or other protective action at its own cost and expense.
Notwithstanding the foregoing, Buyer shall have the right to assume
and control the defense and settlement of a Third Party Action (a) if such
action includes claims for equitable
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<PAGE>
relief which, if determined adversely to Buyer, could reasonably be expected
to interfere with its intended business operations or damage its business
reputation or (b) if Seller fails to do so in a timely manner. In any
circumstances in which Buyer undertakes to control the Third Party Action as
provided in this paragraph, it shall (i) not enter into any resolution or
other compromise involving monetary damages without obtaining the prior
written consent of Seller provided that such written consent may not be
withheld if it would interfere with Buyer's business operation and (ii) keep
Seller informed on an ongoing basis of the status of such Third Party Action
and shall deliver to Seller, copies of all documents related to the Third
Party Action reasonably requested by Seller. Buyer shall act to assure that
all attorneys' fees and expenses incurred in connection therewith are
reasonable.
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<PAGE>
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:
PAINT WORKS CORPORATE ASSOCIATES-H, a New
Jersey general partnership
By: /s/R. Randle Scarborough
-------------------------------------
R. Randle Scarborough, its authorized
general partner
By: /s/Robert K. Scarborough
-------------------------------------
Robert K. Scarborough, its authorized
managing general partner
By: /s/Kevin D. Scarborough
--------------------------------------
Kevin D. Scarborough, its authorized
general partner
By: /s/Olive A. Scarborough
---------------------------------------
Olive A. Scarborough, its authorized
general partner
BUYER:
BRANDYWINE REALTY TRUST, a
Maryland Real Estate Investment Trust
By: /s/Gerard H. Sweeney
--------------------------------------
Name: Gerard H. Sweeney
Title: President & CEO
Executions Continued
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<PAGE>
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
Commonwealth Land Title Insurance Company:
By: /s/M. Gordon Daniels
------------------------
M. Gordon Daniels
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<PAGE>
EXECUTION
50 EAST CLEMENTON ROAD
AGREEMENT OF SALE
Between
PAINT WORKS CORPORATE ASSOCIATES-H
and
BRANDYWINE REALTY TRUST
Dated as of December 5, 1997
<PAGE>
LIST OF EXHIBITS
Exhibit A Description of Land
Exhibit B List of Contracts
Exhibit C Certified Rent Roll
Exhibit D Permitted Exceptions
Exhibit E Excluded Personal Property
Exhibit F The Other Properties
Exhibit G Form of Deed
Exhibit H Bill of Sale
Exhibit I Form of Assignment(s)
Exhibit J Form of Non-Foreign Person Certification
Exhibit K Pending Litigation
Exhibit L Contracts Not Terminable with 30 days Notice
Exhibit M Environmental Notices
Exhibit N Outstanding Brokerage Commissions and TI
Exhibit O Form of Estoppel Certificate
Exhibit P Identified Tenants
Exhibit Q Representation Letter
<PAGE>
Exhibit 10.9
501 SCARBOROUGH DRIVE
AGREEMENT OF SALE
THIS AGREEMENT OF SALE is made and entered into as of the 5th day of
December, 1997 by and between English Creek Partners #1, Limited Partnership, a
New Jersey limited liability corporation having its principal office at
Scarborough Properties, 20 East Clementon Road, Suite 201, Gibbsboro, New Jersey
08026 ("Seller") and BRANDYWINE REALTY TRUST, a Maryland real estate investment
trust or its nominee, 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 a certain tract of land being comprised of one
(1) parcel of property, being Lot 31, Block 1603, together with the building
and improvements thereon, including one office building containing approximately
44,750 square feet, commonly known as 501 Scarborough Drive, Egg Harbor, New
Jersey as more fully described on Exhibit A attached hereto; and
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
Property (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.
"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.
<PAGE>
"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 Property, 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
December 9, 1997.
"Effective Date" shall mean the date on which this Agreement has
been fully executed and delivered by both parties hereto to each other.
"Escrow Agent" shall mean Commonwealth Land Title Insurance
Company, 1700 Market Street, Philadelphia, Pennsylvania 19103.
"Escrow Terms" shall mean the escrow agreement to be entered of
even date herewith between Title Company, Buyer and Seller.
"Improvements" shall mean those certain buildings and other
improvements constructed and located on the Land as described on Exhibit A.
"Land" shall mean that certain parcel of real property located at
501 Scarborough Drive, Egg Harbor, New Jersey.
"Leases" shall mean those certain leases (and guarantees thereof,
if any) listed on Exhibit "C" 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 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
Property (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 "D" to this
Agreement, (iv) special assessments which become a lien on any of the Real
Property on or after the Closing Date, and (v) such other title matters existing
on the Closing Date which are
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<PAGE>
accepted or deemed accepted by Buyer pursuant to Paragraph 5 hereof; and (vii)
the rights of Tenants of any of the Real Property pursuant to the Leases for all
or any portion of any of the Real Property.
"Personal Property" shall (except as specifically excluded on
Exhibit "E" hereto) mean all of Seller's right, title and interest in and to the
tangible personal property including, without limitation, artwork, 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 Property on the Closing Date, and all artwork, renderings, flags, awnings
and trade dress; all architects', engineers', surveyors' and other real estate
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 "501 Scarborough Drive."
"Property" shall mean the Real Property and such of the
Contracts, Leases, Licenses, Personal Property and other rights, titles,
interests and obligations which pertain to the Real Property and are intended to
be conveyed, sold or otherwise transferred to Buyer by Seller pursuant to this
Agreement.
"Real Property" shall mean the Land and the Improvements.
"Tenants" shall mean the tenants under the Leases.
2. Acquisition Of The Property. 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 Property;
(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 Property;
(d) to the extent assignable to Buyer and approved by Buyer, all
right, title and interest of Seller in and to the Contracts and the Licenses
relating to any of the Real Property;
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<PAGE>
(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 Property shall be Six
Million One Hundred Fifty Thousand Dollars ($6,150,000), as adjusted pursuant to
Paragraph 7 of this Agreement, which shall be paid to Seller in the following
manner:
(a) Twenty Thousand Dollars ($20,000) (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. In addition thereto, by
delivery, within two (2) business days next following the Due Diligence
Expiration Date of Buyer's good check in the amount of $10,000.
(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
conditioned upon the closing of the sale of the other properties identified on
Exhibit "F" attached hereto (the "Other Properties"), so that no one or more of
the Other Properties and the Property hereunder may be sold without all of the
Property being sold unless expressly provided for in writing by the parties
hereto and in any event the Deposit hereunder and thereunder shall be deemed a
single deposit for the entire transaction.
4. Closing. The closing of the transaction contemplated by this
Agreement (the "Closing") shall be held on or before December 12, 1997, but in
any event no later than fifteen (15) days next following the Due Diligence
Expiration Date, at the offices of Brandywine Realty Trust, Plaza 1000 at Main
Street, Suite 400, Voorhees, New Jersey, commencing at 10:00 a.m., time being of
the essence.
5. Title And Conveyance Of The Property.
(a) At Closing, title to the Real Property shall be insurable at
regular rates by Commonwealth Land 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
Property is not insurable as aforesaid, Buyer's sole right and remedy shall be
as set forth in paragraph 5(b) below.
(b) (i) Buyer has applied 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 Property, an owner's policy
of title insurance as above specified
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<PAGE>
("Title Policy"). Said Commitments shall agree to insure the proposed title of
the Buyer to each of the Real Property 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 prior to the Due
Diligence Termination Date, together with 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
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 thirty (30) days to
enable Seller to effect such cure.
(ii) 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
canceled 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.
(iii) Notwithstanding the provisions of the foregoing
paragraph, if the condition of title to the Real Property at the Closing is
other than that which Buyer is required or agrees to accept hereunder solely by
reason of any mortgages or other monetary liens (hereinafter referred to as
"Liens") which can be satisfied or remedied by the payment of a liquidated
amount of money to the extent of the Purchase Price, 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
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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.
(iv) 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 (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 the expiration of the Due Diligence, 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 Real
Property by a Bargain and Sale Deed with covenant against grantor's acts (the
"Deed"), subject in all cases to the Permitted Exceptions, in the forms attached
hereto and made a part hereof as Exhibit "G".
(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
"H".
(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 the
Property, by executing an Assignment and Assumption Agreement in the form
attached hereto and made a part hereof as Exhibit "I" (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 Deed, executed by Seller, covering the Real
Property (and separate quitclaim deeds to the Real Property 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;
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(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 Property 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 "J";
(ix) All building records and Tenant lease files with
respect to the Real Property 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;
(xiii) A letter, from the New Jersey Department of
Environmental Protection or its successor ("NJDEP") stating that the provisions
of the Industrial
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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
Real Property (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.
(xvii) Such affidavits of title or other certifications as
shall be required by the Title Company to insure Buyer's title to the Property
as set forth in Section 3, and to provide affirmative endorsements (a) against
mechanic's liens, (b) insuring against any violation of existing covenants,
conditions or restrictions, and insuring that future violation will not result
in forfeiture of title, (c) insuring that all foundations in place as of the
date of such policy are within the lot lines and applicable set back lines, (d)
insuring that the buildings and structures on the Property do not encroach onto
adjoining land or onto any easements, (e) insuring that confirming that there
are no encroachments of improvements from adjoining land onto the Property (f)
removing any exceptions for matters which an accurate survey would disclose, and
(g) providing affirmative insurance with respect to such other matters as Buyer
or its lender shall specify.
(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; and
(ii) The Assignments, executed by Buyer.
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 Property, 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 Property 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
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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 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 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 Property, 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 Property 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 Property 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 Property 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 stamps imposed in connection with the recordation of the Deeds for
the 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. If any tenant is in arrears in the payment of rent
or additional rent on the Closing Date, rents received from such tenant ninety
(90) days after the Closing Date shall be applied in the following order of
priority: (a) to the Buyer, so long as such tenant is in arrears for current or
prior rent arising after Closing, then (b) to Seller for all rent in arrears
prior to the Closing Date; and then (c) to Buyer with no further claim by Seller
thereto. Except as herein provided, Buyer is
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not under any obligation to collect rents in arrears for the benefit of Seller.
Any rents which are delinquent or otherwise not paid at the time of Closing, and
collected by Buyer or Seller within ninety (90) days after Closing shall be
apportioned as aforesaid and the portion to which Seller is entitled shall be
promptly remitted by Buyer to Seller. Seller shall have no claim to rents
collected ninety (90) days after the Closing Date. 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 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 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 Property. Buyer shall assume, pay or reimburse
(as applicable) Seller on the Closing Date for 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 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
Property, provided the same were approved by Buyer or are otherwise permitted as
set forth in Paragraph 15(e) hereof and provided that such costs are set forth
on Exhibit "C" hereto. 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.
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(g) Seller shall be solely responsible for the payment of any
"roll back taxes" assessed or imposed upon any of the Real Property 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 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.
8. Possession Of Property.
(a) Seller shall deliver possession to the 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) 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 New Jersey, and is in good
standing in such state.
(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.
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(3) Except as set forth in Exhibit "K" 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 on Exhibit "K", 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 limited liability 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 Property (the
"Personal Property Leases"); (iv) Licenses; (v) surveys; (vi) title reports;
(vii) engineering reports; and (viii) environmental reports.
(6) To the best of Seller's knowledge, (i) all of the
Leases, Contracts and Personal Property Leases and Licenses, 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 Property or the use or repair of the same
or of any alleged default by Seller under any such Lease, or Personal Property
Lease or License. Except as set forth on Exhibit "L", 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 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
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the Closing, there are and shall be no liens against the Real Property 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. Buyer shall be under no obligation
to assume any of Seller's employees, it being Seller's sole responsibility and
obligation to provide severance arrangements, if any, for all such employees.
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 Property or any portion thereof.
(9) Except as set forth on Exhibit "M", 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 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 Property, 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 Property (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.
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(12) To the best of Seller's knowledge, except as set
forth in Exhibit "N" attached hereto and made a part hereof, all management
fees, leasing commissions and tenant improvement allowances are fully paid,
there are no brokerage commissions owing by Seller with respect to any of the
Leases or otherwise related to the Property 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 Property 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 Property.
(16) Except as may be set forth in a Lease as
specifically noted on Schedule C, there are no options, rights of first refusal
or conditional sales agreements regarding the purchase and sale of the Real
Property.
