<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 7, 1998
BRANDYWINE REALTY TRUST
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 1-9106 23-2413352
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
16 Campus Boulevard, Newtown Square, Pennsylvania 19073
(Address of principal executive offices)
(610) 325-5600
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
(i) First Commercial Acquisition: On May 8, 1998, Brandywine Operating
Partnership L.P. (the "Operating Partnership") acquired a portfolio of 11 office
properties (the "First Commercial Properties") in the Greater Harrisburg,
Pennsylvania area for an aggregate consideration of approximately $48.5 million
(the "Aggregate Consideration"). The First Commercial Properties consist of (i)
four office properties containing an aggregate of approximately 76,000 net
rentable square feet in Commerce Park, commonly known as 2401, 2404, 2405 and
2407 Park Drive, Harrisburg, Susquehanna Township, Pennsylvania; (ii) four
office properties containing approximately 61,000 net rentable square feet in
Corporate Center 81, commonly known as 600 and 800 Corporate Circle and 200 and
500 Nationwide Drive, Harrisburg, Susquehanna Township, Pennsylvania; and (iii)
three office properties containing approximately 250,000 net rentable square
feet in Camp Hill Corporate Center, commonly known as 150, 200 and 300 Corporate
Center Drive, East Pennsboro Township, Pennsylvania. As of May 8, 1998, the
First Commercial Properties were approximately 95% leased to 33 tenants. Each of
IBM (approximately 35.2%) and Highmark, Inc. (approximately 25.4%) occupies more
than 10% of the aggregate net rentable square feet at the First Commercial
Properties.
The acquisition of the First Commercial Properties was structured as the
acquisition by a wholly-owned subsidiary of the Operating Partnership of a 99%
profits interest and an 89% capital interest in the existing limited partnership
(the "First Commercial Partnership") that owns the First Commercial Properties,
with an obligation of the Operating Partnership to acquire the residual
interests (1% profits interest and 11% capital interest) no later than June 7,
2001. At the closing, the Operating Partnership paid a portion of the Aggregate
Consideration through a combination of $37.9 million in cash and an aggregate of
390,364 Class A Units of limited partner interest in the Operating Partnership.
Each Class A Unit is redeemable, at the option of the holder, on and after the
first anniversary of the closing date for either an amount of cash equal to the
trading price of one Common Share at the time of the redemption or, at the
option of the Company, for one Common Share. The Units are subject to earlier
redemption upon a change in control of the Company or the death of the
applicable holder. The Operating Partnership is obligated to pay the balance of
the Aggregate Consideration (an amount equal to approximately $1.3 million) at
the time it acquires the residual interests in such combination of cash and
Class A Units (with each Class A Unit valued at $23.75 with no additional
underwriting costs) as the holders of the residual interests may elect.
The two-step transfer of ownership interests in the First Commercial
Partnership is intended to comply with a statutory exemption from Pennsylvania
real estate transfer taxes. However, the Operating Partnership has not obtained
a specific ruling from the Pennsylvania Department of Revenue as to the
applicability of such exemption to the First Commercial transaction. If
Pennsylvania transfer taxes were to be opposed on the transaction,
responsibility for such taxes would be split equally between the Operating
Partnership and the contributors. However, if the Operating Partnership desired
or were required, for financing purposes or otherwise, to acquire the residual
interests before June 7, 2001, the Operating Partnership could be required to
pay real estate transfer taxes in an aggregate amount of approximately $970,000.
The Units and the Common Shares issuable upon redemption of the Units
have not been registered under the Securities Act of 1933 or any state
securities laws and may not be offered and
-2-
<PAGE>
sold in the United States absent registration or an applicable exemption from
registration. The Company has agreed to file a registration statement
registering the resale of Common Shares issuable upon redemption of Units. See
Exhibit 10.2 under Item 7.
In connection with its acquisition of partnership interests in the First
Commercial Partnership, the Operating Partnership agreed to pay certain tax
liabilities that might be incurred by certain persons who held partnership
interests in the First Commercial Partnership in the event the Operating
Partnership were to take certain actions, such as a sale of the applicable
properties during the period ending December 31, 2002. See Exhibit 10.5 under
Item 7.
The transferors of the First Commercial Partnership interests to the
Operating Partnership are parties unaffiliated with the Company and the
Operating Partnership. The identity of each of the transferors is set forth in
Exhibit 10.1. The Company based its determination of the acquisition price of
the First Commercial Partnership interests on the expected cash flow from the
First Commercial Properties and their physical condition, location, competitive
advantages, existing tenancies and opportunities to retain and attract
additional tenants. The acquisition price was determined by arm's-length
negotiation between the Company and the transferors.
The table set forth below shows scheduled lease expirations for leases
in place at May 8, 1998 for the First Commercial Properties for each of the
next ten years, assuming none of the tenants exercise renewal options or
termination rights, if any, at or prior to scheduled expirations:
-3-
<PAGE>
Scheduled Lease Expirations
<TABLE>
<CAPTION>
Percentage of Total
Final Annualized Base Final Annualized Base
Year of Number of Leases Net Rentable Square Rent From Properties Rent From Properties
Lease Expiring Within Footage Subject to Under Expiring Under Expiring
Expiration the Year(1) Expiring Leases Leases(2) Leases
---------- ---------------- ------------------- -------------------- ----------------------
<S> <C> <C> <C> <C>
1998 4 30,092 $ 391,961 5.9%
1999 9 208,083 3,637,007 54.7%
2000 6 34,112 556,735 8.4%
2001 6 75,921 1,366,168 20.5%
2002 10 40,222 615,517 9.3%
2003 1 2,500 60,000 0.9%
2004 -- -- -- 0.0%
2005 -- -- -- 0.0%
2006 -- -- -- 0.0%
2007 -- -- -- 0.0%
2008 and thereafter 1 308 21,043 0.3%
-- ------- ---------- -----
Total 37 391,238 $6,648,431 100%
== ======= ========== =====
</TABLE>
- - ---------------------
(1) A lease is considered to expire if, and at any time, it is terminable by
the tenant without payment of penalty or premium.
(2) "Final Annualized Base Rent" for each lease scheduled to expire
represents the cash rental rate in the final month prior to expiration
multiplied by twelve.
(ii) One Christina Centre Acquisition: On May 11, 1998, the Operating
Partnership purchased One Christina Centre (the "Property"), an approximately
321,511 net rentable square foot high-rise office building in Wilmington,
Delaware. The purchase price for the Property was approximately $41.6 million.
As of May 11, 1998, the Property was approximately 99% leased to seven
tenants. Each of American Express Travel Services (approximately 11%), First USA
Bank (approximately 16.8%) and Beneficial Corporation (approximately 66.2%)
occupies more than 10% of the net rentable square feet at the Property. The
seller of the Property was Christina Page Mill, L.L.C., a party unaffiliated
with the Company and the Operating Partnership. The Company based its
determination of the acquisition price of the Property on the expected cash flow
from the Property and its physical condition, location, competitive advantages,
existing tenancies and opportunities to retain and attract additional tenants.
The acquisition price was determined by arm's-length negotiation between the
Company and the seller.
-4-
<PAGE>
The table set forth below shows scheduled lease expirations for leases
in place at May 11, 1998 for the Property for each of the next ten years,
assuming none of the tenants exercise renewal options or termination rights, if
any, at or prior to scheduled expirations:
Scheduled Lease Expirations
<TABLE>
<CAPTION>
Percentage of Total
Final Annualized Base Final Annualized Base
Year of Number of Leases Net Rentable Square Rent From Properties Rent From Properties
Lease Expiring Within Footage Subject to Under Expiring Under Expiring
Expiration the Year(1) Expiring Leases Leases(2) Leases
---------- ---------------- ------------------- -------------------- ----------------------
<S> <C> <C> <C> <C>
1998 1 1,415 $ 24,763 0.5%
1999 2 33,211 492,453 9.3%
2000 1 8,158 120,331 2.3%
2001 1 663 14,255 0.3%
2002 -- -- -- 0.0%
2003 -- -- -- 0.0%
2004 1 5,932 113,301 2.1%
2005 1 6,575 123,281 2.3%
2006 -- -- -- 0.0%
2007 -- -- -- 0.0%
2008 and thereafter 22 263,348 4,406,849 83.2%
-- ------- ---------- -----
Total 29 319,302 $5,295,233 100%
== ======= ========== =====
</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 acquisition of the First Commercial
Properties and One Christina Centre, the Company's portfolio consists of 151
office properties and 28 industrial properties (including an office property
that is currently under construction and that the Company has agreed to acquire
upon its completion during the second quarter of 1998) that contain an aggregate
of approximately 12.2 million net rentable square feet.
