<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (No Fee Required)
For the transition period from ___________ to ___________
Commission file number 1-9106
------
Brandywine Realty Trust
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 23-2413352)
-------------------------------- -------------------
State or other jurisdiction (I.R.S. Employer
of incorporation or organization Identification No.)
16 Campus Boulevard, Newtown Square, Pennsylvania 19073
------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(610) 325-5600
-----------------------------
Registrant's telephone number
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
A total of 21,045,040 Common Shares of Beneficial Interest were outstanding
as of August 13, 1997.
<PAGE>
BRANDYWINE REALTY TRUST
TABLE OF CONTENTS
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as of June 30,
1997 (unaudited) and December 31, 1996
Consolidated Statements of Operations for the
three months ended June 30, 1997
(unaudited) and June 30, 1996 (unaudited)
Consolidated Statements of Operations for the
six months ended June 30, 1997 (unaudited)
and June 30, 1996 (unaudited)
Consolidated Statements of Cash Flow for the
six months ended June 30, 1997 (unaudited)
and June 30, 1996 (unaudited)
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures
about Market Risk--Not applicable
PART II--OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities--Not applicable
Item 3. Defaults Upon Senior Securities--Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
2
<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1.--FINANCIAL STATEMENTS
BRANDYWINE REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Real estate investments
Operating properties..................................... $ 358,597 $ 161,284
Accumulated depreciation................................. (14,388) (9,383)
----------- ------------
344,209 151,901
Cash and cash equivalents................................. 10,777 18,279
Escrowed cash............................................. 1,213 2,044
Accounts receivable....................................... 2,755 1,366
Due from affiliates....................................... 293 517
Investment in management company.......................... 202 --
Deferred costs and other assets........................... 4,980 4,219
----------- ------------
Total assets............................................ $ 364,429 $ 178,326
----------- ------------
----------- ------------
LIABILITIES AND BENEFICIARIES' EQUITY
Mortgage notes payable.................................... $ 46,960 $ 36,644
Notes payable, Credit Facility............................ 130,775 --
Accrued interest.......................................... 395 202
Accounts payable and accrued expenses..................... 2,650 3,119
Distributions payable..................................... 4,192 2,255
Excess of losses over investment in management company.... -- 14
Tenant security deposits and deferred rents............... 2,721 1,324
----------- ------------
Total liabilities....................................... 187,693 43,558
----------- ------------
Minority interest......................................... 5,508 6,398
----------- ------------
Convertible preferred shares--$0.01 par value, 5,000,000
preferred shares authorized............................ -- 26,444
----------- ------------
Beneficiaries' equity
Shares of beneficial interest, $0.01 par value, 25,000,000
common shares authorized, 11,045,040 shares issued and
outstanding............................................ 111 70
Additional paid-in capital............................... 186,426 113,047
Share warrants........................................... 962 962
Cumulative earnings (deficit)............................ 460 (3,248)
Cumulative distributions................................. (16,731) (8,905)
----------- ------------
Total beneficiaries' equity............................. 171,228 101,926
----------- ------------
Total liabilities and beneficiaries' equity............. $ 364,429 $ 178,326
----------- ------------
----------- ------------
</TABLE>
The accompanying condensed notes are an integral part of these consolidated
financial statements.
3
<PAGE>
BRANDYWINE REALTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share information)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------- --------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Rents................................................... $ 9,890 $ 930 $ 16,889 $ 1,907
Tenant reimbursements................................... 1,958 38 3,285 68
Other................................................... 272 14 544 52
---------- ------- ----------- --------
Total revenue.......................................... 12,120 982 20,718 2,027
---------- ------- ----------- --------
Operating Expenses:
Interest................................................ 2,084 209 3,059 416
Depreciation and amortization........................... 3,465 223 5,775 465
Property operating expenses............................. 4,222 409 7,032 859
Management fees......................................... 442 10 757 22
Administrative expenses................................. 261 137 430 259
---------- ------- ----------- --------
Total operating expenses............................... 10,474 988 17,053 2,021
---------- ------- ----------- --------
Income (loss) before equity in income of management
company and minority interest............................ 1,646 (6) 3,665 6
Equity in income of management company................... 92 -- 217
---------- ------- ----------- --------
Income (loss) before minority interest................... 1,738 (6) 3,882 6
Minority interest in income.............................. (80) (3) (174) (5)
---------- ------- ----------- --------
Net Income (loss)........................................ 1,658 (9) 3,708 1
Income allocated to Preferred Shares..................... -- -- (499) --
---------- ------- ----------- --------
Income (loss) allocated to Common Shares................. $ 1,658 $ (9) $ 3,209 $ 1
---------- ------- ----------- --------
---------- ------- ----------- --------
PER SHARE DATA:
Earnings per share of beneficial interest
Income (loss) allocated to Common Shares................ $ 0.17 $(0.01) $ 0.36 $ 0.00
----------- ------- ----------- --------
----------- ------- ----------- --------
Weighted average number of shares outstanding, including
share equivalents...................................... 9,830,234 635,510 8,809,379 629,641
----------- ------- ----------- --------
----------- ------- ----------- --------
</TABLE>
The accompanying condensed notes are an integral part of these consolidated
financial statements.
4
<PAGE>
BRANDYWINE REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
---------------------
1997 1996
---------- ---------
(UNAUDITED AND IN
THOUSANDS)
<S> <C> <C>
Cash flows from operating activities:
Net income.................................................................. $ 3,708 $ 1
Adjustments to reconcile net income to net cash provided
by operating activities:
Minority interest in income of affiliates................................. 174 5
Depreciation and amortization............................................. 5,775 465
Equity in income of affiliate............................................. (216) --
Changes in assets and liabilities:
(Increase) decrease in accounts receivable.............................. (1,389) (33)
Decrease in affiliate receivable........................................ 224 --
(Increase) decrease in other assets..................................... 69 (19)
Increase (decrease) in accounts payable and accrued expenses............ 565 --
Increase (decrease in accrued mortgage interest......................... 193 --
Increase (decrease) in other liabilities................................ 1,397 (25)
---------- ---------
Net cash provided by operating activites............................ 10,500 394
---------- ---------
Cash flows from investing activities:
Acquisition of properties................................................... (194,604) --
Decrease (increase) in escrowed cash........................................ 831 526
Capital expenditures and leasing commissions paid........................... (4,573) (633)
---------- ---------
Net cash used in investing activities............................... (198,346) (107)
---------- ---------
Cash flows from financing activites:
Proceeds from issuance of shares, net....................................... 45,404 338
Distributions paid to shareholders.......................................... (5,975) (204)
Distributions paid to minority partners..................................... (177) (5)
Proceeds from note payable to shareholder................................... -- 992
Proceeds from mortgage notes payable........................................ 13,277 --
Repayment of mortgage notes payable......................................... (2,961) (53)
Proceeds from notes payable, Credit Facility................................ 137,775 --
Repayment of notes payable, Credit Facility................................. (7,000) --
Costs associated with new ventures.......................................... -- (560)
Other....................................................................... 1 8
---------- ---------
Net cash provided by (used in) financing activities................. 180,344 516
---------- ---------
Increase (decrease) in cash and cash equivalents.............................. (7,502) 803
Cash and cash equivalents at beginning of period.............................. 18,279 840
---------- ---------
Cash and cash equivalents at end of period.................................... $ 10,777 $ 1,643
---------- ---------
---------- ---------
</TABLE>
The accompanying condensed notes are an integral part of these consolidated
financial statements.
5
<PAGE>
BRANDYWINE REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
1. ORGANIZATION AND NATURE OF OPERATIONS:
Brandywine Realty Trust (the "Company"), is a Maryland real estate investment
trust. As of June 30, 1997, the Company owned 75 properties (collectively,
the "Properties"). The Company's interest in 74 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 June 30, 1997, the Company held a 96.9% interest in the Operating
Partnership. Brandywine Realty Services Corporation (the "Management
Company"), is owned by the Operating Partnership through a 100% interest in
the non-voting preferred stock and a 5% interest in the voting common stock.
The Management Company is responsible for managing and leasing 74 of the
Company's Properties and other properties on behalf of third parties, as well
as development opportunities as they arise.
As of June 30, 1997, the Company's portfolio aggregated approximately 4.3
million square feet available for lease for office and industrial purposes.
As of June 30, 1997, the overall occupancy rate of the Properties was
approximately 92.8%. The Company's Properties are primarily located within
the suburban Philadelphia office and industrial market area.
2. GENERAL:
BASIS OF PRESENTATION
The financial statements have been prepared by the Company without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
the financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules
and regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. In the opinion of
the Company, all adjustments (consisting solely of normal recurring matters)
necessary to fairly present the financial position of the Company as of June
30, 1997, and the results of its operations and its cash flows for the three
and six month periods ended June 30, 1997 and 1996 have been included. The
results of operations for such interim periods are not necessarily indicative
of the results for a full year. For further information, refer to the
Company's consolidated financial statements and footnotes thereto included in
the Annual Report on Form 10-K (as amended by Form 10-K/A) for the year ended
December 31, 1996.
RECLASSIFICATIONS
Certain previously reported amounts have been reclassified to conform to the
current presentation.
Net Income (Loss) Per Share
Net income (loss) per share is based on the weighted average number of common
shares of beneficial interest ("Common Shares") outstanding adjusted to give
effect to common share equivalents. In February, 1997, the Financial
Accounting Standards Board issued Statement No. 128, "Earnings per Share",
which is effective for financial statements for periods ending after December
15, 1997. At that time, the Company will be required to change the method
currently used to compute and disclose earnings per share and to restate all
6
<PAGE>
prior periods. The impact of Statement No. 128 on the calculation of primary
and fully diluted earnings per share for the interim periods presented is
expected to be immaterial.
3. ACQUISITIONS OF REAL ESTATE INVESTMENTS:
All acquisitions since January 1, 1996 were accounted for by the purchase
method. For the year ended December 31, 1996, the Company acquired 33
properties aggregating 1.7 million net rentable square feet. During the
period January 1, 1997 through June 30, 1997, the Company acquired 38
properties (32 office and 6 industrial) totaling 2.3 million net rentable
square feet.
The following table summarizes certain information regarding acquisition
activity from January 1, 1997 through June 30, 1997:
<TABLE>
<CAPTION>
NET PURCHASE
DATE OF NUMBER OF RENTABLE PRICE
ACQUISITION PROPERTIES TYPE LOCATION SQUARE FEET (IN MILLIONS)
- ---------------------- --------------- ----------- ------------------------------ ----------- -------------
<S> <C> <C> <C> <C> <C>
January 24 3 Office Marlton, NJ 89,186 (a)
2 Office Mt. Laurel, NJ 200,436 (a)
March 4 7 Office Voorhees, NJ 235,209 $ 21.5
March 6 1 Office East Goshen, PA 38,470 $ 3.6
April 3 2 Industrial King of Prussia, PA 124,960 $ 3.5
April 18 4 Office Marlton, NJ 201,970 $ 14.5
May 23 4 Industrial Westampton, NJ 388,767 (b)
1 Office Marlton, NJ 43,719 (b)
3 Office Langhorne, PA 115,390 (b)
2 Office Lower Gwynedd, PA 139,467 (b)
May 30 5 Office Mt. Laurel, NJ 495,103 (c)
1 Office King of Prussia, PA 112,905 (c)
June 5 2 Office Exton, PA 64,594 $ 5.3
June 16 1 Office Broomall, PA 62,934 $ 4.1
--- ----------
38 2,313,110
</TABLE>
- ------------------------
(a) These properties were acquired for an aggregate purchase price of $31.3
million.
(b) These properties were acquired for an aggregate purchase price of $41.6
million.
(c) These properties were acquired for an aggregate purchase price of $66.2
million.
On July 29, 1997, the Company purchased three office properties (the "Berwyn
Park Properties") containing an aggregate of approximately 241,458 net
rentable square feet located in Tredyffrin Township, Chester County,
Pennsylvania and approximately 12.5 acres of land adjacent to such properties
for an aggregate cash purchase price of approximately $37.2 million (the
"Berwyn Park Acquisition").
On July 31, 1997, the Company purchased five office properties (the "Green
Hills Properties") containing an aggregate of approximately 574,241 net
rentable square feet located in Reading, Berks County, Pennsylvania and
approximately 133 acres of additional unimproved land for an aggregate
purchase price of approximately $40.0 million (the "Green Hills
Acquisition"). A $38.5 million cash payment was made at closing funded with
$15.0 million of Credit Facility borrowings and $23.5 million from existing
cash reserves. The $1.5 million balance of the purchase price is payable in
equal installments on August 1, 1998, 1999 and 2000, subject to a 5% interest
rate.
7
<PAGE>
As of August 13, 1997, the Company's portfolio consists of 83 properties (74
office and 9 industrial) aggregating approximately 5.1 million net rentable
square feet.
The results of operations for each of the properties acquired since January
1, 1996 have been included from their respective purchase dates. The
following unaudited pro forma financial information of the Company has been
prepared as if the sales of securities in 1996 (refer to the Company's Form
10-K for the year ended December 31, 1996 for more information), the March
1997 Offering (see Note 5), the July 1997 Offering (see Note 5), and the
acquisitions of the 79 properties (including the eight properties acquired
subsequent to June 30, 1997) acquired from July 19, 1996 through July 31,
1997 had all occurred on January 1, 1996. The pro forma financial information
is unaudited and is not necessarily indicative of the results which actually
would have occurred if the acquisitions had occurred on January 1, 1996, nor
does it purport to represent the results of operations for future periods.
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
1997 1996
-------------- ------------
<S> <C> <C>
(UNAUDITED AND IN THOUSANDS)
Pro forma total revenues........................................................... $ 35,962 $ 67,364
Pro forma net income............................................................... $ 10,455 $ 17,054
Pro forma net income per Common Share.............................................. $ 0.51 $ 0.77
</TABLE>
4. INDEBTEDNESS:
As of June 30, 1997, the Company had notes payable under its revolving credit
facility (the "Credit Facility") and an interim credit facility of $130.8
million. The Credit Facility, which was established in December 1996, is
secured by mortgages on certain of the Company's properties and enables
borrowings to fund acquisitions, working capital and other business needs.
During July 1997, the maximum amount of borrowings available under the Credit
Facility was increased from $80 million to $150 million. At the time of such
increase, the interim credit facility was no longer necessary and was fully
satisfied. On July 28, 1997, amounts outstanding under the Credit Facility
were repaid in full using proceeds from the July 1997 Offering (see Note 5
below). The Company borrowed $15 million under the Credit Facility on July
31, 1997 in connection with the Green Hills Acquisition.
5. ISSUANCE OF SHARES AND WARRANTS:
In March 1997, the Company completed the sale of 2,375,500 Common Shares to
the public at a price of $20 5/8 per share (the "March 1997 Offering"). The
net proceeds of the March 1997 Offering were used to fund the Company's
acquisitions, repay certain indebtedness and for working capital purposes.
In March 1997, 54,397 of the Series A Convertible Preferred Shares
("Preferred Shares") were converted into 181,323 Common Shares. In June 1997,
the remaining 427,421 Preferred Shares were converted into 1,424,736 Common
Shares.
On July 28, 1997, the Company completed the sale of 10,000,000 Common Shares
to the public at a price of $20 3/4 per share (the "July 1997 Offering").
Although not exercised as of August 13, 1997, the underwriters have the right
to exercise their over-allotment option, which (if exercised) would result in
the Company issuing up to an additional 1,500,000 Common Shares at a price of
$20 3/4. The net proceeds of the July 1997 Offering were used by the Company
to repay approximately $130.8 million of indebtedness under the Credit
Facility and for working capital and investment purposes.
8
<PAGE>
6. DISTRIBUTIONS:
On June 23, 1997, the Company declared a distribution of $0.36 per share
which was paid on July 10, 1997 to shareholders of record as of June 30, 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Form 10-Q contains forward looking statements within the meaning of
Section 27A of the Securities Act of 1993 and Section 21E of the Securities
Exchange Act of 1934. The words "believe", "expect", "anticipate", "intend",
"estimate" and other expressions which are predictions of or indicate future
events and trends and which do not relate to historical matters identify
forward-looking statements. The Company's actual results could differ
materially from those set forth in the forward-looking statements. Certain
factors that might cause such a difference include the following: Real estate
investment considerations, such as the effect of economic and other
conditions in the market area on cash flows and values; the need to renew
leases or relet space upon the expiration of current leases, and the ability
of a property to generate revenues sufficient to meet debt service payments
and other operating expenses; and risks associated with borrowings, such as
the possibility that the Company will not have sufficient funds available to
make principal payments on outstanding debt, outstanding debt may be
refinanced at higher interest rates or otherwise on terms less favorable to
the Company and interest rates under the Credit Facility may increase.
The following discussion and analysis of the financial condition and results
of operations should be read in conjunction with the accompanying financial
statements and notes thereto.
RESULTS OF OPERATIONS
Comparison of Three and Six Months Ended June 30, 1997 and June 30, 1996
Net income for the three and six months ended June 30, 1997 was $1.7 million
and $3.7 million, respectively, compared with a net loss of $9,000 and net
income of $1,000 for the corresponding periods in 1996. The increase in net
income was primarily attributable to the operating results contributed by the
71 properties (the "Acquisition Properties") acquired during 1996 and through
June 30, 1997.
The Acquisition Properties have increased the Company's leaseable area from
approximately 254,000 net rentable square feet on June 30, 1996 to
approximately 4.3 million net rentable square feet on June 30, 1997.
Revenues, which include rental income, recoveries from tenants and other
income, increased by $11.1 million and $18.7 million for the three and six
months ended June 30, 1997, respectively, as compared to the corresponding
prior year period as a result of the Acquisition Properties. The impact of
the straight-line rent adjustment increased revenues by $521,000 for the six
months ended June 30, 1997.
Property expenses, depreciation and amortization and management fees
increased in aggregate by $7.5 million and $12.2 million for the three and
six months ended June 30, 1997 as compared with the corresponding prior year
periods primarily as a result of the Acquisition Properties. Interest expense
increased as a result of additional indebtedness incurred to finance certain
of the Company's acquisitions. Administrative expenses increased primarily as
a result of the increase in management personnel, professional fees and
public filing costs associated with the Company's growth.
Minority interest primarily represents the portion of the Operating
Partnership which is not owned by the Company.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
STATEMENT OF CASH FLOWS
During the six months ended June 30, 1997, the Company generated $10.5
million in cash flow from operating activities, and together with $137.8
million in borrowings under the Company's Credit Facility, $13.3 million in
additional mortgage notes payable, $45.4 million in net proceeds from share
issuances, escrowed cash of $0.8 million and existing cash reserves of $7.5
million, used an aggregate $215.3 million to (i) purchase 38 Properties for
$194.6 million, (ii) fund capital expenditures and leasing commissions of
$4.6 million, (iii) pay distributions to shareholders and minority partners
totaling $6.1 million, (iv) pay scheduled amortization on mortgage principal
of $0.5 million, (v) satisfy $2.5 million of mortgage notes payable, and (vi)
pay down its outstanding borrowings on its Credit Facility by $7.0 million.
CAPITALIZATION
As of June 30, 1997, the Company had approximately $177.7 million of debt
outstanding, consisting of mortgage loans totaling $47.0 million and notes
payable under the Company's revolving Credit Facility of $130.8 million. The
mortgage loans mature between December 1997 and November 2004. The Credit
Facility provides for borrowings up to $150.0 million and bears interest at a
per annum floating rate equal to the 30, 60 or 90-day LIBOR, plus 175 basis
points. For the six months ended June 30, 1997, the weighted average interest
on the Company's debt was 8.99%.
The Company's debt to market capitalization was 43.5% as of June 30, 1997 (at
the June 30, 1997 closing share price of $20.25). After application of the
net proceeds from the July 1997 Offering and the subsequent acquisitions of
the Berwyn Park Properties and the Green Hills Properties, the Company's debt
to market capitalization decreased to 12.3% (based on the $20.75 per share
pricing). As a general policy, the Company intends, but is not obligated, to
adhere to a policy of maintaining a debt to market capitalization ratio of no
more than 50%. This policy is intended to provide the Company with financial
flexibility to select the optimal source of capital to finance its growth.
SHORT AND LONG TERM LIQUIDITY
The Company believes that its cash flow from operations is adequate to fund
its short-term liquidity requirements for the foreseeable future. Cash flow
from operations is generated primarily from rental revenues and operating
expense reimbursements from tenants and the management services income from
providing services to third parties. The Company intends to use these funds
to meet its principal short-term liquidity needs which are to fund operating
expenses, debt service requirements, recurring capital expenditures, tenant
allowances, leasing commissions and the minimum distribution required to
maintain the Company's REIT qualifications under the Internal Revenue Code.
For the quarter ended June 30, 1997, the Company declared distributions
totaling $0.36 per Common Share amounting to approximately $4.0 million. In
addition, during this period, the Company's distributions declared to
minority partners totaled approximately $126,000.
The Company expects to meet its long-term liquidity requirements, such as for
property acquisitions and development, scheduled debt maturities,
renovations, expansions and other non-recurring capital improvements, through
its Credit Facility and other long-term secured and unsecured indebtedness
and the issuance of additional Operating Partnership units and equity
securities.
FUNDS FROM OPERATIONS
Management generally considers Funds from Operations ("FFO") as one measure
of REIT performance. The Company adopted the NAREIT definition of FFO in 1996
and has used this definition for all periods presented in the financial
statements included herein. FFO is calculated as net income (loss) adjusted
10
<PAGE>
for depreciation expense attributable to real property, amortization expense
attributable to capitalized leasing costs, gains on sales of real estate
investments and extraordinary and nonrecurring items. FFO should not be
considered an alternative to net income as an indication of the Company's
performance or to cash flows as a measure of liquidity.
FFO for the three and six months ended June 30, 1997 and June 30, 1996 is
summarized in the following table (in thousands, except share and per share
data).
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------- -------------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
------------ --------- ---------- ------------
Income before minority interest........................... $ 1,738 $ (6) $ 3,882 $ 6
Add (Deduct):
Depreciation attributable to real property.............. 3,124 182 5,093 384
Amortization attributable to leasing costs.............. 160 33 339 65
Minority interest not attributable to unit holders...... (5) (3) (16) (5)
------------ --------- --------- ------------
Funds from Operations before minority interest............ $ 5,017 $ 206 $ 9,298 $ 450
------------ --------- --------- ------------
------------ --------- --------- ------------
Weighted average Common Shares, including common share
equivalents............................................. 11,423,396(1) 635,510 10,595,612(1) 629,641
------------ --------- ---------- ------------
------------ --------- ---------- ------------
Funds from Operations per share........................... $ 0.44 $ 0.32 $ 0.88 $ 0.71
------------ --------- ---------- ------------
------------ --------- ---------- ------------
</TABLE>
- ------------------------
(1) Includes the weighted average effect of 1,424,736 Common Shares issued upon
the conversion of the Preferred Shares for the period prior to conversion,
the weighted average effect of 349,325 Common Shares issuable upon the
conversion of 349,325 Operating Partnership units and the weighted average
effect of the 50,242 Common Shares issued upon the conversion of 50,242
Operating Partnership units for the period prior to conversion.
11
<PAGE>
Part II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not currently involved (nor was it involved at June 30,
1997) in any material legal proceedings nor, to the Company's knowledge, is
any material legal proceeding currently threatened against the company, other
than routine litigation arising in the ordinary course of business,
substantially all of which is expected to be covered by liability insurance.
ITEM 2. CHANGES IN SECURITIES
(a) On May 12, 1997, the Company held its Annual Meeting of Shareholders. At
the Meeting, the shareholders approved an amendment to the Company's Declaration
of Trust to permit the Board of Trustees to alter the number of authorized
shares of beneficial interest of the Company. Reference is hereby made to the
discussion of the amendment contained in the Company's Proxy Statement prepared
in connection with the Annual Meeting of Shareholders and filed with the
Securities and Exchange Commission.
(b) Not applicable.
(c) During the three months ended June 30, 1997, the Company issued an
aggregate of 50,242 common shares upon the conversion of units of limited
partnership interest in Brandywine Operating Partnership, L.P. by the holders of
such units. In addition, during such three month period, an aggregate of 427,421
preferred shares were converted by the holder into 1,424,736 Common Shares.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 12, 1997, the Company held its Annual Meeting of Shareholders.
Reference is hereby made to the information contained in Item 5 of the Company's
Current Report on Form 8-K dated June 9, 1997 filed with the Securities and
Exchange Commission with respect to the business transacted at the Annual
Meeting of Shareholders.
ITEM 5. OTHER INFORMATION
As previously reported in a Current Report on Form 8-K dated June 27, 1997,
the Company: (i) entered into an agreement of sale to purchase three office
properties (the "Berwyn Park Properties") containing an aggregate of
approximately 241,458 net rentable square feet located in Tredyffrin Township,
Chester County, Pennsylvania and approximately 12.5 acres of land adjacent to
such properties for an aggregate purchase price of approximately $37.2 million
(the "Berwyn Park Acquisition") and (ii) entered into an agreement of sale to
purchase five office properties (the "Green Hills Properties") containing an
aggregate of approximately 574,241 net rentable square feet located in Reading,
Berks County, Pennsylvania and approximately 133 additional acres of unimproved
land for an aggregate purchase price of approximately $40.0 million (the "Green
Hills Acquisition").
On July 29, 1997, the Company consummated the Berwyn Park Acquisition and
on July 31, 1997, the Company consummated the Green Hills Acquisition.
The Company based its determination of the price that was paid for each
of the above acquisitions on the expected cash flow, physical condition,
location, competitive advantages, existing tenancies and opportunities to
retain and attract additional tenants. The purchase price of each of the
above acquisitions was determined by arm's-length negotiation between the
Company and the sellers.
12
<PAGE>
As of July 31, 1997: (i) the Berwyn Park Properties were approximately 98.7%
leased to 21 tenants, with a remaining weighted average lease term of
approximately 50 months and (ii) the Green Hills Properties were approximately
84.2% leased to 15 tenants, with a remaining weighted average lease term of
approximately 84 months.
The table set forth below shows certain information regarding rental rates
and lease expirations for the Green Hills Properties.
Scheduled Lease Expirations
(Green Hills Properties)
<TABLE>
<CAPTION>
RENTABLE SQUARE FINAL ANNUALIZED PERCENTAGE OF TOTAL
YEAR OF NUMBER OF LEASES FOOTAGE SUBJECT BASE RENT UNDER FINAL ANNUALIZED
LEASE EXPIRING WITHIN TO EXPIRING EXPIRING LEASES BASE RENT UNDER
EXPIRATION THE YEAR (1) LEASES (2) EXPIRING LEASES
- -------------- ------------------- ----------------- ------------------ -------------------
<S> <C> <C> <C> <C>
1997 ............ 2 515 $ 6,946 0.1%
1998 ............ 2 2,173 27,299 0.3%
1999 ............ 1 6,946 37,925 0.4%
2000 ............ 5 13,217 185,696 2.0%
2001 ............ 1 10,306 123,672 1.3%
2002 ............ 1 14,951 242,954 2.6%
2003 ............ 4 53,295 1,296,294 14.0%
2004 ............ 8 182,064 3,442,657 37.1%
2005 ............ 4 200,000 3,914,000 42.2%
2006 and
Thereafter ...... -- -- -- 0.0%
---- --------- ------------- ------
Total ......... 28 483,467 $ 9,277,443 100.0%
------ --------- ------------- ------
------ --------- ------------- ------
</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.
13
<PAGE>
The table set forth below shows certain information regarding rental rates
and lease expirations for the Berwyn Park Properties.
Scheduled Lease Expirations
(Berwyn Park Properties)
<TABLE>
<CAPTION>
RENTABLE SQUARE FINAL ANNUALIZED PERCENTAGE OF TOTAL
YEAR OF NUMBER OF LEASES FOOTAGE SUBJECT BASE RENT UNDER FINAL ANNUALIZED
LEASE EXPIRING WITHIN TO EXPIRING EXPIRING LEASES BASE RENT UNDER
EXPIRATION THE YEAR (1) LEASES (2) EXPIRING LEASES
- ----------------------- --------------------- ----------------- ------------------ -------------------
<S> <C> <C> <C> <C>
1997 .................. 3 4,240 $ 45,495 1.0%
1998 .................. 11 42,609 729,203 15.8%
1999 .................. 3 17,577 368,721 8.0%
2000 .................. 2 11,897 234,541 5.1%
2001 .................. 6 63,089 1,306,256 28.2%
2002 .................. 5 34,456 780,390 16.9%
2003 .................. -- -- -- 0.0%
2004 .................. 4 64,460 1,164,297 25.2%
2005 .................. -- -- -- 0.0%
2006 and
Thereafter ............ -- -- -- 0.0%
---- ------- ------------ ------
Total ............... 34 238,328 $ 4,628,903 100.0%
---- ------- ------------ ------
---- ------- ------------ -------
</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.
After giving effect to the Berwyn Park Acquisition and the Green Hills
Acquisition, the Company's portfolio consists of 74 office properties and nine
industrial properties that contain an aggregate of approximately 5.1 million net
rentable square feet.
The audited statement of revenue and certain expenses of the Green Hills
Properties for the year ended December 31, 1996 and the unaudited statement of
revenue and certain expenses for the six months ended June 30, 1997 are included
on pages F-13 to F-16.
The audited combined statement of revenue and certain expenses of the Berwyn
Park Properties for the year ended December 31, 1996 and the unaudited combined
statement of revenue and certain expenses for the six months ended June 30, 1997
are included on pages F-17 to F-20.
Pro forma financial information which reflects the Company's acquisition of
the Green Hills Properties and the Berwyn Park Properties and the effects of the
July 1997 Offering as of and for the six months ended June 30, 1997 and for the
year ended December 31, 1996 is included on pages F-1 to F-12.
14
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.1 Agreement of Sale dated June 26, 1997 between the Company and Salient 3
Communications, Inc. relating to the Green Hills Acquisition.
10.2 Sale Agreement dated July 7, 1997 between the Company and Berwyn
Development Associates relating to the Berwyn Park Acquisition.
10.3 Separation Agreement between the Company and Brian Belcher.
23.1 Consent of Arthur Andersen LLP.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K:
During the three months ended June 30, 1997, and through August 13, 1997,
the Company filed the following:
(i) a Current Report on Form 8-K dated April 18, 1997 (reporting under
Items 5 and 7) regarding the Company's acquisition of 201 and 221 King Manor
Drive, two industrial facilities, containing an aggregate of approximately
125,000 square feet and located in Montgomery County, Pennsylvania.
(ii) a Current Report on Form 8-K/A No. 1 dated April 29, 1997 (amending
Item 7, as originally filed) regarding the Company's acquisition of the Main
Street Properties, located in southern New Jersey. Such Form 8-K/A No. 1
incorporated an audited combined statement of revenue and certain expenses of
the Main Street Properties for the year ended December 31, 1996; and pro forma
financial information as of and for the year ended December 31, 1996.
(iii) a Current Report on Form 8-K dated May 1, 1997 (reporting under Items
5 and 7) regarding the Company's acquisitions of a 6.8 acre parcel of
undeveloped land located in Montgomery County, Pennsylvania, the Greentree
Executive Campus, a multi-building garden office complex located in Burlington
County, New Jersey, and Five Eves Drive, a midrise office building, located in
Burlington County, New Jersey.
(iv) a Current Report on Form 8-K dated May 9, 1997 (reporting under Item 5)
regarding the Company's earnings for the three months ended March 31, 1997 and
certain other financial information.
(v) a Current Report on Form 8-K dated June 9, 1997 (reporting under Item
2, Item 5 and Item 7) regarding the Company's acquisitions of the TA
Properties (a ten property portfolio of office and flex/ warehouse space
containing an aggregate of approximately 687,821 net rentable square feet
located in Langhorne, Bucks County, PA; Lower Gwynedd, Montgomery County, PA;
Evesham Township, Burlington County, NJ; and Westampton, Burlington County,
NJ, and eight undeveloped parcels with an area of approximately 37 acres) and
the Emmes Properties (a six property portfolio of office space containing an
aggregate of approximately 608,008 net rentable square feet located in Mount
Laurel, NJ and King of Prussia, PA). The Current Report also included the
voting results on matters considered at the Annual Meeting of Shareholders of
the Company held on May 12, 1997. Such Form 8-K also included audited
combined statements of revenue and certain expenses of the TA Properties and
the Emmes Properties for the year ended December 31, 1996 and pro forma
financial information as of and for the three months ended March 31, 1997 and
for the year ended December 31, 1996.
15
<PAGE>
(vi) a Current Report on Form 8-K dated June 26, 1997 (reporting under Item
5 and Item 7) regarding the Company's acquisition of 1974 Sproul Road, an office
property located in Broomall, Pennsylvania containing approximately 62,934 net
rentable square feet. Such Form 8-K also included audited combined statements of
revenue and certain expenses of the Greentree Executive Campus and of 748 & 855
Springdale Drive for the year ended December 31, 1996 and pro forma financial
information as of and for the three months ended March 31, 1997 and for the year
ended December 31, 1996.
(vii) a Current Report on Form 8-K dated June 27, 1997 (reporting under Item
5 and Item 7) regarding the Company entering into an agreement of sale to
purchase five office properties containing an aggregate of approximately 574,241
net rentable square feet located in Reading, Berks County, Pennsylvania and
approximately 147 acres of land; and an agreement of sale to purchase three
office properties containing approximately 241,458 net rentable square feet
located in Tredyffrin Township, Chester County, Pennsylvania and approximately
12.5 acres of land.