(17) There are no oral or written leases or rights of
occupancy or grants or claims of right, title or interest in any portion of the
Property other than the leases (the "Leases") listed on the rent roll attached
hereto as Exhibit "C". No tenant has advised Seller that Seller is in default
under any of the Leases, or asserted any claim or basis for any claim for free
or reduced rent or right of setoff against the landlord or the rent under the
Leases, and Seller and its agent have no actual knowledge of any default or any
event which has taken place which, with the passage of time, or the delivery of
notice, or both, could become an event of default. Except for Penn Mutual Life
Insurance Company, Seller's existing lender who shall be paid off at Closing,
Seller has the sole right to collect rents under the Leases, and neither such
right nor any of the Leases has been assigned, pledged, hypothecated or
otherwise encumbered by Seller except as additional collateral for the existing
mortgage upon the Property which shall be satisfied at or before Closing. No
holder of any such collateral assignment has asserted or exercised any of its
right to collect such rents. Each of the Leases is valid and subsisting and in
full force and effect, the tenant is in actual possession in the normal course,
and the rents set forth in Exhibit "C" are the actual rents, income and charges
being collected by Seller under the Leases. All obligations of Seller which it
is required to complete pursuant to any Lease (or any unsigned lease proposal or
lease amendment) has been completed as of this date or shall be completed as of
Closing, and all costs therefore have been or shall be paid by Seller, and
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all of Seller's work has or shall have been accepted by the Tenant without
exception on or before Closing, other than routine punch list items, which items
shall remain the responsibility of Seller following Closing, and which
obligation shall expressly survive Closing. The amount of each security deposit
contains, where required by law or otherwise applicable, interest which has
accrued in accordance with law. No tenant of the Property under any of the
Leases has, and shall not at Closing have, prepaid any rent under any of the
Leases for more than one (1) month. Except as otherwise set forth on Exhibit
"C", no security deposits by tenants have heretofore been returned or applied to
charges against the tenants.
(18) To the best of Seller's knowledge, the Property
and the continued operation and use thereof comply with all applicable
requirements of federal, state and local law, and all applicable requirements of
governmental bodies or agencies having jurisdiction thereof, no portion of the
Property lies within a flood hazard area, flood plain or wetland; and there are
no outstanding notices of any violations issued by governmental authority having
jurisdiction over the Property.
(19) To the best of Seller's knowledge, no Hazardous
Substances (defined below) and no Hazardous Wastes (defined below) are present
on the Property including, without limitation, asbestos, flammable substances,
explosives, radioactive materials, hazardous wastes, toxic substances,
pollutants, pollution, contaminant, polychlorinated bypheryls ("PCBs"), urea
formaldehyde foam insulation, radon, corrosive, irritant, biologically
infectious materials, petroleum product, garbage, refuse, sludge, hazardous or
waste materials, and there has been no use of the Property that may, under any
federal, state or local environmental statute, ordinance or regulation, require,
at any time, any closure or cessation of the use or occupancy of the Property
and/or impose, at any time, upon the owner of the Property any clean-up or other
monetary obligation. Seller hereby indemnifies and holds Buyer harmless of,
from and against any and all liability, loss or damage suffered or incurred as a
result of a claim, demand, cost or judgment in favor of a third party,
including, without limitation, any governmental authority, arising from the
deposit, storage, disposal, burial, dumping, injecting, spilling, leaking, or
other placement or release in or on the Property of Hazardous Substances or
Wastes during Seller's period of ownership. To the best of Seller's knowledge,
neither the Property nor any portion thereof, have been identified on the
federal CERLIS, the National Priorities List (40 C.F.R. Part 300, App. B) or
any state or local list of potential hazardous waste disposal sites or as an
industrial establishment. Seller has conducted a complete and thorough
inspection and test of the underground storage tanks located on the Property, if
any, and Seller has confirmed that, to the best of its knowledge, the results
thereof show compliance with all requirements of the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C. Sections 6901 et seq. and all other applicable
federal, state and local laws, and Seller has taken all other necessary and
appropriate action to comply fully therewith.
(20) To the best of Seller's knowledge, all adequate
utilities, useable public sanitary and storm sewers, public water facilities,
electric facilities and, if any, gas facilities (collectively, the "Utilities"),
are installed in, and are duly connected to, the
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Real Property the sanitary sewer system has been dedicated to, and accepted by,
the Municipal Utility Authority, and can be used without charge except the
normal and usual metered utility charges and water and sewer charges. All
Utilities required for the operation of the Property either enter the Property
through adjoining public streets or, if they pass through adjoining public land,
do so in accordance with valid public easements or private easements which will
inure to the benefit of Buyer at no cost to the owner of the Property. All of
said Utilities are installed and operating and all installation, connection and
"tap-in" charges have been paid for in full.
(21) No work has been performed or is in progress
at, and no materials have been furnished to the Property which, though not
presently the subject of, might give rise to construction, mechanic's,
materialmen's, municipal or other liens against the Property or any portion
thereof, except that for which full and complete releases have been obtained.
If any lien for any such work is filed before or after Closing, Seller shall
promptly discharge the same.
(22) To the best of Seller's knowledge, none of the
artwork being a part of the Personal Property was prepared on a "work for hire"
basis and none of the artwork was commissioned after 1991.
(23) To the best of Seller's knowledge, all
applicable charges, fees and assessments (including condominium fees, to the
extent applicable) and any and all other sums due under declarations,
cross-easements and like agreements to which the Property or any portion
thereof may be subject, have been paid, and no special assessments thereunder
are pending, there is no constituted Board of Directors for the Property or
the development and all consents and approvals required to be obtained under
any such declarations, cross-easements and like agreements have been obtained
pursuant to the requirements of such documentation and Seller shall pay for
all 1997 retension basin charges due to the adjacent Shopping Center under
that certain recorded Declaration dated _____________, 1997.
(24) To the best of Seller's knowledge, all debts,
liabilities, and obligations of Seller arising out of the construction,
ownership, and operation of the Property including, but not limited to,
construction costs, salaries, taxes, accounts payable and the like, have been
paid as they became due and payable and shall continue to be so paid from the
date hereof until the Closing Date.
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. 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
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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 $50,000 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
$50,000 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 actual 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:
(1) 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.
(2) 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
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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.
(3) 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.
(4) 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.
(5) 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.
(6) 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.
(7) 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, N.A. Buyer
acknowledges that its obligations hereunder are not conditioned upon any
third party financing or capital infusion by another party.
(8) 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
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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), and all such representations shall survive for a period of one year
from the Closing.
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 Property 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 Property shall
be subject to the rights of the Tenants of any of the Real Property, who shall
not be unreasonably disturbed during any such inspection by Buyer. Buyer shall
not engage in any activity in or about the Real Property 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 Property, 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
Property 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 Property 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 Property 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
Property. 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 Property shall maintain public liability insurance policies
(naming Seller as an additional named insured with respect to any liability
occurring on the Real Property), 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 Property.
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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 Property.
(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 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 Property.
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 the Property with zoning, licensing and all other
governmental requirements, Leases for any of the Real Property, operating
statements pertaining to the Property and all other aspects and conditions of
the Property 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 shall obtain, prior to the Closing the
Non-Applicability Letter from the NJDEP 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.
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(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 "O". 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 at
least 75% of the Tenants at each Property, including those identified on Exhibit
"P" 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, 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.
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 Property, 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 Property is commenced, Seller agrees promptly to
notify Buyer thereof. In the event of a material taking of one or more Real
Property 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 the Property 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 Property, and at Closing, Buyer shall pay to Seller
the aggregate of the Allocated Prices for the remaining Real Property. 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.
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(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
Property so damaged, an amount equal to or less than ten percent (10%) of the
Purchase Price for such Real Property, there shall be no abatement or adjustment
in the Purchase Price 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
Property 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 Property 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 Property is an amount which is greater than ten
percent (10%) of the Purchase 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 the
Property which have suffered damage to the Improvements by fire or other
casualty in an amount which exceeds ten percent (10%) of the Purchase 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 Property, and at Closing,
Buyer shall pay to Seller the aggregate of the Purchase Prices for the remaining
Real Property. 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 Property for which this Agreement has been terminated.
14. Default.
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(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 Property
from sale to the general public at a time when other parties would be interested
in purchasing such Real Property, 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.
(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 Fifteen Thousand Dollars ($15,000) ("Due
Diligence Costs") for the Property or (Y) to seek specific performance of
Seller's obligation to convey the Real Property in accordance with this
Agreement. If Buyer 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 Property,
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 the Property between the Execution
Date and the Closing Date in the same general manner as Seller has operated the
Property 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.
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(b) Seller shall comply with all of the obligations of landlord
under the Leases and all other agreements and contractual arrangements affecting
the Real Property by which Seller is bound or to which the Real Property, 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 agreement affecting the Real Property,
or any portion or portions thereof.
(d) No contract for or on behalf of or affecting the Real
Property 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 Property. Any new lease
shall be on Buyer'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 Property, or any portion thereof, without
the prior written consent of Buyer, 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
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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.
(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 Property, 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
Property, or any portion thereof;
(iii) Notice of any actual or threatened litigation
against Seller or affecting or relating to the Real Property, or any portion
thereof which may materially and adversely affect the Real Property or Seller's
ability to consummate the transactions contemplated by this Agreement; and
(iv) Vacancy of any demised Property by a tenant, other than
in accordance with a scheduled lease termination.
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 PROPERTY, 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
PROPERTY INCLUDING, WITHOUT LIMITATION: (i) THE VALUE, CONDITION,
MERCHANTABILITY, MARKETABILITY, PROFITABILITY, SUITABILITY OR FITNESS FOR A
PARTICULAR USE OR PURPOSE OF ANY OF THE PROPERTY, (ii) THE MANNER OR QUALITY OF
THE CONSTRUCTION OR MATERIALS INCORPORATED INTO ANY OF THE PROPERTY AND (iii)
THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF ANY OF THE PROPERTY.
BUYER AGREES THAT WITH RESPECT TO THE PROPERTY, 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
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AGREEMENT. BUYER REPRESENTS THAT IT IS A KNOWLEDGEABLE BUYER 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 THE PROPERTY
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 THE PROPERTY "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
PROPERTY BY SELLER, ANY AGENT OF SELLER OR ANY THIRD PARTY. BUYER EXPRESSLY
AGREES THAT THE TERMS AND 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 PROPERTY 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. Conditions Precedent to Closing.
The obligations of Buyer hereunder are subject to the fulfillment of
the following conditions prior to or on the Closing Date (any one of which may
be waived in whole or in part by Buyer at or prior to the Closing) and in the
event any of the conditions are not complied with, Buyer may terminate this
Agreement by notifying the Seller and Escrow Agent and thereupon shall be
returned the Deposit and thereafter this Agreement shall be null and void:
(a) Correctness of Warranties and Representations. The
warranties and representations made by Seller in this Agreement shall be true
and correct on the Closing Date as though such representations and warranties
were made on the Closing Date (except for changes in the Leases permitted under
the terms of this Agreement).
(b) Compliance with Terms and Conditions. Seller shall have
performed and complied with all of the terms and conditions required by this
Agreement to be performed and complied with by it prior to or on the Closing
Date.
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(c) Buyer's Satisfaction with Inspection. Buyer shall have
notified Seller of Buyer's satisfaction with the inspection performed under
Section 11 of this Agreement, or shall fail to notify Seller on or before the
Due Diligence Expiration Date, of Buyer's dissatisfaction with the results of
such review.
18. Brokers.
(a) Seller and Buyer each represent to the other that 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 18(a) hereof.
(c) The provisions of this Paragraph 18 shall survive Closing
hereunder, or any other termination of this Agreement.
19. 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 to Buyer, addressed to:
Brandywine Operating Partnership, L.P.
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
Attn: Gerard H. Sweeney,
President and Chief Executive Officer
with a copy in each instance to:
Brad A. Molotsky, General Counsel
Brandywine Operating Partnership, L.P.
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
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<PAGE>
If to Seller, addressed to:
English Creek Partners #1,
Limited Partnership
20 E. Clementon Road, Suite 201
Gibbsboro, New Jersey 08026
Attention: R. Randle Scarborough
with a copy in each instance to:
Kelly Young, Esquire
20 East Clementon Road, Suite 202
Gibbsboro, New Jersey 08026
If to Escrow Agent, addressed to:
M. Gordon Daniels, Esquire
Commonwealth Land Title Insurance Company
1700 Market Street
Philadelphia, Pennsylvania 19103
or to such-other address or addresses and to the attention of such other person
or persons as any of the parties may notify the other in accordance with the
provisions of this Agreement. 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 delivery) by the party
to whom such notice is sent. Notices by the parties may be given on their
behalf by their respective attorneys.
20. Successors And Assigns. Except to a subsidiary or related party,
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.
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<PAGE>
21. 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.
22. 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.
23. 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.
24. Captions And Recitals. The captions contained herein are not a
part of this Agreement and are included solely for the convenience of the
parties.