-5-
<PAGE>
Item 5. Other Events.
(i) Additional Facility: On May 7, 1998, the Company and the Operating
Partnership entered into an unsecured credit facility (the "Additional
Facility") with NationsBank, N.A. permitting advances of up to $150 million,
subject to certain conditions. The Additional Facility matures on November 7,
1998 and, in the absence of a default by the Company, is subject to one
two-month extension at the option of the Company upon payment to NationsBank,
N.A. of an extension fee equal to one-fourth of one percent of the then
principal amount outstanding under the Additional Facility. The Additional
Facility enables the Company to borrow funds at an interest rate equal to LIBOR
plus 150 basis points (LIBOR plus 175 basis points during the two-month
extension period) or, at the Company's option, the Prime Rate plus 25 basis
points (Prime Rate plus 50 basis points during the two-month extension period).
Amounts repaid by the Company under the Additional Facility are not subject to
reborrowing. NationsBank, N.A. is the administrative agent and a lender under
the Company's $330 million unsecured revolving credit facility (the "Revolving
Facility"). The Additional Facility incorporates the covenants contained in the
Revolving Facility. In addition, the Additional Facility contains provisions
requiring the Company and the Operating Partnership to obtain a debt financing
commitment and an underwriting agreement which together will provide funds
either through mortgage loans or an equity issuance that will be sufficient to
repay when due the Additional Facility. A consent of the lenders under the
Revolving Facility will be required before the Company may use the proceeds of
an equity offering to repay the Additional Facility. Such a consent has been
requested of the lenders. At the closing of the Additional Facility, the Company
paid NationsBank, N.A. a $300,000 origination fee. A copy of the Promissory Note
executed by the Company and the Operating Partnership to evidence borrowings
under the Additional Facility is attached as Exhibit 10.5 under Item 7 below.
(ii) Two Tower Bridge: On May 11, 1998, the Operating Partnership,
through a wholly-owned subsidiary (the "OP Subsidiary"), was admitted as a
general partner (with a 35% residual interest) to an existing limited
partnership (the "Two Tower Bridge Partnership") that owns an existing
four-story office building in the Borough of Conshohocken, Montgomery County,
Pennsylvania. The office building contains approximately 83,000 net rentable
square feet and, as of May 1, 1998, was fully leased to seven tenants. The OP
Subsidiary's admission to the Two Tower Bridge Partnership occurred concurrently
with the refinancing of a first mortgage loan that encumbered the building with
proceeds of a new $7.0 million first mortgage loan from Nationwide Life
Insurance Company. In exchange for its general partnership interest, the OP
Subsidiary made a capital contribution to the Two Tower Bridge Partnership in
the approximate amount of $2.7 million. This contribution is entitled to a 10%
preferential return. Additional information relating to this transaction, and
related transactions, is contained in the Company's Current Report on Form 8-K
filed with the Securities and Exchange Commission on November 18, 1997.
-6-
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statement of Business Acquired.
The combined statement of revenue and certain expenses of the First
Commercial Properties for the year ended December 31, 1997 together with
the report of Independent Public Accountants thereon are included on
pages F-10 to F-13.
The statement of revenue and certain expenses of One Christina Centre
for the year ended December 31, 1997 together with the report of
Independent Public Accountants thereon are included on pages F-14 to
F-17.
(b) Pro Forma Financial Information.
Pro forma financial information which reflects the Company's acquisition
of the First Commercial Properties and One Christina Centre as of and
for the year ended December 31, 1997 are included on pages F-1 to F-9.
(c) Exhibits.
10.1 Contribution Agreement, dated April 7, 1998, by and between the
entities listed on Schedule 1 thereto and Brandywine Operating
Partnership, L.P.
10.2 First Amendment to Contribution Agreement dated May 8, 1998.
10.3 Registration Rights Agreement, dated May 8, 1998, by and among
Brandywine Realty Trust, Brandywine Operating Partnership, L.P.,
and certain other persons.
10.4 Third Amendment, dated May 8, 1998, to the Amended and Restated
Agreement of Limited Partnership of Brandywine Operating
Partnership, L.P.
10.5 Tax Indemnification Agreement dated May 8, 1998, by and between
Brandywine Operating Partnership, L.P. and the parties identified
on the signature page.
10.6 Promissory Note ($150 million) to NationsBank, N.A.
10.7 Second Amended and Restated Agreement of Limited Partnership (Two
Tower Bridge Associates).
-7-
<PAGE>
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BRANDYWINE REALTY TRUST
Date: May 13, 1998 By: /s/ GERARD H. SWEENEY
------------------------
Gerard H. Sweeney
President and Chief Executive Officer
(Principal Executive Officer)
Date: May 13, 1998 By: /s/ MARK S. KRIPKE
---------------------
Mark S. Kripke
Chief Financial Officer
(Principal Financial and Accounting
Officer)
-8-
<PAGE>
BRANDYWINE REALTY TRUST
INDEX TO FINANCIAL STATEMENTS
I. UNAUDITED PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION
o Pro Forma Condensed Consolidating Balance Sheet
as of December 31, 1997...................................................F-4
o Pro Forma Condensed Consolidating Statement of Operations for the
Year Ended December 31, 1997..............................................F-5
o Notes and Management's Assumptions to Unaudited Pro Forma Condensed
Consolidating Financial Information.......................................F-6
II. FIRST COMMERCIAL PROPERTIES
o Report of Independent Public Accountants..................................F-10
o Combined Statement of Revenue and Certain Expenses for the Year
Ended December 31, 1997 (audited).........................................F-11
o Notes to Statement of Revenue and Certain Expenses........................F-12
III. ONE CHRISTINA CENTRE
o Report of Independent Public Accountants..................................F-14
o Statement of Revenue and Certain Expenses for the Year
Ended December 31, 1997 (audited).........................................F-15
o Notes to Statement of Revenue and Certain Expenses........................F-16
F-1
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION
The following sets forth the pro forma condensed consolidating balance
sheet of Brandywine Realty Trust ("the Company") as of December 31, 1997 and the
pro forma condensed consolidating statement of operations for the year ended
December 31, 1997.
The pro forma condensed consolidating financial information should be
read in conjunction with the historical financial statements of the Company and
those acquisitions deemed significant pursuant to the rules and regulations of
the Securities and Exchange Commission.
The unaudited pro forma condensed consolidating financial information is
presented as if the following events occurred on December 31, 1997 for balance
sheet purposes, and on January 1, 1997 for purposes of the statement of
operations:
- - - The Company acquired the properties described in Note 1 to these pro forma
financial statements.
- - - 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 net proceeds from the March 1997
Offering were contributed to the Operating Partnership in exchange for
2,375,500 GP Units.
- - - The Company issued 11,500,000 Common Shares at $20.75 per share, of which
1,500,000 shares related to the underwriter's exercise of the over-allotment
option (the "July 1997 Offering"). The net proceeds from the July 1997
Offering were contributed to the Operating Partnership in exchange for
11,500,000 GP Units.
- - - The Company issued 786,840 Common Shares at $22.31 per share (the "September
1997 Offering"). The net proceeds from the September 1997 Offering were
contributed to the Brandywine Operating Partnership, L.P. (the "Operating
Partnership") in exchange for 786,840 units of general partnership interest
("GP Units") in the Operating Partnership.
- - - The Company issued 751,269 Common Shares at $24.63 per share (the "December
1997 Offering"). The net proceeds from the December 1997 Offering were
contributed to the Operating Partnership in exchange for 751,269 GP Units.
- - - The Company issued 11,000,000 Common Shares at $24.00 per share, of which
1,000,000 shares related to the underwriter's exercise of the over-allotment
option (the "January 1998 Offering"). The net proceeds from the January 1998
Offering were contributed to the Operating Partnership in exchange for
11,000,000 GP Units.
- - - The Company issued an aggregate of 1,012,820 Common Shares at $24.06 per share
(the "February 18, 1998 Offering"). The net proceeds from the February 18,
1998 Offering were contributed to the Operating Partnership in exchange for
1,012,820 GP Units.
- - - The Company issued an aggregate of 629,921 Common Shares at $23.81 per share
(the "February 27, 1998 Offering"). The net proceeds from the February 27,
1998 Offering were contributed to the Operating Partnership in exchange for
629,921 GP Units.
- - - The Company issued an aggregate of 625,000 Common Shares at $24.00 per share
(the "April 1998 Offering"). The net proceeds from the April 1998 Offering
were contributed to the Operating Partnership in exchange for 625,000 GP
Units.