(viii) a Current Report on Form 8-K/A No. 1 dated July 21, 1997 (amending
Item 5 as originally filed) regarding the Company's acquisition of a 6.8 acre
parcel of undeveloped land located in Montgomery County, Pennsylvania, the
Greentree Executive Campus, a multi-building garden office complex located in
Burlington County, New Jersey and Five Eves Drive, a midrise office building,
located in Burlington County, New Jersey.
(ix) a Current Report on Form 8-K dated July 23, 1997 (reporting under Item
5 and Item 7) regarding the Company increasing the amount available for
borrowing under its revolving credit facility to up to $150.0 million and the
Company entering into an underwriting agreement with various underwriters
pursuant to which the Company agreed to sell an aggregate of 10,000,000 common
shares of beneficial interest, $.01 par value per share, and granted the
underwriters an option to purchase up to an additional 1,500,000 common shares
solely to cover over-allotments, if any.
(x) a Current Report on Form 8-K dated August 7, 1997 (reporting under Item
5) regarding the Company's earnings for the three and six months ended June 30,
1997 and certain other financial information.
16
<PAGE>
BRANDYWINE REALTY TRUST
SIGNATURES OF REGISTRANT
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
(Registrant)
Date: August 13, 1997 By: /s/ Gerard H. Sweeney
-------------------------------------
Gerard H. Sweeney, President and
Chief Executive Officer
(Principal Executive Officer)
Date: August 13, 1997 By: /s/ Mark S. Kripke
--------------------------------------
Mark S. Kripke, Chief Financial Officer
and Secretary
(Principal Financial and Accounting
Officer)
17
<PAGE>
BRANDYWINE REALTY TRUST
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C> <C>
I. UNAUDITED PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION
- Pro Forma Condensed Consolidating Balance Sheet as of June 30, 1997............... F-3
- Pro Forma Condensed Consolidating Statement of Operations for the
Year Ended December 31, 1996.................................................... F-4
- Pro Forma Condensed Consolidating Statement of Operations for the
Six Months Ended June 30, 1997.................................................. F-5
- Notes and Management's Assumptions to Unaudited Pro Forma Condensed
Consolidating Financial Information............................................. F-6
II. GREEN HILLS PROPERTIES
- Report of Independent Public Accountants........................................... F-12
- Statements of Revenue and Certain Expenses for the
Year Ended December 31, 1996 (audited) and for the
Six Month Period Ended June 30, 1997 (unaudited)................................ F-13
- Notes to Statements of Revenue and Certain Expenses................................ F-14
III. BERWYN PARK PROPERTIES
- Report of Independent Public Accountants........................................... F-16
- Combined Statements of Revenue and Certain Expenses for the
Year Ended December 31, 1996 (audited) and for the
Six Month Period Ended June 30, 1997 (unaudited)................................ F-17
- Notes to Combined Statements of Revenue and Certain Expenses....................... F-18
</TABLE>
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION
The following sets forth the pro forma condensed consolidating balance sheet
of Brandywine Realty Trust ("the Company") as of June 30, 1997 and the pro forma
condensed consolidating statements of operations for the six months ended June
30, 1997 and for the year ended December 31, 1996.
The pro forma condensed consolidating financial information should be read
in conjunction with the historical financial statements of the Company and those
acquisitions deemed significant pursuant to the rules and regulations of the
Securities and Exchange Commission.
The unaudited pro forma condensed consolidating financial information is
presented as if the following events occurred no later than June 30, 1997, for
balance sheet purposes, and at the beginning of the period presented, for
purposes of the statements of operations:
- The Company acquired the properties described in Note 1 to these pro
forma financial statements.
- The Company acquired its partnership interests in Brandywine Operating
Partnership, L.P. (the "Operating Partnership").
- The Company issued 4,600,000 Common Shares at $16.50 per share, of which
600,000 shares related to the underwriter's exercise of the
over-allotment option (the "1996 Offering").
- The Company issued 636,363 Common Shares at $16.50 per share to a voting
trust established for the benefit of the Pennsylvania State Employees
Retirement System ("SERS"), in exchange for $10.5 million (the "SERS
Offering") and contributed such proceeds to the Operating Partnership in
exchange for 636,363 units of general partnership interest ("GP Units")
in the Operating Partnership.
- The Company issued 709,090 Common Shares at $16.50 per share to two
investment funds managed by Morgan Stanley Asset Management Inc. (the
"Morgan Stanley Offering") and contributed the proceeds to the Operating
Partnership in exchange for 709,090 GP Units.
- The Operating Partnership repaid $49,805,000 of mortgage indebtedness and
$764,000 of loans made by Safeguard Scientifics, Inc. and paid a $500,000
prepayment penalty with a portion of the proceeds of the 1996 Offering,
the SERS Offering and the Morgan Stanley Offering.
- The Company issued 2,375,500 Common Shares at $20.625 per share, of which
175,500 shares related to the underwriter's exercise of the
over-allotment option (the "March 1997 Offering").
- The Company issued 10,000,000 Common Shares at $20.75 per share (the
"July 1997 Offering"). The net proceeds from the July 1997 Offering were
contributed to the Operating Partnership in exchange for 10,000,000 GP
Units.
- The Operating Partnership repaid $130,775,000 of indebtedness under the
Company's revolving credit facility using proceeds from the July 1997
Offering.
The pro forma condensed consolidating financial information is unaudited
and is not necessarily indicative of what the actual financial position
would have been at June 30, 1997, nor does it purport to represent the
future financial position and the results of operations of the Company.
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JUNE 30, 1997 (NOTES 1 AND 2)
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
BRANDYWINE
REALTY TRUST GREEN HILLS BERWYN PARK
HISTORICAL JULY 1997 PROPERTIES PROPERTIES PRO FORMA
CONSOLIDATED OFFERING(A) (B) (C) CONSOLIDATED
------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Real estate investments, net............... $ 344,209 $ -- $ 40,444 $ 37,664 $ 422,317
Cash and cash equivalents.................. 10,777 65,475 (23,944) (37,664) 14,644
Escrowed cash.............................. 1,213 -- -- -- 1,213
Accounts receivable........................ 2,755 -- -- -- 2,755
Due from affiliates........................ 293 -- -- -- 293
Investment in management company........... 202 -- -- -- 202
Deferred costs and other assets............ 4,980 -- -- -- 4,980
------------ ----------- ----------- ------------ ------------
Total assets........................... 364,429 65,475 16,500 -- 446,404
------------ ----------- ----------- ------------ ------------
------------ ----------- ----------- ------------ ------------
LIABILITIES:
Mortgage notes payable..................... 46,960 -- 1,500 -- 48,460
Notes payable, Credit Facility............. 130,775 (130,775) 15,000 15,000
Accrued interest........................... 395 -- -- -- 395
Accounts payable and accrued expenses...... 2,650 -- -- -- 2,650
Distributions payable...................... 4,192 -- -- -- 4,192
Tenant security deposits and deferred
rents.................................... 2,721 -- -- -- 2,721
------------ ----------- ----------- ------------ ------------
Total liabilities...................... 187,693 (130,775) 16,500 -- 73,418
------------ ----------- ----------- ------------ ------------
MINORITY INTEREST............................ 5,508 -- -- -- 5,508
------------ ----------- ----------- ------------ ------------
BENEFICIARIES' EQUITY:
Common shares of beneficial interest....... 111 100 -- -- 211
Additional paid-in capital................. 186,426 196,150 -- -- 382,576
Share warrants............................. 962 -- -- -- 962
Cumulative earnings........................ 460 -- -- -- 460
Cumulative distributions................... (16,731) -- -- -- (16,731)
------------ ----------- ----------- ------------ ------------
Total beneficiaries' equity............ 171,228 196,250 -- -- 367,478
------------ ----------- ----------- ------------ ------------
Total liabilities and beneficiaries'
equity............................... $ 364,429 $ 65,475 $ 16,500 $ -- $ 446,404
------------ ----------- ----------- ------------ ------------
------------ ----------- ----------- ------------ ------------
</TABLE>
<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
REALTY
TRUST
HISTORICAL 1996
CONSOLIDATED (A) EVENTS (B) SUBTOTAL
---------------- ---------- --------
<S> <C> <C> <C>
REVENUE:
Base rents...................................... $ 8,462 $12,646 $21,108
Tenant reimbursements........................... 1,372 2,838 4,210
Other........................................... 196 100 296
---------------- ---------- --------
Total Revenue............................... 10,030 15,584 25,614
---------------- ---------- --------
OPERATING EXPENSES:
Interest........................................ 2,751 513 3,264
Depreciation and amortization................... 2,836 4,687 7,523
Property expenses............................... 3,709 6,830 10,539
General and administrative...................... 825 148 973
---------------- ---------- --------
Total operating expenses.................... 10,121 12,178 22,299
---------------- ---------- --------
Income (loss) before minority interest...... (91) 3,406 3,315
Minority interest in (income) loss................ (45) (429) (474)
---------------- ---------- --------
Income (loss) before uncombined entity............ (136) 2,977 2,841
Equity in income of management company............ (26) 66 40
---------------- ---------- --------
Net income (loss)................................. (162) 3,043 2,881
(Income) loss allocated to Preferred Shares....... (401) (1,847) (2,248)
---------------- ---------- --------
Income (loss) allocated to Common Shares.......... $ (563) $ 1,196 $ 633
---------------- ---------- --------
---------------- ---------- --------
Earnings (loss) per Common Share.................. $ (0.43)
----------------
----------------
Weighted average number of shares
outstanding including share equivalents.......... 1,302,648
----------------
----------------
<CAPTION>
1997 EVENTS
-------------------------------------------------
JULY
1997 1997 GREEN HILLS BERWYN PARK
OTHER OFFERING PROPERTIES PROPERTIES
EVENTS (C) (E) (F) (G)
---------- -------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUE:
Base rents..................................... $24,375 $ -- $7,700 $3,815
Tenant reimbursements.......................... 4,636 -- -- 720
Other.......................................... 396 -- -- 108
---------- -------- ----------- -----------
Total Revenue.............................. 29,407 -- 7,700 4,643
---------- -------- ----------- -----------
OPERATING EXPENSES:
Interest....................................... 10,805 (9,808) 1,200 --
Depreciation and amortization.................. 6,119 -- 1,294 1,205
Property expenses.............................. 11,805 -- 3,419 1,991
General and administrative..................... -- -- -- --
---------- -------- ----------- -----------
Total operating expenses................... 28,729 (9,808) 5,913 3,196
---------- -------- ----------- -----------
Income (loss) before minority interest..... 678 9,808 1,787 1,447
Minority interest in (income) loss............... 342 (100) (28) (27)
---------- -------- ----------- -----------
Income (loss) before uncombined entity........... 1,020 9,708 1,759 1,420
Equity in income of management company........... 215 -- (115) 166
---------- -------- ----------- -----------
Net income (loss)................................ 1,235 9,708 1,644 1,586
(Income) loss allocated to Preferred Shares...... -- -- -- --
---------- -------- ----------- -----------
Income (loss) allocated to Common Shares......... $ 1,235 $ 9,708 $1,644 $1,586
---------- -------- ----------- -----------
---------- -------- ----------- -----------
Earnings (loss) per Common Share.................
Weighted average number of shares
outstanding including share equivalents.........
<CAPTION>
TOTAL
PRO FORMA
CONSOLIDATED
------------
REVENUE:
Base rents..................................... $ 56,998
Tenant reimbursements.......................... 9,566
Other.......................................... 800
------------
Total Revenue.............................. 67,364
------------
OPERATING EXPENSES:
Interest....................................... 5,461
Depreciation and amortization.................. 16,141
Property expenses.............................. 27,754
General and administrative..................... 973
------------
Total operating expenses................... 50,329
------------
Income (loss) before minority interest..... 17,035
Minority interest in (income) loss............... (287)
------------
Income (loss) before uncombined entity........... 16,748
Equity in income of management company........... 306
------------
Net income (loss)................................ 17,054
(Income) loss allocated to Preferred Shares...... (2,248)
------------
Income (loss) allocated to Common Shares......... $ 14,806
------------
------------
Earnings (loss) per Common Share................. $ 0.77
------------
------------
Weighted average number of shares
outstanding including share equivalents....... 19,291,406
------------
------------
</TABLE>
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (NOTES 1 AND 3)
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
BRANDYWINE 1997 EVENTS
REALTY ------------------------------------------------------------
TRUST 1997 TOTAL
HISTORICAL OTHER JULY 1997 GREEN HILLS BERWYN PARK PRO FORMA
CONSOLIDATED (A) EVENTS (D) OFFERING (E) PROPERTIES (F) PROPERTIES (G) CONSOLIDATED
---------------- ----------- ------------- --------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE:
Base rents...................... $ 16,889 $ 7,159 $ -- $ 3,936 $ 2,128 $ 30,112
Tenant reimbursements........... 3,285 1,636 -- -- 321 5,242
Other........................... 544 33 -- -- 31 608
---------------- ----------- ------------- ------------ --------------- ------------
Total Revenue............... 20,718 8,828 -- 3,936 2,480 35,962
---------------- ----------- ------------- ------------ --------------- ------------
OPERATING EXPENSES:
Interest........................ 3,059 3,804 (4,864) 595 -- 2,594
Depreciation and amortization... 5,775 1,902 -- 642 598 8,917
Property operating expenses..... 7,032 3,242 -- 1,775 916 12,965
Other expenses.................. 1,187 -- -- -- -- 1,187
---------------- ----------- ------------- ------------ --------------- ------------
Total operating expenses.... 17,053 8,948 (4,864) 3,012 1,514 25,663
---------------- ----------- ------------- ------------ --------------- ------------
Income (loss) before
minority interest......... 3,665 (120) 4,864 924 966 10,299
Minority interest in (income)
loss............................ (174) 39 (8) (14) (17) (174)
---------------- ----------- ------------- ------------ --------------- ------------
Income (loss) before uncombined
entity.......................... 3,491 (81) 4,856 910 949 10,125
Equity in income of management
company......................... 217 88 -- (57) 82 330
---------------- ----------- ------------- ------------ --------------- ------------
Net income (loss)................. 3,708 7 4,856 853 1,031 10,455
(Income) loss allocated to
Preferred Shares................ (499) -- -- -- -- (499)
---------------- ----------- ------------- ------------ --------------- ------------
Income (loss) allocated to Common
Shares.......................... $ 3,209 $ 7 $ 4,856 $ 853 $ 1,031 $ 9,956
---------------- ----------- ------------- ------------ --------------- ------------
---------------- ----------- ------------- ------------ --------------- ------------
Earnings (loss) per Common
Share........................... $ 0.36 $ 0.51
---------------- ------------
---------------- ------------
Weighted average number of shares
outstanding including share
equivalents..................... 8,809,379 19,655,886
---------------- ------------
---------------- ------------
</TABLE>
<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 August 13, 1997, the Company owned 83 properties. The Company's
interest in 82 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 August 13, 1997, the Company held
a 98.4% 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 and the Berwyn Park 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 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 and the
Berwyn Park Properties by the Company have been made.
2. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET:
(A) Reflects the July 1997 Offering and the use of a portion of the net
proceeds to repay $130.8 million of indebtedness under the Credit Facility.
(B) Reflects the Company's acquisition of the Green Hills Properties as
follows:
<TABLE>
<CAPTION>
GREEN HILLS
PROPERTIES
-----------
<S> <C>
Purchase Price....................................................................................... $ 40,000
Closing Costs........................................................................................ 444
-----------
$ 40,444
</TABLE>
<PAGE>
(C) Reflects the Company's acquisition of Berwyn Park as follows:
BERWYN PARK
PROPERTIES
------------
Purchase Price.............................. $ 37,150
Closing Costs............................... 514
------------
$ 37,664
3. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS:
(A) Reflects the historical consolidated operations of the Company.
(B) Reflects the historical operations of the SSI/TNC Properties,
LibertyView Building and the 1996 Additional Acquisition Properties from January
1, 1996 through the respective dates of acquisition, plus the pro forma 1996
Offering adjustments. The table below reflects the adjustments:
<TABLE>
<CAPTION>
SSI/TNC
PROPERTIES
AND 700/800
LIBERTYVIEW DELAWARE BUSINESS CENTER
BUILDING SERS PROPERTIES CORPORATE CENTER DRIVE
----------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Revenue:
Base rents............. $ 5,714 $4,008 $2,036 $651
Tenant reimbursements.. 2,511 249 -- 76
Other.................. 100 -- -- --
----------- ------ ------ -----
Total revenue...... 8,325 4,257 2,036 727
Operating Expenses:
Interest............... 3,783 194 -- --
Depreciation and
amortization......... 2,819 818 374 212
Property expenses...... 2,831 2,217 552 270
General and
administrative....... 715 -- -- --
----------- ------ ------ -----
Total operating
expenses......... 10,148 3,229 926 482
Income (loss) before
minority interest...... (1,823) 1,028 1,110 245
Minority interest in
(income) loss.......... 513 -- -- --
Income (loss) before
uncombined entity...... (1,310) 1,028 1,110 245
Equity in income of
management company..... 75 -- -- --
----------- ------ ------ -----
Net income (loss)........ (1,235) 1,028 1,110 245
Income allocated to
Preferred Shares....... -- -- -- --
----------- ------ ------ -----
Income (loss) allocated
to Common Shares....... $(1,235) $1,028 $1,110 $245
----------- ------ ------ -----
----------- ------ ------ -----
<CAPTION>
1996 PRO FORMA
8000 LINCOLN & OTHER OFFERING TOTAL PRO FORMA
DRIVE ADJUSTMENTS 1996 EVENTS
--------------- ---------------- ---------------
<S> <C> <C> <C>
Revenue:
Base rents............. $237 $-- $12,646
Tenant reimbursements.. 2 -- 2,838
Other.................. -- -- 100
----- ------- -------
Total revenue...... 239 -- 15,584
Operating Expenses:
Interest............... -- (3,464) 513
Depreciation and
amortization......... 89 375 4,687
Property expenses...... 231 729 6,830
General and
administrative....... -- (567) 148
----- ------- -------
Total operating
expenses......... 320 (2,927) 12,178
Income (loss) before
minority interest...... (81) 2,927 3,406
Minority interest in
(income) loss.......... -- (942) (429)
Income (loss) before
uncombined entity...... (81) 1,985 2,977
Equity in income of
management company..... -- (9) 66
----- ------- -------
Net income (loss)........ (81) 1,976 3,043
Income allocated to
Preferred Shares....... -- 1,847 1,847
----- ------- -------
Income (loss) allocated
to Common Shares....... $(81) $ 129 $ 1,196
----- ------- -------
----- ------- -------
</TABLE>
<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
for the year ended December 31, 1996 and other pro forma adjustments to reflect
the March 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 minority interest............. 1,215 665 288 234 (181)
Minority interest in (income) loss................. (20) (11) (5) (4) 3
------ ----------- ----- ----- -----------
Income (loss) before uncombined entity............. 1,195 654 283 230 (178)
Equity in income of management company (iii)....... -- -- -- -- --
------ ----------- ----- ----- -----------
Net income (loss).................................. 1,195 654 283 230 (178)
Income allocated to Preferred Shares............... -- -- -- -- --
------ ----------- ----- ----- -----------
Income (loss) allocated to Common Shares........... $ 1,195 $ 654 $ 283 $ 230 $ (178)
------ ----------- ----- ----- -----------
------ ----------- ----- ----- -----------
<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 minority interest............. (125)
Minority interest in (income) loss................. 2
-----------
Income (loss) before uncombined entity............. (123)
Equity in income of management company (iii)....... --
-----------
Net income (loss).................................. (123)
Income allocated to Preferred Shares............... --
-----------
Income (loss) allocated to Common Shares........... $ (123)
-----------
-----------
</TABLE>
<TABLE>
<CAPTION>
748 & 855
EMMES SPRINGDALE 1974 SPROUL MARCH 1997 TOTAL OTHER
TA PROPERTIES PROPERTIES DRIVE ROAD OFFERING 1997 EVENTS
------------- ----------- ------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Base rents................................ $ 5,102 $ 6,214 $ 940 $ 774 $ -- $ 24,375
Tenant reimbursements..................... 735 2,681 -- 118 -- 4,636
Other..................................... 9 10 -- -- -- 396
------ ----------- ----- ----- ----- -----------
Total revenue......................... 5,846 8,905 940 892 -- 29,407
------ ----------- ----- ----- ----- -----------
Operating Expenses:
Interest (i).............................. 3,168 4,987 400 -- (525) 10,805
Depreciation and amortization (ii)........ 1,352 2,128 171 134 -- 6,119
Property expenses......................... 1,962 3,482 250 492 -- 11,805
General and administrative................ -- -- -- -- -- --
------ ----------- ----- ----- ----- -----------
Total operating expenses.............. 6,482 10,597 821 626 (525) 28,729
------ ----------- ----- ----- ----- -----------
Income (loss) before minority interest...... (636) (1,692) 119 266 525 678
Minority interest in (income) loss.......... 9 27 (2) (5) 348 342
------ ----------- ----- ----- ----- -----------
Income (loss) before uncombined entity...... (627) (1,665) 117 261 873 1,020
Equity in income of management company
(iii)..................................... 105 65 23 22 -- 215
------ ----------- ----- ----- ----- -----------
Net income (loss)........................... (522) (1,600) 140 283 873 1,235
Income allocated to Preferred Shares........ -- -- -- -- -- --
------ ----------- ----- ----- ----- -----------
Income (loss) allocated to Common Shares.... $ (522) $ (1,600) $ 140 $ 283 $ 873 $ 1,235
------ ----------- ----- ----- ----- -----------
------ ----------- ----- ----- ----- -----------
</TABLE>
(i) Pro forma interest expense is presented assuming an effective rate of
7.5% on borrowings under the Company's revolving credit facility. The
adjustment for the Columbia Acquisition Properties also reflects an
effective interest rate of 9.5% on assumed debt. The adjustment for the
March 1997 Offering represents interest savings related to the payoff of
$7 million of credit facility borrowings at an effective rate of 7.5%.
<PAGE>
(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.
(D) Reflects the pro forma adjustments relating to the Columbia Acquisition
Properties, the Main Street Acquisition Properties, 1336 Enterprise Drive, Kings
Manor, Greentree Executive Campus, Five Eves Drive, the TA Properties, the Emmes
Properties, 748 & 855 Springdale Drive and 1974 Sproul Road for the six months
ended June 30, 1997 and other pro forma adjustments to reflect the March 1997
Offering for the six months ended June 30, 1997. The operating results reflected
below include the historical results and related pro forma adjustments to
reflect the period January 1, 1997 through the earlier of the respective
acquisition date or June 30, 1997.
<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....................................... $ 338 $ 542 $ 78 $ 105 $ 602
Tenant reimbursements............................ 24 60 13 27 17
Other............................................ 25 -- -- -- --
----- ----- --- ----- -----
Total revenue................................ 387 602 91 132 619
----- ----- --- ----- -----
Operating Expenses:
Interest (i)..................................... 110 -- -- -- 249
Depreciation and amortization (ii)............... 66 109 21 29 106
Property expenses................................ 130 379 19 43 272
General and administrative....................... -- -- -- -- --
----- ----- --- ----- -----
Total operating expenses..................... 306 488 40 72 627
----- ----- --- ----- -----
Income (loss) before minority interest............. 81 114 51 60 (8)
Minority interest in (income) loss................. (1) (2) (1) (1) --
----- ----- --- ----- -----
Income (loss) before uncombined entity............. 80 112 50 59 (8)
Equity in income of management company............. -- -- -- -- --
----- ----- --- ----- -----
Net income (loss).................................. 80 112 50 59 (8)
Income allocated to Preferred Shares............... -- -- -- -- --
----- ----- --- ----- -----
Income (loss) allocated to Common Shares........... $ 80 $ 112 $ 50 $ 59 $ (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 minority interest............. (37)
Minority interest in (income) loss................. 1
-----
Income (loss) before uncombined entity............. (36)
Equity in income of management company............. --
-----
Net income (loss).................................. (36)
Income allocated to Preferred Shares............... --
-----
Income (loss) allocated to Common Shares........... $ (36)
-----
-----
</TABLE>
<TABLE>
<CAPTION>
748 & 855
EMMES SPRINGDALE 1974 SPROUL MARCH 1997 TOTAL OTHER
TA PROPERTIES PROPERTIES DRIVE ROAD OFFERING 1997 EVENTS
------------- ----------- ------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Base rents................................ $ 2,053 $ 2,570 $ 414 $ 354 $ -- $ 7,159
Tenant reimbursements..................... 299 1,130 -- 54 -- 1,636
Other..................................... 6 2 -- -- -- 33
------ ----------- ----- ----- ----- -----------
Total revenue......................... 2,358 3,702 414 408 -- 8,828
------ ----------- ----- ----- ----- -----------
Operating Expenses:
Interest (i).............................. 1,241 2,049 171 -- (91) 3,804
Depreciation and amortization (ii)........ 530 875 73 61 -- 1,902
Property expenses......................... 698 1,332 99 225 -- 3,242
General and administrative................ -- -- -- -- -- --
------ ----------- ----- ----- ----- -----------
Total operating expenses.............. 2,469 4,256 343 286 (91) 8,948
------ ----------- ----- ----- ----- -----------
Income (loss) before minority interest...... (111) (554) 71 122 91 (120)
Minority interest in (income) loss.......... 1 9 (1) (2) 36 39
------ ----------- ----- ----- ----- -----------
Income (loss) before uncombined entity...... (110) (545) 70 120 127 (81)
Equity in income of management company
(iii)..................................... 41 27 10 10 -- 88
------ ----------- ----- ----- ----- -----------
Net income (loss)........................... (69) (518) 80 130 127 7
Income allocated to Preferred Shares........ -- -- -- -- -- --
------ ----------- ----- ----- ----- -----------
Income (loss) allocated to Common Shares.... $ (69) $ (518) $ 80 $ 130 $ 127 $ 7
------ ----------- ----- ----- ----- -----------
------ ----------- ----- ----- ----- -----------
</TABLE>
<PAGE>
(i) Pro forma interest expense is presented assuming an effective rate of 7.5%
on borrowings under the Company's revolving credit facility. The
adjustment for the Columbia Acquisition Properties also reflects an
effective interest rate of 9.5% on assumed debt. The adjustment for the
March 1997 Offering represents interest savings related to the payoff of
$7 million of credit facility borrowings at an effective rate of 7.5%.
(ii) Pro forma depreciation expense is presented assuming an 80% building and
20% land allocation of the purchase price and capitalized closing costs
and assumes a useful life of 25 years.
(iii) Pro forma equity in income of management company is presented based on
management fees less incremental costs estimated to be incurred.
(E) Reflects pro forma adjustments to reflect interest savings related to
the repayment of $130,775,000 of Credit Facility borrowings at an effective
interest rate of 7.5% with proceeds from the July 1997 Offering.
(F) Reflects the pro forma statements of operations of the Green Hills
Properties for the six months ended June 30, 1997 and for the year ended
December 31, 1996. All amounts represent historical operations except for the
pro forma adjustments noted:
<TABLE>
<CAPTION>
GREEN HILLS PROPERTIES
--------------------------------
YEAR ENDED
DECEMBER 31, SIX MONTHS ENDED
1996 JUNE 30, 1997
------------- -----------------
<S> <C> <C>
Revenue:
Base rents.................................................................... $ 7,700 $ 3,936
Tenant reimbursements......................................................... -- --
Other......................................................................... -- --
------ ------
Total revenue............................................................. 7,700 3,936
Operating Expenses:
Interest (i).................................................................. 1,200 595
Depreciation and amortization (ii)............................................ 1,294 642
Property expenses (iii)....................................................... 3,419 1,775
General and administrative.................................................... -- --
------ ------
Total operating expenses.................................................. 5,913 3,012
Income (loss) before minority interest.......................................... 1,787 924
Minority interest in (income) loss.............................................. (28) (14)
Income (loss) before uncombined entity.......................................... 1,759 910
Equity in income of management company (iv)..................................... (115) (57)
------ ------
Net income (loss)............................................................... 1,644 853
Income allocated to Preferred Shares............................................ -- --
------ ------
Income (loss) allocated to Common Shares........................................ $ 1,644 $ 853
------ ------
------ ------
</TABLE>
(i) Pro forma interest expense is presented assuming an effective rate of 7.5%
on $15 million of borrowings under the Company's revolving credit facility
and an effective rate of 5% on $1.5 million of borrowings under a mortgage
note payable to the seller.
(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 property expenses exclude $666,000 and $333,000 from historical
amounts for the year ended December 31, 1996 and the six months ended
June 30, 1997, respectively. Such amounts represent expected salary
savings.
(iv) Pro forma equity in income of management company is presented based on
management fees less incremental costs estimated to be incurred.
<PAGE>
(G) Reflects the pro forma statements of operations of the Berwyn Park
Properties for the six months ended June 30, 1997 and for the year ended
December 31, 1996. All amounts represent historical operations except for the
pro forma adjustments noted:
<TABLE>
<CAPTION>
BERWYN PARK PROPERTIES
------------------------------
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
1996 1997
------------- ---------------
<S> <C> <C>
Revenue:
Base rents....................................................................... $ 3,815 $ 2,128
Tenant reimbursements............................................................ 720 321
Other............................................................................ 108 31
------ ------
Total revenue................................................................ 4,643 2,480
Operating Expenses:
Interest......................................................................... -- --
Depreciation and amortization (i)................................................ 1,205 598
Property expenses................................................................ 1,991 916
General and administrative....................................................... -- --
------ ------
Total operating expenses..................................................... 3,196 1,514
Income (loss) before minority interest............................................. 1,447 966
Minority interest in (income) loss................................................. (27) (17)
Income (loss) before uncombined entity............................................. 1,420 949
Equity in income of management company (ii)........................................ 166 82
------ ------
Net income (loss).................................................................. 1,586 1,031
Income allocated to Preferred Shares............................................... -- --
------ ------
Income (loss) allocated to Common Shares........................................... $ 1,586 $ 1,031
------ ------
------ ------
</TABLE>
(i) 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.
(ii) Pro forma equity in income of management company is presented based on
management fees less incremental costs estimated to be incurred.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Salient 3 Communications, Inc.:
We have audited the statement of revenue and certain expenses of the Green Hills
Properties for the year ended December 31, 1996. This financial statement is the
responsibility of the Properties' 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 the Green Hills 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 Green Hills
Properties for the year ended December 31, 1996 in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
July 21, 1997
<PAGE>
GREEN HILLS PROPERTIES
STATEMENTS OF REVENUE AND CERTAIN EXPENSES (NOTE 1)
<TABLE>
<CAPTION>
FOR THE FOR THE SIX
YEAR ENDED MONTHS ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ -------------
<S> <C> <C>
(UNAUDITED)
REVENUE:
Base rents (Notes 2 and 3)........................................................ $7,700,000 $ 3,936,000
CERTAIN EXPENSES:
Maintenance and other operating expenses.......................................... 2,083,000 1,084,000
Utilities......................................................................... 1,111,000 534,000
Real estate taxes................................................................. 891,000 490,000
------------ -------------
Total certain expenses........................................................ 4,085,000 2,108,000
------------ -------------
REVENUE IN EXCESS OF CERTAIN EXPENSES............................................... $3,615,000 $ 1,828,000
------------ -------------
------------ -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
GREEN HILLS PROPERTIES
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 1996
1.BASIS OF PRESENTATION:
The statements of revenue and certain expenses reflect the operations of the
Green Hills Properties, located in Berks County, Pennsylvania. The Green Hills
Properties are expected to be acquired by Brandywine Realty Trust (the
"Company") from Salient 3 Communications, Inc. The Green Hills Properties have
an aggregate net rentable area of approximately 550,000 square feet and are
approximately 90% leased as of December 31, 1996.
The accounting records of the Green Hills 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 principles. The accompanying financial statements exclude certain
expenses such as interest, depreciation and amortization, and other costs not
directly related to the future operations of the Green Hills Properties,
pursuant to the rules and regulations of the Securities and Exchange Commission.
The statement of revenue and certain expenses for the six months ended June
30, 1997 is unaudited. In the opinion of management, all adjustments, consisting
solely of normal recurring adjustments, necessary to present fairly the revenue
and certain expenses for the six months ended June 30, 1997 have been included.
The results for such interim period are not necessarily indicative of the
results for the full year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenue and expenses during the
reporting period. The ultimate results could differ from such estimates.
2. OPERATING LEASES:
Base rents presented for the year ended December 31, 1996 and for the six
months ended June 30, 1997 include straight-line adjustments for rental revenue
increases in accordance with generally accepted accounting principles. The
aggregate rental revenue increase resulting from the straight-line adjustment
for the year ended December 31, 1996 and for the six months ended June 30, 1997
were $288,000 and $144,000 (unaudited), respectively.