25. Entire Agreement. This Agreement and the Exhibits and Schedules
attached hereto 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.
26. 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.
(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
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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.
27. 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 Property, it shall conduct such investigation of the Property 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.
28. Limitation Of Liability. No recourse shall be had for any
obligation of Brandywine Realty Trust or Brandywine Operating Partnership, L.P.
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 or Brandywine Operating Partnership, L.P., 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.
Except for breaches of the representations or warranties set forth in
Sections 9 and 18 herein which shall be full recourse obligations to the general
partners of Seller, no recourse shall be had for any obligation of Seller 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 limited partner or employee of Seller 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 Buyer and all parties claiming by, through or under Buyer.
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 Property, which
information is relevant and reasonably necessary, in the opinion of Buyer's
outside, third party accountants (the "Accountants"), to enable Buyer and its
Accountants to prepare financial statements in compliance with any or all of (a)
Rule 3-05 or 3-14 of Regulation S-X of the Securities and Exchange Commission
(the "Commission"), as applicable; (b) any other rule issued by the Commission
and applicable to Buyer; and (c) any registration statement, report or
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<PAGE>
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 "Q", provided that Buyer (and
any assignee or designee acquiring title to the Real Property) 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.
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. Formal tender of an executed deed and purchase money is
hereby waived by Buyer.
33. Further Assurances. After the Closing, 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.
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<PAGE>
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.
36. Indemnification.
Without limitation of any other Seller indemnity obligations set forth
herein, from and after the Closing Date, Seller shall indemnify, defend and save
and hold harmless Buyer, and its respective trustees, directors, officers and
employees, of, from and against any and all loss, cost, expense, damage, claim,
and liability, including reasonable attorney's fees and court costs, including,
without limitation, attorney's fees and costs associated with the enforcement of
Seller's indemnification obligations for all claims brought within one year of
such Closing (hereinafter collectively, "Losses") which Buyer may suffer or
incur, resulting from, relating to, or arising in whole or in part, from or out
of (i) any misrepresentation or breach of a representation or warranty by Seller
contained in this Agreement; (ii) any failure to fulfill any covenant or
agreement of Seller contained in this Agreement; (iii) all litigation set forth
in this Agreement and on Exhibits hereto; (iv) any and all actions, suits,
investigations, proceedings, demands, assessments, audits, judgments, and/or
claims arising out of or relating to any of the foregoing.
Promptly after receipt by Buyer of written notice of the commencement
of any suit, audit, demand, judgment, action, investigation or proceeding (a
"Third Party Action") or promptly after Buyer incurs a Loss or has knowledge of
the existence of a Loss, Buyer will, if a claim with respect thereto is to be
made against Seller due to Seller's obligation to provide indemnification
hereunder, give Seller written notice of such Loss or the commencement of any
Third Party Action; provided, however, that the failure to provide such notice
within a reasonable period of time shall not relieve Seller of any of its
obligations hereunder. Promptly after receiving such notice, Seller will, upon
notice to Buyer, have the right to assume and control the defense and settlement
of any such Third Party Action at its own cost and expense; provided, however,
that it shall be a condition precedent to the exercise of such right by Seller
that Seller shall agree in writing that the Loss, or Third Party Action, as the
case may be, is properly within the scope of the indemnification obligation and
that as between the parties, Seller shall be responsible to satisfy and
discharge such Third Party Action. Seller shall not enter into any resolution
or other compromise of a Third Party Action without obtaining the complete
release of Buyer for any liability to all claimants under or pursuant to such
Third Party Action. Buyer shall have the right to participate in any such
defense, contest or other protective action at its own cost and expense.
Notwithstanding the foregoing, Buyer shall have the right to assume
and control the defense and settlement of a Third Party Action (a) if such
action includes claims for equitable
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relief which, if determined adversely to Buyer, could reasonably be expected to
interfere with its intended business operations or damage its business
reputation or (b) if Seller fails to do so in a timely manner. In any
circumstances in which Buyer undertakes to control the Third Party Action as
provided in this paragraph, it shall (i) not enter into any resolution or other
compromise involving monetary damages without obtaining the prior written
consent of Seller provided that such written consent may not be withheld if it
would interfere with Buyer's business operation and (ii) keep Seller informed on
an ongoing basis of the status of such Third Party Action and shall deliver to
Seller, copies of all documents related to the Third Party Action reasonably
requested by Seller. Buyer shall act to assure that all attorneys' fees and
expenses incurred in connection therewith are reasonable.
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<PAGE>
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:
ENGLISH CREEK PARTNERS #1, LIMITED
PARTNERSHIP
By: /s/ R. Randle Scarborough
-------------------------------------
R. Randle Scarborough, its authorized
general partner
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
Commonwealth Land Title Insurance Company:
By: /s/M. Gordon Daniels
-------------------------------------
M. Gordon Daniels
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EXECUTION
501 SCARBOROUGH DRIVE
AGREEMENT OF SALE
Between
ENGLISH CREEK PARTNERS #1, LIMITED PARTNERSHIP
and
BRANDYWINE REALTY TRUST
Dated as of December 5, 1997
<PAGE>
LIST OF EXHIBITS
Exhibit A Description of Land
Exhibit B List of Contracts
Exhibit C Certified Rent Roll
Exhibit D Permitted Exceptions
Exhibit E Excluded Personal Property
Exhibit F The Other Properties
Exhibit G Form of Deed
Exhibit H Bill of Sale
Exhibit I Form of Assignment(s)
Exhibit J Form of Non-Foreign Person Certification
Exhibit K Pending Litigation
Exhibit L Contracts Not Terminable with 30 days Notice
Management Agreement with Harbor Management Inc. to be
terminated and replaced with Buyer form of Management
Agreement
Exhibit M Environmental Notices
Exhibit N Outstanding Brokerage Commissions and TI
Exhibit O Form of Estoppel Certificate
Exhibit P Identified Tenants
Exhibit Q Representation Letter
<PAGE>
EXHIBIT 10.10
20 EAST CLEMENTON DRIVE
AGREEMENT OF SALE
THIS AGREEMENT OF SALE is made and entered into as of the 8th day of
December, 1997 by and between PAINT WORKS CORPORATE CENTER-H, a New Jersey
general partnership having its principal office at Scarborough Properties, 20
East Clementon Road, Suite 201, Gibbsboro, New Jersey 08026 ("Seller") and
BRANDYWINE REALTY TRUST, a Maryland real estate investment trust or its nominee,
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 a certain tract of land being comprised of six
(6) parcels of property, being Lot 3.02, Block 8.01 (part of 20 E. Clementon
Drive), Lot 3, Block 8.01 (part of 20 E. Clementon Drive), and Lots 16.01,
16.06, 19.01 and 19.03, Block 7.04, together with the building and improvements
thereon, including one office building containing approximately 38,534 square
feet, commonly known as 20 East Clementon Road, Gibbsboro, New Jersey as more
fully described on Exhibit A attached hereto; and
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
Property (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.
"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.
<PAGE>
"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 Property, 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
December 9, 1997.
"Effective Date" shall mean the date on which this Agreement has
been fully executed and delivered by both parties hereto to each other.
"Escrow Agent" shall mean Commonwealth Land Title Insurance
Company, 1700 Market Street, Philadelphia, Pennsylvania 19103.
"Escrow Terms" shall mean the escrow agreement to be entered of
even date herewith between Title Company, Buyer and Seller.
"Improvements" shall mean those certain buildings and other
improvements constructed and located on the Land as described on Exhibit A.
"Land" shall mean that certain parcel of real property located at
20 East Clementon Road and the parking lots appurtenant thereto, Gibbsboro, New
Jersey.
"Leases" shall mean those certain leases (and guarantees thereof,
if any) listed on Exhibit "C" 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 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
Property (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 "D" to this
Agreement, (iv) special assessments which become a lien on any of the Real
Property on or after the Closing Date, and (v) such other title matters existing
on the Closing Date which are
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accepted or deemed accepted by Buyer pursuant to Paragraph 5 hereof; and (vii)
the rights of Tenants of any of the Real Property pursuant to the Leases for all
or any portion of any of the Real Property.
"Personal Property" shall (except as specifically excluded on
Exhibit "E" 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 Property on the Closing Date, and all artwork, renderings, flags, awnings
and trade dress; all architects', engineers', surveyors' and other real estate
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 "20 East Clementon Road."
"Property" shall mean the Real Property and such of the
Contracts, Leases, Licenses, Personal Property and other rights, titles,
interests and obligations which pertain to the Real Property and are intended to
be conveyed, sold or otherwise transferred to Buyer by Seller pursuant to this
Agreement.
"Real Property" shall mean the Land and the Improvements.
"Tenants" shall mean the tenants under the Leases.
2. Acquisition Of The Property. 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 Property;
(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 Property;
(d) to the extent assignable to Buyer and approved by Buyer, all
right, title and interest of Seller in and to the Contracts and the Licenses
relating to any of the Real Property;
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<PAGE>
(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 Property shall be Two
Million Five Hundred Seventy Five Thousand Dollars ($2,575,000), as adjusted
pursuant to Paragraph 7 of this Agreement, which shall be paid to Seller in the
following manner:
(a) Twenty Thousand Dollars ($20,000) (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. In addition thereto, by
delivery, within two (2) business days next following the Due Diligence
Expiration Date of Buyer's good check in the amount of $10,000.
(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.
4. Closing. The closing of the transaction contemplated by this
Agreement (the "Closing") shall be held on or before December 12, 1997, but in
any event no later than fifteen (15) days next following the Due Diligence
Expiration Date, at the offices of Brandywine Realty Trust, Plaza 1000 at Main
Street, Suite 400, Voorhees, New Jersey, commencing at 10:00 a.m., time being of
the essence.
5. Title And Conveyance Of The Property.
(a) At Closing, title to the Real Property shall be insurable at
regular rates by Commonwealth Land 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
Property is not insurable as aforesaid, Buyer's sole right and remedy shall be
as set forth in paragraph 5(b) below.
(b) (i) Buyer has applied 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 Property, 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 Property
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 prior to the Due Diligence Termination Date, together
with the Commitments and copies of all matters of
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<PAGE>
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 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 thirty (30) days to enable Seller to
effect such cure.
(ii) 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
canceled 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.
(iii) Notwithstanding the provisions of the foregoing
paragraph, if the condition of title to the Real Property at the Closing is
other than that which Buyer is required or agrees to accept hereunder solely by
reason of any mortgages or other monetary liens (hereinafter referred to as
"Liens") which can be satisfied or remedied by the payment of a liquidated
amount of money to the extent of the Purchase Price, 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.
(iv) 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 (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.
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(c) Buyer expressly understands, acknowledges and agrees that
any failure by Buyer to notify Seller in writing of any Title Defects on or
before the expiration of the Due Diligence, 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 Real
Property by a Bargain and Sale Deed with covenant against grantor's acts (the
"Deed"), subject in all cases to the Permitted Exceptions and the 2 year
Scarborough Lease, in the forms attached hereto and made a part hereof as
Exhibits "F" and "G".
(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
"H".
(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 the
Property, by executing an Assignment and Assumption Agreement in the form
attached hereto and made a part hereof as Exhibit "I" (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 Deed, executed by Seller, covering the Real
Property (and separate quitclaim deeds to the Real Property 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;
(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;
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(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 Property 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 "J";
(ix) All building records and Tenant lease files with
respect to the Real Property 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;
(xiii) A letter, from the New Jersey Department of
Environmental Protection or its successor ("NJDEP") 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 Real Property (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
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(xvi) Proof as to the due authorization and execution by
Seller of the documents executed and delivered by Seller.
(xvii) Such affidavits of title or other certifications as
shall be required by the Title Company to insure Buyer's title to the Property
as set forth in Section 3, and to provide affirmative endorsements (a) against
mechanic's liens, (b) insuring against any violation of existing covenants,
conditions or restrictions, and insuring that future violation will not result
in forfeiture of title, (c) insuring that all foundations in place as of the
date of such policy are within the lot lines and applicable set back lines, (d)
insuring that the buildings and structures on the Property do not encroach onto
adjoining land or onto any easements, (e) insuring that confirming that there
are no encroachments of improvements from adjoining land onto the Property (f)
removing any exceptions for matters which an accurate survey would disclose, and
(g) providing affirmative insurance with respect to such other matters as Buyer
or its lender shall specify.
(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; and
(ii) The Assignments, executed by Buyer.