F-2
<PAGE>
The pro forma condensed consolidating financial information is unaudited
and is not necessarily indicative of what the actual financial position would
have been at December 31, 1997, nor does it purport to represent the future
financial position and the results of operations of the Company.
F-3
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 1997 (Notes 1 and 2)
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
BRANDYWINE
REALTY TRUST
HISTORICAL SHARE PROPERTY
CONSOLIDATED OFFERINGS ACQUISITIONS PRO FORMA
(A) (B) (C) CONSOLIDATED
------------ --------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Real estate investments, net $563,557 $ - $587,961 $1,151,518
Cash and cash equivalents 29,442 - - 29,442
Escrowed cash 212 - - 212
Accounts receivable 3,689 - - 3,689
Due from affiliates 214 - - 214
Investment in management company 74 - - 74
Investment in unconsolidated real estate ventures 5,480 - - 5,480
Deposits 12,133 - (12,133) -
Deferred costs and other assets 6,680 - - 6,680
--------- --------- -------- ----------
Total assets 621,481 - 575,828 1,197,309
========= ========= ======== ==========
LIABILITIES:
Mortgages and notes payable 163,964 (301,422) 561,658 424,200
Accrued interest 857 - - 857
Accounts payable and accrued expenses 2,377 - - 2,377
Distributions payable 8,843 - - 8,843
Tenant security deposits and deferred rents 5,535 - - 5,535
--------- --------- -------- ----------
Total liabilities 181,576 (301,422) 561,658 441,812
--------- --------- -------- ----------
MINORITY INTEREST 14,377 - 14,170 28,547
--------- --------- -------- ----------
BENEFICIARIES' EQUITY:
Common shares of beneficial interest 241 132 - 373
Additional paid-in capital 446,054 301,290 - 747,344
Share warrants 962 - - 962
Cumulative earnings 11,753 - - 11,753
Cumulative distributions (33,482) - - (33,482)
--------- --------- -------- ----------
Total beneficiaries' equity 425,528 301,422 - 726,950
--------- --------- -------- ----------
Total liabilities and beneficiaries' equity $621,481 $ - $575,828 $1,197,309
========= ========= ======== ==========
</TABLE>
F-4
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997 (Notes 1 and 3)
(Unaudited)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
BRANDYWINE
REALTY 1998
TRUST SHARE
HISTORICAL 1997 OFFERINGS
CONSOLIDATED (A) EVENTS (B) SUBTOTAL (C)
---------------- ---------- -------- ---------
<S> <C> <C> <C> <C>
REVENUE:
Base rents $ 49,928 $29,558 $79,486 $ -
Tenant reimbursements 9,396 3,954 13,350 -
Other 1,736 284 2,020 -
----------- ------- ------- -------
Total Revenue 61,060 33,796 94,856 -
----------- ------- ------- -------
OPERATING EXPENSES:
Interest 7,079 4,303 11,382 (22,607)
Depreciation and amortization 15,589 7,093 22,682 -
Property operating expenses 22,445 13,079 35,524 -
Administrative expenses 659 - 659 -
----------- ------- ------- -------
Total operating expenses 45,772 24,475 70,247 (22,607)
----------- ------- ------- -------
Income (loss) before equity in income of
management company and minority interest 15,288 9,321 24,609 22,607
Equity in income (loss) of management company 89 422(E) 511 -
----------- ------- ------- -------
Income (loss) before minority interest 15,377 9,743 25,120 22,607
Minority interest in (income) loss (376) (355)(F) (731) (815)(F)
----------- ------- ------- -------
Net income (loss) 15,001 9,388 24,389 21,792
Income allocated to Preferred Shares (499) - (499) -
----------- ------- ------- -------
Income (loss) allocated to Common Shares $ 14,502 $ 9,388 $23,890 $21,792
=========== ======= ======= =======
Diluted earnings (loss) per Common Share $ 0.95
===========
Diluted weighted average number of
shares outstanding 15,793,329
===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1998
PROPERTY TOTAL
ACQUISITIONS PRO FORMA
(D) CONSOLIDATED
-------- -----------
<S> <C> <C>
REVENUE:
Base rents $ 62,869 $ 142,355
Tenant reimbursements 10,505 23,855
Other 905 2,925
-------- -----------
Total Revenue 74,279 169,135
-------- -----------
OPERATING EXPENSES:
Interest 42,104 30,879
Depreciation and amortization 18,815 41,497
Property operating expenses 27,729 63,253
Administrative expenses - 659
-------- -----------
Total operating expenses 88,648 136,288
-------- -----------
Income (loss) before equity in income of
management company and minority interest (14,369) 32,847
Equity in income (loss) of management company 1,576(E) 2,087
-------- -----------
Income (loss) before minority interest (12,793) 34,934
Minority interest in (income) loss 414(F) (1,132)
-------- -----------
Net income (loss) (12,379) 33,802
Income allocated to Preferred Shares - (499)
-------- -----------
Income (loss) allocated to Common Shares $(12,379) $ 33,303
======== ===========
Diluted earnings (loss) per Common Share $ 0.90
===========
Diluted weighted average number of
shares outstanding 37,407,699
===========
</TABLE>
F-5
<PAGE>
BRANDYWINE REALTY TRUST
NOTES AND MANAGEMENT'S ASSUMPTIONS TO
UNAUDITED PRO FORMA CONDENSED CONSOLIDATING
FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
1. BASIS OF PRESENTATION:
Brandywine Realty Trust (the "Company") is a Maryland real estate
investment trust. As of May 13, 1998, the Company owned 179 properties. The
Company's interest in all of the Properties is held through Brandywine Operating
Partnership, L.P. (the "Operating Partnership"). The Company is the sole general
partner of the Operating Partnership and as of May 13, 1998, the Company held a
97.4% 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
Columbia Acquisition Properties, the Main Street Acquisition Properties, the TA
Properties, the Emmes Properties, the Greentree Executive Campus Acquisition
Properties, 748 & 855 Springdale Drive, the Green Hills Properties, the Berwyn
Park Properties, 500 & 501 Office Center Drive, Metropolitan Industrial Center,
Atrium 1, Bala Pointe Office Centre, the Scarborough Properties, the GMH
Properties, the RREEF Properties, Three Christina Centre, the DKM Properties,
the First Commercial Properties and One Christina Centre. In management's
opinion, all adjustments necessary to reflect the effects of the March 1997
Offering, the July 1997 Offering, the September 1997 Offering, the December 1997
Offering, the January 1998 Offering, the February 18, 1998 Offering, the
February 27, 1998 Offering, the April 1998 Offering, the acquisitions of the
Columbia Acquisition Properties, the Main Street Acquisition Properties, 1336
Enterprise Drive, the Greentree Executive Campus Acquisition Properties, Five
Eves Drive, Kings Manor, the TA Properties, the Emmes Properties, 748 & 855
Springdale Drive, 1974 Sproul Road, the Green Hills Properties, the Berwyn Park
Properties, 500 & 501 Office Center Drive, Christiana Corporate Center,
Metropolitan Industrial Center, Atrium 1, 5 & 6 Cherry Hill Executive Campus,
220 Commerce Drive, Provident Place, the PECO Building, Bala Pointe Office
Centre, the Scarborough Properties, the GMH Properties, the RREEF Properties,
Three Christina Centre, 920 Harvest Drive, Norriton Business Center, the DKM
Properties, the First Commercial Properties and One Christina Centre by the
Company have been made.
2. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET:
(A) Reflects the Company's historical consolidated balance sheet as of
December 31, 1997.
(B) Reflects the Company's recent public share offerings and the use of
the aggregate net proceeds to repay $301.4 million of indebtedness under the
Credit Facility, as summarized below:
Net Proceeds
------------
January 1998 Offering $249,970
February 18, 1998 Offering 23,052
February 27, 1998 Offering 14,225
April 1998 Offering 14,175
--------
Total $301,422
========
F-6
<PAGE>
(C) Reflects the Company's recent property acquisitions as follows:
<TABLE>
<CAPTION>
Cost Consideration
--------------------------------- ------------------------------------------------
Credit Mortgage Operating
Purchase Closing Facility Debt Partnership
Acquisition Price Costs Total Borrowings Assumption Units Deposits
- - ----------- -------- ------- ----- ---------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
GMH Portfolio $229,015 $1,665 $230,680 $218,547 $ - $ - $12,133
RREEF Portfolio 55,500 657 56,157 56,157 - - -
Three Christina Centre 50,600 1,062 51,662 51,662 - - -
920 Harvest Drive 12,000 164 12,164 12,164 - - -
Norriton Business Center 7,742 283 8,025 2,367 5,658 - -
DKM Portfolio 137,800 381 138,181 119,195 15,374 3,612 -
First Commercial Properties 48,500 227 48,727 38,169 - 10,558 -
One Christina Centre 41,625 740 42,365 42,365 - - -
-------------------------------- ------------------------------------------------
Total $582,782 $5,179 $587,961 $540,626 $21,032 $14,170 $12,133
================================ ================================================
</TABLE>
3. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING STATEMENT
OF OPERATIONS:
(A) Reflects the historical consolidated operations of the Company.