Tenants whose minimum rental payments equaled 10% or more of total base
rents in 1996 were as follows:
<TABLE>
<S> <C>
Parsons................................................. $3,068,000
Penske.................................................. 2,562,000
UGI..................................................... 758,000
</TABLE>
<PAGE>
The Green Hills Properties are leased to tenants under operating leases with
expiration dates extending to the year 2005. Future minimum rentals under
noncancelable operating leases as of December 31, 1996, are as follows:
<TABLE>
<S> <C>
1997........................................................ $ 7,653,000
1998........................................................ 7,806,000
1999........................................................ 7,812,000
2000........................................................ 7,443,000
2001........................................................ 7,267,000
Thereafter.................................................. 20,556,000
</TABLE>
3. RELATED PARTY TRANSACTIONS:
Salient rents office space from the Green Hills Properties under the terms
of a net operating lease. During 1996, Salient paid $196,000 in minimum rent
under this lease which expires in December 31, 1997.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Brandywine Realty Trust:
We have audited the combined statement of revenue and certain expenses of Berwyn
Park 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 the Berwyn Park 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 Berwyn Park
Properties for the year ended December 31, 1996, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
July 21, 1997
<PAGE>
BERWYN PARK PROPERTIES
COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
<TABLE>
<CAPTION>
FOR THE FOR THE SIX
YEAR ENDED MONTHS ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ -------------
<S> <C> <C>
(UNAUDITED)
REVENUE:
Base rents (Note 2)............................................................... $3,815,000 $ 2,128,000
Tenant reimbursements............................................................. 720,000 321,000
Other............................................................................. 108,000 31,000
------------ -------------
Total revenue................................................................. 4,643,000 2,480,000
------------ -------------
CERTAIN EXPENSES:
Maintenance and other operating expenses.......................................... 1,020,000 425,000
Utilities......................................................................... 591,000 296,000
Real estate taxes................................................................. 380,000 195,000
------------ -------------
Total certain expenses........................................................ 1,991,000 916,000
------------ -------------
REVENUE IN EXCESS OF CERTAIN EXPENSES............................................... $2,652,000 $ 1,564,000
------------ -------------
------------ -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BERWYN PARK PROPERTIES
NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 1996
1. BASIS OF PRESENTATION:
The combined statements of revenue and certain expenses reflect the
operations of Berwyn Park Properties located in Berwyn, Pennsylvania which are
expected to be acquired by Brandywine Realty Trust (the "Company") from Berwyn
Development Associates in the third quarter of 1997. Berwyn Park Properties has
an aggregate net rentable area of approximately 241,000 square feet (92% leased
as of December 31, 1996).
The combined statements of revenue and certain expenses reflect the
operations of Berwyn Park Properties. These combined statements of revenue and
certain expenses are to be included in the Company's Current Report on Form 8-K,
as the acquisition has been deemed significant pursuant to the rules and
regulations of the Securities and Exchange Commission.
The accounting records of Berwyn Park 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 principles. The accompanying financial statements exclude certain
expenses such as interest, depreciation and amortization, professional fees, and
other costs not directly related to the future operations of Berwyn Park
Properties.
The combined statement of revenue and certain expenses for the six months
ended June 30, 1997 are unaudited. In the opinion of management, all
adjustments, consisting solely of normal recurring adjustments, necessary to
present fairly the revenue and certain expenses of Berwyn Park Properties for
the six months ended June 30, 1997 have been included. The combined revenue and
certain expenses for such interim periods are not necessarily indicative of the
results for the full year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities which
affect the reported amounts of revenue and expenses during the reporting period.
The ultimate results could differ from those estimates.
2. OPERATING LEASES:
Base rents for the year ended December 31, 1996 and for the six months ended
June 30, 1997, include straight-line adjustments for rental revenue increases in
accordance with generally accepted accounting principles. The aggregate rental
revenue increase resulting from the straight-line adjustments for the year ended
December 31, 1996 and the six months ended June 30, 1997 were $152,000 and
($17,000) (unaudited), respectively.
During 1996, rental revenues earned under leases with Devon Direct
Advertising, Inc. and Delaware Valley Financial were $637,000 and $798,000,
respectively. Each of these leases individually represented greater than 10% of
Berwyn Park Properties' total rental revenue in 1996.
<PAGE>
The Berwyn Park Properties is leased to tenants under operating leases with
expiration dates extending to the year 2004. 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........................................................ $4,152,000
1998........................................................ 3,658,000
1999........................................................ 3,430,000
2000........................................................ 2,955,000
2001........................................................ 2,215,000
Thereafter.................................................. 2,890,000
</TABLE>
Certain leases also include provisions requiring tenants to reimburse Berwyn
Park Properties for management costs and other operating expenses up to
stipulated amounts.
3. RELATED PARTY TRANSACTIONS:
An affiliate of Berwyn Park Properties performs various services on behalf
of the property, including accounting, data processing, leasing and maintenance
services, among others. Total costs for these services was $188,000 in 1996 and
are included in maintenance and other operating expenses in the accompanying
statements of revenue and certain expenses.
Berwyn Park Properties leases office space to certain affiliates at market
rental rates. Total rental payments during 1996 to Berwyn Park Properties under
these lease agreements was approximately $163,000.
<PAGE>
AGREEMENT OF SALE
for
GREEN HILLS CORPORATE CENTER
between
BRANDYWINE REALTY TRUST
and
GILBERT ASSOCIATES, INC.
Dated: June ____, 1997
<PAGE>
AGREEMENT OF SALE
INDEX
Section Page
I. PROPERTY BEING SOLD..................................... 1
A. Real Property........................................... 1
B. Personal Property....................................... 1
C. Leases.................................................. 2
D. Right to Names.......................................... 2
II. PURCHASE PRICE AND MANNER OF PAYMENT.................... 2
A. Purchase Price.......................................... 2
B. Manner of Payment....................................... 2
1. Deposit............................................ 2
2. Additional Deposit................................. 2
3. Cash at Closing.................................... 2
4. Purchase Money Mortgage............................ 3
C. Allocation.............................................. 3
III. TITLE................................................... 3
IV. COVENANTS............................................... 3
A. Maintenance............................................. 3
B. Alterations............................................. 3
C. Lease................................................... 4
D. Security Deposits....................................... 4
E. Bill Tenants............................................ 4
F. Notice to Buyer......................................... 4
G. Update Rent Roll........................................ 4
H. Comply with Leases...................................... 4
I. No New Agreements....................................... 4
J. Tax Disputes............................................ 5
K. No Removal of Personalty................................ 5
V. REPRESENTATIONS AND WARRANTIES.......................... 5
A. Certain Definitions..................................... 5
B. Organization............................................ 5
C. Authority............................................... 6
D. Consents and Approvals.................................. 6
E. Litigation.............................................. 6
F. Absence of Certain Changes or Events; Material
Agreements............................................. 6
G. No Violation of Law..................................... 7
H. Brokers or Finders...................................... 7
<PAGE>
I. Real Estate............................................. 7
J. Taxes................................................... 8
K. Compliance with Laws and Recorded Declarations.......... 9
L. Absence of Undisclosed Liabilities and Contractual
Obligations............................................. 10
M. Leases.................................................. 10
N. Condemnation or Governmental Proceedings................ 11
O. Insurance............................................... 11
P. No Defaults............................................. 11
Q. Significant Agreements.................................. 11
R. Service Contracts....................................... 12
S. Right to Cancel......................................... 12
T. Required Improvements................................... 12
U. Subdivided Parcel....................................... 12
V. Environmental........................................... 12
W. Zoning.................................................. 13
X. Flood Plain............................................. 13
A. Organization............................................ 14
B. Consents and Approvals.................................. 14
C. Litigation.............................................. 14
D. Absence of Certain Changes or Events; Material
Agreements............................................ 14
E. No Violation of Law..................................... 15
F. Brokers or Finders...................................... 15
VI. POSSESSION.............................................. 15
VII. BUYER'S REVIEW AND APPROVAL OF TITLE AND SURVEY......... 15
A. Title Binder............................................ 15
B. Survey.................................................. 16
C. Physical Inspection..................................... 16
1. Contracts, Licenses, Permits....................... 17
2. Utility Costs...................................... 17
3. Inventory.......................................... 17
4. Three Years' Maintenance Expenses.................. 17
5. Three Years' Tax Bills............................. 17
7. Schedule of Violations............................. 17
8. Schedule of Notices................................ 18
9. Schedule of Replacements and Repairs............... 18
10. Zoning, Site Plan, Subdivision Plan or Plat........ 18
11. Takings or Changes................................. 18
12. Tax Assessments, Appeals and Increases............. 18
13. Litigation......................................... 18
14. Insurance Policies................................. 18
D. Seller's Failure to Deliver............................. 18
E. Notification of Certain Matters......................... 18
F. Board of Trustees Approval.............................. 19
<PAGE>
VIII. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.............. 19
IX. FIRE OR OTHER CASUALTY.................................. 19
A. Maintain Insurance...................................... 19
B. Minimal Damage.......................................... 19
C. Substantial Damage...................................... 19
D. Closing After Substantial Damage........................ 20
E. Rent Insurance.......................................... 20
X. CONDEMNATION............................................ 20
XI. EXPENSE ALLOCATIONS..................................... 20
XII. CLOSING................................................. 21
A. Time and Date and Place................................. 21
B. Documents............................................... 21
1. Seller's Documents and Other Items................. 21
2. Buyer's Documents.................................. 24
3. Title Insurance.................................... 24
4. Necessary Documents................................ 24
XIII. DEFAULT; REMEDIES....................................... 24
XIV. CONDITIONS PRECEDENT TO CLOSING......................... 25
A. Correctness of Warranties and Representations........... 25
C. Buyer's Satisfaction with Inspection.................... 25
D. Trustee Approval........................................ 26
E. Estoppels............................................... 26
F. Lease With Seller....................................... 26
XV. PRORATIONS.............................................. 26
A. Operating Expenses...................................... 26
1. Taxes.............................................. 26
2. Sewer Rents........................................ 26
3. Permit Fees........................................ 26
4. Operating Costs.................................... 26
5. Rents.............................................. 26
6. Security Deposits.................................. 28
7. Project Contracts.................................. 28
B. Custom and Practice..................................... 28
C. Future Installments of Taxes............................ 28
D. Application of Prorations............................... 29
E. Schedule of Prorations.................................. 29
F. Escalations............................................. 29
G. Readjustments........................................... 29
H. Indemnification for Seller's Tax Obligations............ 29
<PAGE>
XVI. BROKERS................................................. 29
XVII. ESCROW AGENT............................................ 29
A. Payment to Seller...................................... 30
B. Notice of Dispute...................................... 30
C. Escrow Subject to Dispute.............................. 30
D. Escrow Agent's Rights and Liabilities.................. 30
XVIII. GENERAL PROVISIONS..................................... 30
A. Notices................................................ 30
B. Binding Effect......................................... 31
C. Entire Agreement....................................... 31
D. Governing Law.......................................... 32
E. No Recording........................................... 32
F. Tender................................................. 32
G. Execution in Counterparts.............................. 32
H. Further Instruments.................................... 32
I. Time................................................... 32
J. Designation of Nominee; Assignment of Agreement........ 32
K. Effective Date......................................... 32
L. Time for Acceptance.................................... 33
M. Confidentiality........................................ 33
N. Delivery of Documents.................................. 33
XIX. SEC REPORTING (8-K) REQUIREMENTS....................... 33
XX. INDEMNIFICATION........................................ 33
XXI. EXCULPATION............................................ 34
<PAGE>
AGREEMENT OF SALE
AGREEMENT OF SALE made this 26 day of June, 1997, between BRANDYWINE
REALTY TRUST, a Maryland Real Estate Investment Trust, its assignee or
nominee, having its principal office at 16 Campus Boulevard, Suite 150,
Newtown Square, Pennsylvania 19073 ("Buyer"), and SALIENT 3 COMMUNICATIONS,
INC., a corporation, having its principal office at P.O. Box 1498, Reading,
PA 19603 ("Seller").
BACKGROUND
The Background of this Agreement is as follows:
A. Seller is the owner of a certain tract of land containing
approximately 192 acres, together with the buildings and improvements
thereon, including five buildings containing approximately 574,241 net
rentable square feet, commonly known as 100 Gundy, 200 Gundy, 100 Davis, 300
Gundy and 100 Kachel Boulevard located in Cumru and Robeson Townships, Berks
County, Pennsylvania; and
B. Seller desires to sell to Buyer and Buyer desires to purchase
from Seller the property referred to in this Agreement, upon the terms and
conditions set forth herein.
TERMS AND CONDITIONS
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and with the preceding Background paragraphs incorporated
by reference, the parties hereto, intending to he legally bound hereby,
covenant and agrees as follows:
I. PROPERTY BEING SOLD.
Seller shall sell, transfer and convey to Buyer on the Closing Date
(as hereinafter defined),
A. Real Property. Fee simple interest in the parcels of land, all
as more fully described on Exhibit "A", with the building and improvements
thereon, including the five buildings containing approximately 574,241 net
rentable square feet, commonly known as 100 Gundy, 200 Gundy, 100 Davis, 300
Gundy and 100 Kachel Boulevard located in Cumru and Robeson Townships, Berks
County, Pennsylvania, and all of the easements, licenses, rights of way,
privileges, hereditaments, appurtenances, and rights to any land lying in the
beds of any street, road or avenue, open or proposed, adjoining thereto, and
inuring to the benefit of said land (hereinafter collectively referred to as
the "Premises"); and
B. Personal Property. All equipment, fixtures, machinery and
personalty of every description attached to or used in connection with the
Premises (and not owned by tenants under leases of the Premises), including,
without limitation, those listed on the Schedule of Inventory attached hereto
as Exhibit "B", all artwork, renderings, flags, awnings, trade dress, and all
assignable intangible personal property owned by Seller and used in
connection with the ownership, operation and maintenance of the land,
<PAGE>
improvements and other property, including without limitation, all contract
rights, guaranties and warranties of any nature, all architects', engineers',
surveyors' and other real estate professionals' plans, specifications,
certifications, contracts, reports, data or other technical descriptions,
reports or audits (including, without limitation, all environmental,
structural and mechanical inspection reports), and all marketing materials
("Contract Documents"), all governmental permits, licenses, certificates, and
approvals in connection with the ownership of the Premises ("Licenses"), all
escrow accounts, deposits, instruments, documents of title, general
intangibles, all computers, computer software programs and data and business
records pertaining to the Premises, and all of Seller's rights, claims, and
causes of action if any, to the extent they are assignable, under any
warranties and/or guarantees of manufacturers, contractors or installers, all
rights against tenants and others relating to the Premises or the operation
or maintenance thereof, including to the extent applicable, any warranties
from any previous owners of the Premises (hereinafter collectively referred
to as "Personal Property"); and
C. Leases. All leases, licenses and other occupancy agreements
for any part of the Premises, and all prepaid rent and unapplied security
deposits (the "Leases"); and
D. Right to Names. Any and all right, title and interest of
Seller in and to the name "Green Hills Corporate Center", and the right to
all printing styles, trademarks and logos ("Name").
The Premises, Personal Property, Leases and Name are sometimes
hereinafter referred to as "Property."
II. PURCHASE PRICE AND MANNER OF PAYMENT.
A. Purchase Price. Buyer shall pay the total sum of Forty Million
Dollars ($40,000,000.00) (hereinafter referred to as the "Purchase Price")
subject to adjustment, on a per diem basis.
B. Manner of Payment. The Purchase Price shall be paid in the
following manner:
1. Deposit. By delivery, upon Seller's execution and
delivery of this Agreement, of Buyer's good check in the amount of
$100,000.00 to the Title Company (hereinafter referred to as "Escrow Agent"
or "Escrowee"). This sum, the sum specified in Section II.B.(2) below, and
all other sums paid by Buyer to the Escrow Agent under this Agreement
(hereinafter referred to as the "Deposit") shall be held by Escrow Agent in a
federally-insured, segregated money market account at an institution to be
designated by Buyer until termination or consummation of this Agreement.
Interest on the Deposit shall be credited to Buyer at Closing, or paid to the
party otherwise entitled to the Deposit in the event of the termination of
this Agreement prior to Closing.
<PAGE>
2. Additional Deposit. By delivery, within two (2) business
days next following the Inspection Period Expiration Date (as hereinafter
defined in Section VII.C.), of Buyer's good check in the amount of $50,000.00.
3. Cash at Closing. Thirty-eight Million Three Hundred Fifty
Thousand Dollars ($38,350,000) by delivery to Seller on the Closing Date, by
bank cashier's, title company, or certified check, or by wire transfer, in
the amount of Thirty-eight Million Three Hundred Fifty Thousand Dollars
$38,350,000.00, subject to adjustment as herein provided.
4. Purchase Money Mortgage. One Million Five Hundred
Thousand Dollars ($1,500,000) by delivery to Seller on the Closing Date of
Buyer's Purchase Money Mortgage evidenced by Buyer's Note substantially in
the form of Exhibit "I-1" attached hereto and made a part hereof (the "Note")
and secured by a mortgage encumbering the Premises substantially in the form
of Exhibit "I-2") attached hereto and made a part hereof (the "Mortgage").
The Note will bear interest at the rate of five (5%) percent per annum.
Principal under the Note will be paid in three annual installments each in
the amount of Five Hundred Thousand Dollars ($500,000), payable on the first,
second and third anniversaries of the Closing Date. The Note will be
non-recourse to Buyer. Seller agrees to subordinate the Mortgage to an
institutional first mortgage securing a line of credit extended to Buyer
provided that such line of credit is also secured by mortgages encumbering a
majority of the properties other than the Premises owned directly or
indirectly by Buyer. In lieu of subordinating the Mortgage to an
institutional first mortgage, Seller shall have the right to confine the lien
of the Mortgage to the undeveloped portions of the Premises in which event
the Mortgage will remain as a first mortgage encumbering the undeveloped
portions of the Premises until the Note is paid in full.
C. Allocation. The Purchase Price shall be allocated between
realty and personalty in the manner provided on Schedule 2.3 attached hereto.
III. TITLE. On the Closing Date, Seller shall convey to Buyer good and
marketable fee simple title to the Premises subject only to those rights of
way, easements, covenants restrictions, and objections to title (hereinafter
"Permitted Exceptions") listed on Exhibit "C" hereto, unless identified by
Buyer as "Title Objections" as hereinafter provided, and subject to the
rights of tenants listed on the rent roll attached hereto as Exhibit "D",
which title shall be insurable at regular rates by a reputable title
insurance company ("Title Company") under an ALTA 1970 Form B (Revised
10/17/70 and 3/30/84) title insurance policy ("Title Policy"), with the
endorsements and affirmative insurance specified in Section XII.B.(j) below.
Seller and Buyer consent to use, at Buyer's option, Commonwealth Land Title
Insurance Company, Lawyers Title Insurance Corporation or First American
Title Insurance Company as the Title Company.
IV. COVENANTS. In addition to the covenants contained in the other
Sections of this Agreement, Seller covenants that it shall:
A. Maintenance. At all times prior to the Closing Date, maintain
the Property in good condition and repair, reasonable wear and tear alone
excepted, operate the Property with first class management practices and
<PAGE>
leasing standards, and pay in the normal course of business prior to Closing,
all sums due for work, materials or service furnished or otherwise incurred
in the ownership and operation prior to Closing.
B. Alterations. Not make or permit to be made any alterations,
improvements or additions to the Property without the prior written consent
of Buyer, except those made by tenants pursuant to the right to do so under
their Leases, or by Seller if required by applicable law or ordinance, or as
required under any Lease.
C. Lease. Not enter into any new Lease, nor amend, modify or
terminate any existing Lease without Buyer's consent.
D. Security Deposits. Not apply any Tenant's security deposit to
the discharge of such Tenant's obligations, without Buyer's consent.
E. Bill Tenants. Timely bill all Tenants for all rent billable
under Leases, and use its best efforts to collect any rent in arrears.
F. Notice to Buyer. Notify Buyer promptly of the occurrence of
any of the following:
1. a fire or other casualty causing damage to the Property,
or any portion thereof;
2. receipt of notice of eminent domain proceedings or
condemnation of or affecting the Property, or any portion thereof;
3. receipt of notice from any governmental authority or
insurance underwriter relating to the condition, use or occupancy of the
Property, or any portion thereof, or any real property adjacent to any of the
Property, or setting forth any requirements with respect thereto;
4. receipt or delivery of any default or termination notice
or claim of offset or defense to the payment of rent from any tenant;
5. receipt of any notice of default from the holder of any
lien or security interest in or encumbering the Property, or any portion
thereof;
6. a change in the occupancy of the leased portions of the
Property;
7. notice of any actual or threatened litigation against
Seller or affecting or relating to the Property, or any portion thereof; or
8. the commencement of any strike, lock-out, boycott or other
labor trouble affecting the Property, or any portion thereof.
<PAGE>
G. Update Rent Roll. Provide Buyer with monthly updates of the
rent roll attached as Exhibit "D", each warranted by Seller to be true,
correct and complete, with a final update as of one day prior to the Closing
Date, also warranted by Seller to be true, correct and complete.
H. Comply with Leases. Perform all obligations of the landlord as
required by the Leases or by any order or direction of any governmental
authority having jurisdiction thereof, and to the extent required by law or
by any of the Leases, maintain all security deposits held under all Leases in
a segregated account, with interest thereon as required.
I. No New Agreements. Except for agreements which can be
terminated on not more than thirty (30) days' notice, not enter into any
other agreements which affect the Property or the transactions contemplated
by this Agreement, without the prior written consent of Buyer, and not permit
the creation of any liability which shall bind Buyer or the Premises after
Closing.
J. Tax Disputes. Notify Buyer of any tax assessment disputes
(pending or threatened) prior to Closing, and not agree to any changes in the
real estate tax assessment, nor settle, withdraw or otherwise compromise any
pending claims with respect to prior tax assessments, without Buyer's prior
written consent. If any proceedings shall result in any reduction of
assessment and/or tax for the tax year in which the Closing occurs, it is
agreed that the amount of tax savings or refund for such tax year, less the
reasonable fees and disbursements in connection with such proceedings, shall
be apportioned between the parties as of the date real estate taxes are
apportioned under this Agreement.
The parties agree that from and after the execution and
delivery of this Agreement, Buyer shall have the right to appeal the current
tax assessment of each tax parcel comprising the Premises. Buyer shall
consult with Seller prior to filing tax appeal documents, and shall afford
Seller reasonable advance notice prior to any public hearings or proceedings
at which said appeal will be considered. Seller agrees that Buyer may file
such appeals in its name or in Seller's name, as may be required, and Seller
shall cooperate with Buyer in the prosecution of such appeal; provided,
however, that Buyer agrees to pay the reasonable legal fees incurred by
Seller, if any, in connection with furnishing such cooperation.
K. No Removal of Personalty. Not remove any non-consumable
Personal Property from the Premises without replacing it with similar
personal property, new and of equal or better quality.
V. REPRESENTATIONS AND WARRANTIES. In order to induce Buyer to enter
into this Agreement, Seller hereby represents and warrants to Buyer that the
following representations and warranties are true now and will be true at
Closing except as set forth on a Disclosure Schedule delivered by Seller
concurrently with the execution and delivery of this Agreement (the "Seller
Schedule"):
A. Certain Definitions. As used in this Agreement, "Seller
Material Adverse Effect" shall mean any fact, condition, event, development
or occurrence which, individually or when taken together with all other such
<PAGE>
facts, conditions, events, developments or occurrences, has had or could
reasonably be expected to have a material adverse effect on the ability of
Seller to consummate the transactions contemplated hereby.
B. Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power and authority would not have a Seller Material
Adverse Effect. Seller is duly qualified or licensed to do business and in
good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so duly
qualified or licensed and in good standing would not have a Seller Material
Adverse Effect. Seller has heretofore made available to Buyer a complete and
correct copy of the charter and by-laws or comparable organizational
documents, each as amended to date, of Seller. Such charters, by-laws and
comparable organizational documents are in full force and effect. Seller is
not in violation of any provision of its charter, by-laws or comparable
organizational documents, except for such violations that would not have a
Seller Material Adverse Effect.
C. Authority. Seller has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Seller and the consummation by Seller of the other
transactions contemplated hereby have been duly authorized by the Board of
Directors of Seller, and no other corporate proceedings on the part of Seller
are necessary to authorize this Agreement or to consummate the transactions
so contemplated. This Agreement has been duly executed and delivered by
Seller and constitutes a valid and binding obligation of Seller, enforceable
against it in accordance with its terms.
D. Consents and Approvals. None of the execution, delivery or
performance of this Agreement by Seller or the consummation by Seller of the
transactions contemplated hereby and compliance by Seller with any of the
provisions hereof will (i) conflict with or result in any breach of any
provisions of the charter or by-laws or comparable organizational documents
of Seller, (ii) require any filing by Seller with, or any permit,
authorization, consent or approval to be obtained by Seller of, any court,
arbitral tribunal, administrative agency or commission or other governmental
or other regulatory authority or administrative agency or commission (a
"Governmental Entity") (except where the failure to obtain such permits,
authorizations, consents, approvals or to make such filings would not have a
Seller Material Adverse Effect), (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, amendment, cancellation or
acceleration) under, or result in the creation of any lien or other
encumbrance on any property or asset of Seller pursuant to, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease,
license, contract, agreement, franchise, permit, concession or other
instrument, obligation, understanding, commitment or other arrangement to
which Seller is a party or by which it or any of its properties or assets may
be bound or affected (each, a "Contract"), including, without limitation, the
Leases, (iv) result in the triggering of any right of first refusal or other
right under any stockholder, partnership or joint venture agreement to which
<PAGE>
Seller is a party or (v) violate any order, writ, injunction, decree,
statute, ordinance, rule or regulation applicable to Seller except, in the
case of clauses (iii), (iv) and (v), for violations, breaches or defaults
which would not have a Seller Material Adverse Effect.
E. Litigation. There is no suit, claim, action, proceeding or
investigation pending (in which service of process has been received by an
employee of Seller) or, to the knowledge of Seller, threatened against Seller
or with respect to the Property before any Governmental Entity which, if
adversely determined, individually or in the aggregate would have a Seller
Material Adverse Effect. Seller is not subject to any outstanding order,
writ, injunction or decree which, insofar as can be reasonably foreseen,
individually or in the aggregate, in the future would have a Seller Material
Adverse Effect.
F. Absence of Certain Changes or Events; Material Agreements.
Since September 30, 1996, Seller has conducted its business only in the
ordinary and usual course consistent with past practice, and there has not
been any change or development, or combination of changes or developments,
which have a Seller Material Adverse Effect. As of the date of this
Agreement, Seller has not become a party to any agreement or amendment to an
existing agreement which would be required to be filed by Seller as an
exhibit to its next Annual Report on Form 10-K, except for this Agreement.
The transactions contemplated by this Agreement will not require the consent
from or the giving of notice to a third party pursuant to the terms,
conditions or provisions of any Contract to which Seller is a party or by
which it is bound.
G. No Violation of Law. To its knowledge, Seller is not in
violation of, or is under investigation with respect to, and has not been
given notice or been charged by any Governmental Entity with any violation
of, any law, statute, order, rule, regulation, ordinance or judgment
(including, without limitation, any applicable environmental law, ordinance
or regulation) of any Governmental Entity, except for violations which, in
the aggregate, do not have a Seller Material Adverse Effect.
H. Brokers or Finders. Seller does not have any liability to any
agent, broker, investment banker, financial advisor or other firm or person
for any broker's or finder's fee or any other commission or similar fee in
connection with this Agreement or any of the transactions contemplated hereby.
I. Real Estate.
1. Included in the Seller Schedule is a description of all
real property constituting the Premises.
2. At the Closing title to the Premises shall be good and
marketable and insurable as such, together with Buyer's right to use all
easements benefitting the Premises and the contiguity of all pieces or
parcels of land, if there be more than one contained therein, by any
reputable title insurance company licensed to do business in Pennsylvania at
regular standard rates, free and clear of all pledges, liens, claims,
security interests, restrictions, encumbrances, easements, leases, tenancies,
claims or rights of use or possession and other title objections, including
<PAGE>
any lien or future claim for materials or labor supplied in improvement of
the Premises ("Liens"), excepting only the Permitted Exceptions:
(a) the matters referred to in the Seller Schedule,
including, without limitation, the Leases;
(b) all terms, covenants, conditions and restrictions of
record not objected to by Buyer during the Review Period (as defined below);
(c) water lines, sanitary sewer, drainage, gas
distribution line and main, electrical and telephone easements and
rights-of-way of record not objected to by Buyer during the Review Period;
(d) zoning ordinances, sanitary and building codes and
all statutes, ordinances, regulations, or other administrative enactments of
any municipal authority having jurisdiction over the Premises not objected to
by Buyer during the Review Period;
(e) real property taxes not yet due and payable and
assessments for improvements not yet due and payable as of the Closing Date,
provided that if the Premises are affected by any assessment that is or may
become payable in annual installments, of which one or more is then payable
or has been paid, then for the purposes of this Agreement, any such
assessment shall be deemed a lien on the Premises and shall be paid and
discharged by Seller at or prior to Closing; and
(f) any state of facts that an accurate survey of the
Premises would disclose not objected to by Buyer during the Review Period.
3. Included in the Seller Schedule is a description of all
leases and other possessory agreements pertaining to the Premises
(collectively, the "Leases"). Each of the Leases is valid, binding and in
full force and effect, all rent and other sums payable by or to Seller
thereunder are current within applicable notice and grace periods, no notice
of default or termination under any Lease has been given or received by
Seller that describes a default that has not been cured and, to Seller's
knowledge, except as identified on the Seller Schedule, no event has occurred
that would, with the giving of notice or the passage of time or both,
constitute a default under any of the Leases.
4. Included in the Seller Schedule is a description of all
environmental reports known to Seller that affect the Premises, and Seller
has delivered a complete copy of each such report to Buyer. Except as set
forth therein or otherwise in the Seller Schedule, Seller has no knowledge of
the presence or release of any toxic substance or hazardous material or of
any other environmental condition or contamination in or from the Premises.
In addition, the validity of Buyer's right to use all easements benefitting
the Premises and the contiguity of all pieces or parcels of land, if there be
more than one, shall be so insurable without additional premium.
<PAGE>
5. The Premises are in good repair, order and condition in
all material respects, subject to ordinary wear and tear. To the best of
Seller's knowledge without independent investigation, there is no material
latent or patent structural, mechanical or other significant defect or
deficiency in the improvements.
6. Seller has received no notices, oral or written, and has
no reason to believe, that any Government Entity having jurisdiction over the
Premises intends to exercise the power of eminent domain or similar power
with respect to all or any part of the Premises. Seller has not received any
notice of violation of law or ordinance with respect to the Premises that
will remain uncorrected at Closing.
J. Taxes.
1. There are no liens for Taxes upon the Premises, except for
liens for Taxes not yet due.
2. The Premises constitute separate tax parcels that are
separately assessed for real estate tax purposes; to Seller's knowledge there
is no proceeding pending for the adjustment of the assessed valuation of all
or any portion of the Premises; to Seller's knowledge the Premises have been
assessed and real estate taxes have been paid on the basis of the value of
all improvements as completed; there is no abatement in effect with respect
to all or any portion of the real estate taxes; the real estate tax bills
previously delivered by Seller to Buyer and initialled by Seller and Buyer
for identification are true and complete copies of all bills for taxes levied
against or on account of the Premises or any rent or income from the Premises
since January 1, 1994; and to the best of Seller's knowledge, there are no
proposed reassessments of any of the Premises by any taxing authority and
there are no threatened or pending special assessments or other actions or
proceedings (other than county-wide reassessments and/or the usual increases
in mileage rates that may be under consideration by the taxing authorities in
the jurisdictions where the Premises are located) that could reasonably be
expected to give rise to an increase in real property taxes or assessments
against any of the Premises.
3. "Taxes" shall mean any and all taxes, charges, fees,
levies or other assessments, including, without limitation, real or personal
property, transfer and recording taxes, fees and charges, imposed by any
taxing authority (whether domestic or foreign including, without limitation,
any state, county, local or foreign government or any subdivision or taxing
agency thereof (including a United States possession)), whether computed on a
separate, consolidated, unitary, combined or any other basis; and such term
shall include any interest whether paid or received, fines, penalties or
additional amounts attributable to, or imposed upon, or with respect to, any
such taxes, charges, fees, levies or other assessments.
K. Compliance with Laws and Recorded Declarations. Except as
disclosed on the Seller Schedule, no notice or communication of any kind has
been issued to Seller by any governmental authority, insurance regulatory
body or other person stating or alleging that the Premises or any business or
activity conducted thereon, is in violation of any applicable law, rule or
<PAGE>
regulation, including without limitation, zoning, building, health or fire
codes or that the Premises were being used or operated without first
obtaining any applicable license, permit, certificate, entitlement, grant of
right or other item or document. To the best of Seller's knowledge, Seller
has complied with all laws and requirements of insurance bodies applicable to
the ownership, leasing, use and operation of the Premises and secured all
required consents and approvals and obtained all licenses, permits,
certificates and other documents required by applicable law for the
completion, ownership, leasing, use and occupancy of the Premises. Seller
has not taken any action that would (or failed to take any action, the
omission of which would) result in the revocation or suspension of such
licenses, permits, certificates, entitlements, grants of right and other
items and documents, and Seller has not received any notice of any violation
from any federal, state or municipal entity or notice of an intention by any
such governmental entity to revoke any certificate of occupancy or other
certificate, license, permit, entitlement or grant of right issued by it in
connection with the ownership, use and occupancy of any of the Premises that
in each case has not been cured or otherwise resolved to the satisfaction of
such governmental entity. Seller has not received or been informed in
writing of the receipt of any written notice which is still in effect that
there is, and, to the best of Seller's knowledge, there does not exist, any
violation of a condition or agreement contained in any easement, restrictive
covenant or any similar instrument or agreement affecting the Premises, or
any portion thereof. To the best of Seller's knowledge, (i) any and all
charges and other assessments under declarations and like agreements to which
any of the Premises are subject have been paid and no special assessments
thereunder against any of the Premises are pending, and (ii) all consents and
approvals required to be obtained under such declarations and like agreements
with respect to the Premises have been obtained.