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 Property, 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 Property 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 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 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
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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
Property, 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 Property 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 Property 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 Property 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 stamps imposed in connection with the recordation of the Deeds for the 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. If any tenant is in arrears in the payment of rent
or additional rent on the Closing Date, rents received from such tenant ninety
(90) days after the Closing Date shall be applied in the following order of
priority: (a) to the Buyer, so long as such tenant is in arrears for current or
prior rent arising after Closing, then (b) to Seller for all rent in arrears
prior to the Closing Date; and then (c) to Buyer with no further claim by Seller
thereto. Except as herein provided, Buyer is not under any obligation to
collect rents in arrears for the benefit of Seller. Any rents which are
delinquent or otherwise not paid at the time of Closing, and collected by Buyer
or Seller within ninety (90) days after Closing shall be apportioned as
aforesaid and the portion to which Seller is entitled shall be promptly remitted
by Buyer to Seller. Seller shall have no claim to rents collected ninety (90)
days after the Closing Date. 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
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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 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 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 Property. Buyer shall assume, pay or reimburse
(as applicable) Seller on the Closing Date for 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 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
Property, provided the same were approved by Buyer or are otherwise permitted as
set forth in Paragraph 15(e) hereof and provided that such costs are set forth
on Exhibit "C" hereto. 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 Property 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 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.
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(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.
8. Possession Of Property.
(a) Seller shall deliver possession to the 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) 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 New Jersey General Partnership duly
organized and validly existing under the laws of the State of New Jersey, and is
in good standing in such state.
(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 "K" 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
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expense relating to the litigation identified in on Exhibit "K", 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 limited liability 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 Property (the
"Personal Property Leases"); (iv) Licenses; (v) surveys; (vi) title reports;
(vii) engineering reports; and (viii) environmental reports.
(6) To the best of Seller's knowledge, (i) all of the
Leases, Contracts and Personal Property Leases and Licenses, 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 Property or the use or repair of the same
or of any alleged default by Seller under any such Lease, or Personal Property
Lease or License. Except as set forth on Exhibit "L", 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 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 Property 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.
Buyer shall be under no obligation to assume any of Seller's employees, it being
Seller's sole responsibility and obligation to provide severance arrangements,
if any, for all such employees. This Paragraph shall survive Closing.
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(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 Property or any portion thereof.
(9) Except as set forth on Exhibit "M", 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 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 Property, 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 Property (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 "N" attached hereto and made a part hereof, all management
fees, leasing commissions and tenant improvement allowances are fully paid,
there are no brokerage commissions owing by Seller with respect to any of the
Leases or otherwise related to the Property which have not been paid, and there
are no ongoing commission or leasing fee obligations.
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(13) Seller has received no written notice from any
insurance company which has issued a policy with respect to the Property 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 Property.
(16) Except as may be set forth in a Lease as
specifically noted on Schedule C, there are no options, rights of first refusal
or conditional sales agreements regarding the purchase and sale of the Real
Property.
(17) There are no oral or written leases or rights of
occupancy or grants or claims of right, title or interest in any portion of the
Property other than the leases (the "Leases") listed on the rent roll attached
hereto as Exhibit "C". No tenant has advised Seller that Seller is in default
under any of the Leases, or asserted any claim or basis for any claim for free
or reduced rent or right of setoff against the landlord or the rent under the
Leases, and Seller and its agent have no actual knowledge of any default or any
event which has taken place which, with the passage of time, or the delivery of
notice, or both, could become an event of default. Seller has the sole right to
collect rents under the Leases, and neither such right nor any of the Leases has
been assigned, pledged, hypothecated or otherwise encumbered by Seller except as
additional collateral for the existing mortgage upon the Property which shall be
satisfied at or before Closing. No holder of any such collateral assignment has
asserted or exercised any of its right to collect such rents. Each of the
Leases is valid and subsisting and in full force and effect, the tenant is in
actual possession in the normal course, and the rents set forth in Exhibit "C"
are the actual rents, income and charges being collected by Seller under the
Leases. All obligations of Seller which it is required to complete pursuant to
any Lease (or any unsigned lease proposal or lease amendment) has been completed
as of this date or shall be completed as of Closing, and all costs therefore
have been or shall be paid by Seller, and all of Seller's work has or shall have
been accepted by the Tenant without exception on or before Closing, other than
routine punch list items, which items shall remain the responsibility of Seller
following Closing, and which obligation shall expressly survive Closing. The
amount of each security deposit contains, where required by law or otherwise
applicable, interest which has accrued in accordance with law. No tenant of the
Property under any of the Leases has, and shall not at Closing have, prepaid any
rent under any of the Leases for more than one (1) month. Except as otherwise
set forth on Exhibit "C", no security deposits by tenants have heretofore been
returned or applied to charges against the tenants.
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(18) To the best of Seller's knowledge, the Property
and the continued operation and use thereof comply with all applicable
requirements of federal, state and local law, and all applicable requirements of
governmental bodies or agencies having jurisdiction thereof, no portion of the
Property lies within a flood hazard area, flood plain or wetland; and there are
no outstanding notices of any violations issued by governmental authority having
jurisdiction over the Property.
(19) To the best of Seller's knowledge, no Hazardous
Substances (defined below) and no Hazardous Wastes (defined below) are present
on the Property including, without limitation, asbestos, flammable substances,
explosives, radioactive materials, hazardous wastes, toxic substances,
pollutants, pollution, contaminant, polychlorinated bypheryls ("PCBs"), urea
formaldehyde foam insulation, radon, corrosive, irritant, biologically
infectious materials, petroleum product, garbage, refuse, sludge, hazardous or
waste materials, and there has been no use of the Property that may, under any
federal, state or local environmental statute, ordinance or regulation, require,
at any time, any closure or cessation of the use or occupancy of the Property
and/or impose, at any time, upon the owner of the Property any clean-up or other
monetary obligation. Seller hereby indemnifies and holds Buyer harmless of,
from and against any and all liability, loss or damage suffered or incurred as a
result of a claim, demand, cost or judgment in favor of a third party,
including, without limitation, any governmental authority, arising from the
deposit, storage, disposal, burial, dumping, injecting, spilling, leaking, or
other placement or release in or on the Property of Hazardous Substances or
Wastes during Seller's period of ownership. To the best of Seller's knowledge,
neither the Property nor any portion thereof, have been identified on the
federal CERLIS, the National Priorities List (40 C.F.R. Part 300, App. B) or
any state or local list of potential hazardous waste disposal sites or as an
industrial establishment. Seller has conducted a complete and thorough
inspection and test of the underground storage tanks located on the Property, if
any, and Seller has confirmed that, to the best of its knowledge, the results
thereof show compliance with all requirements of the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C. Sections 6901 et seq. and all other applicable
federal, state and local laws, and Seller has taken all other necessary and
appropriate action to comply fully therewith.
(20) To the best of Seller's knowledge, all adequate
utilities, useable public sanitary and storm sewers, public water facilities,
electric facilities and, if any, gas facilities (collectively, the "Utilities"),
are installed in, and are duly connected to, the Real Property, and can be used
without charge except the normal and usual metered utility charges and water and
sewer charges. All Utilities required for the operation of the Property either
enter the Property through adjoining public streets or, if they pass through
adjoining public land, do so in accordance with valid public easements or
private easements which will inure to the benefit of Buyer at no cost to the
owner of the Property. All of said Utilities are installed and operating and
all installation, connection and "tap-in" charges have been paid for in full.
(21) No work has been performed or is in progress
at, and no materials have been furnished to the Property which, though not
presently the subject of,
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might give rise to construction, mechanic's, materialmen's, municipal or other
liens against the Property or any portion thereof, except that for which full
and complete releases have been obtained. If any lien for any such work is
filed before or after Closing, Seller shall promptly discharge the same.
(22) To the best of Seller's knowledge, none of the
artwork being a part of the Personal Property was prepared on a "work for hire"
basis and none of the artwork was commissioned after 1991.
(23) To the best of Seller's knowledge, all
applicable charges, fees and assessments (including condominium fees, to the
extent applicable) and any and all other sums due under declarations,
cross-easements and like agreements to which the Property or any portion thereof
may be subject, have been paid, and no special assessments thereunder are
pending, and all consents and approvals required to be obtained under any such
declarations, cross-easements and like agreements have been obtained pursuant to
the requirements of such documentation.
(24) To the best of Seller's knowledge, all debts,
liabilities, and obligations of Seller arising out of the construction,
ownership, and operation of the Property including, but not limited to,
construction costs, salaries, taxes, accounts payable and the like, have been
paid as they became due and payable and shall continue to be so paid from the
date hereof until the Closing Date.
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. 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 $50,000 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
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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 $50,000 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 actual 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:
(1) 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.
(2) 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.
(3) 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.
(4) 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
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hereby or which questions the validity of this Agreement or any action taken or
to be taken by Buyer pursuant hereto.
(5) 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.
(6) 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.
(7) 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, N.A. Buyer acknowledges that its
obligations hereunder are not conditioned upon any third party financing or
capital infusion by another party.
(8) 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), and all such representations
shall survive for a period of one year from the Closing.
10. Access To The Property.
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(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 Property 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 Property shall
be subject to the rights of the Tenants of any of the Real Property, who shall
not be unreasonably disturbed during any such inspection by Buyer. Buyer shall
not engage in any activity in or about the Real Property 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 Property, 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
Property 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 Property 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 Property 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
Property. 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 Property shall maintain public liability insurance policies
(naming Seller as an additional named insured with respect to any liability
occurring on the Real Property), 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 Property. 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 Property.
(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 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 Property.
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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 the Property with zoning, licensing and all other
governmental requirements, Leases for any of the Real Property, operating
statements pertaining to the Property and all other aspects and conditions of
the Property 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 shall use its commercially reasonable efforts to
obtain a Non-Applicability Letter for the Land promptly after the Effective
Date, and shall pursue the same diligently and in good faith.
(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 "O". 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
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prior to Closing, Estoppel Certificates shall have been obtained from at least
75% of the Tenants at each Property, including those identified on Exhibit "P"
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, 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.
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 Property, 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 Property is commenced, Seller agrees promptly to
notify Buyer thereof. In the event of a material taking of one or more Real
Property 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 the Property 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 Property, and at Closing, Buyer shall pay to Seller
the aggregate of the Allocated Prices for the remaining Real Property. 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.
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(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
Property so damaged, an amount equal to or less than ten percent (10%) of the
Purchase Price for such Real Property, there shall be no abatement or adjustment
in the Purchase Price 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
Property 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 Property 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 Property is an amount which is greater than ten
percent (10%) of the Purchase 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 the
Property which have suffered damage to the Improvements by fire or other
casualty in an amount which exceeds ten percent (10%) of the Purchase 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 Property, and at Closing,
Buyer shall pay to Seller the aggregate of the Purchase Prices for the remaining
Real Property. 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 Property 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 Property
from sale to the general public at a time when other parties would be interested
in purchasing such Real Property, that Seller shall have sustained damages which
will be
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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.
(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") for the entire Paint Works Property or (Y) to seek specific
performance of Seller's obligation to convey the Real Property in accordance
with this Agreement. If Buyer 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
Property, 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 the Property between the Execution
Date and the Closing Date in the same general manner as Seller has operated the
Property 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 obligations of landlord
under the Leases and all other agreements and contractual arrangements affecting
the Real Property by which Seller is bound or to which the Real Property, 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 agreement affecting the Real Property,
or any portion or portions thereof.
(d) No contract for or on behalf of or affecting the Real
Property 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.
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(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 Property. Any new lease
shall be on Buyer'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 Property, or any portion thereof, without
the prior written consent of Buyer, 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.
(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 Property, 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
Property, or any portion thereof;
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(iii) Notice of any actual or threatened litigation
against Seller or affecting or relating to the Real Property, or any portion
thereof which may materially and adversely affect the Real Property or Seller's
ability to consummate the transactions contemplated by this Agreement; and
(iv) Vacancy of any demised Property by a tenant, other than
in accordance with a scheduled lease termination.
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 PROPERTY, 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
PROPERTY INCLUDING, WITHOUT LIMITATION: (i) THE VALUE, CONDITION,
MERCHANTABILITY, MARKETABILITY, PROFITABILITY, SUITABILITY OR FITNESS FOR A
PARTICULAR USE OR PURPOSE OF ANY OF THE Property, (ii) THE MANNER OR QUALITY OF
THE CONSTRUCTION OR MATERIALS INCORPORATED INTO ANY OF THE PROPERTY AND (iii)
THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF ANY OF THE PROPERTY.
BUYER AGREES THAT WITH RESPECT TO THE PROPERTY, 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 BUYER 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 THE PROPERTY
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
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SHALL ACCEPT THE PROPERTY "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 PROPERTY BY SELLER, ANY AGENT
OF SELLER OR ANY THIRD PARTY. BUYER EXPRESSLY AGREES THAT THE TERMS AND
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
PROPERTY 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. Conditions Precedent to Closing.