(B) Reflects the pro forma statements of operations of the Columbia
Acquisition Properties, the Main Street Acquisition Properties, 1336 Enterprise
Drive, Kings Manor, Greentree Executive Campus, Five Eves Drive, the TA
Properties, the Emmes Properties, 748 & 855 Springdale Drive, 1974 Sproul Road,
the Berwyn Park Properties, the Green Hills Properties, 500/501 Office Center
Drive, Christiana Corporate Center, Metropolitan Industrial Center, Atrium 1, 5
& 6 Cherry Hill Executive Campus, 220 Commerce Drive, Provident Place, the PECO
Building, Bala Pointe Office Centre and the Scarborough Properties for the year
ended December 31, 1997 and other pro forma adjustments to reflect the March
1997 Offering, the July 1997 Offering, the September 1997 Offering and the
December 1997 Offering for the year ended December 31, 1997. The operating
results reflected below include the historical results and related pro forma
adjustments to reflect the period January 1, 1997 through the earlier of the
respective acquisition dates or December 31, 1997. Operating results from those
dates forward are included in the historical results of the Company.
F-7
<PAGE>
<TABLE>
<CAPTION>
Revenue Operating Expenses
-------------------------------------------- --------------------------
Depreciation
Tenant and
reimburse- amortization
Acquisition/Offering Rents ments Other Total Interest (ii)
- - -------------------- ----- ---------- ----- ----- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Columbia Acquisition Properties $ 338 $ 24 $ 25 $ 387 $ 110 $ 66
Main Street Acquisition Properties 542 60 - 602 - 109
1336 Enterprise Drive 78 13 - 91 - 21
Kings Manor 105 27 - 132 - 29
Greentree Executive Campus 602 17 - 619 249 106
Five Eves Drive 103 12 - 115 75 32
TA Properties 2,053 299 6 2,358 1,241 530
Emmes Properties 2,570 1,130 2 3,702 2,049 874
748 & 755 Springdale Drive 414 - - 414 171 73
1974 Sproul Road 354 54 - 408 - 61
Berwyn Park Properties 2,492 376 36 2,904 - 700
Green Hills Properties (iii) 4,567 - - 4,567 690 745
500/501 Office Center Drive 1,106 919 48 2,073 700 340
Christiana Corporate Center 615 22 45 682 308 132
Metropolitan Industrial Center 1,395 306 33 1,734 926 395
Atrium 1 994 34 26 1,054 597 255
5 & 6 Cherry Hill Executive Campus 127 - - 127 218 93
220 Commerce Drive 594 - - 594 345 147
Provident Place 644 90 7 741 411 175
PECO Building (iv) 918 - - 918 652 278
Bala Pointe Office Centre 3,523 34 35 3,592 1,891 807
Scarborough Properties 5,424 537 21 5,982 1,957 1,125
March 1997 Offering - - - - (91) -
July 1997 Offering - - - - (6,905) -
September 1997 Offering - - - - - -
December 1997 Offering - - - - (1,291) -
-----------------------------------------------------------------------------
Total $29,558 $3,954 $284 $33,796 $4,303 $7,093
=============================================================================
</TABLE>
<TABLE>
<CAPTION>
Property
operating
Acquisition/Offering expenses Total Subtotal
- - -------------------- --------- ----- --------
<S> <C> <C> <C>
Columbia Acquisition Properties $ 130 $ 306 $ 81
Main Street Acquisition Properties 379 488 114
1336 Enterprise Drive 19 40 51
Kings Manor 43 72 60
Greentree Executive Campus 272 627 (8)
Five Eves Drive 45 152 (37)
TA Properties 698 2,469 (111)
Emmes Properties 1,332 4,255 (553)
748 & 755 Springdale Drive 99 343 71
1974 Sproul Road 225 286 122
Berwyn Park Properties 1,073 1,773 1,131
Green Hills Properties (iii) 2,059 3,494 1,073
500/501 Office Center Drive 971 2,011 62
Christiana Corporate Center 218 658 24
Metropolitan Industrial Center 472 1,793 (59)
Atrium 1 573 1,425 (371)
5 & 6 Cherry Hill Executive Campus 140 451 (324)
220 Commerce Drive 186 678 (84)
Provident Place 283 869 (128)
PECO Building (iv) - 930 (12)
Bala Pointe Office Centre 1,544 4,242 (650)
Scarborough Properties 2,318 5,400 582
March 1997 Offering - (91) 91
July 1997 Offering - (6,905) 6,905
September 1997 Offering - - -
December 1997 Offering - (1,291) 1,291
--------------------------------
Total $13,079 $24,475 $9,321
================================
</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.
(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 of the Green Hill Properties exclude
$666,000 from historical amounts. Such amount represents expected salary
savings.
(iv) Pro forma base rents for the Peco Building are based on the lease in
place as of November 25, 1997 as historically the property was owner
occupied and was not an operating property. All property expenses are
paid directly by the tenant.
(C) Represents interest expense savings from debt repayments upon the
application of the net proceeds from the January 1998 Offering, the February 18,
1998 Offering, the February 27, 1998 Offering and the April 1998 Offering.
Offering Interest savings (i)
-------- --------------------
January 1998 Offering $(18,748)
February 18, 1998 Offering (1,729)
February 28, 1998 Offering (1,067)
April 1998 Offering (1,063)
Total $(22,607)
(i) Pro forma interest expense is presented assuming an effective rate of 7.5%
on borrowings under the Company's revolving credit facility.
F-8
<PAGE>
(D) Reflects the pro forma statements of operations of the GMH
Portfolio, the RREEF Portfolio, Three Christina Centre, 920 Harvest Drive,
Norriton Business Center, the DKM Portfolio, the First Commercial Properties and
One Christina Centre for the year ended December 31, 1997. The operating results
reflected below include the historical results and related pro forma adjustments
to reflect the period January 1, 1997 through December 31, 1997.
<TABLE>
<CAPTION>
Revenue Operating Expenses
----------------------------------------------- --------------------------------------------------
Depreciation
Tenant and Property
reimburse- amortization operating
Acquisition Rents ments Other Total Interest(i) (ii) expenses Total
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GMH Portfolio $25,049 $ 1,937 $174 $27,160 $16,391 $ 7,382 $10,935 $34,708
RREEF Portfolio 4,160 705 - 4,865 4,212 1,797 1,252 7,261
Three Christina Centre 4,635 2,427 22 7,084 3,875 1,653 2,830 8,358
920 Harvest Drive 1,658 63 - 1,721 912 389 724 2,025
Norriton Business Center 1,161 - - 1,161 658 257 276 1,191
DKM Portfolio 15,182 4,135 24 19,341 10,016 4,422 7,164 21,602
First Commercial Properties 6,235 719 116 7,070 2,863 1,559 2,307 6,729
One Christina Centre 4,789 519 569 5,877 3,177 1,356 2,241 6,774
---------------------------------------------------------------------------------------------------
Total $62,869 $10,505 $905 $74,279 $42,104 $18,815 $27,729 $88,648
===================================================================================================
</TABLE>
(i) Pro forma interest expense is presented assuming an effective rate of
7.5% on borrowings under the Company's revolving credit facility, and an
effective rate of 7% to 8.5% on assumed mortgage indebtedness.
(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.
(E) Pro forma equity in income of management company is based on
management fees less incremental costs estimated to be incurred.
(F) Pro forma minority interest in income represents the incremental pro
forma earnings allocable to minority partners.
F-9
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Brandywine Realty Trust:
We have audited the combined statement of revenue and certain expenses of
First Commercial Properties, described in Note 1, for the year ended December
31, 1997. This financial statement is the responsibility of the Property's
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 statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. 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 a 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 First Commercial 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 First Commercial
Properties for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
April 27, 1998
<PAGE>
FIRST COMMERCIAL PROPERTIES
COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
REVENUE:
Base rents (Note 2) $6,235,000
Tenant reimbursements 719,000
Other 116,000
----------
Total revenues 7,070,000
----------
CERTAIN EXPENSES:
Maintenance and other operating expenses 912,000
Utilities 894,000
Real estate taxes 501,000
----------
Total certain expenses 2,307,000
----------
REVENUE IN EXCESS OF CERTAIN EXPENSES $4,763,000
==========
The accompanying notes are an integral part of this financial statement.