L. Absence of Undisclosed Liabilities and Contractual Obligations.
Except for (i) liabilities disclosed in the Seller Schedule, (ii) liabilities
arising in the ordinary course of business which, if material (individually
or in the aggregate), are disclosed in Seller Schedule, (iii) liabilities at
the date hereof which are specifically disclosed or otherwise reflected in
the Exhibits attached to this Agreement and (iv) current liabilities incurred
in the ordinary course of business after the date hereof, Seller has no, and
the Premises are not subject to liabilities of any nature, whether matured or
unmatured, fixed or contingent, which could reasonably be expected to have,
individually or in the aggregate, a Seller Material Adverse Effect. None of
the Premises is cross-defaulted and/or cross-collateralized with any other
properties other than among the Premises.
M. Leases. The rent roll attached hereto as Exhibit "D" (the
"Rent Roll") lists each of the Leases in effect with respect to the Premises
as the same have been amended or modified; there are no leases, licenses or
other rights of occupancy affecting any of the Premises except for the
Leases. Seller has made available to Buyer complete copies of all of the
documents that constitute the Leases. The Leases are in full force and
effect and, except as set forth on the Rent Roll, (A) to the best of Seller's
knowledge, no uncured Event of Default (as defined in such Leases), has
occurred and is continuing under any such Lease, no tenant has asserted a
defense to, offset or claim against its rent or the performance of its
obligations under its Lease and no tenant has asserted a default on the part
of the landlord which would give it the right to terminate its Lease or set
off against rent, (B) other than as set forth in a Lease, there are no rights
of first refusal on, or options to purchase, any of the Premises, or any
<PAGE>
right to a participation interest (whether of profits, sale or refinancing
proceeds, or calculated based on fair market value) with respect to any such
property, in favor of any tenant, (C) there are no proposed modifications to
any Lease that would reduce (i) the space leased to any tenant, (ii) the
amount of any tenant's rent or (iii) the term of any lease, (D) other than as
set forth in a Lease, no free rent or other rent concession is due any tenant
under the Leases for periods after the Closing Date, (E) other than as set
forth in a Lease, no landlord under a Lease is required to provide tenant
improvements or refurbishments with respect thereto after the Closing Date
(other than any tenant improvements that the landlord may be required to
construct if an expansion option provided in a Lease is exercised), and (F)
other than as set forth in a Lease, no tenant under a Lease has the option to
terminate its lease prior to the stated expiration date; and, except as set
forth on the Seller Schedule, Seller has received no written notice or, to
the best of Seller's knowledge, any other notice, whether or not in writing,
that any tenant as of the date hereof intends to vacate the Premises or
attempt to abrogate its lease other than at the expiration of the term
thereof. Except for (i) security deposits, (ii) the first full month's rent,
whether or not the term of a Lease has commenced, or (iii) rents paid by
tenants on an estimated basis, including, but not limited to, pass-throughs
for additional or increased operating expenses and real estate taxes, no
prepayments of rent more than thirty (30) days in advance have been made
under the Leases. All decorating, repairs, alterations or other work
required to be performed by the landlord under each of the Leases prior to
the date hereof, or the cost of any such work performed by the tenant and to
be reimbursed by the landlord prior to the date hereof, has been performed or
reimbursed, as applicable. No rent or security deposits under the Leases
have been assigned or encumbered. There are no agreements or understandings,
written or oral, with any of the tenants other than as set forth in the
Leases or otherwise set forth on the Rent Roll. All brokerage commissions
and other compensation and fees payable by reason of the Leases have been
paid in full, except as set forth in the Seller Schedule. Except as set forth
on the Seller Schedule, all tenants under Leases are in actual possession of
their leased premises. Seller has no obligation to pay rent or satisfy any
other obligation of any tenant under any Lease for space in any other
building, or to purchase any tenant's leasehold estate in any other building,
or to contribute to any tenant for unfinished tenant leasehold improvements
other than those listed on the Seller Schedule.
N. Condemnation or Governmental Proceedings. No eminent domain,
condemnation, incorporation, annexation or moratorium or similar proceeding
has been commenced or, to the best of Seller's knowledge, threatened by an
authority having the power of eminent domain to condemn any part of the
Premises. To the best of Seller's knowledge without independent
investigation, there are no pending or threatened governmental rules,
regulations, plans, studies or efforts, or court orders or decisions, which
do or could adversely affect the use or value of the Premises for their
present use.
O. Insurance. Exhibit "F" attached hereto lists the insurance
policies relating to the Premises or any part thereof carried by Seller; all
such policies are in full force and effect, and will be continued or renewed
with the existing coverages and policy limits until the Closing Date, and all
premiums thereunder have been paid to the extent due, and will be paid until
the Closing Date; and no notice of cancellation has been received with
respect thereto and, to the best knowledge of Seller, no cancellation is
threatened.
<PAGE>
P. No Defaults. Seller is not in default of any Significant
Agreement (as herein defined) and, to the best of Seller's knowledge, no
event has occurred which with the giving of notice or passage of time would
become a default under any such Significant Agreement.
Q. Significant Agreements. To the best of Seller's knowledge,
there are no Significant Agreements other than as set forth on Exhibit "E"
attached hereto and made a part hereof. For purposes hereof, "Significant
Agreement" means and includes any of the following to which Seller is a party
and by which all or any portion of the Premises may be subject or bound, in
each such case as amended and currently in effect, inclusive of any waivers
relating thereto:
1. all agreements, instruments and documents (excluding the
Leases and Service Contracts) with respect to the Premises evidencing,
securing, or pertaining to the contractual obligations of a person that
involve annual payments or receipts in excess of $10,000;
2. all leases where Seller is the lessee (including capital
leases), contracts, agreements or commitments (whether written or oral) that
are not terminable without penalty on not more than thirty (30) days notice
and that involve annual gross payments or receipts in excess of $10,000;
3. all ground leases where Seller is a ground lessee; and
4. all reciprocal easement agreements affecting the Premises
except as are set forth as Permitted Exceptions.
Each of the Significant Agreements is valid and binding
and in full force and effect, enforceable against the parties thereto in
accordance with its terms.
R. Service Contracts. All service agreements, if any, with
respect to the maintenance and operation of the Premises are set forth on
Exhibit "E" attached hereto and made a part hereof ("Service Contracts"); all
Service Contracts are terminable by Seller within not more than thirty (30)
days. Seller shall terminate any management agreement with respect to the
Premises effective on the Closing Date.
S. Right to Cancel. Except as set forth on the Seller Schedule,
to the best of Seller's knowledge, no condition exists which, with the giving
of notice or the passage of time, or both, would constitute a default by
Seller, thereby permitting any party to cancel its obligations under any
Significant Agreement benefitting the Premises.
T. Required Improvements. To the best of Seller's knowledge, all
alterations, improvements, or other work required to have been completed by
Seller under any reciprocal easement agreement or development or similar
agreement with any municipality or other governmental authority which relates
to, or otherwise affects the Premises, and to which Seller is a party has
heretofore been completed and paid for in full.
<PAGE>
U. Subdivided Parcel. The Premises are an independent unit which
do not now rely on any facilities or facilities of municipalities or public
utility and water companies located on any property not included in the
Premises to fulfill any municipal or governmental requirement or for the
furnishing to the Premises of any essential building systems or utilities.
V. Environmental. To the best of Seller's knowledge and except as
may be set forth on the Seller Schedule:
1. The Premises and all operations conducted thereon are now
and always have been in compliance with all federal, state, and local
statutes, ordinances, regulations, rules, standards, and requirements of
common law concerning or relating to industrial hygiene and the protection of
health and the environment (collectively, "the Environmental Laws"). There
are no conditions on, about, beneath or arising from the Premises which might
give rise to liability, the imposition of a statutory lien or require
"Response," "Removal" or "Remedial Action," as defined herein, under any of
the Environmental Laws. As used in this Agreement, the terms "Response,"
"Removal" and "Remedial Action" shall be defined with reference to Sections
101(23) - 101 (25) of the Comprehensive Environmental Response, Compensation
and Liability Act ("CERCLA"), as amended by the Superfund Amendments and
Reauthorization Act ("SARA"), 42 U.S.C. Sections 9601(23) - 9601(25).
2. "Hazardous Substances," as defined below, have never been
used, handled, generated, processed, treated, stored, transported to or from,
released, discharged, or disposed of on, about or beneath the Premises.
There are no transformers containing or contaminated with PCB's or storage
tanks above or below the Premises. There is no asbestos or asbestos
containing material on the Premises or in any Building.
3. As used in this Section, the term "Hazardous Substance"
shall mean any substance regulated under any of the Environmental Laws
including, without limitation, any substance which is: (A) gasoline,
petroleum products, explosives, radioactive materials, including by-products,
source and/or other nuclear material or solid waste, asbestos or
asbestos-containing material or polychlorinated biphenyls or related or
similar material; (B) defined, designated or listed as a "Hazardous
Substance" pursuant to Sections 307 and 311 of the Clean Water Act, 33 U.S.C.
Sections 1317, 1321, Section 101(14) of CERCLA, 42 U.S.C. Section 9601
or Section 103 of the Pennsylvania Hazardous Sites Cleanup Act, 35 Pa. C.S.A.
Section 6020.103; (C) listed in the United States Department of
Transportation Hazardous Material Table, 49 C.F.R. Section 172.101; (D)
defined, designated or listed as a "Hazardous Waste" pursuant to Section
1004(5) of the Resource and Conservation and Recovery Act, 42 U.S.C. 6903(5)
or Section 103 of the Pennsylvania Solid Waste Management Act, 35 Pa. C.S.A.
Section 6018.103; or (E) regulated under the Pennsylvania Clean Streams Law,
35 Pa. C.S.A. Section 691.1-691.1001, and in the regulations adopted and
publications promulgated pursuant thereto.
4. Seller has not received notice or actual or constructive
knowledge of: (A) any claim, demand, investigation, enforcement, Response,
Removal, Remedial Action or other governmental or regulatory action
instituted or threatened against Seller or the Premises pursuant to any of
the Environmental Laws; (B) any claim, demand, suit or action made or
threatened by any person against Seller or the Premises relating to any form
of damage, loss or injury resulting from, or claimed to result from, any
<PAGE>
Hazardous Substance on, about, beneath or arising from the Premises or any
alleged violation of the Environmental Laws; and (C) any communication to or
from any governmental or regulatory agency arising out of or in connection
with Hazardous Substances on, about, beneath, arising from or generated at
the Premises, including without limitation, any notice of violation,
citation, complaint, order, directive, request for information or response
thereto, notice letter, demand letter or compliance schedule. If discovered
prior to Closing, Seller shall immediately advise Buyer of any of the claims
or communications listed in clauses (A) through (C) above and also shall
immediately advise Buyer of the discovery of any Hazardous Substances on,
about, beneath, or arising from the Premises or the discovery of any
condition on, about, beneath, or arising from the Premises which might give
rise to liability, the imposition of a statutory lien or require Response,
Removal or Remedial Action under any of the Environmental Laws.
W. Zoning. To the best of Seller's knowledge, the current zoning
classification of the Premises under the Zoning Code of Cumru Township is
"Highway Commercial" and under the Zoning Code of Robeson Township is "Light
Industrial" and the construction, operation and use of the buildings and
other improvements constituting the Premises do not violate any zoning,
subdivision, building or similar law, ordinance, order, regulation or
recorded plat or any certificate of occupancy issued for the Premises; no
zoning variances, special exceptions or zoning board of adjustment
certificates were issued for the construction of the Premises or for its
present use; and the buildings and improvements on the Premises are not
non-conforming uses or structures.
X. Flood Plain. To the best of Seller's knowledge without
independent investigation, no portion of the Premises is located within an
area designated as a flood hazard area or an area which will require the
purchase of flood insurance for the obtaining of any federally insured or
federally related loan; except as set forth on the Seller Schedule, no
portion of the Premises is located in any area constituting a "wetland."
Buyer represents and warrants to Seller as follows, except as set forth
on a Disclosure Schedule delivered by Buyer concurrently with the execution
and delivery of this Agreement (the "Buyer Schedule"):
K. Organization. Buyer is a real estate investment trust duly
formed and existing under and by virtue of the laws of the State of Maryland
and is in good standing with the State Department of Assessments and Taxation
of Maryland and has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted
except where the failure to be so organized, existing and in good standing or
to have such power and authority would not have a Buyer Material Adverse
Effect. As used in this Agreement, "Buyer Material Adverse Effect" shall
mean any fact, condition, event, development or occurrence which,
individually or when taken together with all other such facts, conditions,
events, developments or occurrences, has had or could reasonably be expected
to have a material adverse effect on the ability of Buyer to consummate the
transactions contemplated hereby. But in no case shall include the effects
of facts, conditions, events, developments or occurrences that are generally
applicable in (1) the commercial real estate industry, (ii) the United States
economy or credit markets, or (iii) the United States securities markets.
Buyer is duly qualified or licensed to do business and in good standing in
<PAGE>
each jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure to be so duly qualified or
licensed and in good standing would not in the aggregate have a Buyer
Material Adverse Effect. Buyer has heretofore made available to Seller a
complete and correct copy of the Declaration of Trust and by-laws or
comparable organizational documents, each as amended to date, of Buyer. Such
Declaration of Trust, by-laws and comparable organizational documents are in
full force and effect. Buyer is not in violation of any provision of its
Declaration of Trust, partnership agreement, charter, by-laws or comparable
organizational documents, except for such violations that would not,
individually or in the aggregate, have a Buyer Material Adverse Effect.
L. Consents and Approvals. The execution, delivery or performance
of this Agreement by Buyer; the consummation by Buyer of the transactions
contemplated hereby; and the compliance by Buyer with any of the provisions
hereof will not (i) conflict with or result in any breach of any provision of
the Declaration of Trust or Bylaws of Buyer, (ii) require any filing by Buyer
or its Subsidiaries with, or permit, authorization, consent or approval of,
any Governmental Entity to be obtained by Buyer (except where the failure to
obtain such permits, authorizations, consents or approvals or to make such
filings would not have a Buyer Material Adverse Effect), or (iii) violate any
order, writ, injunction, decree, statute, ordinance, rule or regulation
applicable to Buyer except, in the case of clause (iii), for violations,
breaches or defaults which would not have a Buyer Material Adverse Effect.
M. Litigation. There is no suit, claim, action, proceeding or
investigation pending (in which service of process has been received by an
employee of Buyer) or, to the knowledge of Buyer, threatened against Buyer
before any Governmental Entity which, if adversely determined, individually
or in the aggregate would have a Buyer Material Adverse Effect. Buyer is not
subject to any outstanding order, writ, injunction or decree which, insofar
as can be reasonably foreseen, individually or in the aggregate, in the
future would have a Buyer Material Adverse Effect.
N. Absence of Certain Changes or Events; Material Agreements.
Since December 31, 1996, Buyer has conducted its business only in the
ordinary and usual course consistent with past practice, and there has not
been any change or development, or combination of changes or developments,
which have a Buyer Material Adverse Effect. The transactions contemplated by
this Agreement will not constitute a change of control under or require the
consent from or the giving of notice to a third party pursuant to the terms,
conditions or provisions of any Contract to which Buyer is a party or by
which it is bound.
O. No Violation of Law. To its knowledge, Buyer is not in
violation of, or, under investigation with respect to, or been given notice
or been charged by any Governmental Entity with any violation of, any law,
statute, order, rule, regulation, ordinance or judgment (including, without
limitation, any applicable environmental law, ordinance or regulation) of any
Governmental Entity, except for violations which, in the aggregate, do not
have a Buyer Material Adverse Effect.
<PAGE>
P. Brokers or Finders. Buyer does not have any liability to
any agent, broker, investment banker, financial advisor or other firm or
person for any broker's or finder's fee or any other commission or similar
fee in connection with this Agreement or any of the transactions contemplated
hereby.
VI. POSSESSION. Possession of the Premises is to be given to Buyer,
subject to the right of tenants under the Leases on the Closing Date, by
delivery of the Deed, and all keys, combinations and security codes at
Closing.
VII. BUYER'S REVIEW AND APPROVAL OF TITLE AND SURVEY.
A. Title Binder. Buyer has secured a current title commitment
(the "Title Binder") from the Title Company, and shall have until the
Inspection Period Expiration Date (as hereinafter defined in Section VII.(C)
to examine the condition of title, including the terms and provisions of all
items and documents referred to in the Title Binder, and all information
regarding title as disclosed on the Survey (hereinafter defined), and to
approve or disapprove the same. If Buyer shall disapprove the condition of
title, such disapproval shall be set forth in a notice given to Seller (the
"Disapproval Notice") identifying the condition of title to the Property or
any of the terms, provisions or contents of said items, documents or Survey
which are disapproved by Buyer (the "Title Objections"). Subject to the
provisions of the succeeding portion of this Section VII.A., Seller shall
have until the date which is ten (10) days after the date of the Disapproval
Notice (the "Title Cure Expiration Date") in which to cure or eliminate all
items which Buyer disapproves in the Disapproval Notice, and to furnish
evidence satisfactory to Buyer and the Title Company that all such items have
been cured or eliminated or that arrangements have been made with the Title
Company and any parties in interest to cure or eliminate the same at or prior
to the Closing. If Seller fails to remove any Title Objection in accordance
with the provisions of the immediately preceding sentence, Buyer,
nevertheless, may elect (at or prior to the Closing) to consummate the
transaction provided for in this Agreement subject to any such Title
Objection(s) as may exist as of the Closing with a credit against the
Purchase Price equal to the sum necessary to remove such Title Objection(s),
and Seller shall remain liable (which liability shall survive the Closing)
for the cost of removing any such Title Objection in excess of the credit
granted against the cash portion of the Purchase Price, and Seller shall
reimburse Buyer for any and all costs, claims, damages, obligations,
liabilities and expenses (including, without limitation, reasonable legal
fees and expenses) incurred by Buyer with respect to the Title Objection(s).
If Buyer shall not so elect, Buyer may terminate this Agreement by notice in
writing to Seller, whereupon the Deposit shall be immediately refunded to
Buyer, and this Agreement shall be null and void, and the parties hereto
shall be relieved of all further obligations and liability under this
Agreement.
B. Survey. Within five (5) business days after the date of this
Agreement, Buyer shall order a current survey of Property (the "Survey"),
prepared by a duly licensed land surveyor acceptable to Buyer. The Survey
shall be currently dated, shall show the location on the Property of all
buildings and improvements, building and set-back lines, easements,
rights-of-way, encroachments, elevations between public roads providing
access to the Property, and the boundary of the Property, and other such
matters affecting the Property whether physically apparent from the ground,
of record in public offices, or otherwise, and shall contain a legal
description of the boundaries of the Premises by metes and bounds which shall
<PAGE>
include a reference to the recorded plat, if any. The surveyor shall certify
to Buyer and to the Title Company and to any lender making a loan to Buyer
secured by the Property that the Survey is correct and was made on the
ground; and that there are no visible discrepancies, conflicts,
encroachments, overlapping of improvements, violations of set-back lines,
easements, rights-of-way or other such matters affecting the Property except
as are shown on the Survey, and that the Survey conforms to all ACTA/ACSM and
Pennsylvania Land Title Association standards and requirements for a Class A
Survey. Any and all recorded matters shown on said Survey shall be legibly
identified by appropriate volume and page recording references with dates of
recording noted. Buyer shall have until the Inspection Period Expiration
Date to approve or disapprove the material contained thereon. If Buyer shall
disapprove such Survey, such disapproval shall be set forth in a Disapproval
Notice as hereinabove provided in Section VII.A., and the provisions of
Section VII.A. with respect to Disapproval Notices shall apply.
C. Physical Inspection. For a period (the "Inspection Period")
commencing on the second (2nd) business day next following the date upon
which Buyer shall receive from Seller a fully-executed counterpart of this
Agreement, and expiring twenty (20) days thereafter (such date is herein
referred to as the "Inspection Period Expiration Date"), Buyer shall have the
right to have performed a physical and mechanical inspection, measurement and
audit of the Property, and Seller shall cooperate with Buyer and shall
furnish to Buyer such information, materials and documents as Buyer may
reasonably request. The inspection, audit and measurement of the Property's
operation, condition and maintenance shall include, without limitation, such
environmental and engineering inspections, reviews and assessments that Buyer
deems appropriate. In the event Seller shall fail to deliver or make
available any item or information material to Buyer's review of the Property
and required to be delivered or made available pursuant to the terms of this
Section within five (5) business days next following the date upon which
Buyer shall receive from Seller a fully-executed counterpart of this
Agreement, then at Buyer's election, the Inspection Period Expiration Date
(and the Closing Date) shall be extended by one day for each day that the
delivery or availability of such item is delayed. If Buyer, at Buyer's sole
and absolute discretion, shall find such inspection(s) to be unsatisfactory
for any reason whatsoever, Buyer shall have the right, at its option, to
terminate this Agreement on or before the Inspection Period Expiration Date,
and upon such termination, the Deposit shall be immediately refunded to the
Buyer, and thereupon the parties hereto shall have no further liabilities one
to the other with respect to the subject matter of this Agreement. Buyer
agrees that it shall not unreasonably interfere with tenants in performing
its inspection. Buyer further agrees that (i) all such activity shall be
done in a good and workmanlike manner and the Property shall at all times be
kept in a safe condition, (ii) immediately after each such survey, assessment
or evaluation, Buyer shall restore to their prior condition those portions of
the Premises disturbed or damaged by Buyer's activity, (iii) Buyer shall
defend, indemnify and save Seller harmless from and against all claims,
actions, suits, damages, losses, costs and expenses (including, without
limitation, attorneys' fees) instituted against or incurred by Seller as a
result of or relating to any activity on the Premises by Buyer, its agents,
employees, designees, representatives and independent contractors, and (iv)
if requested by Seller, Buyer shall provide Seller with a certificate of
comprehensive general liability insurance, in form, in an amount and issued
by a carrier reasonably acceptable to Seller, insuring Seller from all risks
and loss associated with Buyer's exercise of its rights hereunder. During
the Inspection Period, Buyer and its agents, employees, designees,
<PAGE>
representatives and independent contractors also shall have the right, at
Buyer's expense, to perform such other due diligence investigations regarding
the Property as Buyer deems necessary, including, without limitation, title,
zoning, municipal code compliance and other investigations. Buyer may also
conduct discussions with the appropriate local, state and federal agencies,
authorities and governmental bodies regarding the Property. In connection
with such inspection, and without limiting the generality of Seller's
obligations hereunder, Seller agrees to deliver to Buyer, within five (5)
days:
1. Contracts, Licenses, Permits. Copies of the Contract
Documents, the Licenses, all building permits, certificates of occupancy,
insurance policies applicable to the Property and any other documents
evidencing rights described in Section I.(B) hereof;
2. Utility Costs. A break-down of utility costs for the
period the Property has been owned by Seller;
3. Inventory. Invoices, bills of sale, and other evidence
supporting the Schedule of Inventory;
4. Three Years' Maintenance Expenses. Information concerning
maintenance costs of the Property for the past three years, or lesser period,
if owned less than three years by the Seller;
5. Three Years' Tax Bills. A copy of tax bills (i) for the
current year, and (ii) if available, for the preceding two years;
6. Three Years' Operating Statements. Statements of
operation of the Property for the past three years, or lesser period, if
owned less than three years by Seller, and like statements for the balance of
such three year period during which operations were by a prior owner, if
available, and if not available, any statements as were received from such
prior owner, and such other and further information as Buyer shall reasonably
require in order to obtain a certified audit of the operation of the Property
prepared in accordance with generally accepted accounting principles
consistently applied, by an independent certified public accounting firm
selected by Buyer;
7. Schedule of Violations. A schedule setting forth all
violations of any law, ordinance, regulation, rule or requirement of any
governmental body having jurisdiction, whether existing or prospective, of
which Seller has received written notice, issued or noted by any governmental
body during the past three years, and copies of any notices, terminations or
correspondence relating thereto;
8. Schedule of Notices. A schedule of any written demands,
requests, requirements or recommendations regarding the operation,
maintenance, repair or replacement of the Property or any portion thereof, of
which Seller has received notice during the past three years, from the holder
of any mortgage or deed of trust or any insurance company or any board of
fire underwriters or real estate associations or like body, and copies of all
correspondence relating thereto;
<PAGE>
9. Schedule of Replacements and Repairs. All documentation
in Seller's possession regarding replacements and repairs to the Property;
10. Zoning, Site Plan, Subdivision Plan or Plat. All
conditional and permanent zoning, site plan, subdivision, building, housing,
safety, fire and health approvals, including, without limitation, the local
governmental applications, resolutions and approvals supporting the same;
11. Takings or Changes. Copies of all written notices to
Seller of proposed or threatened takings or changes with respect to the
Property or major access roads within a reasonable radius which would affect
the access to the Property, or any portion thereof, by prospective occupants;
12. Tax Assessments, Appeals and Increases. Copies of all
written notices to Seller of all filed, proposed or threatened tax assessment
appeals or tax assessment increases related to the Premises;
13. Litigation. Copies of all pending and written notices to
Seller of threatened litigation, including litigation involving tenants,
affecting the Property or this transaction;
14. Insurance Policies. Copies of all insurance policies of
Seller related to the Property; and
15. Schedule of Employees. A schedule of all current
employees of the Property, setting forth the name, residence, salary, hourly
wages, benefit package, bonuses, vacation and sick pay and other
prerequisites of their employment.
D. Seller's Failure to Deliver. If Seller shall have failed to
deliver to Buyer all documents required to be delivered under Section VII.C.
hereof, Buyer may, at its option, at any time on or after such date, but
prior to the curing of such failure by Seller, give Seller a five (5) day
written notice specifying such default, and if Seller fails to cure such
default within such five (5) day period, Buyer may terminate this Agreement,
receive the return of the Deposit and pursue any other remedy available to it
pursuant to the provisions hereof.
E. Notification of Certain Matters. Seller shall give prompt
notice to Buyer, and Buyer shall give prompt notice to Seller of (a) the
occurrence, or nonoccurrence, of any event the occurrence, or non-occurrence,
of which would be likely to cause (i) any representation or warranty
contained in this Agreement to be untrue or inaccurate or (ii) any covenant,
condition or agreement contained in this Agreement not to be complied with or
satisfied and (b) any failure of Seller or Buyer, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of
any notice pursuant to this Section VII.E. shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
<PAGE>
F. Board of Trustees Approval.
1. Buyer's obligations hereunder are contingent upon Buyer
obtaining the requisite authorization and approval of the Board of Trustees
of Buyer with respect to Buyer's execution, delivery and performance of this
Agreement on or before the Inspection Period Expiration Date. Upon Buyer's
obtaining said authorization and approval, no other proceedings on the part
of Buyer will be necessary to authorize this Agreement or permit Buyer to
consummate the transactions so contemplated herein, and this Agreement will
then constitute a valid and binding obligation of Buyer, enforceable in
accordance with its terms.
2. In the event Buyer is unable to obtain said authorization
and approval of the Board of Trustees of Buyer, within the above referenced
period, Buyer shall have the right, at its option, to terminate this
Agreement on or before the Inspection Period Expiration Date, and upon such
termination, the Deposit shall be immediately refunded to Buyer, and
thereupon the parties hereto shall have no further liabilities to each other
with respect to the subject matter of this Agreement.
VIII. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Buyer and Seller set forth herein shall survive Closing and
delivery of the deed for one (1) year.
IX. FIRE OR OTHER CASUALTY.
A. Maintain Insurance. Seller shall maintain in effect until the
Closing Date the insurance policies (or like policies) now in effect with
respect to the Premises and Personal Property as set forth in Exhibit "F".
B. Minimal Damage. If prior to the Closing Date any portion of
the Property is damaged or destroyed by fire or other casualty, and the cost
of repair or restoration thereof shall be $50,000 or less (as established by
good faith estimates obtained by Buyer), this Agreement shall remain in force.
C. Substantial Damage. If prior to the Closing Date any portion
of the Property is damaged or destroyed by fire or other casualty (a
"Property Casualty") and if (i) the cost to repair the same as reasonably
estimated by Seller and Buyer is less than $250,000, this Agreement shall not
terminate as a result of the Property Casualty, Seller shall have no
obligation to repair or restore the Property Casualty and Buyer shall receive
at Closing a credit against the Purchase Price in the amount reasonably
estimated by Seller and Buyer as the cost to fully repair and restore the
Property Casualty.
If a Property Casualty occurs prior to Closing and the cost to
repair the same as reasonably estimated by Seller and Buyer is more than
$250,000, or such damage results in the termination of the Lease with Penske
Truck Leasing Co., LP, UGI Utilities, Inc., Gilbert/Commonwealth, Inc. or
Parsons Power, Buyer may terminate this Agreement by giving notice to Seller
within thirty (30) days after Buyer receives notice of the casualty, unless,
prior to such date, Seller and Buyer shall have agreed (it being understood
<PAGE>
that neither the Seller nor Buyer shall have any obligation to so agree) to
postpone the Closing Date for a period of time sufficient to permit Seller to
fully repair and restore the Property Casualty prior to Closing. If there is
any partial or total damage or destruction of any portion of the Property, as
above set forth, and if Buyer elects not to terminate this Agreement, then
all insurance proceeds paid or payable to Seller shall belong to Buyer and
shall be paid over and assigned to Buyer at Closing, and Seller shall further
execute all assignments and any other documents or other instruments as Buyer
may reasonably request or as may be necessary to transfer all interest in all
such proceeds to Buyer or to whomever Buyer shall direct.
In the event that the Seller and Buyer are unable to agree on the
amount required to repair or restore the Property Casualty, either Seller or
Buyer may request that the amount to fully repair and restore the Property
Casualty be conclusively determined by an insurance adjuster selected by
Seller and Buyer jointly.
D. Closing After Substantial Damage. So long as this Agreement
shall remain in force under Sections IX.B. or IX.C., then either (a) (i) all
proceeds of insurance collected prior to Closing, plus the amount of
deductible under Seller's insurance policy, shall be adjusted subject to
Buyer's approval and participation in any adjustment, and shall be credited
to Buyer against the Purchase Price payable by Buyer at Closing, and (ii) all
unpaid claims and rights in connection with losses shall be assigned to Buyer
at Closing, or, (b) at Buyer's option, Seller shall (i) restore the Property
by Closing to its condition immediately preceding the casualty, (ii) remain
liable for any damages resulting from the failure to complete the repair by
Closing, and (iii) include Buyer, and obtain Buyer's approval to, any
adjustments made by Seller.
E. Rent Insurance. All rental loss insurance and the proceeds
thereof allocable to any period subsequent to Closing shall be paid or
assigned to Buyer at Closing.
X. CONDEMNATION. If, prior to the Closing Date, all or any portion of
the Premises is taken by eminent domain or a notice of any eminent domain
proceedings with respect to the Premises or any part thereof is received by
Seller, then Seller shall within five (5) days thereafter give notice thereof
to Buyer and Buyer shall have the option to (a) complete the purchase
hereunder or (b) if such taking, in Buyer's sole and absolute discretion,
adversely affects the Premises or its current economic viability, terminate
this Agreement, in which event the Deposit shall be immediately refunded to
Buyer, and this Agreement shall be null and void. Buyer shall deliver
written notice of its election to Seller within ten (10) days after the date
upon which the Buyer receives written notice of such eminent domain
proceedings. If notice of condemnation is received by Buyer and it fails to
deliver said written notice of its election within said time period, such
failure shall constitute a waiver by Buyer of its right to terminate this
Agreement. If this Agreement is not so terminated, Buyer shall be entitled
to all awards or damages by reason of any exercise of the power of eminent
domain or condemnation with respect to or for the taking of the Premises or
any portion thereof, and until such time as closing has occurred, or this
Agreement terminates. Any negotiation for, or agreement to, and all contests
of any offers and awards relating to eminent domain proceedings shall be
conducted with the joint approval and consent of Seller and Buyer.
<PAGE>
XI. EXPENSE ALLOCATIONS.
A. Seller shall pay for one-half of all applicable realty transfer
taxes related to the execution, delivery and recording of the Deed, Bill of
Sale, and other Closing Documents, and all related recording charges.
B. Buyer shall pay for one-half of all applicable realty transfer
taxes, for Buyer's title examination, and for Buyer's title examination and
premiums.
C. Buyer and Seller shall be responsible for paying their own
attorney's fees in connection with this transaction.
XII. CLOSING.
A. Time and Date and Place. The Closing on the sale of the
Property (herein referred to as the "Closing") shall take place at a time
specified by Buyer in writing to Seller at least five (5) days prior to the
specified Closing Date, but in any event no later than the last to occur of
(i) ten (10) days next following the Inspection Period Expiration Date, or
(ii) July 30, 1997, at the offices of Drinker Biddle & Reath LLP, 1000
Westlakes Drive, Suite 300, Berwyn, PA 19312 commencing at 10:00 a.m.
B. Documents. At Closing, the parties indicated shall
simultaneously execute and deliver the following:
1. Seller's Documents and Other Items. Seller shall execute
and deliver or cause to be executed and delivered to Buyer in proper form for
recording:
(a) Deed. A special warranty deed prepared by Buyer's
counsel in form acceptable to Seller (the "Deed"), conveying the Premises to
Buyer, duly executed by Seller for recording. The Deed description shall be
based upon the metes and bounds description attached as Exhibit "A", unless
Buyer requests that Seller convey the Premises by the metes and bounds
description shown on the new survey, if any, obtained by Buyer, in which
event the Premises shall be so conveyed.
(b) Bill of Sale. A bill of sale prepared by Buyer's
counsel in form acceptable to Seller, assigning, conveying and transferring
to Buyer, all of the Personal Property.
(c) Original Leases. All original Leases, tenant files,
tenant correspondence and repair records.
(d) Original Licenses, Contract Documents and Other
Personal Property. All original Licenses, Contract Documents, and other
Personal Property described in Section I.B. of this Agreement.