The obligations of Buyer hereunder are subject to the fulfillment of
the following conditions prior to or on the Closing Date (any one of which may
be waived in whole or in part by Buyer at or prior to the Closing) and in the
event any of the conditions are not complied with, Buyer may terminate this
Agreement by notifying the Seller and Escrow Agent and thereupon shall be
returned the Deposit and thereafter this Agreement shall be null and void:
(a) Correctness of Warranties and Representations. The
warranties and representations made by Seller in this Agreement shall be true
and correct on the Closing Date as though such representations and warranties
were made on the Closing Date (except for changes in the Leases permitted under
the terms of this Agreement).
(b) Compliance with Terms and Conditions. Seller shall have
performed and complied with all of the terms and conditions required by this
Agreement to be performed and complied with by it prior to or on the Closing
Date.
(c) Buyer's Satisfaction with Inspection. Buyer shall have
notified Seller of Buyer's satisfaction with the inspection performed under
Section 11 of this Agreement, or shall fail to notify Seller on or before the
Due Diligence Expiration Date, of Buyer's dissatisfaction with the results of
such review.
18. Brokers.
(a) Seller and Buyer each represent to the other that 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 18(a) hereof.
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(c) The provisions of this Paragraph 18 shall survive Closing
hereunder, or any other termination of this Agreement.
19. 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 to Buyer, addressed to:
Brandywine Operating Partnership, L.P.
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
Attn: Gerard H. Sweeney,
President and Chief Executive Officer
with a copy in each instance to:
Brad A. Molotsky, General Counsel
Brandywine Operating Partnership, L.P.
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
If to Seller, addressed to:
Paint Works Corporate Center-H
20 E. Clementon Road, Suite 201
Gibbsboro, New Jersey 08026
Attention: R. Randle Scarborough
with a copy in each instance to:
Kelly Young, Esquire
20 East Clementon Road, Suite 202
Gibbsboro, New Jersey 08026
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<PAGE>
If to Escrow Agent, addressed to:
M. Gordon Daniels, Esquire
Commonwealth Land Title Insurance Company
1700 Market Street
Philadelphia, Pennsylvania 19103
or to such-other address or addresses and to the attention of such other person
or persons as any of the parties may notify the other in accordance with the
provisions of this Agreement. 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 delivery) by the party
to whom such notice is sent. Notices by the parties may be given on their
behalf by their respective attorneys.
20. Successors And Assigns. Except to a subsidiary or related party,
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.
21. 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.
22. 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.
23. 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.
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<PAGE>
24. Captions And Recitals. The captions contained herein are not a
part of this Agreement and are included solely for the convenience of the
parties.
25. Entire Agreement. This Agreement and the Exhibits and Schedules
attached hereto 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.
26. 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.
(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.
27. 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 Property, it shall conduct such investigation of the Property 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.
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<PAGE>
28. Limitation Of Liability. No recourse shall be had for any
obligation of Brandywine Realty Trust or Brandywine Operating Partnership, L.P.
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 or Brandywine Operating Partnership, L.P., 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.
Except for breaches of representations and warranties as stated in
Sections 9 and 18 herein, which shall be full recourse obligations, no recourse
shall be had for any obligation of Seller 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 general partner or employee of Seller 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 Buyer and all parties
claiming by, through or under Buyer.
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 Property, which
information is relevant and reasonably necessary, in the opinion of Buyer's
outside, third party accountants (the "Accountants"), to enable Buyer and its
Accountants to prepare financial statements in compliance with any or all of (a)
Rule 3-05 or 3-14 of Regulation S-X of the Securities and Exchange Commission
(the "Commission"), as applicable; (b) any other rule issued by the Commission
and applicable to Buyer; and (c) any registration statement, report or
disclosure statement filed with the Commission by, or on behalf of Buyer.
Seller shall deliver to Buyer's accountants a representation letter (the
"Letter"), in the form annexed hereto as Exhibit "Q", provided that Buyer (and
any assignee or designee acquiring title to the Real Property) 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
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<PAGE>
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.
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. Formal tender of an executed deed and purchase money is
hereby waived by Buyer.
33. Further Assurances. After the Closing, 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.
36. Indemnification.
Without limitation of any other Seller indemnity obligations set forth
herein, from and after the Closing Date, Seller shall indemnify, defend and save
and hold harmless Buyer, and its respective trustees, directors, officers and
employees, of, from and against any and all loss, cost, expense, damage, claim,
and liability, including reasonable attorney's fees and court costs, including,
without limitation, attorney's fees and costs associated with the enforcement of
Seller's indemnification obligations for all claims brought within one year of
such Closing (hereinafter collectively, "Losses") which Buyer may suffer or
incur, resulting from, relating to, or arising in whole or in part, from or out
of (i) any misrepresentation or breach of a representation or warranty by Seller
contained in this Agreement; (ii) any failure to fulfill any covenant or
agreement of Seller contained in this Agreement; (iii) all litigation as set
forth in this
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<PAGE>
Agreement and on Exhibits hereto; (iv) any and all actions, suits,
investigations, proceedings, demands, assessments, audits, judgments, and/or
claims arising out of or relating to any of the foregoing.
Promptly after receipt by Buyer of written notice of the commencement
of any suit, audit, demand, judgment, action, investigation or proceeding (a
"Third Party Action") or promptly after Buyer incurs a Loss or has knowledge of
the existence of a Loss, Buyer will, if a claim with respect thereto is to be
made against Seller due to Seller's obligation to provide indemnification
hereunder, give Seller written notice of such Loss or the commencement of any
Third Party Action; provided, however, that the failure to provide such notice
within a reasonable period of time shall not relieve Seller of any of its
obligations hereunder. Promptly after receiving such notice, Seller will, upon
notice to Buyer, have the right to assume and control the defense and settlement
of any such Third Party Action at its own cost and expense; provided, however,
that it shall be a condition precedent to the exercise of such right by Seller
that Seller shall agree in writing that the Loss, or Third Party Action, as the
case may be, is properly within the scope of the indemnification obligation and
that as between the parties, Seller shall be responsible to satisfy and
discharge such Third Party Action. Seller shall not enter into any resolution
or other compromise of a Third Party Action without obtaining the complete
release of Buyer for any liability to all claimants under or pursuant to such
Third Party Action. Buyer shall have the right to participate in any such
defense, contest or other protective action at its own cost and expense.
Notwithstanding the foregoing, Buyer shall have the right to assume
and control the defense and settlement of a Third Party Action (a) if such
action includes claims for equitable relief which, if determined adversely to
Buyer, could reasonably be expected to interfere with its intended business
operations or damage its business reputation or (b) if Seller fails to do so in
a timely manner. In any circumstances in which Buyer undertakes to control the
Third Party Action as provided in this paragraph, it shall (i) not enter into
any resolution or other compromise involving monetary damages without obtaining
the prior written consent of Seller provided that such written consent may not
be withheld if it would interfere with Buyer's business operation and (ii) keep
Seller informed on an ongoing basis of the status of such Third Party Action and
shall deliver to Seller, copies of all documents related to the Third Party
Action reasonably requested by Seller. Buyer shall act to assure that all
attorneys' fees and expenses incurred in connection therewith are reasonable.
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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:
PAINT WORKS CORPORATE CENTER-H, a New Jersey
general partnership
By: /s/Robert K. Scarborough
-------------------------------------
Robert K. Scarborough, its authorized
managing general partner
By: /s/Olive A. Scarborough
-------------------------------------
Olive A. Scarborough, its authorized
general partner
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
Commonwealth Land Title Insurance Company:
By: /s/M. Gordon Daniels
----------------------
M. Gordon Daniels
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<PAGE>
EXECUTION
20 EAST CLEMENTON ROAD
AGREEMENT OF SALE
Between
PAINT WORKS CORPORATE CENTER-H
and
BRANDYWINE REALTY TRUST
Dated as of December 8, 1997
<PAGE>
LIST OF EXHIBITS
Exhibit A Description of Land
Exhibit B List of Contracts
Exhibit C Certified Rent Roll
Exhibit D Permitted Exceptions
Exhibit E Excluded Personal Property
Exhibit F Form of Deed
Exhibit G Form of Scarborough Lease
Exhibit H Bill of Sale
Exhibit I Form of Assignment(s)
Exhibit J Form of Non-Foreign Person Certification
Exhibit K Pending Litigation
Exhibit L Contracts Not Terminable with 30 days Notice
Exhibit M Environmental Notices
Exhibit N Outstanding Brokerage Commissions and TI
Exhibit O Form of Estoppel Certificate
Exhibit P Identified Tenants
Exhibit Q Representation Letter
<PAGE>
Exhibit 10.11
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of December 11, 1997, is
entered into by and among BRANDYWINE REALTY TRUST, a Maryland real estate
investment trust (the "Trust"), BRANDYWINE OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership (the "Partnership"), LAUREL OAK ROAD, L.L.C. (the
"LLC"), and M. SEAN SCARBOROUGH and R. RANDLE SCARBOROUGH, the sole members of
the LLC (together, the "Members").
RECITALS
WHEREAS, the LLC holds ownership interests in certain properties (the
"Properties") which it may contribute to the Partnership in exchange for units
of limited partnership interests ("Units") in the Partnership in accordance with
the terms of that certain Agreement, dated as of the date hereof, by and among
the parties hereto (the "Contribution Agreement");
WHEREAS, pursuant to the Partnership Agreement (as defined below), the
Units will be redeemable for cash or common shares of beneficial interest, par
value $.01 per share, of the Trust (the "Common Shares") upon the terms and
subject to the conditions contained therein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Definitions. In addition to the definitions set forth above, the
following terms, as used herein, have the following meanings:
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under common control with such
Person. For the purposes of this definition, "control", when used with respect
to any Person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement" means this Registration Rights Agreement, as it may
be amended, supplemented or restated from time to time.
"Business Day" means any day except a Saturday, Sunday or other
day on which commercial banks in New York, New York are authorized by law to
close.
"Commission" means the United States Securities and Exchange
Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
<PAGE>
"Partnership Agreement" means the Amended and Restated Agreement
of Limited Partnership of the Partnership dated as of November 18, 1997, as the
same may be amended, modified or restated from time to time.
"Person" means an individual or a corporation, partnership,
limited liability company, association, trust, or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Registrable Securities" means any Common Shares issued or
issuable upon any redemption of Units issued pursuant to the Contribution
Agreement; provided that such Common Shares shall cease to constitute
Registrable Securities once: (i) a registration statement covering such Common
Shares has been declared effective by the Commission and such Common Shares have
been sold or transferred pursuant to such effective registration statement, (ii)
such Common Shares may be sold pursuant to Rule 144(k) under the Securities Act
or (iii) such Common Shares have been otherwise transferred in a transaction
that would constitute a sale thereof under the Securities Act, the Trust has
delivered a new certificate or other evidence of ownership for such Common
Shares not bearing the Securities Act restricted stock legend and such Common
Shares may be resold without subsequent registration under the Securities Act.
"Registration Expenses" means all expenses incident to the
Trust's performance of or compliance with Article 2, including, without
limitation, all registration and filing fees, all listing fees, all fees and
expenses of complying with securities or blue sky laws, and printing expenses,
the fees and disbursements of counsel for the Trust and of the Trust's
independent public accountants, but excluding fees and disbursements of counsel
or other advisors for the LLC or the Members and excluding any brokerage
discounts or commissions payable in connection with a sale of Registrable
Securities.
"Rule 144" means Rule 144 under the Securities Act, as amended
from time to time (or any successor statute).
"Securities Act" means the Securities Act of 1933, as amended.
2. Registration Rights.
2.1 Registration on Demand.
2.1.1 Demand. At any time following the issuance of the
Units to the LLC and subject to Sections 2.1.3 and 2.1.6, upon the written
request (the "Demand") of the LLC that the Trust effect the registration under
the Securities Act of the reoffer and resale of all, and not less than all, of
the Registrable Securities, the Trust shall prepare and file, within 75 days
after the Demand is received, and shall thereafter use its reasonable efforts to
cause to become effective, a "shelf" registration statement under the Securities
Act covering the reoffer and resale of the Registrable Securities by the LLC in
an offering to be made on a continuous basis pursuant to Rule 415 under the
Securities Act.
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<PAGE>
2.1.2 Registration of Other Securities. Whenever the
Trust shall effect a registration pursuant to this Section 2.1, holders of
securities of the Trust who have "piggyback" registration rights may include all
or a portion of such securities in such registration, offering or sale.