F-11
<PAGE>
FIRST COMMERCIAL PROPERTIES
NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 1997
1. BASIS OF PRESENTATION:
The statement of revenue and certain expenses reflect the operations of First
Commercial Properties (the "Properties") located in Harrisburg, Pennsylvania.
The Properties are expected to be acquired from Brandywine Operating
Partnership, L.P. (the "Operating Partnership"), a limited partnership of
which Brandywine Realty Trust (the "Company") is the sole general partner. The
Properties consist of a portfolio of eleven office buildings with
approximately 38 tenants in May 1998. The Properties have an aggregate net
rentable area of approximately 410,000 square feet which was 96% leased as of
December 31, 1997. The net purchase price for Property is expected to be $48.5
million.
The statement of revenue and certain expenses is to be included in the
Company's current report on Form 8-K, as the above-described transaction has
been deemed significant pursuant to the rules and regulations of the
Securities and Exchange Commission. 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
Property.
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 and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. The
ultimate results could differ from those estimates.
2. OPERATING LEASES:
Base rents presented for the year ended December 31, 1997, include
straight-line adjustments for rental revenue increases in accordance with
generally accepted accounting principles. The aggregate rental revenue
decrease resulting from the straight-line adjustment for the year ended
December 31, 1997, was $59,000.
The following tenants account for greater than 10% of minimum rent:
Property Tenant Minimum Rent
-------- ------ ------------
300 Corporate Center Dr. IBM $2,678,000
200 Corporate Center Dr. PA Blue Shield 975,000
F-12
<PAGE>
The Properties are leased to tenants under operating leases with expiration
dates extending to the year 2003. Future minimum rentals under noncancelable
operating leases, excluding tenant reimbursements of operating expenses as of
December 31, 1997, are as follows:
1998 $ 5,465,000
1999 3,450,000
2000 976,000
2001 777,000
2002 412,000
Thereafter 538,000
-----------
Total $11,618,000
Certain leases also include provisions requiring tenants to reimburse First
Commercial Properties for management costs and other operating expenses up to
stipulated amounts.
3. RELATED PARTY TRANSACTIONS:
First Commercial Development Company, a related party, leases 3,166 square feet
of the Properties. The lease is on a month-to-month basis at approximately
$4,617 per month. Rents totaling $55,405 have been included in the statement of
revenues and certain expenses.
F-13
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Brandywine Realty Trust:
We have audited the statement of revenue and certain expenses of One Christina
Centre, described in Note 1, for the year ended December 31, 1997. This
financial statement is the responsibility of the Property's 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 statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. 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 a 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 Property's revenue and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenue and certain expenses of One Christina
Centre for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
May 1, 1998
F-14
<PAGE>
ONE CHRISTINA CENTRE
STATEMENT OF REVENUE AND CERTAIN EXPENSES (NOTE 1)
FOR THE YEAR ENDED DECEMBER 31, 1997
REVENUE:
Minimum rent (Note 2) $4,789,000
Tenant reimbursements 519,000
Other Income (Note 4) 569,000
----------
Total revenue 5,877,000
----------
CERTAIN EXPENSES:
Maintenance and other operating expenses 1,114,000
Utilities 738,000
Real estate taxes 389,000
----------
Total certain expenses 2,241,000
----------
REVENUE IN EXCESS OF CERTAIN EXPENSES $3,636,000
==========
The accompanying notes are an integral part of this financial statement.
F-15
<PAGE>
ONE CHRISTINA CENTRE
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 1997
2. BASIS OF PRESENTATION:
The statement of revenue and certain expenses reflect the operations of One
Christina Centre (the "Property"), located in Wilmington, Delaware. The
Property is expected to be acquired by Brandywine Realty Trust (the "Company")
from Christina Pagemill, LLC in May 1998 for a net purchase price of
approximately $41.6 million. The Property has an aggregate net rentable area
of approximately 333,000 square feet which is 95% leased as of December 31,
1997. This statement of revenue and certain expenses is to be included in the
Company's current report on Form 8-K, as the above described transaction has
been deemed significant pursuant to the rules and regulations of the
Securities and Exchange Commission.
The accounting records of the Property are maintained on an accrual basis. 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 the Property.
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 and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. The
ultimate results could differ from those estimates.
2. OPERATING LEASES:
Base rents presented for the year ended December 31, 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, 1997 was $535,000.
The following tenants account for greater than 10% of minimum rent:
Beneficial Corporation $2,424,000
First USA Bank $1,070,000
The Property is leased to tenants under operating leases with expiration dates
extending to the year 2010. Future minimum rentals under noncancelable
operating leases, excluding tenant reimbursements of operating expenses as of
December 31, 1997, are as follows:
1998 $ 4,285,000
1999 3,959,000
2000 3,976,000
2001 3,953,000
2002 4,061,000
Thereafter 33,010,000
-----------
$53,244,000
===========
F-16
<PAGE>
Certain leases also include provisions requiring tenants to reimburse the
Property for management costs and other operating expenses up to stipulated
amounts.
3. MANAGEMENT FEES:
The Property paid management fees of $172,000 to LaSalle Partners, an
unrelated third party, based on percentages as defined in the management
agreement. These management fees are included within maintenance and other
operating expenses in the statement of revenue and certain expenses.
4. OTHER INCOME:
The Property receives revenue from the operation of a parking facility that is
managed by an unrelated third party. Revenue received from the operation of
this facility totaled approximately $494,000 for the year ended December 31,
1997, and is included in other income on the statement of revenues and certain
expenses.
<PAGE>
FIRST COMMERCIAL DEVELOPMENT COMPANY
COMMERCE PARK
CORPORATE CENTER 81
CAMP HILL CORPORATE CENTER
CONTRIBUTION AGREEMENT
AMONG
THE MEMBERS OF FIRST COMMERCIAL DEVELOPMENT
COMPANY LISTED ON SCHEDULE 1 TO THIS AGREEMENT
AND
BRANDYWINE OPERATING PARTNERSHIP, L.P.
Dated as of April 7 , 1998
<PAGE>
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT is made and entered into as of the 7th day of
April, 1998 by and among THE MEMBERS OF FIRST COMMERCIAL DEVELOPMENT COMPANY
LISTED ON SCHEDULE " 1 " HERETO (together, the "Members") having the addresses
set forth on Schedule "1" hereto and BRANDYWINE OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership or its nominee, having an address at Newtown
Square Corporate Campus, 16 Campus Boulevard, Suite 150, Newtown Square,
Pennsylvania 19073 (the "Partnership").
RECITALS
A. First Commercial Development Company ("First Commercial") is a
Pennsylvania limited partnership whose general partner and limited partners
are listed on Schedule "1" attached hereto (the general partner and the
limited partners are collectively the "Members").
B. First Commercial is the owner of a certain tract of land, together
with the buildings and improvements thereon, including four (4) office
buildings containing approximately 71,728 net rentable square feet in Commerce
Park, commonly known as 2401, 2404, 2405 and 2407 Park Drive, Harrisburg,
Susquehanna Township, Pennsylvania as more fully described on Exhibit "A"
attached hereto; and
C. First Commercial is the owner of a certain tract of land, together
with the buildings and improvements thereon, including four (4) office
buildings containing approximately 61,821 net rentable square feet in
Corporate Center 81, commonly known as 600 and 800 Corporate Circle and 200
and 500 Nationwide Drive, Harrisburg, Susquehanna Township, Pennsylvania as
more fully described on Exhibit "A" attached hereto.
D. First Commercial is the owner of a certain tract of land, together
with the buildings and improvements thereon, including three (3) office
buildings containing approximately 277,092 net rentable square feet in Camp
Hill Corporate Center, commonly known as 150, 200 and 300 Corporate Center
Drive, East Pennsboro Township, Pennsylvania as more fully described on
Exhibit "A" attached hereto.
E. The Members desire and hereby agree to contribute, and the Partnership
desires and hereby agrees to acquire or accept, all of the Members' right,
title and interest as partners in and to First Commercial (the "First
Commercial Partnership Interests"), subject to and on the terms and conditions
hereinafter set forth.
-1-
<PAGE>
NOW THEREFORE, in consideration of the mutual promises and agreements
hereinafter set forth and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Definitions Of Certain Terms. For all purposes of this Agreement, the
following terms shall have the respective meanings set forth below:
"Agreement" shall mean this document entitled "Contribution
Agreement", all exhibits and schedules attached hereto or made a part hereof
and all amendments to this Agreement which are agreed to in writing and signed
by all of the parties hereto.