<PAGE>
(e) Assignment of Leases. An assignment and
assumption agreement with reciprocal indemnities, prepared by Buyer's counsel
in form acceptable to Seller (the "Assignment"), duly executed by Seller and
Buyer, assigning, conveying and transferring to Buyer the Leases.
(f) Assignment of Licenses, Contract Documents and Other
Personal Property. An assignment agreement prepared by Buyer's counsel, in
form acceptable to Seller, assigning, conveying and transferring to Buyer the
Licenses, Contracts Documents and Other Personal Property, including,
specifically, the Names.
(g) FIRPTA Certificates. All certificate(s) required
under Section 1445 of the Code.
(h) Tenant Letter. Letters to each tenant advising of
the change in ownership and directing the payment of rent to such party as
the Buyer shall designate, said letter to be in form acceptable to Buyer.
(i) Estoppel Certificate from Cumru and Robeson
Townships. A Certification Statement or its equivalent issued by the zoning
officer, building inspector or other official of the municipality in which
the Property is located stating that the present use of the Property as an
office building complex is lawful, that there are no violations of record,
and that all conditions and required work have been performed in order that
the Property be a legally subdivided parcel. Such Statement shall be dated
not earlier than the date hereof. If such Certification Statement is not
available, Seller shall have the right, but not the obligation, to substitute
its own Certificate and Indemnity in place thereof.
(j) Title Insurance Certificates. Such affidavits of
title or other certifications as shall be required by the Title Company to
insure Buyer's title to the Premises as set forth in Section III, and to
provide affirmative endorsements (a) against mechanic's liens, (b) insuring
against any violation of existing covenants, conditions or restrictions, and
insuring that future violation will not result in forfeiture of title, (c)
insuring that all foundations in place as of the date of such policy are
within the lot lines and applicable set back lines, (d) insuring that the
buildings and structures on the Premises do not encroach onto adjoining land
or onto any easements, (e) insuring that confirming that there are no
encroachments of improvements from adjoining land onto the Premises (f)
removing any exceptions for matters which an accurate survey would disclose ,
and (g) providing affirmative insurance with respect to such other matters as
Buyer or its lender shall specify.
<PAGE>
(k) Updated Rent Roll. An updated schedule of
Leases, containing all information required to be set forth in Exhibit "D",
which schedule is correct and complete as of the date of closing.
(l) Seller Certificate. A written certification
confirming that as of Closing no representation or warranty of Seller
contained in this Agreement, nor any document or certificate delivered to
Buyer pursuant to this Agreement or in connection with the transaction
contemplated hereby, contains any untrue statement of a material fact or
knowingly omits to state a material fact necessary to make any representation
or warranty contained herein misleading.
(m) Organization Certifications. Confirmation of the
good standing and existence of Seller and the due authority of those
executing for them, including, without limitation, the following documents
issued no earlier than 30 days prior to Closing: (a) good standing
certificate in state of organization and in the State in which the Premises
are located, (b) articles of incorporation, partnership agreement or other
formation instrument certified by the secretary of state of the state of
incorporation, (c) a certificate from the secretary of the corporation or
managing general partner of the partnership confirming the incumbency of the
signatories and the current force and effect of the resolution authorizing
their execution of the documents required under this Agreement.
(n) Keys. All keys, combinations and security codes for
all locks and security devices on the Property;
(o) Tax Bills. Current tax bills and, if available, tax
bills for each of the years of Seller's ownership of the Property;
(p) Tax Reduction Rights. An instrument assigning to
Buyer any claims for the reduction of real or personal property taxes
assessed against any portion of the Property for the fiscal year in which the
Closing takes place; any refund for such year shall be prorated when received;
(q) Tenant's Estoppels.
(1) Seller shall use its best efforts to obtain, and
shall deliver to Buyer promptly as the same are received but in any event no
later than the Closing Date, estoppel certificates ("Tenant Estoppel
Certificates") dated no earlier than thirty (30) days prior to the Closing
Date from all tenants (except as otherwise provided for herein below in
subparagraph (2)) under Leases (in substantially the form of Exhibit "H"
attached hereto and made a part hereof). In lieu of delivering such required
Tenant Estoppel Certificates, if Seller shall have attempted in good faith
<PAGE>
but shall have been unable to secure the same, then Seller shall be permitted
(but not obligated) to substitute its own Certificate and Indemnity,
substantially in the form of Exhibit "H" for each tenant from whom Seller
failed to receive a Tenant Estoppel Certificate.
(2) Notwithstanding anything to the contrary contained
herein, Seller shall obtain Tenant Estoppel Certificates for the following
tenants: Penske Truck Leasing Co., L.P., UGI Utilities, Inc. and Parsons Power
(the "Required Tenants"), and in no event shall Seller be permitted to
substitute its own Certificate and Indemnity for any or all of the Required
Tenants.
2. Buyer's Documents. Buyer shall deliver or cause to be
delivered to Seller:
(a) The amounts required to be paid to Seller pursuant to
this Agreement;
(b) Confirmation of the existence and subsistence of
Buyer, and the authority of those executing for Buyer, including, without
limitation, the following documents issued no earlier than thirty (30) days
prior to Closing: (a) good standing certificate in State of Maryland, (b)
Buyer's Amendment and Restatement of Declaration of Trust filed on August 27,
1996, as amended, (c) a certificate from any officer of Buyer confirming the
incumbency of the signatories and the current force and effect of the
resolution authorizing their execution of the documents required under this
Agreement.
3. Title Insurance. As a condition to Buyer's obligations at
Closing, Title Company shall furnish Buyer at Closing with the Title Policy,
in the form approved by Buyer pursuant to Section III, in the full amount of
the Purchase Price, wherein the Title Company shall insure fee simple title
to the Property in Buyer or its designee as of the Closing Date containing no
exceptions to title other than those which have been approved by Buyer in
writing pursuant to Section III hereof and providing the title endorsements
specified in Section XII.B.(1)(j) above.
4. Necessary Documents. Buyer and Seller shall execute and
deliver such other documents and instruments as may be reasonably necessary
to complete the transaction contemplated by this Agreement.
XIII. DEFAULT; REMEDIES
A. In the event that any of Seller's representations, warranties
or covenants contained in this Agreement are untrue or if Seller shall have
failed to have performed any of the covenants and/or agreements contained in
this Agreement which are to be performed by Seller, on or before the date set
forth in this Agreement for the performance thereof, or if any of the
<PAGE>
conditions precedent to Buyer's obligation to consummate the transaction
contemplated by this Agreement shall have failed to occur, Buyer may, at its
option, rescind this Agreement by giving written notice of such rescission to
Seller and Seller shall immediately thereafter return the Deposit, and
thereupon, subject to the provisions of Section XIII.C. below, the parties
shall have no further liability to each other hereunder. In the alternative,
but without limiting Buyer's right upon any default by Seller hereunder to
receive the prompt return of the Deposit, Buyer may seek to enforce specific
performance of this Agreement.
B. Buyer recognizes that the Property will be removed by Seller
from the market during the existence of this Agreement and that if this
purchase and sale is not consummated because of Buyer's default Seller shall
be entitled to compensation for such detriment. Seller and Buyer acknowledge
that it is extremely difficult and impracticable to ascertain the extent of
the detriment, and to avoid this problem, Seller and Buyer agree that if the
purchase and sale contemplated in this Agreement is not consummated because
of Buyer's default under this Agreement, Seller shall be entitled to retain
the Deposit as liquidated damages. The parties agree that the sum stated
above as liquidated damages shall be in lieu of any other relief to which
Seller might otherwise be entitled, Seller hereby specifically waiving any
and all rights which it may have to damages or specific performance as a
result of Buyer's default under this Agreement.
C. Buyer's Out-of-Pocket Costs. In the event of Seller's breach
or default hereunder which results in Buyer's termination of this Agreement,
or in the event that Seller shall fail to perform any term, covenant or
agreement, or satisfy any condition herein stipulated (including, without
limitation, a failure of title), then, in any such event, upon termination by
Buyer hereunder, in addition to receiving the immediate return of the
Deposit, anything in the Agreement contained to the contrary notwithstanding,
Buyer shall also receive from Seller, upon demand, Buyer's actual, documented
out-of-pocket costs and expenses associated with this Agreement and Buyer's
anticipated acquisition of the Property including, without limitation,
Buyer's reasonable counsel fees and costs, title expenses, survey costs, and
other costs and expenses associated with Buyer's due diligence, including,
without limitation, legal, financial and accounting due diligence, Buyer's
structural inspection of the Property and Buyer's environmental assessment of
the Property (collectively, "Transaction Costs"). The foregoing list is not
intended to be exclusive, but representative of the costs and expenses that
the parties anticipate that Buyer will incur in anticipation of this
transaction. Seller's maximum reimbursement liability under this Section
XIII.C. shall not exceed $50,000.00.
XIV. 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. All of the
representations and warranties of Seller contained in this Agreement shall
have been true and correct when
<PAGE>
made, and shall be true and correct on the Closing date with the same effect
as if made on and as of the Closing Date. In the event any representation or
warranty is not true and correct on the Closing Date, Seller shall deliver to
Buyer at Closing a certification explaining in what respects the
representation or warranty is no longer true and correct. In the event Buyer
determines, in its sole and absolute discretion, that the representation or
warranty which is no longer true and correct is a Company Material Adverse
Effect, Buyer shall have the right to (i) terminate this Agreement, or (ii)
require as a condition of closing a specific indemnity from Seller with
respect to the fact disclosed as not being true and correct on the Closing
Date.
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 title review performed under
Section VII of this Agreement, or shall fail to notify Seller on or before
the Title Review Expiration Date, of Buyer's dissatisfaction with the results
of such review.
D. Trustee Approval. This Agreement and the transactions
contemplated hereby shall have received formal approval of Buyer's Board of
Trustees at a meeting duly called to consider same.
E. Estoppels. Seller shall have delivered to Buyer the required
Estoppels.
F. Lease With Seller. Buyer and Seller shall enter into a lease
substantially in the form attached hereto as Exhibit "J" and made a part
hereof.
XV. PRORATIONS.
A. Operating Expenses. The following items shall be prorated at
Closing, as of close of business of the day immediately preceding Closing
"Adjustment Date":
1. Taxes. Real estate taxes applicable to the Property for
the tax year in which Closing occurs, based on the respective tax years for
which such taxes are assessed and on the most recent assessment of the
Property and the then applicable tax rates. All real estate taxes, charges
and assessments shall be pro rated on a per diem basis as of midnight of the
day preceding the Closing Date, disregarding any discount or penalty and on
the basis of the fiscal year of the authority levying the same. If any of
the same have not been finally assessed as of the Closing Date for the
current fiscal year of the taxing authority, then the same shall be adjusted
at Closing based upon the most recently issued bills therefor, and shall be
re-adjusted immediately when and if final bills are issued. If any portion
of the Property is a net leased property wherein the tenant(s) have paid or
will pay all such taxes, charges and assessments directly to the person or
entity entitled to receive the same (and not to Seller as landlord under the
applicable Leases), no apportionment shall be made.
<PAGE>
2. Sewer Rents. All sewer rents not based on meter readings.
Seller shall cause all utility meters to be read and the municipalities or
utility companies servicing the Property to issue final bills to Seller as of
the date of Closing, and all such bills shall be paid by Seller.
3. Permit Fees. Fees payable with respect to assignable
permits and governmental approvals;
4. Operating Costs. All items of operating cost or expense
incurred by Seller, including but not limited to utilities and fuel oil, and
reasonably allocable or attributable to periods after Closing;
5. Rents. All rents collected, both Basic Rents (as
hereinafter defined) and Additional Rents (as hereinafter defined) shall be
deemed to be applied first to the calendar month in which Closing occurs and
thereafter to current rental periods and secondly to satisfy rental
obligations arising from past rental periods prior to the date of Closing.
As used herein, the term "Basic Rents" shall mean all rents and charges
payable by any and all tenants, including, without limitation, occupancy
rents, but excluding Additional Rents. As used herein, the term "Additional
Rents" shall mean any amounts payable by tenants pursuant to any provisions
of such leases relating to escalation and pass-through of operating and other
similar expenses and any provisions therein in respect of tenant escrows and
reimbursements.
Basic Rents shall be apportioned as follows:
(a) Buyer shall receive a credit at Closing for all Basic
Rents actually collected prior to Closing relating to any period after Closing;
and
(b) With respect to Basic Rents uncollected as of Closing
and owed by occupants of the Property at Closing for any period prior to the
calendar month in which Closing occurs, Seller shall be reimbursed by Buyer
following Buyer's collection of such Basic Rents, to the extent they are
available in accordance with the provisions hereof, as follows: Buyer shall
use its best efforts to collect such rents, and all amounts collected by
Buyer, net of related costs of collection, shall be paid to Seller within ten
(10) days following the month of collection until the entire amount of such
uncollected rents shall have been paid. If Buyer is unable to collect any
portion of such Basic Rents within one hundred eighty (180) days following
Closing, Buyer may elect, with respect to such Basic Rents, either to (I)
assign all such Basic Rents to Seller, after which Seller may pursue any
remedies to collect such Basic Rents and retain any amounts so collected, or
(II) retain such Basic Rents, in which event Buyer, within one hundred eighty
(180) days following Closing, shall make a cash payment to Seller of the
amount of such Basic Rents, less Buyer's reasonable expenses relating to
efforts to collect such Basic Rents, after which any amounts collected by
Buyer shall be retained by Buyer.
<PAGE>
Additional Rents shall be apportioned as follows:
(a) With respect to Additional Rents uncollected at Closing
and owed for any period prior to Closing and not yet billed, Buyer shall submit
appropriate bills to the tenants as soon as is practicable after Buyer
receives sufficient information from Seller concerning Additional Rents to
enable Buyer to do so. Buyer shall use its best efforts to collect such
Additional Rents for a period of three hundred sixty-five (365) days after
the rentals become due. Seller's apportioned interest in any amounts
collected by Buyer to the extent such amounts are available in accordance
with the provisions hereof, net of the costs of collection, shall be paid to
Seller within ten (10) days following receipt thereof. If after the
applicable three hundred sixty-five (365) day period Buyer has been unable to
collect any Additional Rents, Buyer may elect, with respect to one or more of
the leases one of the two alternatives set forth under subsection (A)(2)
above, with the same related cash payment or assignment of accounts as is
therein provided;
(b) With respect to Additional Rents billed and owed by
occupants of the Property as of Closing, Buyer shall use its best efforts to
collect such Additional Rents for a period of one hundred eighty (180) days
after Closing. Any such amounts collected by Buyer, to the extent available
pursuant to the provisions hereof, net of the costs of collection, shall be
paid to Seller within ten (10) days following receipt thereof. If after the
applicable one hundred eighty (180) day period Buyer has been unable to
collect Additional Rents, Buyer may elect, with respect to any one or more of
the leases one of the two alternatives set forth under subsection (A)(2)
above, with the same related cash payment or assignment of accounts as is
therein provided;
(c) Additional Rents shall be allocated over the period
with regard to which such operating expenses are incurred, notwithstanding
the date on which such Additional Rents become payable; and
(d) If the Premises are entirely net leased and the
tenant(s) pay all Additional Rent directly to third parties, no
apportionments or adjustments shall be made.
6. Security Deposits. Seller shall deliver to Buyer at
Closing, in cash or by certified check without adjustment, the amounts of all
security deposits which may have been received from tenants, together with
interest thereon which is due to any tenant under the provisions of any Lease
or applicable law.
7. Project Contracts. The unpaid monetary obligations of
Seller under all Contracts shall, as a general matter, be pro rated on a per
diem basis as of midnight of the day preceding the Closing Date, subject,
nevertheless, to the following: With respect to all
<PAGE>
leasing, brokerage or other commission agreements relating to Property
Leases, there shall be no apportionment or reimbursement of or for any
leasing fees, commissions or other compensation ("Leasing Fees") which is in
respect of any lease executed prior to the Closing, all of which shall be and
remain the responsibility of Seller, and Seller shall pay the same when due
and shall indemnify and hold Seller harmless from all thereof; and (ii)
provided Closing occurs hereunder, Buyer shall be responsible for and shall
pay when due and indemnify and hold Seller harmless from and against or
reimburse to Seller if Seller has paid any Leasing Fees with respect thereto,
all Leasing Fees which are due and payable subsequent to Closing on an "as
collected" basis or all Leasing Fees which are due and payable for a renewal
term which shall come into effect on or after the Closing Date; provided,
however, Seller shall have disclosed to Buyer the existence of such Leasing
Fee on the Company Schedule. Leasing Fees apportionable hereunder shall be
apportioned and pro rated on a per diem basis as of midnight of the day
preceding the Closing Date and as a function of (and calculated with respect
to) the lease term for which the same were paid or will become due and
payable.
B. Custom and Practice. Except as set forth in this Agreement,
the customs of the State and County in which the Premises are located shall
govern prorations.
C. Future Installments of Taxes. If at Closing, the Property or
any part thereof shall be or shall have been affected by an assessment or
assessments which are or may become payable in installments, then for
purposes of this Agreement, all unpaid installments of any such assessment,
including those which are to become due and payable and to be liens upon the
Property shall be paid and discharged by Seller at Closing.
D. Application of Prorations. If such prorations result in a
payment due Buyer, the cash payable at Closing shall be reduced by such sum.
If such prorations result in a payment due Seller, the same shall be paid by
uncertified check at Closing.
E. Schedule of Prorations. The parties shall endeavor to jointly
prepare a schedule of prorations for the Property no less than five (5) days
prior to Closing.
F. Escalations. At least five (5) days prior to Closing, Seller
shall deliver to Buyer a reasonably detailed statement setting forth, as of
the date of Closing (a) the sums collected from tenants under Leases on
account of or in reimbursement of landlord's operating expenses and/or any
other payments made by tenants to landlord on account of sums which are
attributable to expenses paid or incurred by the landlord ("escalation
payments") for the current fiscal year under each such Lease (whether a lease
year or calendar or other year); and (b) the amounts paid or incurred by
Seller during the appropriate fiscal year as aforesaid which Seller expects
will be paid or reimbursed by escalation payments made by tenants.
If Seller shall have collected escalation payments for periods prior
to Closing, whether pursuant to estimates which were in excess of the amounts
actually required to be paid, or otherwise, there shall be an adjustment and
credit to Buyer at Closing for such excess. If the charges were not billed
or have not been collected as of the date of Closing, then, when the amount
of such escalation payments is determined and collected by Buyer from
tenants, Buyer will, upon collection, remit to Seller the portion thereof to
which Seller is entitled to the date of
<PAGE>
Closing. Buyer shall have the right, in good faith, to settle or adjust any
amount of such escalation payments due from any tenant without Seller's prior
consent, provided that such settlement or adjustment applies ratably to all
amounts of escalation payments due from such tenant.
G. Readjustments. The parties shall correct any errors in
prorations as soon after the Closing as amounts are finally determined.
H. Indemnification for Seller's Tax Obligations. Seller shall
indemnify, defend and save and hold harmless Buyer from any loss, cost,
liability or expense (including, without limitation, reasonable counsel fees
and court costs) incurred, paid or suffered by Buyer arising out of or by
reason of any claim made by the Pennsylvania Department of Revenue or by any
other state taxing or employment authorities asserting or indicating any
claims or possible claims for unpaid taxes, penalties, interest or court
costs related thereto of Seller or any related party, due the Commonwealth of
Pennsylvania or its political subdivisions. The provisions of this Section
XIV.H. shall specifically survive Closing hereunder.
XVI. BROKERS. Each party hereby represents and warrants to the other
that it has not employed or retained any broker or finder in connection with
the transactions contemplated by this Agreement, and that neither has had any
dealings with any other person or party which may entitle that person or
party to a fee or commission. Each party shall indemnify the other of and
from any claims for commissions by any person or party claiming such
commission by or through the indemnifying party.
XVII. ESCROW AGENT. The parties hereto have requested that the
Deposit be held in escrow by the Escrow Agent to be applied at the Closing or
prior thereto in accordance with this Agreement. The Escrow Agent will
deliver the Deposit to Seller or to Buyer, as the case may be under the
following conditions:
A. Payment to Seller. To Seller on the Closing Date upon the
consummation of Closing;
B. Notice of Dispute. If either Seller or Buyer believes that it
is entitled to the Deposit or any part thereof, it shall make written demand
therefor upon the Escrow Agent. The Escrow Agent shall promptly mail a copy
thereof to the other party in the manner specified in Section XVIII.A. below.
The other party shall have the right to object to the delivery of the
Deposit, by filing written notice of such objections with the Escrow Agent at
any time within ten (10) days after the mailing of such copy to it in the
manner specified in Section XVIII.A. below, but not thereafter. Such notice
shall set forth the basis for objection to the delivery of the Deposit. Upon
receipt of such notice, the Escrow Agent shall promptly deliver a copy
thereof to the party who filed the written demand.
C. Escrow Subject to Dispute. In the event the Escrow Agent shall
have received the notice of objection provided for in XVII.B. above, of this
Section, in the manner and within the time therein prescribed, the Escrow
Agent shall continue to hold the Deposit until (i) the Escrow Agent receives
written notice from both Seller and Buyer directing the
<PAGE>
disbursement of the Deposit in which case the Escrow Agent shall then
disburse said Deposit in accordance with said direction, or (ii) litigation
arises between Seller and Buyer, in which event the Escrow Agent shall
deposit the Deposit with the Clerk of the Court in which said litigation is
pending, or (iii) the Escrow Agent takes such affirmative steps as the Escrow
Agent may, at the Escrow Agent's option elect in order to terminate the
Escrow Agent's duties including, but not limited to, deposit in Court and an
action for interpleader.
D. Escrow Agent's Rights and Liabilities. Escrow Agent shall not
be required to determine questions of fact or law, and may act upon any
instrument or other writing believed by it in good faith to be genuine and to
be signed and presented by the proper person, and shall not be liable in
connection with the performance of any duties imposed upon Escrow Agent by
the provisions of this Agreement, except for Escrow Agent's own willful
default or gross negligence. Escrow Agent shall have no duties or
responsibilities except those set forth herein. Escrow Agent shall not be
bound by any modification of this Agreement, unless the same is in writing
and signed by Buyer and Seller, and, if Escrow Agent's duties hereunder are
affected, unless Escrow Agent shall have given prior written consent thereto.
In the event that Escrow Agent shall be uncertain as to Escrow Agent's
duties or rights hereunder, or shall receive instructions from Buyer or
Seller which, in Escrow Agent's opinion, are in conflict with any of the
provisions hereof, Escrow Agent shall be entitled to hold and apply the
Deposit, pursuant to Section XVII.C., and may decline to take any other
action.
XVIII. GENERAL PROVISIONS.
A. Notices. All notices or other communications required or
permitted to be given under the terms of this Agreement shall be in writing,
and shall be deemed effective when (i) sent by nationally-recognized
overnight courier, (ii) facsimile with original following by regular mail, or
(iii) deposited in the United States mail and sent by certified mail, postage
prepaid, addressed as follows:
If to Buyer, addressed to:
Brandywine Realty Trust
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
Attn: Gerard H. Sweeney,
President and Chief Executive Officer
with a copy in each instance to:
John W. Fischer, Esquire
Drinker Biddle & Reath, LLP
1000 Westlakes Drive, Suite 300
Berwyn, PA 19312
<PAGE>
If to Seller, addressed to:
Salient 3 Communications, Inc.
P.O. Box 1498
Reading, PA 19603
Attn: Paul Snyder
with a copy in each instance to:
Salient 3 Communications, Inc.
P.O. Box 1498
Reading, PA 19603
Attn: Thomas F. Hafer, Esquire
If to Escrow Agent, addressed to:
Commonwealth Land Title Insurance Company
1700 Market Street
Philadelphia, PA 19103-3990
Attn: M. Gordon Daniels, Esquire
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.
B. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
C. Entire Agreement. All Exhibits attached to this Agreement are
incorporated herein and made a part hereof. This Agreement constitutes the
entire agreement between the parties hereto and supersedes all prior
negotiations, understandings and agreements of any nature whatsoever with
respect to the subject matter hereof. This Agreement may not be modified or
amended other than by an agreement in writing. The captions included in this
Agreement are for convenience only and in no way define, describe or limit
the scope or intent of the terms of this Agreement.
D. Governing Law. This Agreement shall be construed and
interpreted in accordance with the laws of the Commonwealth of Pennsylvania.
E. No Recording. This Agreement shall not be recorded in the
Office for the Recording of Deeds or in any other office or place of public
record.
F. Tender. Tender of Deed by Seller and of the Purchase Price by
Buyer, are hereby mutually waived.
<PAGE>
G. Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original
as against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories.
H. Further Instruments. Seller will, whenever and as often as it
shall be reasonably request so to do by Buyer, and Buyer will, whenever and
as often as it shall be reasonably requested so to do by Seller, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
any and all conveyances, assignments, correction instruments and all other
instruments and documents as may be reasonably necessary in order to complete
the transaction provided for in this Agreement and to carry out the intent
and purposes of this Agreement. All such instruments and documents shall be
satisfactory to the respective attorneys for Buyer and Seller. The
provisions of this Article shall survive the Closing.
I. Time. Time is of the essence. In the event the last day
permitted for the performance of any act required or permitted under this
Agreement falls on a Saturday, Sunday, or legal holiday of the United States
or the Commonwealth of Pennsylvania, the time for such performance will be
extended to the next succeeding business day. Time periods under this
Agreement will exclude the first day and include the last day of such time
period.
J. Designation of Nominee; Assignment of Agreement. Buyer shall
have the right to designate one or more of its subsidiaries or affiliate
entities to acquire title to the Premises hereunder.
K. Effective Date. Whenever the term or phrase "effective date
hereof" or "date hereof" or other similar phrases describing the date this
Agreement becomes binding on Seller and Buyer are used in this Agreement,
such terms or phrases shall mean and refer to the date on which a counterpart
or counterparts of this Agreement executed by Seller and Buyer are deposited
with the Escrow Agent.
L. Time for Acceptance. This Agreement shall constitute an offer
to buy or sell the Property, as case may be, on the terms herein set forth
only when executed by the Seller or Buyer. This Agreement may be accepted by
the party receiving such executed Agreement only by executing this Agreement
and delivering an original signed copy hereof to the Escrow Agent and an
originally signed copy hereof to the other party hereto within five (5)
business days after such receipt. Failure to accept in the manner and within
the time specified shall constitute a rejection and termination of such
officer.
M. Confidentiality. Each of the parties hereto covenants and
agrees to hold the nature and content of this Agreement, including without
limitation, the Purchase Price contained herein, in strict confidence, and
other than disclosure required by the SEC and except as may be necessary to
comply with this Agreement, neither party shall disclose the nature, content
or the Purchase Price of this Agreement without the express written consent
of the other party.
<PAGE>
N. Delivery of Documents. Promptly upon execution hereof by the
parties hereto, Seller shall deliver to Buyer one (1) copy of this Agreement,
complete with all Exhibits and Schedules.
XIX. SEC REPORTING (8-K) REQUIREMENTS.
For the period of time commencing on the date hereof and continuing
through the first anniversary of the Closing Date, and without limitation of
other document production otherwise required of Seller hereunder, Seller
shall, from time to time, upon reasonable advance written notice from Buyer,
provide Buyer and its representatives, with (I) access to all financial and
other information pertaining to the period of Seller's ownership and
operation of the Property, which information is relevant and reasonably
necessary, in the opinion of Buyer's outside, third party accountants (the
"Accountants"), to enable Buyer and its Accountants to prepare financial
statements in compliance with any or all of (a) Rule 3-05 or 3-14 of
Regulation S-X of the Securities and Exchange Commission (the "Commission"),
as applicable; (b) any other rule issued by the Commission and applicable to
Buyer; and (c) any registration statement, report or disclosure statement
filed with the Commission by, or on behalf of Buyer; and (II) a
representation letter, signed by the individual(s) responsible for Seller's
financial reporting, as prescribed by generally accepted auditing standards
promulgated by the Auditing Standards Division of the American Institute of
Certified Public Accountants, which representation letter may be required by
the Accountants in order to render an opinion concerning Seller's financial
statements.
XX. 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 (hereinafter
collectively, "Losses") which Buyer may suffer or incur, resulting from,
relating to, or arising in whole or in part, from or out of (i) any
misrepresentation or breach of a representation or warranty by Seller
contained in this Agreement; (ii) any failure to fulfill any covenant or
agreement of Seller contained in this Agreement; (iii) all litigation set
forth in this Agreement and on Exhibit "D"; hereto; (iv) all claims relating
to the construction, maintenance and operation of the Property prior to
Closing, except that with respect to any construction related claims such
indemnity obligations of Seller shall cease as of the second anniversary of
the Closing hereunder; or (v) 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
<PAGE>
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.
XXI. EXCULPATION.
No recourse shall be had for any obligation of Buyer 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 Buyer, 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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed the day and year first above written.
SALIENT 3 COMMUNICATIONS, INC. BRANDYWINE REALTY TRUST
a Delaware Corporation a Maryland Real Estate Investment Trust
By: /s/ Thomas F. Hafer By: /s/ Gerard H. Sweeney
----------------------------- ---------------------------------
Thomas F. Hafer Gerard H. Sweeney,
Senior Vice President, President and Chief Executive Officer
General Counsel and Secretary
Agreed to by Escrow Agent with regard
to the obligations, terms, covenants
and conditions contained in this
Agreement relating to Escrow Agent.
COMMONWEALTH LAND TITLE INSURANCE COMPANY
By: /s/ Nancy Staino
--------------------------------
Nancy Staino
Vice President
<PAGE>
EXHIBITS TO AGREEMENT OF SALE
"A" - Legal Description
"B" - Schedule of Inventory
"C" - Permitted Encumbrances
"D" - Rent Roll
"E" - Significant Agreements/Service Contracts
"F" - Insurance
"G" - Operating Statements
"H" - Estoppel Certificate Form
"I-1" - Purchase Money Note
"I-2" - Purchase Money Mortgage
"J" - Lease between Seller and Buyer
SCHEDULE TO AGREEMENT OF SALE
Schedule 2.3 - Allocation of Purchase Price
<PAGE>
EXHIBIT "A"
Legal Description
-----------------
<PAGE>
EXHIBIT "B"
Schedule of Inventory
---------------------
TO BE ATTACHED AFTER EXECUTION
<PAGE>
EXHIBIT "C"
Permitted Encumbrances
----------------------
<PAGE>
EXHIBIT "D"
Rent Roll
---------
<PAGE>
EXHIBIT "E"
Significant Agreements/Service Contracts
----------------------------------------
TO BE ATTACHED AFTER EXECUTION
<PAGE>
EXHIBIT "F"
Insurance
---------
TO BE ATTACHED AFTER EXECUTION
<PAGE>
EXHIBIT "G"
Operating Statements
--------------------
TO BE ATTACHED AFTER EXECUTION
<PAGE>
EXHIBIT "H"
Estoppel Certificate Form
-------------------------
<PAGE>
EXHIBIT "I-1"
Purchase Money Note
-------------------
TO BE ATTACHED AFTER EXECUTION
<PAGE>
EXHIBIT "I-2"
Purchase Money Mortgage
-----------------------
TO BE ATTACHED AFTER EXECUTION
<PAGE>
EXHIBIT "J"
Lease between Seller and Buyer
------------------------------
TO BE ATTACHED AFTER EXECUTION
<PAGE>
EXHIBIT "I-1"
Buyer Money Note
----------------
TO BE ATTACHED AFTER EXECUTION
<PAGE>
SCHEDULE 2.3
Allocation of Purchase Price
----------------------------
TO BE ATTACHED AFTER EXECUTION
<PAGE>
Exhibit 10.2
BERWYN PARK
SALE AGREEMENT
BETWEEN
BERWYN DEVELOPMENT ASSOCIATES
a Pennsylvania general partnership
AS SELLER,
AND
BRANDYWINE REALTY TRUST,
a Maryland Real Estate Investment Trust,
AS PURCHASER
As of July 7, 1997
<PAGE>
TABLE OF CONTENTS
Page #
ARTICLE I PURCHASE AND SALE
Section 1.1 Agreement of Purchase and Sale 1
Section 1.2 Property Defined 2
Section 1.3. Purchase Price 2
Section 1.4 Payment of Purchase Price 2
Section 1.5 Deposit 2
Section 1.6 Escrow Agent 3
ARTICLE II TITLE AND SURVEY
Section 2.1 Title Inspection Period 3
Section 2.2 Title Examination 4
Section 2.3 Pre-Closing "Gap" Title Defects 4
Section 2.4 Permitted Exceptions 4
Section 2.5 Conveyance of Title 5
ARTICLE III REVIEW OF PROPERTY
Section 3.1 Right of Inspection 6
Section 3.2 Environmental Reports 6
Section 3.3 Right of Termination 7
Section 3.4 Review of Tenant Estoppels 7
Section 3.5 PECO Disclosure 8
ARTICLE IV CLOSING
Section 4.1 Time and Place 8
Section 4.2 Seller's Obligations at Closing 8
Section 4.3 Purchaser's Obligations at Closing 10
Section 4.4 Credits and Prorations 11
Section 4.5 Transaction Taxes and Closing Costs 14
Section 4.6 Conditions Precedent to Obligation of Purchaser 15
Section 4.7 Conditions Precedent to Obligation of Seller 15
ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.1 Representations and Warranties of Seller 15
Section 5.2 Knowledge Defined 16
Section 5.3 Survival of Seller's Representations and
Warranties 17
Section 5.4 Covenants of Seller 17
Section 5.5 Representations and Warranties of Purchaser 18
Section 5.6 Survival of Purchaser's Representations and
Warranties 18
ARTICLE VI DEFAULT
Section 6.1 Default by Purchaser 19
Section 6.2 Default by Seller 19
Section 6.3 Recoverable Damages 19
ARTICLE VII RISK OF LOSS
Section 7.1 Minor Damage 19
Section 7.2 Major Damage 20
Section 7.3 Definition of "Major" Loss or Damage 20
ARTICLE VIII COMMISSIONS
Section 8.1 Brokerage Commissions 20
ARTICLE IX DISCLAIMERS AND WAIVERS
Section 9.1 No Reliance on Documents 20
SECTION 9.2 AS-IS SALE; DISCLAIMERS 21
Section 9.3 Survival of Disclaimers 22
ARTICLE X MISCELLANEOUS
Section 10.1 Confidentiality 22
Section 10.2 Public Disclosure 22
Section 10.3 Assignment 22
Section 10.4 Notices 23
<PAGE>
Section 10.5 Modifications 24
Section 10.6 Entire Agreement 24
Section 10.7 Further Assurances 24
Section 10.8 Counterparts 24
Section 10.9 Facsimile Signatures 24
Section 10.10 Severability 24
Section 10.11 Applicable Law 25
Section 10.12 No Third-Party Beneficiary 25
Section 10.13 Captions 25
Section 10.14 Construction 25
Section 10.15 Recordation 25
Section 10.16 Time of Essence 25
Section 10.17 SEC Disclosure 25
Section 10.18 Exculpation 25
A DESCRIPTION OF LAND
B LIST OF PERSONAL PROPERTY
C LIST OF OPERATING AGREEMENTS
D LIST OF ENVIRONMENTAL REPORTS
E FORM OF TENANT ESTOPPEL CERTIFICATE
F TENANT ESTOPPEL STANDARDS
G FORM OF DEED
H FORM OF BILL OF SALE
I FORM OF ASSIGNMENT OF LEASES
J FORM OF ASSIGNMENT OF CONTRACTS
K FORM OF TENANT NOTICE
L FORM OF FIRPTA CERTIFICATE
M INTENTIONALLY OMITTED
N LIST OF BROKERAGE AGREEMENTS
O LIST OF SPECIFIED LITIGATION
P RENT ROLL
Q STATEMENT OF TENANT DELINQUENCIES
R FORM OF REPRESENTATION LETTER
<PAGE>
SALE AGREEMENT
THIS SALE AGREEMENT (this "AGREEMENT") is made as of July 7, 1997
(the "EFFECTIVE DATE"), by and between Berwyn Development Associates, a
Pennsylvania general partnership ("SELLER" ), and Brandywine Realty Trust, a
Maryland Real Estate Investment Trust ("PURCHASER").