2.1.3 Registration Statement Form S-3. Registrations
under this Section 2.1 shall only be required to be made on Form S-3, or any
successor form. In the event the Trust is not eligible to use Form S-3 to
register the Registrable Securities at the time it receives a Demand, the Trust
shall notify the LLC (a "Demand Rejection") within five days of its receipt of
the Demand. Thereafter, the LLC shall have the option, exercisable by written
notice delivered to the Trust within five days of its receipt of a Demand
Rejection, to allow the Trust to delay the filing of the applicable registration
statement until that date on which the Trust is again eligible to file a Form
S-3. In the event the LLC does not exercise such option, such Demand shall be
deemed to be withdrawn. The Trust hereby represents and warranties to the LLC
that, as of the date hereof, the Trust is eligble to register the Registrable
Securties on Form S-3.
2.1.4 Expenses. The Trust shall pay the Registration
Expenses in connection with the Demand registration effected pursuant to this
Section 2.1. If a registration requested pursuant to this Section 2.1 is
withdrawn or otherwise not effected, other than at the request of LLC, the Trust
shall pay the Registration Expenses in connection therewith. If the
registration pursuant to a Demand is withdrawn at the request of the LLC and if
the LLC elects not to have such registration count as its Demand registration
under this Section 2.1, the LLC shall pay all the Registration Expenses of such
registration, other than the fees and expenses of counsel to the Trust or of any
other holder of Trust securities participating in the registration (a
"Participating Holder").
2.1.5 Effective Registration Statement. A registration
requested pursuant to this Section 2.1 shall not be deemed to have been effected
(i) unless a registration statement with respect thereto has been declared
effective by the Commission or (ii) if after it has become effective, such
registration is interfered with by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court for any
reason and has not thereafter become effective.
2.1.6 Limitations on Registration on Demand.
(i) In no event shall the Trust be required to effect
more than one registration pursuant to this Section 2.1.
(ii) Notwithstanding anything herein, if the Trust
reasonably believes that the filing of a registration statement with the
Commission would adversely affect the contemplated activities of the Trust, then
the Trust may postpone the filing of the applicable registration statement for a
period not in excess of 30 days or, in the event the filing is being postponed
in connection with a proposed underwritten public offering of the Trust's
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securities, for such longer period (not to exceed an additional 30 days) as may
be reasonably requested by the managing underwriter for such proposed offering.
(iii) Notwithstanding anything herein, if the
filing of a registration statement pursuant to a Demand would require the Trust
to include in a filing with the Commission financial statements of probable or
completed acquisitions in order that such registration statement be in
compliance with rules and regulations of the Commission, then the Trust may
delay the filing of such registration statement until it has included the
requisite financial statements (including any necessary pro forma financial
information) in a filing with the Commission.
2.2 Registration Procedures.
2.2.1 In connection with the registration of any
Registrable Securities under the Securities Act as provided in Section 2.1, the
Trust shall as promptly as practicable:
(i) prepare and file with the Commission the requisite
registration statement to effect such registration and thereafter use
commercially reasonable efforts to cause such registration statement to become
and remain effective;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective and to comply with provisions of the Securities Act with
respect to the disposition of all Registrable Securities covered by such
registration statement until all of such Registrable Securities have been sold
thereunder;
(iii) furnish to the LLC such number of conformed
copies of such registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of the
prospectus contained in such registration statement (including each preliminary
prospectus and any summary prospectus) and any other prospectus filed under Rule
424 under the Securities Act, in conformity with the requirements of the
Securities Act, and such number of copies of such other documents as the LLC may
reasonably request;
(iv) use commercially reasonable efforts (x) to
register or qualify all Registrable Securities under such other securities or
Blue Sky laws of such States of the United States of America where an exemption
is not available and as the LLC shall reasonably request, (y) to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and (z) to take any other action which may
reasonably be necessary or advisable to enable the LLC to consummate the
disposition in such jurisdictions of the Registrable Securities to be sold by
the LLC, except that the Trust shall not for any such purpose be required to
qualify generally to do business as a foreign trust in any jurisdiction wherein
it would not, but
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<PAGE>
for the requirements of this paragraph (iv), be obligated to be so qualified or
to consent to general service of process in any such jurisdiction;
(v) notify the LLC upon discovery that, or upon the
happening of any event as a result of which, the prospectus included in the
registration statement filed pursuant to a Demand, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, in the light of the circumstances under which they were made, and at
the request of the LLC, use its best efforts to promptly prepare and furnish to
the LLC such number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made;
(vi) use commercially reasonable efforts to list all
Registrable Securities covered by such registration statement on any national
securities exchange or over-the-counter market, if any, on which Registrable
Securities covered by such registration statement are then listed.
The LLC agrees that upon receipt of any notice from the Trust of the
happening of an event of the kind described in Section 2.2.1(v), the LLC shall
forthwith discontinue its disposition of Registrable Securities pursuant to the
registration statement relating to such Registrable Securities until the LLC's
receipt of the copies of the supplemented or amended prospectus contemplated by
Section 2.2.1(v).
2.3. Holdback Agreements; Information Blackout.
2.3.1 Holdback Agreements. In connection with an
underwritten public offering of securities of the Trust, the LLC agrees that, if
required by the underwriter or underwriters, it will not effect any public sale
or distribution, including any sale pursuant to Rule 144 under the Securities
Act, of any Registrable Securities, during the period commencing 10 days prior
to the expected commencement of the offering and ending 30 days after the
closing of such offering.
2.3.2 Information Blackout. At any time when a
registration statement effected pursuant to this Section 2 relating to
Registrable Securities is effective, upon written notice from the Trust to the
LLC that the Trust has determined in good faith that sale of Registrable
Securities pursuant to the registration statement would require disclosure by
the Trust of non-public material information not otherwise required, in the
judgment of the Trust, to be disclosed under applicable law, the LLC shall
suspend sales of Registrable Securities pursuant to such registration statement
until the earlier of (a) 30 days after the Trust makes such good faith
determination and (b) such time as the Trust notifies the LLC that such material
information has
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been disclosed to the public or has ceased to be material or that sales pursuant
to such registration statement may otherwise be resumed.
2.4 Preparation. In connection with the preparation and filing
of any registration statement under the Securities Act in which the LLC is a
selling shareholder, the Trust shall give the LLC not less than 15 days prior
written notice of the preparation of such registration statement and give the
LLC and its counsel and accountants the opportunity to review and comment on, at
the LLC's expense, the applicable portions, relating to the LLC (including the
Selling Shareholder and Plan of Distribution sections), of the registration
statement, each prospectus included therein or filed with the Commission, and
each amendment thereof or supplement thereto (provided that the LLC shall
furnish the Trust with comments on any such amendment or supplement as promptly
as the Trust shall reasonably require).
2.5 Indemnification.
2.5.1 Indemnification by the Trust. In the event of any
registration of any securities of the Trust under the Securities Act in which
the LLC is or may be a selling shareholder, the Trust shall, and hereby does,
indemnify and hold harmless, the LLC, its members, officers, employees, agents
and affiliates and each Person who controls the LLC within the meaning of the
Securities Act, insofar as losses, claims, damages, or liabilities (or actions
or proceedings, whether commenced or threatened, in respect thereof) arise out
of or are based upon (a) any untrue statement or alleged untrue statement of any
fact contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus, final
prospectus, or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a fact
required to be stated therein or necessary to make the statements therein in
light of the circumstances in which they were made not misleading, or (b) any
violation by the Trust, its trustees, officers, employees or agents of this
Agreement or any law applicable to and in connection with such registration, and
the Trust shall reimburse the LLC and each such member, officer, agent or
affiliate and controlling Person of the LLC for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, liability, action or proceeding described in clauses (a) or
(b); provided, however, that the Trust shall not be liable in any such case to
the extent that any such loss, claim, damage, liability (or action or proceeding
in respect thereof) or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with information furnished to the Trust by the LLC. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
the LLC or any such director, officer, agent or affiliate or controlling Person
and shall survive the transfer of such securities by the LLC.
2.5.2 Indemnification by the LLC If any Registrable
Securities are included in any registration statement, the LLC shall indemnify
and hold harmless (in the same manner and to the same extent as set forth in
Section 2.5.1 above) the Trust and each trustee,
-6-
<PAGE>
officer and employee of the Trust and each Person who controls the Trust within
the meaning of the Securities Act, with respect to any statement or alleged
statement in or omission or alleged omission from such registration statement,
any preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, if such statement or alleged
statement or omission or alleged omission was made in reliance upon and in
conformity with information furnished to the Trust by the LLC.
2.5.3 Notice of Claims, Etc. Promptly after receipt by
an indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding paragraphs of this Section 2.5,
such indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party, immediately give written notice to the latter of
the commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of this
Section 2.5, except to the extent that the indemnifying party is materially
prejudiced by such failure. In case any such action is brought against an
indemnified party, unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may exist
in respect of such claim, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that the indemnifying
parties may agree, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party shall not
be liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable out of pocket costs related to the indemnified party's cooperation
with the indemnifying party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties arises in respect of such claim after the assumption of the defense
thereof. No indemnifying party shall be liable for any settlement of any action
or proceeding effected without its written consent, which consent shall not be
unreasonably withheld, delayed or conditioned. Consent of the indemnified party
shall be required for the entry of any judgment or to enter into a settlement
only when such judgment or settlement does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect such claim or litigation.
2.5.4 Contribution. If the indemnification provided for
in this Section 2.5 shall for any reason be held by a court to be unavailable to
an indemnified party under Section 2.5.1 or 2.5.2 hereof in respect of any loss,
claim, damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under Sections 2.5.1 or 2.5.2 hereof, the indemnified
party and the indemnifying party under Sections 2.5.1 or 2.5.2 hereof shall
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating the
same), (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Trust on one hand and the LLC on the other or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect the relative fault of the Trust
on one hand and the LLC on the other that resulted in such loss, claim, damage
or liability, or action in respect
-7-
<PAGE>
thereof, as well as any other relevant equitable considerations. No Person
guilty of fraudulent misrepresentation (within the meaning of the Securities
Act) shall be entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation. In addition, no Person shall be obligated to
contribute hereunder any amounts in payment for any settlement of any action or
claim, effected without such Person's written consent, which consent shall not
be unreasonably withheld.
3. Modification; Waivers. This Agreement may be modified or amended
only with the written consent of each party hereto. No party shall be released
from its obligations hereunder without the written consent of the other party.
The observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively) by the party
entitled to enforce such term, but any such waiver shall be effective only if in
a writing signed by the party against which such waiver is to be asserted.
Except as otherwise specifically provided herein, no delay on the part of any
party hereto in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of any party hereto of any
right, power or privilege hereunder operate as a waiver of any other right,
power or privilege hereunder nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any right, power or privilege hereunder.
4. Entire Agreement. This Agreement represents the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and supersedes all other prior and contemporaneous
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof. In the event the LLC elects to sell the
Property to the Partnership for cash instead of contributing the Property to the
Partnership, pursuant to Section 3 of the Contribution Agreement, this Agreement
shall automatically terminate and no party hereto shall have any further rights
or obligations hereunder.
5. Severability. If any provision of this Agreement, or the
application of such provision to any party or circumstance, shall be held
invalid, the remainder of this Agreement or the application of such provision to
other parties or circumstances, to the extent permitted by law, shall not be
affected thereby; provided, that the parties shall negotiate in good faith with
respect to an equitable modification of the provision or application thereof
held to be invalid.
6. 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, (ii) by certified mail, return receipt requested, (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:
-8-
<PAGE>
If to the Trust or the Partnership, addressed to:
-------------------------------------------------
c/o Brandywine Realty Trust
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
Attention: Gerard H. Sweeney, President and Chief Executive
Officer
Fax: (610) 325-5622
with a copy in each instance to:
--------------------------------
Brad A. Molotsky, General Counsel
Brandywine Operating Partnership, L.P.
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
Fax: (610) 325-5622
If to Laurel Oak or a Member, addressed to:
------------------------------------------
Scarborough Properties
20 E. Clementon Road, Suite 201
Gibbsboro, NJ 08026
Attention: R. Randle Scarborough
Fax: (609) 435-4554
with a copy in each instance to:
-------------------------------
Kelly Young, Esquire
20 East Clementon Road, Suite 202
Gibbsboro, NJ 08026
Fax: (609) 346-3233
or to such other address or addresses and to the attention of such other person
or persons as any of the parties may notify the other in accordance with the
provisions of this Agreement. 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 delivery) by the party
to whom such notice is sent. Notices by the parties may be given on their
behalf by their respective attorneys.