"Closing" shall have the meaning ascribed to that term in
Paragraph 4 hereof. The date upon which the Closing actually occurs shall be
the "Closing Date."
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder or with respect
thereto.
"Common Shares" shall mean the common shares of beneficial
interest, par value $.01 per share, of the Trust.
"Contracts" shall mean all contracts and agreements with
respect to the management (excluding property management agreements),
operation, supply, maintenance, repair or construction affecting any of the
Property, all as described in Exhibit "B" attached hereto.
"Deposit" shall mean the two payments in the amount of Two
Hundred Thousand Dollars ($200,000), each, delivered by the Partnership to
Escrow Agent pursuant to Paragraph 3(a) hereof, together with all interest
earned thereon, if any.
"Due Diligence Termination Date" shall mean 5:00 p.m. E.S.T. on
the date which is twenty five (25) days from the Effective Date.
"Effective Date" shall mean the date on which this Agreement
has been fully executed and delivered by all parties hereto to each other.
"Escrow Agent" shall mean Commonwealth Land Title Insurance
Company, 1700 Market Street, Philadelphia, Pennsylvania 19103.
"Escrow Terms" shall mean the escrow agreement to be entered of
even date herewith between the Escrow Agent, the Members and the Partnership.
"Excluded Assets" shall mean the assets of First Commercial
which are described in Paragraph 2(b).
-2-
<PAGE>
"First Commercial" shall mean First Commercial Development
Company, a Pennsylvania limited partnership and its predecessor entity, First
Commercial Development Company, a Pennsylvania general partnership.
"First Commercial Partnership Interests" shall mean all of the
general partner and limited partner partnership interests of First Commercial,
collectively.
"Improvements" shall mean those certain buildings and other
improvements constructed and located on the Land as described on Exhibit "A"
attached hereto.
"Initial Members" shall mean John S. Trogner, Sr., John S.
Trogner, Jr. and Blair S. Trogner, Sr.
"Land" shall mean collectively the certain parcels of real
property which are owned by First Commercial and located in Harrisburg,
Pennsylvania and in Camp Hill, Pennsylvania, as described on Exhibit "A"
attached hereto.
"Leases" shall mean those certain leases (and guarantees
thereof, if any) listed on Exhibit "C" attached hereto, or hereafter entered
into by First Commercial, as landlord, in accordance with the terms of this
Agreement, for any space within any of the Improvements located on any of the
Land.
"Licenses" shall mean the licenses, permits, approvals and
agreements affecting any of the Real Property.
"Other Assets" shall mean the Excluded Assets and the Other
Properties, collectively.
"Other Properties" shall mean all of the real property which
First Commercial owned, transferred and conveyed to third parties prior to the
Effective Date, which are listed on Exhibit "F-2" attached hereto.
"Partnership Agreement of the Partnership" and "Partnership
Agreement" shall mean the Amended and Restated Agreement of Limited
Partnership of the Partnership, as amended.
"Permitted Exceptions" shall mean with respect to any of the
Real Property (i) the lien of real estate taxes, water rent and sewer charges
that are not due and payable on the Closing Date, (ii) the printed exclusions,
conditions and stipulations contained in the Commitment (as hereinafter
defined), (iii) additional exceptions to title set forth in Exhibit "D"
attached hereto, (iv) special assessments which become a lien on any of the
Real Property on or after the Closing Date, and (v) such other title matters
-3-
<PAGE>
existing on the Closing Date which are accepted or deemed accepted by the
Partnership pursuant to Paragraph 5 hereof; and (vii) the rights of Tenants of
any of the Real Property pursuant to the Leases for all or any portion of any
of the Real Property.
"Personal Property" shall (except as specifically excluded on
Exhibit "E" attached hereto) mean all of First Commercial's right, title and
interest in and to the tangible personal property including, without
limitation, furniture, furnishings, equipment, machinery and fixed and movable
fixtures, together with all component and replacement parts, owned by First
Commercial, situated on any of the Real Property on the Closing Date, and all
artwork, renderings, flags, awnings and trade dress; all architects',
engineers', surveyors' and other real estate professionals' plans,
specifications, certifications, reports, data or other technical descriptions
(including, without limitation, all environmental, structural and mechanical
inspection reports) to the extent the same are in First Commercial's
possession, are not proprietary in nature, and related directly to the Real
Property and all building names and First Commercial's rights, if any, in and
to the names "Commerce Park, Corporate Center 81, and Camp Hill Corporate
Center."
"Property" shall mean the Real Property and such of the
Contracts, Leases, Licenses, Personal Property and other rights, titles,
interests and obligations which pertain to the Real Property and are intended
to be contributed, conveyed, sold or otherwise transferred to the Partnership
by First Commercial pursuant to this Agreement.
"Real Property" shall mean the Land and the Improvements.
"Tenants" shall mean the tenants under the Leases.
"Trust" shall mean Brandywine Realty Trust, a Maryland real
estate investment trust, the sole general partner of the Partnership.
"Underlying Shares" shall mean the Common Shares issuable upon
the redemption of the Units issuable hereunder.
"Units" shall mean Class A Units of Limited Partnership
Interests in the Partnership.
2. The Transaction
(a) Contribution of Partnership Interests in First Commercial.
On the Closing Date, subject to the terms and conditions set forth in this
Agreement, the Members shall contribute, assign, transfer and convey to the
Partnership and the Partnership shall accept from the Members the following:
-4-
<PAGE>
(i) On the Closing Date, the Members shall contribute (the
"Initial Contribution") to the Partnership, and the Partnership shall acquire
from the Members, all of the general partner interests and certain limited
partner interests in First Commercial, comprising in the aggregate a 99%
profits interest and a 89% capital interest in First Commercial. In return for
the Initial Contribution, the Partnership shall, on the Closing Date, pay to
the Members the initial consideration (the "Initial Consideration") consisting
of a payment of cash and/or the issuance to the Members of the number of
Units, having an aggregate value equal to 93% of the Net Consideration, such
value to be determined under Paragraph 3 of this Agreement. The Initial
Contribution shall be made by the Members and the Initial Consideration shall
be allocated to the Members as set forth on Schedule "2" attached hereto.
(ii) One Thousand One Hundred and Twenty Six Days after the
Closing Date, the Members shall contribute (the "Subsequent Contribution") to
the Partnership and the Partnership shall acquire from the Initial Members all
of the remaining limited partner interests in First Commercial, comprising in
the aggregate a 1% profits interest and a 11% capital interest in First
Commercial. In return for the Subsequent Contribution, the Partnership shall
on the closing date for the Subsequent Consideration, pay to the Initial
Members the subsequent consideration (the "Subsequent Consideration")
consisting of a payment of cash and/or the issuance to the Initial Members of
the number of Units having the aggregate value equal to 7% of the Net
Consideration, such value to be determined under Paragraph 3 of this
Agreement. In addition as part of the Subsequent Consideration, the
Partnership shall pay to the Initial Members the amount, if any, that is equal
to the aggregate amount that would have been distributed on or before the date
of the Subsequent Contribution in respect of such Units had they been issued
to the Initial Members on the Closing Date, less any amounts distributed to
the Initial Members after the Closing Date and prior to the date of the
Subsequent Contribution in respect of the First Commercial Partnership
Interests of the Initial Members retained by the Initial Members after the
Initial Contribution.
(b) Excluded Assets. Prior to Closing, First Commercial shall assign,
transfer and convey to the Members or an entity designated by the Members, (i)
the real property which is described on Exhibit "F-1" attached hereto, and
(ii) all cash and cash equivalents of First Commercial except for any such
items which are to be transferred or credited to the Partnership under the
terms of this Agreement. The Members and First Commercial are hereby
authorized to transfer and withdraw from First Commercial the Excluded Assets,
prior to or simultaneously with the Closing of the Initial Contribution. The
costs of the transfer, including without limitation transfer taxes, shall be
borne by the Members and the obligation of the Members to pay all transfer
taxes in connection with such transfers shall survive the Closing, without
limitation.
-5-
<PAGE>
(c) Liabilities.
(i) The Members shall pay, perform and discharge all
obligations and liabilities of First Commercial which relate to the periods
prior to the Closing or which by their terms are to be paid, performed or
discharged on or before the Closing Date for the Initial Contribution (whether
or not such liabilities or obligations have been disclosed to the
Partnership). Such payments shall occur prior to Closing or with respect to
invoices received after Closing promptly upon receipt of such invoices.