W I T N E S S E T H:
ARTICLE I
PURCHASE AND SALE
Section 1.1 AGREEMENT OF PURCHASE AND SALE. Subject to the terms and
conditions hereinafter set forth, Seller agrees to sell and convey to Purchaser,
and Purchaser agrees to purchase from Seller, the following:
(a) that certain tract or parcel of land situated in Chester County,
Pennsylvania, more particularly described in Exhibit A attached hereto and made
a part hereof, together with all rights and appurtenances pertaining to such
property, including any right, title and interest of Seller in and to adjacent
streets, alleys or rights-of-way (the property described in clause (a) of this
Section 1.1 being herein referred to collectively as the "Land");
(b) the buildings, structures, fixtures and other improvements affixed to
or located on the Land, excluding fixtures owned by tenants (the property
described in clause (b) of this Section 1.1 being herein referred to
collectively as the "IMPROVEMENTS");
(c) any and all of Seller's right, title and interest in and to all
tangible personal property located upon the Land or within the Improvements,
including, without limitation, any and all appliances, furniture, carpeting,
draperies and curtains, tools and supplies, and other items of personal property
owned by Seller (excluding cash and any software), located on and used
exclusively in connection with the operation of the Land and the Improvements,
which personal property includes without limitation the personal property listed
on Exhibit B attached hereto (the property described in clause (c) of this
Section 1.1 being herein referred to collectively as the "PERSONAL PROPERTY");
(d) any and all of Seller's right, title and interest in and to the
leases, licenses and occupancy agreements covering all or any portion of the
Real Property, to the extent they are in effect on the date of the Closing (as
such term is defined in Section 4.1 hereof) (the property described in clause
(d) of this Section 1.1 being herein referred to collectively as the "LEASES"),
together with all rents and other sums due thereunder (the "Rents") and any and
all security deposits in Seller's possession in connection therewith (the
"SECURITY DEPOSITS"); and
(e) any and all of Seller's right, title and interest in and to (i) all
assignable contracts and agreements (collectively, the "OPERATING AGREEMENTS")
listed and described on Exhibit C attached hereto and made a part hereof,
relating to the upkeep, repair, maintenance or operation of the Land,
Improvements or Personal Property, and (ii) all assignable existing warranties
and guaranties (express or implied) issued to Seller in connection with the
Improvements or the Personal Property, and (iii) all assignable existing
permits, licenses, approvals and authorizations issued by any governmental
authority in connection with the Property and (iv) the non-exclusive right to
the name "Berwyn Park" (the property described in clause (e) of this Section 1.1
being sometimes herein referred to collectively as the "INTANGIBLES").
Section 1.2 PROPERTY DEFINED. The Land and the Improvements are
hereinafter sometimes referred to collectively as the "REAL PROPERTY." The
Land, the Improvements, the Personal Property, the Leases and the Intangibles
are hereinafter sometimes referred to collectively as the "PROPERTY."
Section 1.3. PURCHASE PRICE. Seller is to sell and Purchaser is to
purchase the Property for the amount of THIRTY SEVEN MILLION ONE HUNDRED FIFTY
THOUSAND DOLLARS ($37,150,000) (the "PURCHASE PRICE").
<PAGE>
Section 1.4 PAYMENT OF PURCHASE PRICE. The Purchase Price, as increased
or decreased by prorations and adjustments as herein provided, shall be payable
in full at Closing by one or more wire transfers of immediately available funds
to a bank account or accounts designated by Seller in writing to Purchaser prior
to the Closing.
Section 1.5 DEPOSIT. Simultaneously with the execution and delivery of
this Agreement, Purchaser is depositing with Commonwealth Land Title Insurance
Company (the "ESCROW AGENT"), having its office at 1700 Market Street,
Philadelphia, Pennsylvania Attention: Gordon Daniels, Esquire, the sum of
Two Hundred Fifty Thousand Dollars ($250,000) (the "INITIAL DEPOSIT") in good
funds, either by certified bank or cashier's check or by federal wire transfer.
On or before the expiration of the "Inspection Period" (as defined in Section
3.1 below), Purchaser shall deliver to Escrow Agent the additional sum of Eight
Hundred Fifty Thousand Dollars ($850,000) (the "Second Deposit") in good funds,
either by certified check, or cashier's check or by federal wire transfer, and
upon receipt thereof Escrow Agent immediately shall notify Seller of such
receipt. The Initial Deposit and the Second Deposit, together with any interest
earned thereon, are collectively referred to as the "Deposit". Notwithstanding
that the stated period for the Inspection Period and/or Title Inspection Period
(as hereinafter defined) may not otherwise have expired, upon the delivery of
the Second Deposit to the Escrow Agent, the Inspection Period and Title
Inspection Period shall be deemed to have expired. The Escrow Agent shall hold
the Deposit in an interest-bearing account reasonably acceptable to Seller and
Purchaser, in accordance with the terms and conditions of this Agreement. All
interest on such sum shall be deemed income of Purchaser, and Purchaser shall be
responsible for the payment of all costs and fees imposed on the Deposit
account. The Deposit shall be distributed in accordance with the terms of this
Agreement. The failure of Purchaser to timely deliver any portion of the
Deposit hereunder shall be a material default, and shall entitle Seller, at
Seller's sole option, to terminate this Agreement immediately.
Section 1.6 ESCROW AGENT.
Escrow Agent shall hold and dispose of the Deposit in accordance with
the terms of this Agreement. At the Closing, the Deposit shall be paid by
Escrow Agent to Seller. If the Closing does not occur, and either Seller or
Purchaser shall make a written demand upon Escrow Agent for payment of the
Deposit, Escrow Agent shall give written notice (the "Deposit Notice") to the
other party of such demand and shall continue to hold the Deposit for seven (7)
business days thereafter. Seller and Purchaser agree that the duties of the
Escrow Agent hereunder are purely ministerial in nature and shall be expressly
limited to the safekeeping and disposition of the Deposit in accordance with
this Agreement. Escrow Agent shall incur no liability in connection with the
safekeeping or disposition of the Deposit for any reason other than Escrow
Agent's willful misconduct or gross negligence. In the event that Escrow Agent
shall be in doubt as to its duties or obligations with regard to the Deposit, or
in the event that Escrow Agent receives conflicting instructions from Purchaser
and Seller with respect to the Deposit within seven (7) business days of
furnishing the Deposit Notice, as aforesaid, Escrow Agent shall not be required
to disburse the Deposit and may, at its option, continue to hold the Deposit
until both Purchaser and Seller agree as to its disposition, or until a final
judgment is entered by a court of competent jurisdiction directing its
disposition, or Escrow Agent may interplead the Deposit in accordance with the
laws of the state in which the Property is located.
Seller and Purchaser agree that Escrow Agent is acting purely as a
stakeholder at their request and for their convenience, and that Escrow Agent
shall not be deemed to be the agent of either of the parties.
Escrow Agent shall not be responsible for any interest on the Deposit
except as is actually earned, or for the loss of any interest resulting from the
withdrawal of the Deposit prior to the date interest is posted thereon or for
any loss caused by the failure, suspension, bankruptcy or dissolution of the
institution in which the Deposit is deposited.
Escrow Agent shall execute this Agreement solely for the purpose of
being bound by the provisions of Sections 1.5 and 1.6 hereof.
ARTICLE II
TITLE AND SURVEY
Section 2.1 TITLE INSPECTION PERIOD. During the period beginning upon
the Effective Date and ending at 5:00 p.m. (local time at the Property) on the
twentieth (20th) day
<PAGE>
following the Effective Date (hereinafter referred to as
the "TITLE INSPECTION PERIOD"), Purchaser shall have the right to review (a) a
current preliminary title report on the Real Property, accompanied by copies of
all documents referred to in the report, which shall be obtained by Purchaser
promptly after the Effective Date (with a copy of the preliminary title report
simultaneously furnished to Seller) (b) copies of the most recent property tax
bills for the Property, which shall be obtained by Seller promptly after the
Effective Date; (c) a survey of the Real Property prepared by a licensed
surveyor or engineer hired by Purchaser (the "SURVEY"); and (d) a copy of
Seller's existing title insurance policy and/or survey for the Real Property, if
available, which policy and survey (if available) shall be provided by Seller
promptly after the Effective Date.
Section 2.2 TITLE EXAMINATION. Purchaser shall notify Seller in writing
(the "TITLE NOTICE") prior to the expiration of the Title Inspection Period
which exceptions to title (including survey matters), if any, will not be
accepted by Purchaser. If Purchaser fails to notify Seller in writing of its
disapproval of any exceptions to title by the expiration of the Title Inspection
Period, or if pursuant to any other provision of this Agreement the Title
Inspection Period shall be deemed to have expired, Purchaser shall be
conclusively deemed to have approved the condition of title to the Real
Property. If Purchaser notifies Seller in writing that Purchaser objects to any
exceptions to title, Seller shall have ten (10) business days after receipt of
the Title Notice to notify Purchaser (a) that Seller will remove such
objectionable exceptions from title on or before the Closing; provided that
Seller may extend the Closing for such period as shall be required to effect
such cure, but not beyond thirty (30) days; or (b) that Seller elects not to
cause such exceptions to be removed. The procurement by Seller of a commitment
for the issuance of the Title Policy (as defined in Section 2.5 hereof) or an
endorsement thereto insuring Purchaser against any title exception which was
disapproved pursuant to this Section 2.2 shall be deemed a cure by Seller of
such disapproval. If Seller gives Purchaser notice under clause (b) above,
Purchaser shall have five (5) business days in which to notify Seller that
Purchaser will nevertheless proceed with the purchase and take title to the
Property subject to such exceptions, or that Purchaser will terminate this
Agreement. If this Agreement is terminated pursuant to the foregoing provisions
of this paragraph, then neither party shall have any further rights or
obligations hereunder (except for any indemnity obligations of either party
pursuant to the other provisions of this Agreement), the Deposit shall be
returned to Purchaser and each party shall bear its own costs incurred
hereunder. If Purchaser shall fail to notify Seller of its election within said
five-day period, Purchaser shall be deemed to have elected to proceed with the
purchase and take title to the Property subject to such exceptions.
Section 2.3 PRE-CLOSING "GAP" TITLE DEFECTS. Purchaser may, at or
prior to Closing, notify Seller in writing (the "GAP NOTICE") of any objections
to title (a) raised by the Title Company between the expiration of the Title
Inspection Period and the Closing and (b) not disclosed by the Title Company or
otherwise known to Purchaser prior to the expiration of the Title Inspection
Period; provided that Purchaser must notify Seller of such objection to title
within two (2) business days of being made aware of the existence of such
exception. If Purchaser sends a Gap Notice to Seller, Purchaser and Seller
shall have the same rights and obligations with respect to such notice as apply
to a Title Notice under Section 2.2 hereof.
Section 2.4 PERMITTED EXCEPTIONS. The Property shall be conveyed
subject to the following matters, which are hereinafter referred to as the
"PERMITTED EXCEPTIONS":
(a) those matters that either are not objected to in writing within the
time periods provided in Sections 2.2 or 2.3 hereof, or if objected to in
writing by Purchaser, are those which Seller has elected not to remove or cure,
or has been unable to remove or cure, and subject to which Purchaser has elected
or is deemed to have elected to accept the conveyance of the Property;
(b) the rights of tenants under the Leases;
(c) the lien of all ad valorem real estate taxes and assessments and
water and sewer rents not yet due and payable as of the date of Closing, subject
to adjustment as herein provided;
(d) local, state and federal laws, ordinances or governmental regulations,
including but not limited to, building and zoning laws, ordinances and
regulations, now or hereafter in effect relating to the Property;
(e) title to those portions of the Property within the bed of (i) Cassatt
Avenue, (ii) Relocated Cassatt Avenue, and (iii) Swedesford Road;
(f) restriction prohibiting explosives and fences as in Deed Book S-21,
page 270;
(g) Declaration of Easements and Covenants for Berwyn Park dated December
8, 1984, and recorded in Misc Deed Book 665, Page 80, as amended and recorded in
Record Book 650, Page 290;
(h) items shown on the Survey and not objected to by Purchaser or waived
or deemed waived by Purchaser in accordance with Section 2.2 hereof; and
<PAGE>
(i) all mechanics', materialmen's and other similar liens, levies and
charges against the Property, whether existing now or at the time of Closing,
which is the obligation of any of the tenants of the Property or a portion
thereof to discharge, whether under its respective Lease, or by law or
otherwise.
Section 2.5 CONVEYANCE OF TITLE. At Closing, Seller shall convey and
transfer to Purchaser fee simple title to the Land and Improvements, by
execution and delivery of the Deed (as defined in Section 4.2(a) hereof).
Evidence of delivery of such title shall be the issuance by Commonwealth Land
Title Insurance Company (the "TITLE COMPANY"), or another national title
company, of an ALTA 1992 Form of Owner's Policy of Title Insurance (the "TITLE
POLICY") covering the Real Property, in the full amount of the Purchase Price,
subject only to the Permitted Exceptions.
ARTICLE III
REVIEW OF PROPERTY
Section 3.1 RIGHT OF INSPECTION. During the period beginning upon the
Effective Date and ending at 5:00 p.m. (local time at the Property) on the
thirtieth (30th) day after the Effective Date (hereinafter referred to as the
"INSPECTION PERIOD"), Purchaser shall have the right to make a physical
inspection of the Real Property, including an inspection of the environmental
condition thereof pursuant to the terms and conditions of this Agreement, and to
examine at the Property (or the property manager's office, as the case may be)
documents and files located at the Property or the property manager's office
concerning the leasing, maintenance and operation of the Property, but excluding
Seller's, and the Seller's partners', partnership or corporate records, internal
memoranda, financial projections, budgets, appraisals, accounting and tax
records and similar proprietary, confidential or privileged information
(collectively, the "Confidential Documents").
Purchaser understands and agrees that any on-site inspections of the
Property shall occur at reasonable times agreed upon by Seller and Purchaser
after reasonable prior written notice to Seller and shall be conducted so as not
to interfere unreasonably with the use of the Property by Seller or its tenants.
Seller reserves the right to have a representative present during any such
inspections. If Purchaser desires to do any invasive testing at the Property,
Purchaser shall do so only after notifying Seller and obtaining Seller's prior
written consent thereto, which consent may be subject to any terms and
conditions imposed by Seller in its sole discretion, including without
limitation the prompt restoration of the Property to its condition prior to any
such inspections or tests, at Purchaser's sole cost and expense. At Seller's
option, Purchaser will furnish to Seller copies of any reports received by
Purchaser relating to any inspections of the Property. Purchaser agrees to
protect, indemnify, defend and hold Seller harmless from and against any claim
for liabilities, losses, costs, expenses (including reasonable attorneys' fees),
damages or injuries arising out of or resulting from the inspection of the
Property by Purchaser or its agents or consultants, and notwithstanding anything
to the contrary in this Agreement, such obligation to indemnify and hold
harmless Seller shall survive Closing or any termination of this Agreement.
Section 3.2 ENVIRONMENTAL AND GEOTECHNICAL REPORTS. PURCHASER ACKNOWLEDGES
THAT (1) PURCHASER HAS RECEIVED COPIES OF THE ENVIRONMENTAL AND/OR GEOTECHNICAL
REPORTS LISTED ON EXHIBIT D ATTACHED HERETO, (2) IF SELLER DELIVERS ANY
ADDITIONAL ENVIRONMENTAL AND/OR GEOTECHNICAL REPORTS TO PURCHASER, PURCHASER
WILL ACKNOWLEDGE IN WRITING THAT IT HAS RECEIVED SUCH REPORTS PROMPTLY UPON
RECEIPT THEREOF, (3) ANY ENVIRONMENTAL AND/OR GEOTECHNICAL REPORTS DELIVERED OR
TO BE DELIVERED BY SELLER OR ITS REPRESENTATIVES OR CONSULTANTS TO PURCHASER ARE
BEING MADE AVAILABLE SOLELY AS AN ACCOMMODATION TO PURCHASER AND MAY NOT BE
RELIED UPON BY PURCHASER IN CONNECTION WITH THE PURCHASE OF THE PROPERTY, AND
(4) SELLER MAKES NO REPRESENTATION OR WARRANTY THAT IT HAS PROVIDED TO PURCHASER
ALL ENVIRONMENTAL AND/OR GEOTECHNICAL REPORTS THAT MAY HAVE BEEN PREPARED WITH
RESPECT TO THE PROPERTY. PURCHASER AGREES THAT NEITHER SELLER NOR ITS PARTNERS
SHALL HAVE ANY LIABILITY OR OBLIGATION WHATSOEVER FOR ANY INACCURACY IN OR
OMISSION FROM ANY ENVIRONMENTAL AND/OR GEOTECHNICAL REPORT. PURCHASER HAS
CONDUCTED, OR WILL CONDUCT PRIOR TO THE EXPIRATION OF THE INSPECTION PERIOD, ITS
OWN INVESTIGATION OF THE ENVIRONMENTAL AND/OR GEOTECHNICAL CONDITION OF THE
PROPERTY TO THE EXTENT PURCHASER DEEMS SUCH AN INVESTIGATION TO BE NECESSARY OR
APPROPRIATE, AND PURCHASER SHALL DELIVER TO SELLER A COPY OF ALL WRITTEN
ENVIRONMENTAL AND/OR GEOTECHNICAL REPORTS PURCHASER OBTAINS TOGETHER WITH A
LETTER FROM THE COMPANY FROM WHICH ANY SUCH REPORT IS OBTAINED ENTITLING SELLER
TO RELY THEREON.
Section 3.3 RIGHT OF TERMINATION. If for any reason whatsoever
Purchaser determines that the Property or any aspect thereof is unsuitable for
Purchaser's acquisition, Purchaser shall have the right to terminate this
Agreement by giving written notice thereof to Seller prior to the expiration of
the Inspection Period, and if Purchaser gives such notice of termination within
the Inspection Period, this Agreement shall terminate. If this Agreement is
terminated pursuant to the foregoing provisions of this paragraph, then neither
party shall have any further rights or obligations hereunder (except for any
indemnity obligations of either party pursuant to the other provisions of this
Agreement), the Deposit shall be returned to Purchaser and each party shall bear
its own costs incurred hereunder. If Purchaser fails to give Seller a notice of
termination prior to the expiration of the
<PAGE>
Inspection Period, or if pursuant to any other provision of this Agreement
the Inspection Period shall be deemed to have expired, Purchaser shall be
deemed to have approved all aspects of the Property (except title and survey,
which shall be governed by Article II hereof) and to have elected to proceed
with the purchase of the Property pursuant to the terms hereof.
Section 3.4 REVIEW OF TENANT ESTOPPELS. Seller shall deliver to each
tenant of the Property an estoppel certificate in substantially the form of
Exhibit E attached hereto (the "FORM TENANT ESTOPPELS"), and shall request that
the tenants complete and sign the Form Tenant Estoppels and return them to
Seller. Seller shall deliver copies of the completed Form Tenant Estoppels to
Purchaser as Seller receives them; provided, however, Purchaser acknowledges and
agrees that each tenant only shall be obligated to return an estoppel as set
forth in such tenant's lease (the "Lease Tenant Estoppels"). The Form Tenant
Estoppels and/or Lease Tenant Estoppels that are executed by a tenant and
delivered to Purchaser as aforesaid are hereafter collectively referred to as
the Tenant Estoppels. Purchaser shall notify Seller within three (3) days of
receipt of any Tenant Estoppel in the event Purchaser determines such Tenant
Estoppel as executed and modified by a tenant is not acceptable to Purchaser
along with the reasons for such determination, but no such Tenant Estoppel shall
be deemed unacceptable by Purchaser if it complies with the applicable tenant's
lease in all material respects. In the event Purchaser fails to give such
notice within such three (3) day period then any such Tenant Estoppel shall be
deemed to be acceptable to Purchaser. In the event that Seller fails to obtain
the Tenant Estoppels (or in lieu thereof, at Seller's option, Seller estoppels
therefor) that meet the tenant estoppel standards described on Exhibit F
attached hereto on or before five (5) days prior to Closing, Purchaser shall
have the right to terminate this Agreement by written notice to Seller. If this
Agreement is terminated pursuant to the foregoing provisions of this paragraph,
then neither party shall have any further rights or obligations hereunder
(except for any indemnity obligations of either party pursuant to the other
provisions of this Agreement), the Deposit shall be returned to Purchaser and
each party shall bear its own costs incurred hereunder. If Purchaser fails to
give Seller a notice of termination as set forth above, Purchaser shall be
deemed to have approved the Tenant Estoppels (and Seller estoppels, if
applicable) and to have elected to proceed with the purchase of the Property
pursuant to the terms hereof. Any Tenant Estoppel which is received from a
tenant after Seller provides its own estoppel may be substituted by Seller for
Seller's estoppel and Seller shall have no further liability thereunder,
provided that such Tenant Estoppel contains no changes or, if changed, complies
in all material respects with the provisions of the applicable lease, or is
otherwise reasonably acceptable to Purchaser. The provisions of this Section
3.4 shall survive the Closing.
Section 3.5 PECO DISCLOSURE. Purchaser acknowledges that Seller has
advised Purchaser that PECO has indicated its interest in taking by eminent
domain an access road over the Property to serve PECO's intended development on
PECO's adjacent property, but to the knowledge of the parties no declaration of
taking has been filed with respect to the Property. In addition, Purchaser
acknowledges that Seller has given to Purchaser copies of a PECO traffic study,
comments thereon by Seller's consultant, and an update of the traffic study.
ARTICLE IV
CLOSING
Section 4.1 TIME AND PLACE. The consummation of the transaction
contemplated hereby (the "CLOSING") shall be held at the offices of Blank Rome
Comisky & McCauley, 1200 Four Penn Center Plaza, Philadelphia, Pennsylvania on
the forty fifth (45th) day after the Effective Date (unless such day is not a
business day, in which case on the next business day), unless extended as
specifically in this Agreement provided. At the Closing, Seller and Purchaser
shall perform the obligations set forth in, respectively, Section 4.2 and
Section 4.3 hereof, the performance of which obligations shall be concurrent
conditions; provided that the Deed shall not be recorded until Seller receives
confirmation that Seller has received the full amount of the Purchase Price,
adjusted by prorations as set forth herein. At Seller's option, the Closing
shall be consummated through an escrow administered by Escrow Agent. In such
event, the Purchase Price and all documents shall be deposited with the Escrow
Agent as escrowee.
Section 4.2 SELLER'S OBLIGATIONS AT CLOSING. At Closing, Seller shall:
(a) deliver to Purchaser a duly executed special warranty deed (the
"DEED") in the form attached hereto as Exhibit G, conveying the Land and
Improvements, subject only to the Permitted Exceptions; the warranty of title in
the Deed will be only as to claims made by, through or under Seller and not
otherwise;
(b) deliver to Purchaser a duly executed bill of sale in the form attached
hereto as Exhibit H (the "BILL OF SALE") conveying the Personal Property without
warranty of title or use and without warranty, express or implied, as to
merchantability and fitness for any purpose ;
(c) assign to Purchaser, and Purchaser shall assume, the Seller's interest
in and to the obligations with respect to the Leases, Rents and Security
Deposits, including any and all obligations to pay leasing commissions and
finder's fees and Tenant Inducement Costs with respect to the Leases and
amendments, renewals and expansions thereof, to the extent provided in Section
4.4(b)(v) hereof, by duly executed assignment
<PAGE>
and assumption agreement (the "ASSIGNMENT OF LEASES") in the form attached
hereto as Exhibit I pursuant to which (i) Seller shall indemnify Purchaser
and hold Purchaser harmless from and against any and all claims pertaining
thereto arising prior to Closing and (ii) Purchaser shall indemnify Seller
and hold Seller harmless from and against any and all claims pertaining
thereto arising from and after the Closing, including without limitation,
claims made by tenants with respect to tenants' Security Deposits to the
extent such Security Deposits are paid, credited or assigned to Purchaser;
(d) to the extent assignable, assign to Purchaser, and Purchaser shall
assume, Seller's interest in and to the obligations with respect to the
Operating Agreements and the other Intangibles by duly executed assignment and
assumption agreement (the "ASSIGNMENT OF CONTRACTS") in the form attached hereto
as Exhibit J pursuant to which (i) Seller shall indemnify Purchaser and hold
Purchaser harmless from and against any and all claims pertaining thereto
arising prior to Closing and (ii) Purchaser shall indemnify Seller and hold
Seller harmless from and against any and all claims pertaining thereto arising
from and after the Closing;
(e) join with Purchaser to execute a notice (the "TENANT NOTICE") in the
form attached hereto as Exhibit K, which Purchaser shall send to each tenant
under each of the Leases promptly after the Closing, informing such tenant of
the sale of the Property and of the assignment to and assumption by Purchaser of
Seller's interest in, and obligations under, the Leases (including, if
applicable, any Security Deposits), and directing that all Rent and other sums
payable after the Closing under each such Lease be paid as set forth in the
notice;
(f) In the event that any representation or warranty of Seller needs to be
modified due to material changes since the Effective Date, deliver to Purchaser
a certificate, dated as of the date of Closing and executed on behalf of Seller
by a duly authorized representative thereof, identifying any representation or
warranty which is not, or no longer is, true and correct and explaining the
state of facts giving rise to the change. In no event shall Seller or its
partners be liable to Purchaser for, or be deemed to be in default hereunder by
reason of, any breach of representation or warranty which results from any
change that (i) occurs between the Effective Date and the date of Closing and
(ii) is expressly permitted under the terms of this Agreement or is beyond the
reasonable control of Seller to prevent; provided, however, that the occurrence
of a change which is not permitted hereunder or is beyond the reasonable control
of Seller to prevent shall, if materially adverse to Purchaser, constitute the
non-fulfillment of the condition set forth in Section 4.6(b) hereof which shall
entitle Purchaser, at Purchaser's sole option, to terminate this Agreement. If
this Agreement is terminated pursuant to the foregoing provisions of this
paragraph (f), then neither party shall have any further rights or obligations
hereunder (except for any indemnity obligations of either party pursuant to the
other provisions of this Agreement), and the Deposit shall be returned to
Purchaser and each party shall bear its own costs incurred hereunder. If,
despite changes or other matters described in such certificate, the Closing
occurs, Seller's representations and warranties set forth in this Agreement
shall be deemed to have been modified by all statements made in such
certificate;
(g) deliver to Purchaser such evidence as the Title Company may reasonably
require as to the authority of the person or persons executing documents on
behalf of Seller;
(h) deliver to Purchaser a certificate in the form attached hereto as
Exhibit L duly executed by Seller stating that Seller is not a "foreign person"
as defined in the Federal Foreign Investment in Real Property Tax Act of 1980;
(i) deliver to Purchaser the Leases and the Operating Agreements, together
with such leasing and property files and records located at the Property or the
property manager's office which are material in connection with the continued
operation, leasing and maintenance of the Property, but excluding any
Confidential Documents, and shall deliver to Purchaser all keys in Seller's
possession and the combination to all combination locks under Seller's control.
For a period of three (3) years after the Closing, Purchaser shall allow Seller
and its partners and their agents and representatives access without charge to
all files, records and documents delivered to Purchaser at the Closing, upon
reasonable advance notice and at all reasonable times, to examine and make
copies of any and all such files, records and documents, which right shall
survive the Closing;
(j) deliver such affidavits as may be customarily and reasonably required
by the Title Company, in a form reasonably acceptable to Seller;
(k) deliver to Purchaser possession and occupancy of the Property, subject
to the Permitted Exceptions;
(l) execute a settlement statement acceptable to Seller; and
(m) deliver such additional documents as shall be reasonably required to
consummate the transaction contemplated by this Agreement.
Section 4.3 PURCHASER'S OBLIGATIONS AT CLOSING. At Closing, Purchaser
shall:
<PAGE>
(a) pay to Seller the full amount of the Purchase Price (which amount
shall include the Deposit), as increased or decreased by prorations and
adjustments as herein provided, in immediately available wire transferred funds
pursuant to Section 1.4 hereof;
(b) join Seller in execution of the Assignment of Leases, Assignment of
Contracts and Tenant Notices;
(c) In the event that any representation or warranty of Purchaser set
forth in Sections 5.5(a) or (b) hereof needs to be modified due to material
changes since the Effective Date, deliver to Seller a certificate, dated as of
the date of Closing and executed on behalf of Purchaser by a duly authorized
representative thereof, identifying any such representation or warranty which is
not, or no longer is, true and correct and explaining the state of facts giving
rise to the change. In no event shall Purchaser be liable to Seller for, or be
deemed to be in default hereunder by reason of, any breach of representation or
warranty set forth in Sections 5.5(a) or (b) hereof which results from any
change that (i) occurs between the Effective Date and the date of Closing and
(ii) is expressly permitted under the terms of this Agreement or is beyond the
reasonable control of Purchaser to prevent; provided, however, that the
occurrence of a change which is not permitted hereunder or is beyond the
reasonable control of Purchaser to prevent shall, if materially adverse to
Seller, constitute the non-fulfillment of the condition set forth in Section
4.7(c) hereof which shall entitle Seller, at Seller's sole option, to terminate
this Agreement. If this Agreement is terminated pursuant to this paragraph (c),
and was by reason of a change beyond the reasonable control of Purchaser to
prevent, then neither party shall have any further rights or obligations
hereunder (except for indemnity obligations of either party pursuant to the
provisions of this Agreement), and the Deposit shall be returned to Purchaser
and each party shall bear its own costs incurred hereunder. If the change is
within the reasonable control of Purchaser, the same shall constitute a default
by Purchaser under Section 6.1. If, despite changes or other matters described
in such certificate, the Closing occurs, Purchaser's representations and
warranties set forth in this Agreement shall be deemed to have been modified by
all statements made in such certificate;
(d) deliver to Seller such evidence as the Title Company may reasonably
require as to the authority of the person or persons executing documents on
behalf of Purchaser;
(e) deliver such affidavits as may be customarily and reasonably required
by the Title Company, in a form reasonably acceptable to Purchaser;
(f) execute a settlement statement acceptable to Purchaser; and
(g) deliver such additional documents as shall be reasonably required to
consummate the transaction contemplated by this Agreement.
Section 4.4 CREDITS AND PRORATIONS.
(a) All income and expenses of the Property shall be apportioned as of
12:01 a.m., on the day of Closing, as if Purchaser were vested with title to the
Property during the entire day upon which Closing occurs. Such prorated items
shall include without limitation the following:
(i) all Rents, if any;
(ii) taxes and assessments (including personal property taxes on the
Personal Property) levied against the Property;
(iii) utility charges for which Seller is liable, if any, such
charges to be apportioned at Closing on the basis of the most recent meter
reading occurring prior to Closing (dated not more than fifteen (15) days prior
to Closing) or, if unmetered, on the basis of a current bill for each such
utility;
(iv) all amounts payable under brokerage agreements and Operating
Agreements, pursuant to the terms of this Agreement; and
(v) any other operating expenses or other items pertaining to the
Property which are customarily prorated between a purchaser and a seller in the
county in which the Property is located.