7. Successors and Assigns. This Agreement shall inure to the
benefit of and shall be binding upon the Trust and the LLC and their respective
successors and permitted
-9-
<PAGE>
assigns. The parties hereto anticipate that the LLC will transfer all of the
Units to the Members in a transaction exempt from the registration requirements
of the Securities Act. Following such a transfer, all references herein to
"LLC" shall be deemed to refer to the Members, and following such a transfer,
all decisions and notices hereunder shall be made by the holders of not less
than a majority of the Registrable Securities outstanding and all other holders
of Registrable Securities shall be bound by any such decision.
8. Counterparts. This Agreement may be executed in counterparts,
each of which for all purposes shall be deemed to be an original and all of
which together shall constitute the same agreement.
9. Headings. The Section headings in this Agreement are for
convenience of reference only, and shall not be deemed to alter or affect the
meaning or interpretation of any provisions hereof.
10. Construction. This Agreement shall be governed, construed and
enforced in accordance with the laws of the Commonwealth of Pennsylvania without
regard to its principles of conflict of laws.
11. Recapitalizations, etc. In the event that any shares of
beneficiary interest or other securities are issued in respect of, in exchange
for, or in substitution of, any Registrable Securities by reason of any
reorganization, recapitalization, reclassification, merger, consolidation,
spin-off, partial or complete liquidation, share dividend, split-up, sale of
assets, distribution to shareholders or combination of the shares of Registrable
Securities or any other similar change in the Trust's capital structure,
appropriate adjustments shall be made in this Agreement so as to fairly and
equitably preserve, as far as practicable, the original rights and obligations
of the parties hereto under this Agreement.
12. Term. This Agreement shall continue in full force and effect
until the earlier of (i) six (6) years after the date hereof and (ii) the first
date on which the LLC and its permitted assigns may sell all of the Registrable
Securities held by them in a ninety (90) day period pursuant to Rule 144 under
the Securities Act.
-10-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the date first above written and delivered by their respective duly
authorized officers.
LAUREL OAK ROAD, LLC
By: /s/ M. Sean Scarborough
--------------------------------
M. Sean Scarborough, authorized
member
By: /s/ R. Randle Scarborough
--------------------------------
R. Randle Scarborough, authorized
member
/s/ M. Sean Scarborough
------------------------------------
M. Sean Scarborough
/s/ R. Randle Scarborough
------------------------------------
R. Randle Scarborough
BRANDYWINE OPERATING PARTNERSHIP, L.P.
By: BRANDYWINE REALTY TRUST, its sole
general partner
By: /s/ Gerard H. Sweeney
--------------------------------
Name: Gerard H. Sweeney
Title: President & CEO
BRANDYWINE REALTY TRUST
By: /s/ Gerard H. Sweeney
--------------------------------
Name: Gerard H. Sweeney
Title: President & CEO
-11-
<PAGE>
Exhibit 10.12
FIRST AMENDMENT TO AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
BRANDYWINE OPERATING PARTNERSHIP, L.P.
THIS FIRST AMENDMENT, dated as of December 11, 1997 (the "Amendment"),
amends the Amended and Restated Partnership Agreement (the "Partnership
Agreement") of BRANDYWINE OPERATING PARTNERSHIP, L.P., a Delaware limited
partnership (the "Partnership"). Capitalized terms used herein but not defined
herein shall have the meanings given such terms in the Partnership Agreement.
BACKGROUND
A. Pursuant to the Partnership Agreement, Brandywine Realty Trust (the
"General Partner"), as the general partner of the Partnership, has the power and
authority to issue additional Partnership Interests to persons on such terms and
conditions as the General Partner may deem appropriate.
B. The General Partner, pursuant to the exercise of such power and
authority and in accordance with the Partnership Agreement, has determined to
execute this Amendment to the Partnership Agreement to evidence the issuance of
additional Partnership Interests and the admission of the other signatories
hereto as Limited Partners of the Partnership in exchange for certain
contributions of real estate and real estate related assets that are being made
to the Partnership on the date hereof pursuant to three separate Agreements
(relating, respectively, to properties commonly known as 1007 Laurel Oak Road,
500 Scarborough Drive and the PaintWorks Property) among the Partnership, the
General Partner and the Admitted Partners.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby amend the Partnership Agreement as
follows:
1. The Partnership Agreement is hereby amended to reflect the
admission as a Limited Partner on the date hereof of the Persons set forth on
Schedule A-1 attached hereto (the "Initial Admitted Partners") and the ownership
by such Persons of the number of Class A Units listed opposite each Person's
name on Schedule A-1. Immediately following the issuance of such Class A Units
to the Initial Admitted Partners, the Initial Admitted Partners will transfer
all of such Class A Units to the members or partners of such Initial Admitted
Partners, with the result that the Initial Admitted Partners will have withdrawn
from and ceased to be Limited Partners and the Persons listed on Schedule A-2
attached hereto (the "Subsequent Admitted Partners") will have become Limited
Partners and will hold the Class A Units issued pursuant to this Amendment.
Attached as Schedule B is a list of the Partners of the Partnership prior to the
admission of the Initial Admitted Partners, together with the number and class
of Partnership Interests owned by such partners.
<PAGE>
2. The Partnership Interests issued hereby shall constitute Class A
Units; provided that any distribution to be received by the Subsequent Admitted
Partners on the Class A Units transferred to them on the date hereof by the
Initial Admitted partners on account of the fiscal quarter in which the
Subsequent Admitted Partners are admitted to the Partnership shall be pro-rated
to reflect the portion of the fiscal quarter of the Partnership for which the
Subsequent Admitted Partners held such Class A Units and shall not be pro-rata
in accordance with their then Percentage Interests.
3. By execution of this Amendment to the Partnership Agreement by
the General Partner and the Initial Admitted Partners and Subsequent Admitted
Partners, the Initial Admitted Partners and Subsequent Admitted Partners agree
to be bound by each and every term of the Partnership Agreement as amended from
time to time in accordance with the terms of the Partnership Agreement. The
General Partner confirms that the provisions in Section 18.1(a) of the
Partnership Agreement shall apply to the Subsequent Admitted Partners
notwithstanding Section 18.7 of the Partnership Agreement.
4. On the date of this Amendment, each of the Subsequebt Admitted
Partners shall execute and deliver to Brandywine Realty Trust an Irrevocable
Proxy coupled with an Interest in the form set forth on Exhibit 1 hereto
attached.
5. Except as expressly set forth in this Amendment to the
Partnership Agreement, the Partnership Agreement is hereby ratified and
confirmed in each and every respect.
IN WITNESS WHEREOF, this Amendment to the Partnership Agreement has
been executed and delivered as of the date first above written.
GENERAL PARTNER:
BRANDYWINE REALTY TRUST
By: /s/ Gerard H. Sweeney
---------------------------------------------
Its: President and CEO
---------------------------------------------
INITIAL ADMITTED PARTNERS:
LAUREL OAK ROAD LLC
By: /s/ M. Sean Scarborough
---------------------------------------------
Its: Member
---------------------------------------------
[Executions Continued]
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<PAGE>
ENGLISH CREEK PARTNERS #2,
Limited Partnership
By: /s/ R. Randle Scarborough
---------------------------------------------
Its: General Partner
---------------------------------------------
PWCCW
By: Robert K. Scarborough
---------------------------------------------
SUBSEQUENT ADMITTED PARTNERS:
/s/ R. Randle Scarborough
-------------------------------------------------
R. Randle Scarborough
/s/ M. Sean Scarborough
-------------------------------------------------
M. Sean Scarborough
/s/ Steven L. Shapiro
-------------------------------------------------
Steven L. Shapiro
/s/ Robert K. Scarborough
-------------------------------------------------
Robert K. Scarborough
/s/ Raymond J. Perkins
-------------------------------------------------
Raymond J. Perkins
-3-
<PAGE>
SCHEDULE "A-1"
INITIAL NUMBER OF
ADMITTED PARTNERSHIP
PARTNERS INTERESTS
Laurel Oak Road LLC 61,188
English Creek Partners #2,
Limited Partnership 63,404
PWCCW 265,384
<PAGE>
SCHEDULE "A- 2"
SUBSEQUENT NUMBER OF
ADMITTED PARTNERSHIP
PARTNERS INTERESTS
R. Randle Scarborough 59,578
M. Sean Scarborough 60,576
Steven L. Shapiro 1,902
Robert K. Scarborough 265,384
Raymond J. Perkins 2,536
<PAGE>
SCHEDULE "B"
BRANDYWINE OPERATING PARTNERSHIP, L.P.
OUTSTANDING PARTNERSHIP INTERESTS
AS OF DECEMBER 11, 1997
NUMBER OF
PARTNERSHIP
INTERESTS
LIMITED PARTNERS (ALL CLASS A UNITS)
Safeguard Scientifics, Inc. 252,387
The Nichols Company 2,742
Brian F. Belcher 7,245
Jack R. Loew 1,245
Craig C. Hough 1,245
Gary C. Bender 1,434
Werner A. Fricker 6,830
Brandywine Holdings I, Inc. 5
Brandywine Realty Trust 163,399
NUMBER OF
PARTNERSHIP
INTERESTS
GENERAL PARTNER (ALL GP UNITS)
Brandywine Realty Trust 23,172,642
<PAGE>
EXHIBIT 1
IRREVOCABLE PROXY COUPLED WITH AN INTEREST
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
irrevocably constitutes and appoints the General Partner, any Liquidating
Trustee, and authorized officers and attorneys-in-fact of each, and each of
those acting singly, in each case with full power of substitution, as its
true and lawful agent and attorney-in-fact, with full power and authority in
its name, place and stead to: execute, swear to, acknowledge, deliver, file
and record in the appropriate public offices (i) all certificates, documents
and other instruments (including, without limitation, this Agreement and the
Certificate and all amendments or restatements thereof) that the General
Partner or the Liquidating Trustee deems appropriate or necessary to form,
qualify or continue the existence or qualification of the Partnership as a
limited partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware and in all other jurisdictions in
which the Partnership may conduct business or own property; (ii) all
instruments that the General Partner deems appropriate or necessary to
reflect any amendment, change, modification or restatement of this Agreement
in accordance with its terms; (iii) all conveyances and other instruments or
documents that the General Partner deems appropriate or necessary to reflect
the dissolution and liquidation of the Partnership pursuant to the terms of
this Agreement, including, without limitation, a certificate of cancellation;
and (iv) all instruments relating to the admission, withdrawal, removal or
substitution of any Partner pursuant to the provisions of this Agreement, or
the Capital Contribution of any Partner. The foregoing power of attorney is
irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying upon the power of the General
Partner to act as contemplated by this Agreement in any filing or other
action by it on behalf of the Partnership, and it shall survive the death,
incapacity or incompetency of a Limited Partner to the effect and extent
permitted by law and the Transfer of all or any portion of such Limited
Partner's Partnership Units and shall extend to such Limited Partner's heirs,
distributees, successors, assigns and personal representatives.
IN WITNESS WHEREOF, the undersigned has executed and delivered this Proxy
on this [ ] day of December, 1997.
-----------------------------------------------
(To be executed by each person/entity receiving
Partnership Interests at or immediately after
the Closing)
<PAGE>
Exhibit 10.13
TAX INDEMNIFICATION AGREEMENT
This Tax Indemnification Agreement (the "Agreement") is made as of
December 11, 1997, by and among Brandywine Operating Partnership, L.P., a
Delaware limited partnership (the "Partnership"), Robert K. Scarborough t/a
PWCCW ("PWCCW"), and Robert K. Scarborough ("RKS") (together with PWCCW, the
"Limited Partner").
WITNESSETH:
WHEREAS, the Limited Partner has executed that certain Amended and
Restated Agreement of Limited Partnership of Brandywine Operating Partnership,
L.P., dated as of November 18, 1997 (the "Partnership Agreement"); and
WHEREAS, Limited Partner received its limited partnership interest in
the Partnership in exchange for the contribution to the Partnership of certain
assets listed on Schedule A hereto (the "Assets") in a transaction to which
Section 721 of the Internal Revenue Code of 1986, as amended (the "Code")
applied; and
WHEREAS, at the time of the contribution, Limited Partner had
unrealized built-in gain (as defined in Treasury Regulation Section
1.704-3(a)(3)) in each Asset as set forth on Schedule A hereto; and
WHEREAS, the Partnership is willing to reimburse and indemnify the
Limited Partner for possible tax on the built-in gain of the Limited Partner in
the Assets under the limited circumstances set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the covenants
and agreements set forth herein, the parties hereto, intending to be legally
bound hereby, agree as follows:
AGREEMENT
1. Definitions. As used in this Agreement, the capitalized terms
shall have the respective meanings ascribed to them in this Section 1.
Capitalized terms not defined herein, shall have the meanings ascribed to them
in the Partnership Agreement.