(ii) Except as expressly set forth in Paragraph 7 of this
Agreement, all liabilities or obligations of First Commercial accrued as of
the Closing or relating to periods prior to the Closing, whether or not
relating to the Property, which are not paid, performed or discharged by First
Commercial prior to the Closing, shall be transferred and assigned by First
Commercial to the Members or their designee and the said transferee shall be
responsible for and shall perform such excluded liabilities and obligations.
The liabilities and obligations which are to be transferred and assigned under
this Paragraph 2(c)(ii) are the "Excluded Liabilities."
(d) Right of First Refusal Properties.
(i) The Real Property is subject to the following rights of
first refusal to purchase: a right of first refusal for the benefit of IBM
with respect to the property known as 300 Corporate Center Drive, Camp Hill,
Pennsylvania, as set forth in Article 23 of the lease with IBM for such
property; and a right of first refusal for the benefit of Tracking Systems
Corporation ("Tracking") with respect to the property known as 2404 Park
Drive, Harrisburg, Pennsylvania, as set forth in Paragraph 7 of the lease with
Tracking for such property. First Commercial has received a letter from IBM
which waives the right of first refusal under Article 23 of the IBM Lease.
First Commercial has sent to Tracking a letter (the "Tracking RFR Letter")
which requests the waiver of Tracking of its right of first refusal. The IBM
waiver letter and the request letter to Tracking are set forth as Exhibit "AA"
hereto.
(ii) Should Tracking not waive its right of first refusal but
instead offer and agree to purchase its first refusal property (the "Tracking
Refusal Purchase Property"), the transactions under this Agreement shall
proceed with the following changes to the terms and provisions of this
Agreement:
(1) the Real Property shall consist of all of the Real Property
listed on Exhibit "A" hereto except for the Tracking Refusal Purchase Property.
(2) the Aggregate Consideration shall be reduced by an amount
equal to the base consideration payable under the Tracking RFR Letter for the
Tracking Refusal Purchase Property which is $825,000; and
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(3) each Member shall notify the Partnership of the applicable
cash/Units allocation of the Aggregate Consideration for such Member in the
aggregate and with respect to the Initial Contribution and the Subsequent
Contribution; and
(e) The Partnership agrees to change the name of First
Commercial and stop using the name "First Commercial" within three months
after the Closing. Within three months after the Closing, the Partnership
shall assign and transfer to the Members or an entity designated by the
Members on an "as is" basis the rights of the Partnership to the name "First
Commercial Development Company" and "First Commercial" and all derivatives
thereof. The name change and the transfer of the name by the Partnership to
the Members or such entity and the subsequent use of the name by the Members
and such entity shall be done in a manner which minimizes any confusion of
third parties and the public with respect to the entity known as First
Commercial immediately after the Closing.
3. Consideration And Time Of Payment. The total value of the
consideration (the "Aggregate Consideration") to be received by the Members
from the Partnership, in exchange for the First Commercial Partnership
Interests, shall be Forty Eight Million Five Hundred Thousand Dollars
($48,500,000), as adjusted pursuant to Paragraph 7 of this Agreement. The
amount of the Aggregate Consideration which is payable to the Members shall be
reduced by the amount of principal and accrued interest secured by the
Mortgage Debt on the Real Property as of the Closing Date which is paid off
under Paragraph 3(b) below or which is assumed by the Partnership. Such
reduced Consideration shall be called the "Net Consideration." The Aggregate
Consideration shall be paid to the Members in the following manner:
(a) On the Effective Date, the Partnership shall deliver a
check, subject to collection, in the amount of Two Hundred Thousand Dollars
($200,000) to the Escrow Agent, which check shall be payable to the order of
the Escrow Agent and shall be held and disbursed pursuant to the Escrow Terms.
Thereafter, within two (2) business days following the Due Diligence
Expiration Date, the Partnership shall deliver a check, subject to collection,
in the amount of Two Hundred Thousand Dollars ($200,000) to the Escrow Agent,
which check shall be payable to the order of the Escrow Agent and shall be
held and disbursed pursuant to the Escrow Terms. In the event that the Members
elect, pursuant to subparagraph (d) below, to receive all of the Consideration
in Units in exchange for the contribution of the Partnership Interests, the
Escrow Agent shall release the Deposit to the Partnership at the Closing.
(b) At the Closing, the Partnership shall deliver in cash
sufficient funds to payoff all of the debt on the Real Property which is
listed on Exhibit "G" attached hereto (the "Mortgage Debt") provided, however,
that amount of such funds shall not exceed an amount equal to 93% of the
Aggregate Consideration.
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(c) (i) The balance of the Initial Consideration shall be paid to the
Members at the Closing and the making of the Initial Contribution by wire
transfer of immediately available funds to an account designated by the
Members.
(ii) The Subsequent Consideration shall be paid to the Initial
Members upon the making of the Subsequent Contribution, by wire transfer of
immediately available funds to an account designated by the Initial Members.
(d) In lieu of receiving the cash Consideration pursuant to subparagraphs
(a) and (c)(i) and (ii) above, the Members may elect, at their option, to
receive all or a portion of the cash Consideration in the form of Class A
Units of Limited Partnership Interest ("Units") in the Partnership in exchange
for the contribution to the Partnership of all or a portion, as the case may
be, of the First Commercial Partnership Interests. The Members may make such
election by providing the Partnership written notice not later than twenty
(20) days prior to the applicable Closing Date. Such election notice shall
state the dollar amount of the Consideration to be received in Units. The
number of Units issuable in satisfaction of the applicable portion of the
Consideration that the Members elect to be so received shall be computed by
dividing the aggregate dollar amount of such applicable portion of the
Consideration by the Computed Market Price. The term "Computed Market Price"
shall mean the average closing price for the Common Shares as reported by the
New York Stock Exchange (the "NYSE") for the ten (10) trading day period
immediately preceding the Due Diligence Termination Date. The distributions
declared by the Partnership in respect of the Class A Units issuable pursuant
to this Agreement during the initial calendar quarter in which the Closing
occurs shall be pro-rated by the Partnership based on the number of days the
Class A Units are outstanding during such quarter. For example, if the Class A
Units issuable pursuant to this Agreement are issued on May 1, 1998, each of
such Class A Units shall be entitled to receive an amount equal to two-thirds
of the amount of the distributions payable to a Class A Unit that was
outstanding during the full quarter.
(e) (i) It is the intent of the parties to this Agreement that the
transaction qualify as a tax-deferred contribution by the Members to the
Partnership of the First Commercial Partnership Interests under Section 721 of
the Code with respect to the receipt of Units by the Members.
(ii) At the request of the Members, the Partnership shall
provide the Members with an allocation of additional debt (through guarantees
in the form attached hereto as Exhibit "H" or otherwise) to provide the
Members with sufficient tax basis to defer at Closing income tax recognition
in connection with the Section 721 contribution to the Partnership.
(iii) The Partnership makes no representations and warranties
regarding the tax consequences to the Members of the transactions under this
Agreement.
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(f) The Members will be responsible for any prepayment costs
associated with the Mortgage Debt payoffs.
(g) The Units to be issued to the Members will be restricted
from sale for two years as provided in the Partnership Agreement of the
Partnership.
4. Closing. The closing of the Initial Contribution and the transactions
contemplated by this Agreement (the "Closing") shall be held on or before May
5, 1998, at the offices of counsel to the Members, Buchanan, Ingersoll,
Professional Corporation, Eighth Floor, 30 North Third Street, Harrisburg, PA,
commencing at 10:00 a.m., time being of the essence.
5. Title And IDA Conveyances.
(a) At Closing, legal and equitable title to the Real Property
shall be in the name of First Commercial and insurable at regular rates by
Commonwealth Land Title Insurance Company (the "Title Insurer"), free and
clear of all liens, encumbrances and restrictions other than the Permitted
Exceptions; provided, however, that if title to any of the Real Property is
not insurable as aforesaid, the Partnership's sole right and remedy shall be
as set forth in Paragraph 5(b) below. Title to the properties known as 600 and
800 Corporate Circle and 200 and 500 Nationwide Drive, is currently in the
name of the Dauphin County Industrial Development Authority and title to the
properties known as 2401 and 2404 Park Drive, Harrisburg, Susquehanna
Township, Pennsylvania is currently in the name of the Susquehanna Township
Industrial Development Authority (collectively the "Authority"). Prior to
Closing, the Members shall take all necessary action to cause title to such
properties to be transferred to First Commercial free and clear of all liens
and encumbrances in favor of the Authority and terminate any and all
agreements involving the Authority with respect to such properties. All such
action and transfers shall be taken at no cost and expense to the Partnership,
including without limitation, transfer taxes and the obligation of the Members
to pay all transfer taxes in connection with such transfers shall survive the
Closing, without limitation.