(b) Notwithstanding anything contained in Section 4.4(a) hereof:
(i) At Closing, (A) Seller shall, at Seller's option, either deliver
to Purchaser any Security Deposits actually held by Seller pursuant to the
Leases or credit to the account of Purchaser the amount of such Security
Deposits (to the extent such Security Deposits have not been applied against
delinquent Rents or otherwise as provided in the Leases), and (B) Purchaser
shall credit to the account of Seller all refundable cash or other deposits
posted with utility companies serving the Property, or, at Seller's option,
Seller shall be entitled to receive and retain such refundable cash and
deposits;
<PAGE>
(ii) Any taxes paid at or prior to Closing shall be prorated based
upon the amounts actually paid. If taxes and assessments due and payable
during the year of Closing have not been paid before Closing, Seller shall be
charged at Closing an amount equal to that portion of such taxes and
assessments which relates to the period before Closing and Purchaser shall
pay the taxes and assessments prior to their becoming delinquent. Any such
apportionment made with respect to a tax year for which the tax rate or
assessed valuation, or both, have not yet been fixed shall be based upon the
tax rate and/or assessed valuation last fixed. To the extent that the actual
taxes and assessments for the current year differ from the amount apportioned
at Closing, the parties shall make all necessary adjustments by appropriate
payments between themselves within thirty (30) days after such amounts are
determined following Closing, subject to the provisions of Section 4.4(d)
hereof;
(iii) Charges referred to in Section 4.4(a) hereof which are
payable by any tenant to a third party shall not be apportioned hereunder, and
Purchaser shall accept title subject to any of such charges unpaid and Purchaser
shall look solely to the tenant responsible therefor for the payment of the
same. If Seller shall have paid any of such charges on behalf of any tenant,
and shall not have been reimbursed therefor by the time of Closing, Purchaser
shall credit to Seller an amount equal to all such charges so paid by Seller;
(iv) As to utility charges referred to in Section 4.4(a)(iii) hereof,
Seller may on notice to Purchaser elect to pay one or more of all of said items
accrued to the date hereinabove fixed for apportionment directly to the person
or entity entitled thereto, and to the extent Seller so elects, such item shall
not be apportioned hereunder, and Seller's obligation to pay such item directly
in such case shall survive the Closing or any termination of this Agreement;
(v) Purchaser shall be responsible for the payment of (A) all Tenant
Inducement Costs (as hereinafter defined) and leasing commissions which become
due and payable (whether before or after Closing) as a result of any new Leases,
or any renewals, amendments or expansions of existing Leases, signed during the
Lease Approval Period (as hereinafter defined) and, if required, approved or
deemed approved in accordance with Section 5.4 hereof; and (B) all Tenant
Inducement Costs and leasing commissions with respect to new Leases, or
renewals, amendments or expansions of existing Leases, signed or entered into
from and after the date of Closing; and (C) all leasing commissions listed on
Exhibit N attached hereto to the extent due and payable from and after the date
of Closing. If, as of the date of Closing, Seller shall have paid any Tenant
Inducement Costs or leasing commissions for which Purchaser is responsible
pursuant to the foregoing provisions, Purchaser shall reimburse Seller therefor
at Closing. For purposes hereof, the term "TENANT INDUCEMENT COSTS" shall mean
any out-of-pocket payments required under a Lease to be paid by the landlord
thereunder to or for the benefit of the tenant thereunder which is in the nature
of a tenant inducement, including specifically, without limitation, tenant
improvement costs, lease buyout costs, and moving, design, refurbishment and
club membership allowances. The term "Tenant Inducement Costs" shall not
include loss of income resulting from any free rental period, it being agreed
that Seller shall bear the loss resulting from any free rental period until the
date of Closing and that Purchaser shall bear such loss from and after the date
of Closing. For purposes hereof, the term "LEASE APPROVAL PERIOD" shall mean
the period from the Effective Date until the date of Closing;
(vi) Unpaid and delinquent Rent collected by Seller and Purchaser
after the date of Closing shall be delivered as follows: (a) if Seller collects
any unpaid or delinquent Rent for the Property, Seller shall, within fifteen
(15) days after the receipt thereof, deliver to Purchaser any such Rent which
Purchaser is entitled to hereunder relating to the date of Closing and any
period thereafter, and (b) if Purchaser collects any unpaid or delinquent Rent
from the Property, Purchaser shall, within fifteen (15) days after the receipt
thereof, deliver to Seller any such Rent which Seller is entitled to hereunder
relating to the period prior to the date of Closing. Seller and Purchaser agree
that (i) all Rent received by Seller or Purchaser within the first ninety (90)
day period after the date of Closing shall be applied first to unpaid Rents for
the month in which the Closing occurred, then to current Rents and then to
delinquent Rent, if any, in the order of their maturity, and (ii) all Rent
received by Seller or Purchaser after the first ninety (90) day period after the
date of Closing shall be applied first to current Rent and then to delinquent
Rent, if any, in the inverse order of maturity. Purchaser will make a good
faith effort after Closing to collect all Rents in the usual course of
Purchaser's operation of the Property, but Purchaser will not be obligated to
institute any lawsuit or other collection procedures to collect delinquent
Rents. Seller may attempt to collect any delinquent Rents owed Seller and may
institute any lawsuit or collection procedures, but may not evict any tenant.
In the event that there shall be any Rents or other charges under any Leases
which, although relating to a period prior to Closing, do not become due and
payable until after Closing or are paid prior to Closing but are subject to
adjustment after Closing (such as year end common area expense reimbursements
and the like), then any Rents or charges of such type received by Purchaser or
its representatives or Seller or its representatives subsequent to Closing
shall, to the extent applicable to a period extending through the Closing, be
prorated between Seller and Purchaser as of Closing and Seller's portion thereof
shall be remitted promptly to Seller by Purchaser.
(c) [Intentionally omitted]
(d) Except as otherwise provided herein, any revenue or expense amount
which cannot be ascertained with certainty as of Closing shall be prorated on
the basis of the parties' reasonable estimates of such amount, and shall be the
subject of a final proration sixty (60) days after Closing, or as soon
thereafter as the
<PAGE>
precise amounts can be ascertained. Purchaser shall promptly notify Seller
when it becomes aware that any such estimated amount has been ascertained.
Once all revenue and expense amounts have been ascertained, Purchaser shall
prepare, and certify as correct, a final proration statement which shall be
subject to Seller's approval. Upon Seller's acceptance and approval of any
final proration statement submitted by Purchaser, such statement shall be
conclusively deemed to be accurate and final.
(e) Subject to the final sentence of Section 4.4(d) hereof, the provisions
of this Section 4.4 shall survive Closing.
Section 4.5 TRANSACTION TAXES AND CLOSING COSTS
(a) Seller and Purchaser shall execute such returns, questionnaires and
other documents as shall be required with regard to all applicable real property
transaction taxes imposed by applicable federal, state or local law or
ordinance;
(b) Seller shall pay the fees of any counsel representing Seller in
connection with this transaction. Seller shall also pay the following costs and
expenses:
* one-half (1/2) of the escrow fee, if any, which may be charged by the
Escrow Agent or Title Company; and
* one-half (1/2) of any transfer tax which becomes payable by reason of the
transfer of the Property from Seller to Purchaser.
(c) Purchaser shall pay the fees of any counsel representing Purchaser in
connection with this transaction. Purchaser shall also pay the following costs
and expenses:
*one-half (1/2) of the escrow fee, if any, which may be charged by the
Escrow Agent or Title Company;
* one-half (1/2) of any transfer tax which becomes payable by reason of the
transfer of the Property from Seller to Purchaser.
* the fee for the title examination and the Title Commitment and the
premium for the Owner's Policy of Title Insurance to be issued to Purchaser
by the Title Company at Closing, and all endorsements thereto;
* the cost of the Survey;
* the fees for recording the Deed;
* any sales tax, documentary stamp tax or similar tax which becomes payable
by reason of the transfer of the Property;
(d) The Personal Property is included in this sale without charge, except
that Purchaser shall pay to Seller the amount of any and all sales or similar
taxes payable in connection with the transfer of the Personal Property and
Purchaser shall execute and deliver any tax returns required of it in connection
therewith;
(e) All costs and expenses incident to this transaction and the closing
thereof, and not specifically described above, shall be paid by the party
incurring same; and
(f) The provisions of this Section 4.5 shall survive the Closing.
Section 4.6 CONDITIONS PRECEDENT TO OBLIGATION OF PURCHASER. The
obligation of Purchaser to consummate the transaction hereunder shall be subject
to the fulfillment on or before the date of Closing of all of the following
conditions, any or all of which may be waived by Purchaser in its sole
discretion:
(a) Seller shall have delivered to Purchaser all of the items required to
be delivered to Purchaser pursuant to the terms of this Agreement, including but
not limited to, those provided for in Section 4.2 hereof;
(b) All of the representations and warranties of Seller contained in this
Agreement shall be to the best of Seller's knowledge, true and correct in all
material respects as of the date of Closing (with appropriate modifications
permitted under this Agreement); and
(c) Seller shall have performed and observed, in all material respects,
all covenants and agreements of this Agreement to be performed and observed by
Seller as of the date of Closing.
<PAGE>
Section 4.7 CONDITIONS PRECEDENT TO OBLIGATION OF SELLER. The
obligation of Seller to consummate the transaction hereunder shall be subject to
the fulfillment on or before the date of Closing of all of the following
conditions, any or all of which may be waived by Seller in its sole discretion:
(a) Seller shall have received the Purchase Price as adjusted as provided
herein, pursuant to and payable in the manner provided for in this Agreement;
(b) Purchaser shall have delivered to Seller all of the items required to
be delivered to Seller pursuant to the terms of this Agreement, including but
not limited to, those provided for in Section 4.3 hereof;
(c) All of the representations and warranties of Purchaser contained in
this Agreement shall be true and correct in all material respects as of the date
of Closing (with appropriate modifications permitted under this Agreement); and
(d) Purchaser shall have performed and observed, in all material respects,
all covenants and agreements of this Agreement to be performed and observed by
Purchaser as of the date of Closing.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby
makes the following representations and warranties to Purchaser as of the
Effective Date, which representations and warranties shall be deemed to have
been made again as of the Closing, subject to Section 4.2(f) hereof:
(a) ORGANIZATION AND AUTHORITY. Seller has been duly organized and is
validly existing under the laws of the Commonwealth of Pennsylvania. Seller has
the full right and authority
<PAGE>
to enter into this Agreement and to transfer all of the Property and to
consummate or cause to be consummated the transaction contemplated by this
Agreement. The person signing this Agreement on behalf of Seller is or are
authorized to do so.
(b) PENDING ACTIONS. To Seller's knowledge, Seller has not received
written notice of any action, suit, arbitration, unsatisfied order or judgment,
government investigation or proceeding pending against Seller which, if
adversely determined, could individually or in the aggregate materially
interfere with the consummation of the transaction contemplated by this
Agreement.
(c) OPERATING AGREEMENTS. To Seller's knowledge, the Operating Agreements
listed on Exhibit C are all of the agreements concerning the operation and
maintenance of the Property entered into by Seller and affecting the Property,
except those operating agreements that are not assignable or are to be
terminated by Seller within thirty (30) days after the Closing, and except any
agreement with Seller's property manager, which shall be terminated by Seller.
(d) LEASE BROKERAGE. To Seller's knowledge, there are no agreements with
brokers providing for the payment from and after the Closing by Seller or
Seller's successor-in-interest of leasing commissions or fees for procuring
tenants with respect to the Property, except as disclosed in Exhibit N hereto;
(e) LITIGATION. To Seller's knowledge, except as set forth on Exhibit O
attached hereto, and except tenant eviction proceedings, tenant bankruptcies,
proceedings for the collection of delinquent rentals from tenants and
proceedings related to claims for personal injury or damage to property due to
events occurring at the Property, Seller has not received written notice of any
litigation which has been filed against Seller that arises out of the ownership
of the Property and would materially affect the Property or use thereof, or
Seller's ability to perform hereunder; Seller agrees to indemnify and hold
harmless Buyer from and against all loss, cost and expense it may suffer by
reason of the claim asserted and referred to on Exhibit O attached hereto; and
(f) LEASES. To Seller's knowledge, the rent roll attached hereto as
Exhibit P is accurate in all material respects, and lists all of the leases
currently affecting the Property.
(g) PURCHASE RIGHTS. To Seller's knowledge, Seller has not granted any
rights or options to purchase the Property to, or accepted any offers to
purchase the property from, any party other than Purchaser.
(h) EMPLOYEES OF SELLER. To Seller's knowledge, Seller has no
employees at the Property. Purchaser shall not be responsible for or required
to assume any employee benefit plans or severance obligations of Seller.
(i) STATEMENT OF TENANT DELINQUENCIES. To Seller's knowledge, the
Statement of Tenant Delinquencies attached hereto as Exhibit Q is accurate in
all material respects and lists all overdue monetary obligations to Seller of
tenants at the Property.
(j) NAME. To Seller's knowledge, Seller has not assigned its rights,
if any, to use the name "Berwyn Park" to any other person or entity. The use of
such name by any tenant of the Property shall not be deemed a violation of this
representation and warranty.
Section 5.2 KNOWLEDGE DEFINED. References to the "knowledge" of Seller
shall refer only to the current actual knowledge of the Designated Persons (as
hereinafter defined), and shall not be construed, by imputation or otherwise, to
refer to the knowledge of Seller or any affiliate of Seller, or to any officer,
agent, manager, representative or employee of Seller or any affiliate thereof or
to impose upon such Designated Persons any duty to investigate the matter to
which such actual knowledge, or the absence thereof, pertains. As used herein,
the term "DESIGNATED PERSONS" shall refer to the following persons: (a) Albert
Griffith, (b) William Wilson, (c) Dean Lundahl and (d) J. Patrick Armstrong.
Section 5.3 SURVIVAL OF SELLER'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller set forth in Section 5.1 hereof as
updated as of the Closing in accordance with the terms of this Agreement, shall
survive Closing for a period of one hundred eighty (180) days. No claim for a
breach of any representation or warranty of Seller shall be actionable or
payable if the breach in question results from or is based on a condition, state
of facts or other matter which was known to Purchaser prior to Closing. Seller
shall have no liability to Purchaser for a breach of any representation or
warranty (a) unless the valid claims for all such breaches collectively
aggregate more than Twenty-Five Thousand Dollars ($25,000), in which event the
full amount of such valid claims shall be actionable, up to the Cap (as defined
in this Section), and (b) unless written notice containing a description of the
specific nature of such breach shall have been given by Purchaser to Seller
prior to the expiration of said one hundred eighty (180) day period and an
action shall have been commenced by Purchaser against Seller within two hundred
forty (240) days of Closing. Purchaser agrees to first seek recovery under any
insurance policies, service contracts and Leases prior to seeking recovery from
Seller, and Seller shall not be liable to Purchaser if Purchaser's claim is
satisfied from such insurance policies, service contracts or Leases. As used
herein, the term "CAP " shall mean the total aggregate amount of Five Hundred
Thousand Dollars ($500,000).
Section 5.4 COVENANTS OF SELLER. Seller hereby covenants with Purchaser
as follows:
<PAGE>
(a) From the Effective Date hereof until the Closing or earlier
termination of this Agreement, Seller shall use reasonable efforts to operate
and maintain the Property in a manner generally consistent with the manner in
which Seller has operated and maintained the Property prior to the date hereof;
(b) Except as provided hereinbelow, a copy of any amendment, renewal or
expansion of an existing Lease (unless such renewal or expansion is pursuant to
the terms of an existing Lease) or of any new Lease which Seller wishes to
execute between the Effective Date and the date of Closing will be submitted to
Purchaser prior to execution by Seller. Purchaser agrees to notify Seller in
writing within five (5) business days after its receipt thereof of either its
approval or disapproval thereof, including all Tenant Inducement Costs and
leasing commissions to be incurred in connection therewith. In the event
Purchaser informs Seller within such five business day period that Purchaser
does not approve the amendment, renewal or expansion of the existing Lease or
the new Lease, which approval shall not be unreasonably withheld, Seller will
not enter into such renewal or expansion or new lease. In the event Purchaser
fails to notify Seller in writing of its approval or disapproval within the five
(5) business day period set forth above, Purchaser shall be deemed to have
approved such new Lease, amendment, renewal or expansion. At Closing, Purchaser
shall reimburse Seller for any Tenant Inducement Costs, leasing commissions or
other expenses, including legal fees, incurred by Seller pursuant to an
amendment, a renewal, an expansion or a new Lease approved (or deemed approved)
by Purchaser.
Section 5.5 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
hereby makes the following representations and warranties to Seller as of the
Effective Date, which representations and warranties shall be deemed to have
been made again as of the Closing, subject to Section 4.3(c) hereof:
(a) ORGANIZATION AND AUTHORITY. Purchaser has been duly organized and is
validly existing under the laws of the State of Maryland. Purchaser has the
full right and authority to enter into this Agreement and to consummate or cause
to be consummated the transaction contemplated by this Agreement. The person(s)
signing this Agreement on behalf of Purchaser is or are authorized to do so;
(b) PENDING ACTIONS. To Purchaser's knowledge, there is no action, suit,
arbitration, unsatisfied order or judgment, government investigation or
proceeding pending against Purchaser which, if adversely determined, could
individually or in the aggregate materially interfere with the consummation of
the transaction contemplated by this Agreement.
(c) ERISA. As of the Closing, (1) Purchaser will not be an employee
benefit plan as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), which is subject to Title I of
ERISA, nor a plan as defined in Section 4975(e)(1) of the Internal Revenue Code
of 1986, as amended (each of the foregoing hereinafter referred to collectively
as "PLAN"), and (2) the assets of the Purchaser will not constitute "plan
assets" of one or more such Plans within the meaning of Department of Labor
("DOL") Regulation Section 2510.3-101.
As of the Closing, if Purchaser is a "governmental plan" as defined in
Section 3(32) of ERISA, the closing of the sale of the Property will not
constitute or result in a violation of state or local statutes regulating
investments of and fiduciary obligations with respect to governmental plans.
As of the Closing, Purchaser will be acting on its own behalf and not on
account of or for the benefit of any Plan.
Purchaser has no present intent to transfer the Property to any entity,
person or Plan which will cause a violation of ERISA.
Purchaser shall not assign its interest under this Agreement to any entity,
person, or Plan which will cause a violation of ERISA.
Section 5.6 SURVIVAL OF PURCHASER'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Purchaser set forth in Section 5.5 hereof as
updated as of the Closing in accordance with the terms of this Agreement, shall
survive Closing for a period of one hundred eighty (180) days. Purchaser shall
have no liability to Seller for a breach of any representation or warranty
unless written notice containing a description of the specific nature of such
breach shall have been given by Seller to Purchaser prior to the expiration of
said one hundred eighty (180) day period and an action shall have been commenced
by Seller against Purchaser within two hundred forty (240) days of Closing.
ARTICLE VI
DEFAULT
Section 6.1 DEFAULT BY PURCHASER. In the event the sale of the Property
as contemplated hereunder is not consummated due to Purchaser's default
hereunder, Seller shall be entitled, as its sole remedy, to terminate this
Agreement and receive the Deposit as liquidated damages for the breach of this
Agreement, it being agreed between the parties hereto that the actual damages to
Seller in the event of such breach are impractical to ascertain and the amount
of the Deposit is a reasonable estimate thereof.
Section 6.2 DEFAULT BY SELLER. In the event the sale of the Property as
contemplated hereunder is not consummated due to Seller's default hereunder,
Purchaser shall be entitled, as its sole remedy,
<PAGE>
either (a) to receive the retur nof the Deposit, which return shall operate
to terminate this Agreement and release Seller from any and all liability
hereunder, except that in such event Seller shall reimburse Purchaser for up
to Twenty Five Thousand Dollars ($25,000) for reasonable expenses incurred by
Purchaser and documented to Seller's reasonable satisfaction and incurred in
connection with Purchaser's investigation of the Property or (b) to enforce
specific performance of Seller's obligation to convey the Property to
Purchaser in accordance with the terms of this Agreement, it being understood
and agreed that the remedy of specific performance shall not be available to
enforce any other obligation of Seller hereunder. Except as expressly set
forth in clause (a) of this Section 6.2, Purchaser expressly waives its
rights to seek damages in the event of Seller's default hereunder. Purchaser
shall be deemed to have elected to terminate this Agreement and receive back
the Deposit if Purchaser fails to file suit for specific performance against
Seller in a court having jurisdiction in the county and state in which the
Property is located, on or before thirty (30) days following the date upon
which Closing was to have occurred.
Section 6.3 RECOVERABLE DAMAGES. Notwithstanding Sections 6.1 and 6.2
hereof, in no event shall the provisions of Sections 6.1 and 6.2 limit the
damages recoverable by either party against the other party due to the other
party's obligation to indemnify such party in accordance with this Agreement.
This Section shall survive the Closing or the earlier termination of this
Agreement.
ARTICLE VII
RISK OF LOSS
Section 7.1 MINOR DAMAGE. In the event of loss or damage to the
Property or any portion thereof which is not "Major" (as hereinafter defined),
this Agreement shall remain in full force and effect provided that Seller shall,
at Seller's option, either (a) perform any necessary repairs, or (b) assign to
Purchaser, without representation, warranty or recourse to Seller, all of
Seller's right, title and interest in and to any claims and proceeds Seller may
have with respect to any net casualty insurance policies or net condemnation
awards relating to the premises in question (that is, after expense of
collection), subject however, to Seller's right to receive reimbursement
therefrom of any amounts paid or incurred by Seller for or on account of repairs
and/or restoration of the Property prior to Closing. In the event that Seller
elects to perform repairs upon the Property, Seller shall use reasonable efforts
to complete such repairs promptly and the date of Closing shall be extended a
reasonable time, not to exceed ninety (90) days, in order to allow for the
completion of such repairs. If Seller elects to assign a casualty claim to
Purchaser, the Purchase Price shall be reduced by an amount equal to the lesser
of the deductible amount under Seller's insurance policy or the cost of such
repairs as determined in accordance with Section 7.3 hereof. Upon Closing, full
risk of loss with respect to the Property shall pass to Purchaser.
Section 7.2 MAJOR DAMAGE. In the event of a "Major" loss or damage,
Purchaser may terminate this Agreement by written notice to the Seller, in which
event the Deposit shall be returned to Purchaser. If Purchaser does not elect
to terminate this Agreement within ten (10) days after Seller sends Purchaser
written notice of the occurrence of such Major loss or damage (which notice
shall state the cost of repair or restoration thereof as opined by an architect
in accordance with Section 7.3 hereof), then Purchaser shall be deemed to have
elected to proceed with Closing, in which event Seller shall, at Seller's
option, either (a) perform any necessary repairs, or (b) assign to Purchaser,
without representation, warranty or recourse to Seller, all of Seller's right,
title and interest in and to any claims and proceeds Seller may have with
respect to any net casualty insurance policies or net condemnation awards
relating to the premises in question (that is, after expense of collection),
subject however, to Seller's right to receive reimbursement therefrom of any
amounts paid or incurred by Seller for or on account of repairs and/or
restoration of the Property prior to Closing. In the event that Seller elects
to perform repairs upon the Property, Seller shall use reasonable efforts to
complete such repairs promptly and the date of Closing shall be extended a
reasonable time in order to allow for the completion of such repairs. Upon
Closing, full risk of loss with respect to the Property shall pass to Purchaser.
Section 7.3 DEFINITION OF "MAJOR" LOSS OR DAMAGE. For purposes of
Sections 7.1 and 7.2, "MAJOR" loss or damage refers to the following: (a) loss
or damage to the Property hereof such that the cost of repairing or restoring
the premises in question to substantially the same condition which existed prior
to the event of damage would be, in the opinion of an architect selected by
Seller and reasonably approved by Purchaser, equal to or greater than One
Million Dollars ($1,000,000), and (b) any loss due to a condemnation which
permanently and materially impairs the current use of the Property. If
Purchaser does not give written notice to Seller of Purchaser's reasons for
disapproving an architect within five (5) business days after receipt of notice
of the proposed architect, Purchaser shall be deemed to have approved the
architect selected by Seller.
ARTICLE VIII
COMMISSIONS
Section 8.1 BROKERAGE COMMISSIONS. With respect to the transaction
contemplated by this Agreement, Seller and Purchaser each represent that it has
not utilized a broker . Each party hereto agrees that if any person or entity
makes a claim for brokerage commissions or finder's fees related to the sale of
the Property by Seller to Purchaser, and such claim is made by, through or on
account of any acts or alleged acts of said party or its representatives, said
party will protect, indemnify, defend and hold the other party free and harmless
from and against any and all loss, liability, cost, damage and expense
(including reasonable attorneys'
<PAGE>
fees) in connection therewith. The provisions of this paragraph shall
survive Closing or any termination of this Agreement.
<PAGE>
ARTICLE IX
DISCLAIMERS AND WAIVERS
Section 9.1 NO RELIANCE ON DOCUMENTS. Except as expressly stated
herein, Seller makes no representation or warranty as to the truth, accuracy
or completeness of any materials, data or information delivered by Seller or
its representatives to Purchaser in connection with the transaction
contemplated hereby. Purchaser acknowledges and agrees that all materials,
data and information delivered by Seller to Purchaser in connection with the
transaction contemplated hereby are provided to Purchaser as a convenience
only and that any reliance on or use of such materials, data or information
by Purchaser shall be at the sole risk of Purchaser, except as otherwise
expressly stated herein. Neither Seller, nor any affiliate of Seller, nor the
person or entity which prepared any report or reports delivered by Seller to
Purchaser shall have any liability to Purchaser for any inaccuracy in or
omission from any such reports.
SECTION 9.2 AS-IS SALE; DISCLAIMERS. EXCEPT AS EXPRESSLY SET
FORTH IN THIS AGREEMENT, IT IS UNDERSTOOD AND AGREED THAT SELLER IS NOT
MAKING AND HAS NOT AT ANY TIME MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY
KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY,
INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OR REPRESENTATIONS AS TO
HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
PURCHASER ACKNOWLEDGES AND AGREES THAT UPON CLOSING SELLER SHALL SELL AND
CONVEY TO PURCHASER AND PURCHASER SHALL ACCEPT THE PROPERTY "AS IS, WHERE IS,
WITH ALL FAULTS", EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN THIS
AGREEMENT. PURCHASER HAS NOT RELIED AND WILL NOT RELY ON, AND SELLER IS NOT
LIABLE FOR OR BOUND BY, ANY EXPRESS OR IMPLIED WARRANTIES, GUARANTIES,
STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PROPERTY OR
RELATING THERETO (INCLUDING SPECIFICALLY, WITHOUT LIMITATION, OFFERING
PACKAGES DISTRIBUTED WITH RESPECT TO THE PROPERTY) MADE OR FURNISHED BY
SELLER, THE MANAGERS OF THE PROPERTY, OR ANY REAL ESTATE BROKER OR AGENT
REPRESENTING OR PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN,
DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS SPECIFICALLY SET FORTH
IN THIS AGREEMENT. PURCHASER ALSO ACKNOWLEDGES THAT THE PURCHASE PRICE
REFLECTS AND TAKES INTO ACCOUNT THAT THE PROPERTY IS BEING SOLD "AS-IS."
PURCHASER REPRESENTS TO SELLER THAT PURCHASER HAS CONDUCTED, OR WILL
CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT
NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS
PURCHASER DEEMS NECESSARY OR DESIRABLE TO SATISFY ITSELF AS TO THE CONDITION
OF THE PROPERTY AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE
TAKEN WITH RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM
THE PROPERTY, AND WILL RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION
PROVIDED BY OR ON BEHALF OF SELLER OR ITS AGENTS OR EMPLOYEES WITH RESPECT
THERETO, OTHER THAN SUCH REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER
AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT. UPON CLOSING, PURCHASER SHALL
ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED TO,
CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY
NOT HAVE BEEN REVEALED BY PURCHASER'S INVESTIGATIONS, AND PURCHASER, UPON
CLOSING, SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLER
(AND SELLER'S OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS) FROM
AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES
OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES
(INCLUDING REASONABLE ATTORNEYS' FEES) OF ANY AND EVERY KIND OR CHARACTER,
KNOWN OR UNKNOWN, WHICH PURCHASER MIGHT HAVE ASSERTED OR ALLEGED AGAINST
SELLER (AND SELLER'S OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS)
AT ANY TIME BY REASON OF OR ARISING OUT OF ANY LATENT OR PATENT CONSTRUCTION
DEFECTS OR PHYSICAL CONDITIONS, VIOLATIONS OF ANY APPLICABLE LAWS AND ANY AND
ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE
PROPERTY.
Section 9.3 SURVIVAL OF DISCLAIMERS. The provisions of this Article
IX shall survive Closing or any termination of this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1 CONFIDENTIALITY. Purchaser and its representatives shall
hold in strictest confidence all data and information obtained with respect
to Seller or its business, whether obtained before or after the execution and
delivery of this Agreement, and shall not disclose the same to others;
provided, however, that it is understood and agreed that Purchaser may
disclose such data and information to the employees, lenders, consultants,
accountants and attorneys of Purchaser provided that such persons agree in
writing to treat such data
<PAGE>
and information confidentially. In the event this Agreement is terminated
or Purchaser fails to perform hereunder, Purchaser shall promptly return to
Seller any statements, documents, schedules, exhibits or other written
information obtained from Seller in connection with this Agreement or the
transaction contemplated herein. It is understood and agreed that, with respect
to any provision of this Agreement which refers to the termination of this
Agreement and the return of the Deposit to Purchaser, such Deposit shall not be
returned to Purchaser unless and until Purchaser has fulfilled its obligation to
return to Seller the materials described in the preceding sentence. In the
event of a breach or threatened breach by Purchaser or its agents or
representatives of this Section 10.1, Seller shall be entitled to an injunction
restraining Purchaser or its agents or representatives from disclosing, in whole
or in part, such confidential information. Nothing herein shall be construed as
prohibiting Seller from pursuing any other available remedy at law or in equity
for such breach or threatened breach. The provisions of this Section 10.1 shall
survive Closing or any termination of this Agreement.
Section 10.2 PUBLIC DISCLOSURE. Prior to and after the Closing, except
as required by federal and/or state securities laws, any release to the public
of information with respect to the sale contemplated herein or any matters set
forth in this Agreement will be made only in the form approved by Purchaser and
Seller. The provisions of this Section 10.2 shall survive the Closing or any
termination of this Agreement.
Section 10.3 ASSIGNMENT. Subject to the provisions of this Section 10.3,
the terms and provisions of this Agreement are to apply to and bind the
permitted successors and assigns of the parties hereto. Except for an
assignment of this Agreement to a wholly owned subsidiary or an affiliate
controlled by or under common control by Purchaser which Seller agrees is
permitted, Purchaser may not assign its rights under this Agreement without
first obtaining Seller's written approval, which approval may be given or
withheld in Seller's sole discretion. In the event Purchaser intends to assign
its rights hereunder, and even if permitted as provided in this Section above
(a) Purchaser shall send Seller written notice of its request at least ten (10)
business days prior to Closing, which request shall include the legal name and
structure of the proposed assignee, as well as any other information that Seller
may reasonably request, and (b) Purchaser and the proposed assignee shall
execute an assignment and assumption of this Agreement in form and substance
satisfactory to Seller, and (c) in no event shall any assignment of this
Agreement release or discharge Purchaser from any liability or obligation
hereunder. Notwithstanding the foregoing, under no circumstances shall
Purchaser have the right to assign this Agreement to any person or entity owned
or controlled by an employee benefit plan if Seller's sale of the Property to
such person or entity would, in the reasonable opinion of Seller's ERISA
advisor, create or otherwise cause a "prohibited transaction" under ERISA. Any
transfer, directly or indirectly, of any stock, partnership interest or other
ownership interest in Purchaser shall constitute an assignment of this
Agreement. For the purposes of this Section 10.3, the term "control" or
"controlled" shall mean possessing a majority interest in ownership and voting
rights. The provisions of this Section 10.3 shall survive the Closing or any
termination of this Agreement.
Section 10.4 NOTICES. Any notice pursuant to this Agreement shall be
given in writing by (a) personal delivery, (b) reputable overnight delivery
service with proof of delivery, (c) United States Mail, postage prepaid,
registered or certified mail, return receipt requested, or (d) legible facsimile
transmission, sent to the intended addressee at the address set forth below, or
to such other address or to the attention of such other person as the addressee
shall have designated by written notice sent in accordance herewith, and shall
be deemed to have been given upon receipt or refusal to accept delivery, or, in
the case of facsimile transmission, as of the date of the facsimile transmission
provided that an original of such facsimile is also sent to the intended
addressee by means described in clauses (a), (b) or (c) above. Unless changed
in accordance with the preceding sentence, the addresses for notices given
pursuant to this Agreement shall be as follows:
If to Seller: Berwyn Development Associates
C/O LCOR Inc.
300 Berwyn Park, Suite 115
Berwyn, PA 19312
Attention: Dean O. Lundahl
Telephone No.(610) 408-4443
Telecopy No. (610) 640-0516
with a copy to: Metropolitan Life Insurance Company
Real Estate Investments
8300 Boone Boulevard - Suite 750
Vienna, VA 22182
Attention: Christine Madigan
Telephone No. (703) 506-8008
Telecopy No. (703) 848-2594
with a copy to: Metropolitan Life Insurance Company
200 Park Avenue, 12th Floor
New York, New York 10166
Attention: William P. Gardella, Esquire
Telephone No. (212) 578-5884
Telecopy No. (212) 685-5927
If to Purchaser: Brandywine Realty Trust
16 Campus Boulevard, Suite 150
<PAGE>
Newtown Square, PA 19073
Attention: Gerard H. Sweeney
Telephone No. (610) 325-5600
Telecopy No. (610) 325-5622
with a copy to: Brad A. Molotsky, Esquire
Pepper, Hamilton & Scheetz
3000 Two Logan Square
Philadelphia, PA 19103
Telephone No. (215) 981-4262
Telecopy No. (215) 981-4930
Section 10.5 MODIFICATIONS This Agreement cannot be changed orally, and
no executory agreement shall be effective to waive, change, modify or discharge
it in whole or in part unless such executory agreement is in writing and is
signed by the parties against whom enforcement of any waiver, change,
modification or discharge is sought.