<PAGE>
"Built-in Gain" means the unrealized built-in gain of the Limited
Partner in the Assets, individually and cumulatively, as determined from time to
time in accordance with Section 704(c), Treasury Regulation Section
1.704-3(a)(3) and the Partnership Agreement.
"Covered Tax Liabilities" means the sum of (A) any federal and state
taxes (excluding interest and penalties) imposed on any remaining Built-in Gain
of the Limited Partner as a result of a sale or distribution (other than a
distribution to the Limited Partner) of the Assets to which Section 704(c) of
the Code applies at time during the Term, plus (B) any additional federal and
state taxes (excluding interest and penalties) which may be imposed on a
distribution to the Limited Partner under this Agreement.
"Term" means the 48 month period beginning as of the date of this
Agreement.
2. Indemnification for Tax on Built-in Gain. Within 90 days
following the occurrence of an event (such as a sale or distribution of the
Assets (other than a distribution to the Limited Partner) to which Section
704(c) of the Code applies) which causes the Covered Tax Liabilities to become
fixed and determined, the Partnership hereby agrees that it shall cause a
distribution to be made by the Partnership to the partners of the Partnership
under and in accordance with Section 6.1 of the Partnership Agreement such that
under such distribution, the Limited Partner shall receive an amount equal to
the Covered Tax Liabilities paid by the Limited Partner. Notwithstanding the
foregoing, federal, state or local tax on the Built-in Gain of the Limited
Partner arising as a result of (i) the sale or distribution of the Assets after
the Term or (ii) the disposition, transfer or conversion by the Limited Partner
of its limited partnership interest at any time (including during the Term),
shall be the sole obligation of the Limited Partner and the Partnership shall
not effect a distribution under this Section 2 and Section 6.1 of the
Partnership Agreement and shall have no other liability therefor under this
Agreement or otherwise.
3. Initial Determination of its Built-in Gain. The Limited Partner
hereby represents and warrants that as of the date of their contribution to the
Partnership, the Built-in Gain of the Limited Partner in each of the Assets is
as set forth on Schedule A hereto.
4. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without regard to the
conflict of law principles thereof.
<PAGE>
5. Counterparts. This Agreement may be executed in one or more
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts together constituting the same agreement.
IN WITNESS WHEREOF, this Tax Indemnification Agreement has been duly
executed and delivered by the respective parties on the date first above
written.
BRANDYWINE OPERATING PARTNERSHIP, L.P.
By: Brandywine Realty Trust, its general partner
/s/ Gerard H. Sweeney
------------------------------------------------------
By: Gerard H. Sweeney
Title: President and Chief Executive Officer
ROBERT K. SCARBOROUGH T/A PWCCW
/s/ Robert K. Scarborough
------------------------------------------------------
By: Robert K. Scarborough
/s/ Robert K. Scarborough
------------------------------------------------------
Robert K. Scarborough
<PAGE>
Exhibit 10.14
TAX INDEMNIFICATION AGREEMENT
This Tax Indemnification Agreement (the "Agreement") is made as of
December 11, 1997, by and among Brandywine Operating Partnership, L.P., a
Delaware limited partnership (the "Partnership"), Laurel Oak Road LLC ("Laurel
Oak"), and M. Sean Scarborough ("MSS") and R. Randle Scarborough ("RSS")
(collectively with Laurel Oak, the "Limited Partner").
WITNESSETH:
WHEREAS, the Limited Partner has executed that certain Amended and
Restated Agreement of Limited Partnership of Brandywine Operating Partnership,
L.P., dated as of November 18, 1997 (the "Partnership Agreement"); and
WHEREAS, Limited Partner received its limited partnership interest in
the Partnership in exchange for the contribution to the Partnership of certain
assets listed on Schedule A hereto (the "Assets") in a transaction to which
Section 721 of the Internal Revenue Code of 1986, as amended (the "Code")
applied; and
WHEREAS, at the time of the contribution, Limited Partner had
unrealized built-in gain (as defined in Treasury Regulation Section
1.704-3(a)(3)) in each Asset as set forth on Schedule A hereto; and
WHEREAS, the Partnership is willing to reimburse and indemnify the
Limited Partner for possible tax on the built-in gain of the Limited Partner in
the Assets under the limited circumstances set forth herein; and
WHEREAS, MSS and RRS are the members of Laurel Oak, and Laurel Oak may
distribute its limited partnership interest in the Partnership to MSS and RRS.
NOW, THEREFORE, in consideration of the foregoing and the covenants
and agreements set forth herein, the parties hereto, intending to be legally
bound hereby, agree as follows:
AGREEMENT
1. Definitions. As used in this Agreement, the capitalized terms
shall have the respective meanings ascribed to them in this Section 1.
Capitalized terms not defined herein, shall have the meanings ascribed to them
in the Partnership Agreement.
<PAGE>
"Built-in Gain" means the unrealized built-in gain of the Limited
Partner in the Assets, individually and cumulatively, as determined from time to
time in accordance with Section 704(c), Treasury Regulation Section
1.704-3(a)(3) and the Partnership Agreement.
"Covered Tax Liabilities" means the sum of (A) any federal and state
taxes (excluding interest and penalties) imposed on any remaining Built-in Gain
of the Limited Partner as a result of a sale or distribution (other than a
distribution to the Limited Partner) of the Assets to which Section 704(c) of
the Code applies at time during the Term, plus (B) any additional federal and
state taxes (excluding interest and penalties) which may be imposed on a
distribution to the Limited Partner under this Agreement.
"Term" means the 48 month period beginning as of the date of this
Agreement.
2. Indemnification for Tax on Built-in Gain. Within 90 days
following the occurrence of an event (such as a sale or distribution of the
Assets (other than a distribution to the Limited Partner) to which Section
704(c) of the Code applies) which causes the Covered Tax Liabilities to become
fixed and determined, the Partnership hereby agrees that it shall cause a
distribution to be made by the Partnership to the partners of the Partnership
under and in accordance with Section 6.1 of the Partnership Agreement such that
under such distribution, the Limited Partner shall receive an amount equal to
the Covered Tax Liabilities paid by the Limited Partner. Notwithstanding the
foregoing, federal, state or local tax on the Built-in Gain of the Limited
Partner arising as a result of (i) the sale or distribution of the Assets after
the Term or (ii) the disposition, transfer or conversion by the Limited Partner
of its limited partnership interest at any time (including during the Term),
shall be the sole obligation of the Limited Partner and the Partnership shall
not effect a distribution under this Section 2 and Section 6.1 of the
Partnership Agreement and shall have no other liability therefor under this
Agreement or otherwise.
3. Initial Determination of its Built-in Gain. The Limited Partner
hereby represents and warrants that as of the date of their contribution to the
Partnership, the Built-in Gain of the Limited Partner in each of the Assets is
as set forth on Schedule A hereto.
4. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without regard to the
conflict of law principles thereof.
<PAGE>
5. Counterparts. This Agreement may be executed in one or more
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts together constituting the same agreement.
IN WITNESS WHEREOF, this Tax Indemnification Agreement has been duly
executed and delivered by the respective parties on the date first above
written.
BRANDYWINE OPERATING PARTNERSHIP, L.P.
By: Brandywine Realty Trust, its general partner
/s/ Gerard H. Sweeney
------------------------------------------------------
By: Gerard H. Sweeney
Title: President and Chief Executive Officer
LAUREL OAK ROAD LLC
/s/ M. Sean Scarborough
------------------------------------------------------
By: Mr. Sean Scarborough
Title: Member
/s/ M. Sean Scarborough
------------------------------------------------------
By: M. Sean Scarborough
/s/ R. Randle Scarborough
------------------------------------------------------
By: R. Randle Scarborough
<PAGE>
Exhibit 10.15
TAX INDEMNIFICATION AGREEMENT
This Tax Indemnification Agreement (the "Agreement") is made as of
December 11, 1997, by and among Brandywine Operating Partnership, L.P., a
Delaware limited partnership (the "Partnership"), English Creek Partners #2,
Limited Partnership, a New Jersey Limited Partnership ("English Creek") and R.
Randle Scarborough ("RRS") (together with English Creek, the "Limited Partner").
WITNESSETH:
WHEREAS, the Limited Partner has executed that certain Amended and
Restated Agreement of Limited Partnership of Brandywine Operating Partnership,
L.P., dated as of November 18, 1997 (the "Partnership Agreement"); and
WHEREAS, Limited Partner received its limited partnership interest in
the Partnership in exchange for the contribution to the Partnership of certain
assets listed on Schedule A hereto (the "Assets") in a transaction to which
Section 721 of the Internal Revenue Code of 1986, as amended (the "Code")
applied; and
WHEREAS, at the time of the contribution, Limited Partner had
unrealized built-in gain (as defined in Treasury Regulation Section
1.704-3(a)(3)) in each Asset as set forth on Schedule A hereto; and
WHEREAS, the Partnership is willing to reimburse and indemnify the
Limited Partner for possible tax on the built-in gain of the Limited Partner in
the Assets under the limited circumstances set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the covenants
and agreements set forth herein, the parties hereto, intending to be legally
bound hereby, agree as follows:
AGREEMENT
1. Definitions. As used in this Agreement, the capitalized terms
shall have the respective meanings ascribed to them in this Section 1.
Capitalized terms not defined herein, shall have the meanings ascribed to them
in the Partnership Agreement.
"Built-in Gain" means the unrealized built-in gain of the Limited
Partner in the Assets, individually and cumulatively, as determined from time to
time in accordance with Section 704(c), Treasury Regulation Section
1.704-3(a)(3) and the Partnership Agreement.
<PAGE>
"Covered Tax Liabilities" means the sum of (A) any federal and state
taxes (excluding interest and penalties) imposed on any remaining Built-in Gain
of the Limited Partner as a result of a sale or distribution (other than a
distribution to the Limited Partner) of the Assets to which Section 704(c) of
the Code applies at time during the Term, plus (B) any additional federal and
state taxes (excluding interest and penalties) which may be imposed on a
distribution to the Limited Partner under this Agreement.
"Term" means the 48 month period beginning as of the date of this
Agreement.
2. Indemnification for Tax on Built-in Gain. Within 90 days
following the occurrence of an event (such as a sale or distribution of the
Assets (other than a distribution to the Limited Partner) to which Section
704(c) of the Code applies) which causes the Covered Tax Liabilities to become
fixed and determined, the Partnership hereby agrees that it shall cause a
distribution to be made by the Partnership to the partners of the Partnership
under and in accordance with Section 6.1 of the Partnership Agreement such that
under such distribution, the Limited Partner shall receive an amount equal to
the Covered Tax Liabilities paid by the Limited Partner. Notwithstanding the
foregoing, federal, state or local tax on the Built-in Gain of the Limited
Partner arising as a result of (i) the sale or distribution of the Assets after
the Term or (ii) the disposition, transfer or conversion by the Limited Partner
of its limited partnership interest at any time (including during the Term),
shall be the sole obligation of the Limited Partner and the Partnership shall
not effect a distribution under this Section 2 and Section 6.1 of the
Partnership Agreement and shall have no other liability therefor under this
Agreement or otherwise.
3. Initial Determination of its Built-in Gain. The Limited Partner
hereby represents and warrants that as of the date of their contribution to the
Partnership, the Built-in Gain of the Limited Partner in each of the Assets is
as set forth on Schedule A hereto.
4. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without regard to the
conflict of law principles thereof.
<PAGE>
5. Counterparts. This Agreement may be executed in one or more
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts together constituting the same agreement.
IN WITNESS WHEREOF, this Tax Indemnification Agreement has been duly
executed and delivered by the respective parties on the date first above
written.
BRANDYWINE OPERATING PARTNERSHIP, L.P.
By: Brandywine Realty Trust, its general partner
/s/ Gerard H. Sweeney
------------------------------------------------------
By: Gerard H. Sweeney
Title: President and Chief Executive Officer
ENGLISH CREEK PARTNERS #2, LIMITED
PARTNERSHIP
/s/ R. Randle Scarborough
------------------------------------------------------
By: R. Randle Scarborough
Title: General Partner
/s/ R. Randle Scarborough
------------------------------------------------------
R. Randle Scarborough
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated November 14, 1997 in this Form 8-K on the combined statement of
revenue and certain expenses of the Scarborough Properties; our report dated
December 3, 1997 in this Form 8-K on the combined statement of revenue and
certain expenses of Bala Pointe Office Centre; and our report dated December 13,
1997 in this Form 8-K on the combined statement of revenue and certain expenses
of the GMH Properties into the Company's previously filed Registration
Statements on Forms S-3 (File No. 333-20991 and File No. 333-20999).
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
December 17, 1997