Section 10.6 ENTIRE AGREEMENT This Agreement, including the exhibits and
schedules hereto, contains the entire agreement between the parties hereto
pertaining to the subject matter hereof and fully supersedes all prior written
or oral agreements and understandings between the parties pertaining to such
subject matter, other than the confidentiality agreement executed by Purchaser
and Seller in connection with the Property.
Section 10.7 FURTHER ASSURANCES Each party agrees that it will execute
and deliver such other documents and take such other action, whether prior or
subsequent to Closing, as may be reasonably requested by the other party to
consummate the transaction contemplated by this Agreement. The provisions of
this Section 10.7 shall survive Closing.
Section 10.8 COUNTERPARTS. This Agreement may be executed in
counterparts, all such executed counterparts shall constitute the same
agreement, and the signature of any party to any counterpart shall be deemed a
signature to, and may be appended to, any other counterpart.
Section 10.9 FACSIMILE SIGNATURES. In order to expedite the transaction
contemplated herein, telecopied signatures may be used in place of original
signatures on this Agreement. Seller
<PAGE>
and Purchaser intend to be bound by the signatures on the telecopied document,
are aware that the other party will rely on the telecopied signatures, and
hereby waive any defenses to the enforcement of the terms of this Agreement
based on the form of signature.
Section 10.10 SEVERABILITY. If any provision of this Agreement is
determined by a court of competent jurisdiction to be invalid or unenforceable,
the remainder of this Agreement shall nonetheless remain in full force and
effect.
Section 10.11 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania.
Purchaser and Seller agree that the provisions of this Section 10.11 shall
survive the Closing or any termination of this Agreement.
Section 10.12 NO THIRD-PARTY BENEFICIARY. The provisions of this
Agreement and of the documents to be executed and delivered at Closing are and
will be for the benefit of Seller and Purchaser only and are not for the benefit
of any third party, and accordingly, no third party shall have the right to
enforce the provisions of this Agreement or of the documents to be executed and
delivered at Closing.
Section 10.13 CAPTIONS. The section headings appearing in this Agreement
are for convenience of reference only and are not intended, to any extent and
for any purpose, to limit or define the text of any section or any subsection
hereof.
Section 10.14 CONSTRUCTION The parties acknowledge that the parties and
their counsel have reviewed and revised this Agreement and that the normal rule
of construction to the effect that any ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation of this Agreement
or any exhibits or amendments hereto.
Section 10.15 RECORDATION. This Agreement may not be recorded by any
party hereto without the prior written consent of the other party hereto. The
provisions of this Section 10.15 shall survive the Closing or any termination of
this Agreement.
Section 10.16 TIME OF THE ESSENCE. The time for the payment of money and
all other times referred to for the performance by Purchaser of any provisions
of this Agreement are hereby agreed to be of the essence of this Agreement.
Section 10.17 SEC DISCLOSURE. During the period beginning on the
Effective Date and ending on the first anniversary of the date of the Closing;
and in addition to any other document production required of Seller hereunder,
Seller shall, from time to time, upon reasonable advance written notice from
Purchaser, provide Purchaser and its representatives with (i) access to all
financial and other information pertaining to Seller's ownership and operation
of the Property for the period of January 1, 1995 to and including Closing, but
excluding any Confidential Documents (as defined in Section 3.1 of this
Agreement), to enable Purchaser and Arthur Anderson & Co. (the "Accountant") 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, and (b) any registration statement report or
disclosure statement required to be filed with the Commission by or on behalf of
the Purchaser, and (ii) if required by the Accountant in order to render an
opinion concerning the operating statements for the Property, a representation
letter substantially in the form attached hereto as Exhibit R.
Section 10.18 EXCULPATION. No recourse shall be had for any obligation
of Purchaser
<PAGE>
under this Agreement or under any document executed in connection with or
pursuant to this Agreement 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 statue,
or rule of law, or by the enforcement of any assessment or penalty or otherwise,
all such liability being expressly waived and released by Seller and all parties
claiming by, through or under Seller, it being agreed by Purchaser and Seller
that recourse against Purchaser under this Agreement shall be limited to the
assets of Brandywine Realty Trust.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the Effective Date.
SELLER:
BERWYN DEVELOPMENT ASSOCIATES, a Pennsylvania
general partnership
By: Linpro Berwyn Associates, general partner
By: _______________________________
Name: Eric Eichler
Title: Managing General Partner
By: Metropolitan Life Insurance Company
general partner
By: _______________________________
Name:
Title:
PURCHASER:
BRANDYWINE REALTY TRUST
By: _______________________
Name: Gerard H. Sweeney
Title: President/CEO
<PAGE>
Escrow Agent executes this Agreement below solely for the purpose of
acknowledging that it agrees to be bound by the provisions of Sections 1.5 and
1.6 hereof.
ESCROW AGENT:
COMMONWEALTH LAND TITLE INSURANCE COMPANY
a Pennsylvania corporation
By: _______________________
Name: _____________________
Title: ____________________
<PAGE>
EXHIBIT A
DESCRIPTION OF LAND
<PAGE>
EXHIBIT B
LIST OF PERSONAL PROPERTY
<PAGE>
EXHIBIT C
LIST OF OPERATING AGREEMENTS
VENDOR AGREEMENT PURPOSE TERM CANCELLATION DATE CLAUSE
NAME
<PAGE>
EXHIBIT D
LIST OF ENVIRONMENTAL AND GEOTECHNICAL REPORTS
<PAGE>
EXHIBIT E
TENANT ESTOPPEL FORM
___________________________[Date]
[PURCHASER]
____________________
____________________
[SELLER]
Berwyn Development Associates
C/O LCOR Inc.
300 Berwyn Park, Suite 115
Berwyn, PA 19312
Re: Lease dated ________________, 199 _ (the "Lease") executed between
____________________________ ("Landlord"), and __________________ ("Tenant"),
for those premises located at ________________________________.
Gentlemen:
The undersigned Tenant understands that you or your assigns intend to
acquire fee title to that property located at _____________ (the "Property")
from Berwyn Development Associates. The undersigned Tenant does hereby certify
to you as follows:
A. Tenant has entered into a certain lease together with all amendments
(the "Lease") as described on Schedule 1 attached hereto.
B. The Lease is in full force and effect and has not been modified,
supplemented, or amended except as set forth on Schedule 1 attached hereto.
C. Tenant has not given Landlord written notice of any dispute between
Landlord and Tenant or that Tenant considers Landlord in default under the
Lease.
D. Tenant does not claim any offsets or credits against rents payable
under the Lease.
E. Tenant has not paid a security or other deposit with respect to the
Lease, except as follows: ___________________________________.
F. Tenant has fully paid rent to and including the month of
______________, 199_.
G. Tenant has not paid any rentals in advance except for the current
month of _________, 199_.
<PAGE>
H. The Lease expires on ____________________________.
I. Tenant has no options, rights of first offer or rights of first
refusal to purchase the Property, except as follows:
TENANT:
_________________________________
a _______________________________
By: _____________________________
Name: ___________________________
Title: __________________________
<PAGE>
EXHIBIT F
TENANT ESTOPPEL STANDARDS
Tenants representing 70% or more of occupied space in the Property,
including the following tenants (Required Estoppels):
Berwyn 100 Shared Medical
Berwyn 200 Devon Direct
Berwyn 300 Delval Financial
<PAGE>
EXHIBIT G
FORM OF DEED
[A deed form is not included as it is a State specific document. The deed will
be a limited or special warranty type deed in which the Property will be
conveyed subject to the Permitted Exceptions (as described in Section 2.4 of the
Sale Agreement) with a warranty of title by Seller as to the lawful claims of
all persons claiming by, through or under Seller, but against none other.]
<PAGE>
EXHIBIT H
FORM OF BILL OF SALE
KNOW ALL MEN BY THESE PRESENTS, that BERWYN DEVELOPMENT ASSOCIATES, a
Pennsylvania general partnership (the "Seller"), for and in consideration of the
sum of Ten Dollars and other valuable consideration to it in hand paid by
_________ , a _____________ the "Purchaser"), the receipt and sufficiency of
which are hereby acknowledged, hereby sells, assigns, transfers and conveys unto
said Purchaser any and all of Seller's right, title and interest in and to all
tangible personal property located upon the land described in Schedule "1"
attached hereto and hereby made a part hereof (the "Land") or within the
improvements located thereon, including, without limitation, any and all
appliances, furniture, carpeting, draperies and curtains, tools and supplies,
and other items of personal property owned by Seller (excluding cash and any
software), used exclusively in the operation of the Land and improvements, as
is, where is, and without warranty of title or use, and without warranty,
express or implied, of merchantability or fitness for a particular purpose.
TO HAVE AND TO HOLD all of said personal property unto Purchaser, its
successors and assigns, to its own use forever.
IN WITNESS WHEREOF, Seller has executed this Bill of Sale as of the __day
of ______________, 199_
BERWYN DEVELOPMENT ASSOCIATES, a Pennsylvania
general partnership
By: Linpro Berwyn Associates, general partner
By: _______________________________
Name: Eric Eichler
Title: Managing General Partner
By: Metropolitan Life Insurance Company
general partner
By: _______________________________
Name:
Title:
[ACKNOWLEDGMENT AND/OR WITNESSES TO BE
ADDED IF REQUIRED UNDER APPLICABLE STATE LAW]
<PAGE>
SCHEDULE "1"
LEGAL DESCRIPTION
[To be attached]
<PAGE>
EXHIBIT I
FORM OF ASSIGNMENT OF LEASES
THIS ASSIGNMENT OF LEASES (the "Assignment") is made as of this __day of
______________ , 199 __ between BERWYN DEVELOPMENT ASSOCIATES, a Pennsylvania
general partnership ("Assignor") and ____________ , a _____________
("Assignee").
For and in consideration of the sum of Ten Dollars ($10.00) and other
valuable consideration to it in hand paid by Assignee to Assignor, the
conveyance by Assignor to Assignee of all that certain real property being
particularly described on Schedule "1" attached hereto and incorporated herein
by this reference, more commonly known as Berwyn Park located in the Township of
Tredyffrin, County of Chester, Commonwealth of Pennsylvania (the "Property"),
and the mutual covenants herein contained, the receipt and sufficiency of the
foregoing consideration being hereby acknowledged by the parties hereto,
Assignor hereby assigns, transfers, sets over and conveys to Assignee all of
Assignor's right, title and interest in, to and under any and all existing and
outstanding leases, licenses and occupancy agreements (collectively, the
"Leases"), of the improvements comprising a part of the Property, including
without limitation, all those Leases described on Schedule "2" attached hereto
and incorporated herein by this reference, together with all security deposits
tendered under the Leases remaining in the possession of Assignor and described
on Schedule "3" attached hereto and incorporated herein by this reference (the
"Security Deposits").
Assignee does hereby assume and agree to perform all of Assignor's
obligations under or with respect to the Leases accruing from and after the date
hereof, including without limitation, any and all obligations to pay leasing
commissions and finder's fees which are due or payable after the date hereof as
specifically set forth on Schedule "4" attached hereto and incorporated herein
by this reference, with respect to the tenants listed on said Schedule "4", and
claims made by tenants with respect to the tenants' security deposits listed on
Schedule "3". Assignee agrees to indemnify, protect, defend and hold Assignor
harmless from and against any and all liabilities, losses, costs, damages and
expenses (including reasonable attorneys' fees) directly or indirectly arising
out of or related to any breach or default in Assignee's obligations hereunder.
Assignor shall remain liable for all of Assignor's obligations under or with
respect to the Leases accruing prior to the date hereof. Assignor agrees to
indemnify, protect, defend and hold Assignee harmless from and against any and
all liabilities, losses, costs, damages and expenses (including reasonable
attorneys' fees) directly or indirectly arising out of or related to any breach
or default in Assignor's obligations hereunder.
This Assignment shall be binding upon and inure to the benefit of Assignor
and Assignee and their respective heirs, executors, administrators, successors
and assigns.
This Assignment may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
<PAGE>
IN WITNESS WHEREOF, Assignor and Assignee have each executed this
Assignment as of the date first written above.
ASSIGNOR:
BERWYN DEVELOPMENT ASSOCIATES
By: Linpro Berwyn Associates, general partner
By: ____________________________
Name:
Title:
By: Metropolitan Life Insurance Company
general partner
By: ____________________________
Name:
Title:
ASSIGNEE:
________________________
a _______________________
By: ______________________
Name:
Title:
[ADD STATE SPECIFIC ACKNOWLEDGMENTS
AND/OR WITNESSES FOR ASSIGNOR AND ASSIGNEE]
SCHEDULE "1"
LEGAL DESCRIPTION
SCHEDULE "2"
LEASES
[To be attached]
<PAGE>
SCHEDULE "3"
SECURITY DEPOSITS
<PAGE>
SCHEDULE "4"
LEASING COMMISSIONS AND TENANTS
<PAGE>
EXHIBIT J
FORM OF ASSIGNMENT OF CONTRACTS
THIS ASSIGNMENT AND ASSUMPTION OF CONTRACTS AND INTANGIBLES (the
"Assignment") is made as of the ____ day of _________, 199 between BERWYN
DEVELOPMENT ASSOCIATES, a Pennsylvania general partnership ("Assignor") and
__________________ , a ______________________________("Assignee").
For and in consideration of the sum of Ten Dollars ($10.00) and other
valuable consideration to it in hand paid by Assignee to Assignor, the
conveyance by Assignor to Assignee of all that certain real property being
particularly described on Schedule "1" attached hereto and incorporated herein
by this reference, more commonly known as Berwyn Park located in the Township of
Tredyffrin, County of Chester, Commonwealth of Pennsylvania (the "Property"),
and the mutual covenants herein contained, the receipt and sufficiency of the
foregoing consideration being hereby acknowledged by the parties hereto,
Assignor hereby assigns, transfers, sets over and conveys to Assignee all of
Assignor's right, title and interest, to the extent assignable, in, to and under
any and all of the following, to wit:
(i) the contracts and agreements listed and described on Schedule "2"
attached hereto and incorporated herein by this reference (the
"Contracts"),
(ii) all existing warranties and guaranties (express or implied) issued to
Assignor in connection with the improvements or the personal property
being conveyed to Assignee by Bill of Sale on the date hereof,
(iii) all existing permits, licenses, approvals and authorizations issued
by any governmental authority in connection with the Property, and
(iv) the non-exclusive right to the name "Berwyn Park."
All items described in (ii), (iii) and (iv) above are hereinafter collectively
referred to as "Intangible Property."
Assignee does hereby assume and agree to perform all of Assignor's
obligations under the Contracts and Intangible Property accruing from and after
the date hereof. Assignee agrees to indemnify, protect, defend and hold
Assignor harmless from and against any and all liabilities, losses, costs,
damages and expenses (including reasonable attorneys' fees) directly or
indirectly arising out of or related to any breach or default in Assignee's
obligations hereunder. Assignor shall remain liable for all of Assignor's
obligations under the Contracts and Intangible Property accruing prior to the
date hereof. Assignor agrees to indemnify, protect, defend and hold Assignee
harmless from and against any and all liabilities, losses, costs, damages and
<PAGE>
expenses (including reasonable attorneys' fees) directly or indirectly arising
out of or related to any breach or default in Assignor's obligations hereunder.
This Assignment shall be binding upon and inure to the benefit of Assignor
and Assignee and their respective heirs, executors, administrators, successors
and assigns.
This Assignment may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, Assignor and Assignee have each executed this
Assignment as of the date first written above.
ASSIGNOR:
BERWYN DEVELOPMENT ASSOCIATES
By: Linpro Berwyn Associates, general partner
By: ____________________________
Name:
Title:
By: Metropolitan Life Insurance Company
general partner
By: ____________________________
Name:
Title:
ASSIGNEE:
________________________________
a _______________________________
By: _____________________________
[ADD STATE SPECIFIC ACKNOWLEDGMENTS
AND/OR WITNESSES FOR ASSIGNOR AND ASSIGNEE]
<PAGE>
SCHEDULE "1"
LEGAL DESCRIPTION
SCHEDULE "2"
CONTRACTS
[To be attached]
EXHIBIT K
FORM OF TENANT NOTICE
TENANT NOTIFICATION LETTER
[DATE OF SALE CLOSING]
HAND DELIVERED
TO: All Tenants at BERWYN PARK, BERWYN, PA
RE: Berwyn Park
Notification Regarding Change of Ownership
This letter is to notify you as a Tenant at Berwyn Park, Berwyn, Pennsylvania
(the "Property"), that the Property has been sold by Berwyn Development
Associates, ("Seller"), to ______________, a ________________- ("Purchaser").
As of the date hereof, your Lease has been assigned by Seller to Purchaser.
From the date of this letter, any and all rent hereinafter due, or any other
amounts hereinafter due under the terms of your Lease, shall be directed as
follows:
TO:___________________
ATTN: _______________
AT:___________________
_______________________
As part of the sale, all refundable tenant deposits, if any, actually held by
Seller with respect to the Property have been transferred to, and Seller's
obligations with respect to such deposits have been assumed by, Purchaser as of
the date of this letter. Any and all payments of rent (or other sums due
<PAGE>
under your Lease) hereafter paid to any party other than Purchaser shall not
relieve you of the obligation of making said payment to Purchaser.
Seller: BERWYN DEVELOPMENT ASSOCIATES
By: Linpro Berwyn Associates, general partner
By: ____________________________
Name:
Title:
By: Metropolitan Life Insurance Company
general partner
By: ____________________________
Name:
Title:
Purchaser: ______________________
a ____________________
By: _______________________________
Name:
Title:
<PAGE>
EXHIBIT L
FORM OF FIRPTA CERTIFICATE
CERTIFICATE REGARDING FOREIGN INVESTMENT
IN REAL PROPERTY TAX ACT
(ENTITY TRANSFEROR)
Section 1445 of the Internal Revenue Code provides that a transferee
(purchaser) of a U.S. real property interest must withhold tax if the transferor
(seller) is a foreign person. To inform the transferee (purchaser) that
withholding of tax is not required upon the disposition of a U.S. real property
interest by BERWYN DEVELOPMENT ASSOCIATES, a Pennsylvania general partnership
("Transferor") Transferor hereby certifies:
1. Transferor is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Internal Revenue
Code and Income Tax Regulations).
2. Transferor's Federal Employer Identification Number is
__________________
3. Transferor's office address is:
300 Berwyn Park
Suite 115
Berwyn, PA 19312
4. The address or description of the property which is the subject matter
of the disposition is 100, 200 and 300 Berwyn Park, Berwyn, Pennsylvania.
Transferor understands that this certification may be disclosed to the
Internal Revenue Service by transferee and that any false statement contained
herein could be punished by fine, imprisonment, or both.
<PAGE>
Transferor declares that it has examined this certification and to the best
of its knowledge and belief, it is true, correct and complete, and further
declares that the individual executing this certification on behalf of
Transferor has full authority to do so.
BERWYN DEVELOPMENT ASSOCIATES
By: Linpro Berwyn Associates, general partner
By: ____________________________
Name:
Title:
By: Metropolitan Life Insurance Company
general partner
By: ____________________________
Name:
Title:
Dated:___________________
<PAGE>
EXHIBIT M
INTENTIONALLY OMITTED
<PAGE>
EXHIBIT N
LIST OF BROKERAGE AGREEMENTS
[e.g. Lease Commission Agreement dated ______ by and between Berwyn Development
Associates and XYZ Brokerage Company]
<PAGE>
EXHIBIT O
LIST OF SPECIFIED LITIGATION
[e.g. XYZ v. Berwyn Development Associates, action filed on ____ in ______
court]
<PAGE>
EXHIBIT P
RENT ROLL
<PAGE>
EXHIBIT Q
STATEMENT OF TENANT DELINQUENCIES
<PAGE>
EXHIBIT R
FORM OF SEC REPRESENTATION LETTER
<PAGE>
SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT is dated as of August 1, 1997 and is made
by and between BRIAN F. BELCHER ("Belcher"), an individual who resides at 829
Juniper Drive, Lafayette Hill, PA 19444, as well as each and every
dependent, heir, executor and assign of Belcher, and BRANDYWINE REALTY TRUST
("BRT"), a Maryland real estate investment trust, having its headquarters at
16 Campus Boulevard, Newtown Square, Pennsylvania 19073, together with each
and every one of its predecessors, successors (by merger or otherwise),
parents, subsidiaries (including but not limited to Brandywine Realty
Services Corporation ("BRSC")), affiliates, divisions, trustees, directors,
officers, employees and agents, whether present or former.
WHEREAS, Belcher entered into an Employment Agreement dated as of
July 31, 1996 (the "Employment Agreement") with BRSC;
WHEREAS, BRSC assigned its rights and delegated its obligations
under the Employment Agreement to BRT;
WHEREAS, the parties intend that Belcher's employment with BRT will
terminate on August 1, 1997 and that the Employment Agreement will terminate
on that date;
WHEREAS, Belcher and BRT desire to part on an amicable basis.
NOW, THEREFORE, in consideration of the mutual promises hereinafter
set forth, Belcher and BRT, acting of their own free will and intending to be
legally and irrevocably bound, hereby agree as follows:
1. Employment Termination. Belcher agrees that his employment
with BRT is terminated, effective as of August 1, 1997, and Belcher resigns
from all positions with BRT, effective as of August 1, 1997. Without
limiting the generality of the foregoing, all rights and obligations of BRT
and Belcher under the Employment Agreement shall terminate, effective as of
August 1, 1997. Belcher waives any and all rights to reinstatement and/or
consideration for future employment with BRT.
2. Salary Continuation. BRT agrees to pay Belcher salary
continuation in the total amount of One Hundred Twenty-Five Thousand Dollars
($125,000.00) for the period from August 1, 1997 to August 1, 1998. This
salary continuation will be paid in the same manner and with the same
federal, state and local tax withholdings as Belcher's current salary.
3. COBRA. For the one-year period commencing August 1, 1997, BRT
will provide, at its expense, Belcher with family coverage under the
Company's group medical plan subject to the terms of the plan as in effect
<PAGE>
from time to time. All co-pays, deductibles and uninsured amounts will be
the responsibility of Belcher. Belcher's employment, for purposes of
continuation of benefits for himself and eligible dependents at his (or
their) own cost under COBRA, shall terminate on August 1, 1997. Accordingly,
Belcher's statutory right under COBRA to continue participation in BRT's
group medical coverage for a period of up to eighteen (18) months, at his own
cost, shall commence on August 1, 1997. Belcher agrees to promptly notify BRT
by written notice to the President and Chief Executive Officer of BRT if he
becomes eligible to participate in a comparable medical plan with a new
employer.
4. Transfer of Partnership Interest. Belcher hereby transfers,
effective automatically on August 1, 1997, all of his right, title and
interest as a partner in Brandywine Realty Services Partnership ("BRSP") to
BRSP in exchange for $25.00 and shall, on such date, withdraw as a partner of
BRSP.
5. Fee Sharing. If at any time prior to April 30, 1998 Belcher
renders services to Safeguard Scientifics, Inc. ("SSI") or any affiliate of
SSI as of the date of this Agreement (an "SSI Affiliate"), then he shall
remit to BRT forty percent (40%) of all fees earned on account of such
services promptly following his receipt of payment, whether or not he
receives payment before or after April 30, 1998. The foregoing obligation
shall not apply to services rendered by Belcher to SSI or an SSI Affiliate on
or after April 30, 1998.
6. Confidentiality.
(a) Belcher agrees that he will not disclose or use, for his
direct or indirect benefit or the direct or indirect benefit of any third
party, any Confidential Information (as hereinafter defined) of BRT.
"Confidential Information" means any and all proprietary or non-public
information of BRT, including without limitation, information as to BRT's
business and financial strategy and BRT's relationships with actual and
prospective sellers or buyers of real estate or tenants of real estate.
Confidential Information does not include information that is generally known
or readily accessible in the real estate industry.
(b) Belcher agrees that he will, effective as of August 1,
1997: (i) discontinue all use of Confidential Information; (ii) return to BRT
all material furnished by BRT that contains Confidential Information; and
(iii) erase any Confidential Information contained in computer memory under
his ownership or control.
(c) Belcher agrees to return to BRT on August 1, 1997 any
documents and material whatsoever relating to the business of BRT. He also
agrees that he will not make or retain copies of the foregoing.
7. Restricted Activities. Between August 1, 1997 and August 22,
1998: (A) Belcher agrees that he will not accept employment with, or act as a
consultant to: (i) any real estate investment trust or real estate company
that owns, purchases or sells office or industrial properties within any of
2
<PAGE>
the counties in which BRT (or any subsidiary) currently owns a property or
(ii) any of the companies (and any their respective subsidiaries and
affiliates) listed on Exhibit A attached hereto and (B) Belcher agrees that
he will not act as a broker or tenant representative for any of the tenants
(or any of their subsidiaries or affiliates) of the Company or any of its
subsidiaries that have leases that are scheduled to expire on or before
December 31, 1998. The foregoing sentence shall not restrict Belcher from
acting as a broker or tenant representative to any person or entity not
covered by clause (B) thereof. In the event that, prior to August 22, 1998,
any tenant with a lease scheduled to expire on or before December 31, 1998
contacts Belcher regarding his provision of services to it, Belcher will
promptly notify either the Chairman of the Board or the President and Chief
Executive Officer of the Company as to the substance of such contact.
Belcher acknowledges that his agreement in this Paragraph 7 is reasonable in
time and scope and is necessary to protect the business interests of BRT.
Belcher further acknowledges that irreparable harm would be suffered by BRT
if he were to violate such agreement and, accordingly, agrees that, in
addition to legal relief and remedies, BRT will be entitled to equitable
relief and remedies to enforce his compliance with such agreement. Belcher
further acknowledges the adequacy of the consideration he is receiving under
this Agreement in consideration for his agreement contained in this Paragraph
7. Without limiting the foregoing, and in addition to all other rights and
remedies available to BRT, if Belcher violates his agreement in this
Paragraph 7, he will immediately be required to pay to BRT an amount equal to
all amounts paid to him by BRT pursuant to Paragraph 2 and BRT will have no
further obligation to make payments to him pursuant to Paragraph 2 or to
provide, at its expense, medical coverage for him or his family pursuant to
Paragraph 3.
8. Waiver and Release of Claims. Belcher completely releases,
relinquishes, waives and discharges BRT, its officers, trustees, directors,
employees, agents, successors and assigns from all claims, liabilities,
demands and causes of action, known or unknown, filed or contingent, which he
may have or claim to have against BRT as of the date of termination of his
employment arising out of or in any way related to his employment with BRT or
the termination of that employment. Belcher agrees that he has executed this
Agreement on his own behalf, and also on behalf of his dependents, heirs,
agents, representatives and assigns. This release includes, but is not
limited to, a release of any rights or claims he may have under:
(a) the Age Discrimination in Employment Act, which prohibits
age discrimination in employment;
(b) Title VII of the Civil Rights Act of 1964, as amended by
the Civil Rights Act of 1991, which prohibits discrimination in employment
based on race, color, national origin, religion or sex;
(c) the Americans with Disabilities Act, which prohibits
discrimination on the basis of a covered disability;
3
<PAGE>
(d) the Employer Retirement and Income Security Act,
which prohibits discrimination on the basis of entitlement to certain
benefits;
(e) any other federal, state or local laws or regulations
prohibiting employment discrimination;
(f) breach of any express or implied contract claims;
(g) wrongful termination or any other tort claims, including
claims for attorney's fees, whether based on common law or otherwise;
(h) all claims to acquire or exercise any other rights or
entitlements of stock, warrants, options, or other securities of BRT;
provided that nothing contained herein shall terminate or restrict Belcher's
rights under the warrants held by him on the date hereof exercisable for an
aggregate of 40,000 common shares of beneficial interest of BRT at any time
before 5:00 p.m. on August 22, 2002, as more fully provided in said warrants,
or under the units of limited partnership interest held by him in Brandywine
Operating Partnership, L.P.
BRT agrees to release, relinquish, waive and discharge Belcher of
all claims, liabilities, demands and causes of action, known or unknown,
which it may have or claim to have against Belcher as of the date of the
signing of this Agreement.
The foregoing releases do not waive Belcher's or BRT's respective
rights to enforce claims arising under this Agreement or any claims which by
law may not be waived.
9. Cooperation. Belcher agrees to cooperate with BRT and its
executives in facilitating an orderly transition with respect to matters
relating to his responsibilities as a BRT executive, and, in furtherance of
such agreement, agrees to provide, at no additional compensation, reasonable
consultation to BRT's Chairman of the Board, President and Chief Executive
Officer and such other executives, including BRT's Chief Financial Officer,
as they may identify from time to time. Belcher agrees that he will not in
the future voluntarily assist any individual or entity in preparing, or
prosecuting any action or proceeding against BRT, its trustees, directors,
officers, employees, or affiliates, including but not limited to, any
administrative agency claims. Belcher also agrees that he will, at BRT's
expense (and subject to payment to Belcher of reasonable compensation and
without unreasonably interfering with his future employment obligations),
cooperate with and assist BRT in its defense of any such action or proceeding.
10. Arbitration of Disputes Under this Agreement. The parties
agree that any and all disputes arising out of the performance or breach of
this Agreement or any promise or covenant herein shall be resolved by
submission to arbitration in Philadelphia, Pennsylvania under, and in
accordance with, the rules and procedures of the American Arbitration
Association.
4
<PAGE>
11. Enforcement. All remedies at law and equity shall be available
for the enforcement of this Agreement. This Agreement may be pleaded as a
full bar to the enforcement of any claim in any way related to or arising out
of Belcher's employment with BRT and/or the termination of his employment to
the extent of the waivers set forth in Paragraph 8 above.
All sums due to Belcher hereunder shall be paid without reduction
for compensation earned by Belcher in any subsequent employment and shall be
payable to Belcher or his estate notwithstanding Belcher's death, disability
or any other factor.
12. Opportunity to Review and Right to Revoke. Belcher
acknowledges that he is acting of his own free will, that he has been
afforded twenty-one (21) days to read and review the terms of this Agreement,
that he has been advised to, and has had an opportunity to, seek the advice
of counsel, and that he is voluntarily entering into this Agreement with full
knowledge of its respective provisions and effects. Belcher also
acknowledges that he has seven (7) days following his signing of this
Agreement to revoke this Agreement in which case BRT will have no obligation
to make any payment to him.
13. Contractual Effect. The parties understand and acknowledge
that the terms of this Agreement are contractual and not a mere recital.
Consequently, they expressly consent that this Agreement shall be given full
force and effect according to each and all of its express terms and
provisions, and that it shall be binding upon the respective parties as well
as their heirs, executors, successors, administrators and assigns.
14. Invalidity. In case any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be illegal or
unenforceable in any respect, such illegality or unenforceability shall not
affect the validity of any other provision of this Agreement.
15. Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, Belcher and BRT each acknowledge that they are
acting of their own free will, that they have had a sufficient opportunity to
read and review the terms of this Agreement, they have each received the
advice of their respective counsel with
5
<PAGE>
respect hereto, and that they have voluntarily caused the execution of this
Agreement and by reference herein as of the day and year set forth below.
/s/ Brian F. Belcher Witness: /s/ Anthony A. Nichols, Sr.
- --------------------------------- ---------------------------
Brian F. Belcher
On behalf of Brandywine Realty Trust:
By: /s/ Gerard H. Sweeney Witness: /s/ Anthony A. Nichols, Sr.
------------------------- ---------------------------
Title: President and Chief Executive Officer
JOINDER
Pursuant to Paragraph 4 of the above agreement, Brandywine Realty
Services Partnership ("BRSP") hereby pays to Brian F. Belcher the sum of
$25.00 in exchange for his entire right, title and interest as a partner in
BRSP.
BRANDYWINE REALTY SERVICES
PARTNERSHIP
By: /s/ Gerard H. Sweeney
---------------------------------
Gerard H. Sweeney, a General Partner
6
<PAGE>
Exhibit A
---------
- - Pitcairn Companies
- - Berwind Companies
- - Partnerships/Corporations affiliated with Ira Lubert
- - Preferred Properties
- - O'Neil Properties
- - LCOR, Inc.
- - Kevin F. Donahue & Co.
- - Bell Atlantic Properties
- - Advanta Corporation
- - GMAC
7
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports dated July 21, 1997 included in this Form 10-Q, into the Company's
previously filed Registration Statements on Forms S-3 (File No. 333-20991 and
File No. 333-20999) and Forms S-8 (File No. 333-14243 and File No. 333-28427).
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
August 13, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 11,990
<SECURITIES> 0
<RECEIVABLES> 2,755
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 14,745
<PP&E> 358,597
<DEPRECIATION> 14,388
<TOTAL-ASSETS> 364,429
<CURRENT-LIABILITIES> 2,650
<BONDS> 0
0
0
<COMMON> 171,228
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 364,429
<SALES> 0
<TOTAL-REVENUES> 20,718
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 13,994
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,059
<INCOME-PRETAX> 3,708
<INCOME-TAX> 3,708
<INCOME-CONTINUING> 3,708
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,708
<EPS-PRIMARY> 0.36
<EPS-DILUTED> 0.36
</TABLE>