(b) (i) The Partnership has applied for a title insurance
commitment (1992 ALTA Form with Creditor's Rights Exclusion Deleted) to be
issued by the Title Insurer ("Commitment"), agreeing to issue to the
Partnership, upon the Closing, an owner's policy of title insurance as above
specified ("Title Policy"). Said Commitments shall agree to insure the
proposed title of the Partnership to each of the Real Property subject only to
the Permitted Exceptions and such other title exceptions as the Partnership
has agreed to accept or is deemed to have accepted pursuant to this Paragraph.
If any of the Commitments disclose any title exceptions in addition to the
Permitted Exceptions and the Partnership objects to such additional title
exceptions (the "Title Defects"), the Partnership shall notify the Members of
such Title Defects with sufficient specificity to enable the Members to
respond. The Partnership's notice of any Title Defects shall be given in
writing to the Members no later than the date which is five (5) business days
prior to the Due Diligence Termination Date, together with the Commitments and
copies of all matters of record raised therein as exceptions thereto, after
which
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the Partnership shall be deemed to have waived any and all Title Defects not
so raised, except for Title Defects which are first disclosed to the
Partnership in continuations of title issued subsequent to the issuance of the
Commitments, unless the Partnership fails to object to same in writing within
three (3) business days after the Partnership's receipt of the continuation of
title in which the same is disclosed, in which case the Partnership will be
deemed to have waived such additional Title Defects. The Members shall have
the right, but not the obligation (except as otherwise specifically provided),
to cure such Title Defects and, if the Members elect to attempt to cure the
Title Defects but have not cured same on or before the Closing Date, then the
Closing Date may be extended by the Members at their sole option for up to
thirty (30) days to enable the Members to effect such cure.
(ii) In the event that either (a) title is not in accordance
with the terms of this Agreement, (b) the Members elect not to cure or cause
the removal of any exception to title, except as required in subparagraph
(iii) below, or (c) if the Members are unable to satisfy any other conditions
to the Partnership's obligations under this Agreement, then (except as
otherwise specifically provided in subparagraph (iii) below) the sole
liability of the Members shall be to (A) direct the Escrow Agent to return the
Deposit to the Partnership and (B) reimburse the Partnership for the
reasonable charges imposed by the Title Company for preparation of the
Commitments (without the issuance of a policy) and for the reasonable fees
paid by the Partnership to update the existing surveys and in respect of the
Partnership's actual, documented out-of-pocket costs of due diligence, the sum
of which shall in no event exceed in the aggregate $45,000 (collectively the
"Partnership's Reasonable Costs"), and upon such payments being made, this
Agreement shall be deemed canceled and the parties hereto shall be released of
all obligations and liabilities hereunder, except as to any provisions which
expressly survive a termination of this Agreement; and the Partnership shall
have no rights of action against the Members in law or in equity, for damages
or, except for the purpose of enforcing the Members's contractual obligations
under subparagraph (iii) below, for specific performance. Notwithstanding the
foregoing, the Partnership shall have the right to waive any conditions to the
Partnership's obligations hereunder, in which event the Members shall make the
deliveries provided for herein to the Partnership to the extent that the
Members are able so to do, and there shall be no reduction in the
Consideration in such event.
(iii) Notwithstanding the provisions of the foregoing
paragraph, if the condition of title to the Real Property at the Closing is
other than that which the Partnership is required or agrees to accept
hereunder solely by reason of any mortgages or other monetary liens
(hereinafter referred to as "Liens") which can be satisfied or remedied by the
payment of a liquidated amount of money, the Members shall not have the right
to cancel this Agreement and the Members shall either (aa) discharge, satisfy,
or bond the same or (bb) deliver such funds to be held in escrow required by
the Title Company, in either event so that the Title Company shall
affirmatively insure the full and complete discharge of the foregoing and
shall agree to omit the same as an exception to its title insurance policy.
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(iv) Notwithstanding anything to the contrary contained in this
Agreement, the Members shall have no duty nor be required to take any action,
to institute any proceedings or to incur any expense (other than as may be
expressly required in subparagraph (iii) above) in order to remedy or remove
any objections to title or otherwise to render title in accordance with the
terms called for in this Agreement.
6. Closing Documents - Closing and Subsequent Contribution.
(a) At the Closing, as a condition of the Partnership's obligations
to close hereunder, the Members shall deliver or cause to be delivered the
following:
(i) An Assignment of Partnership Interests of First Commercial
comprising the Initial Contribution;
(ii) An executed counterpart of an Amended and Restated Limited
Partnership Agreement of First Commercial in the form of Exhibit "I" hereto,
which substitutes the Partnership for the Members as the partners in First
Commercial with respect to the First Commercial Partnership Interests which
are the subject of the Closing and the Initial Contribution;
(iii) Proof as to the due authorization and execution by the
Members of the documents executed and delivered by the Members;
(iv) The signed originals (or true and correct copies of same)
of the Contracts, Leases, Licenses, as are in the possession or control of
First Commercial;
(v) All machinery and/or equipment operating manuals, technical
data and other documentation relating to the building systems and equipment,
and all machinery, equipment and other building warranties and guarantees, if
any, but only to the extent that any of the same are in the possession or
control of First Commercial;
(vi) All master and duplicate keys, combinations and codes to
all locks and security devices for the Improvements which are in the
possession or control of First Commercial;
(vii) Written notice from First Commercial or First
Commercial's managing agent to each Tenant in form reasonably satisfactory to
the Partnership stating that the Real Property has been acquired by the
Partnership and that tenant security deposits (if any) in First Commercial's
possession have been transferred to the Partnership and directing the Tenants
to make future rental payments to the Partnership at the address designated by
the Partnership;
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(viii) Non-foreign person certification in the form of Exhibit
"J" attached hereto;
(ix) All building records and Tenant lease files with respect
to the Real Property which are in the possession of First Commercial;
(x) Each bill of current real estate taxes, sewer charges and
assessments, water charges and other utilities and to the extent in First
Commercial's possession or control, bills for each of the same for the three
(3) preceding years, together with proof of payment thereof (to the extent
same have been paid);
(xi) All plans, specifications, as-built drawings, surveys,
site plans, and final, written reports of architects, engineers and surveyors,
and any other Personal Property forming part of the Property or any portion
thereof, but only to the extent that the same exist and are in the possession
of First Commercial or any property manager controlled by First Commercial;
(xii) Subject to the provisions of Paragraph 11(d), below,
Estoppel Letters, if any, received from Tenants;
(xiii) Updated rent rolls, which shall be certified by First
Commercial to be correct and complete as of Closing Date;
(xiv) Proof as to the due authorization and execution by First
Commercial of the documents executed and delivered by First Commercial;
(xv) An affidavit or affidavits of title in favor of the Title
Insurer on the form used by such Title Insurer, in form reasonably acceptable
to the Members to enable the Title Insurer to issue the Commitments described
in Paragraph 5(b)(i) and as shall be required by the Title Company to insure
the Partnership's title to the Property as set forth in Section 5. The
Partnership shall require affirmative endorsements consistent with the
Members' obligations under Paragraph 5(b)(iii), above and 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) with respect to
non-attribution to the Partnership and First Commercial after Closing of any
knowledge or activities of First Commercial and the Members on or before the
Closing;
(xvi) A Registration Rights Agreement (the "Registration Rights
Agreement") in the form of Exhibit "K" attached hereto, executed by the
Members;
(xvii) Proof satisfactory to the Partnership, in its sole
discretion, as to the transfer to the Members or an entity designated by the
Members of the Excluded Assets and the Excluded Liabilities; and
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(xviii) The closing certificate required pursuant to Paragraph
9.
(b) At the Closing, as a condition of the obligations of the Members to
close hereunder, the Partnership shall deliver or cause to be delivered the
following:
(i) The balance of the Initial Consideration (in immediately
available funds or Units in accordance with Paragraph 3);
(ii) A Registration Rights Agreement executed by the Trust; and
(iii) Proof as to the due authorization and execution by the
Partnership of the documents executed and delivered by the Partnership;
(iv) An executed counterpart of an Amendment to the Amended and
Restated Limited Partnership Agreement of the Partnership evidencing the
issuance of Units to the Members as specified above;
(v) An executed counterpart of an Amended and Restated Limited
Partnership Agreement of First Commercial;
(vi) The Tax Indemnification Agreement in the form of Exhibit
"L" hereto.
(vi) The closing certificate required pursuant to Paragraph 9.
(c) At the making of the Subsequent Contribution, as a condition of the
obligations to pay the Subsequent Consideration, the Members shall deliver or
cause to be delivered the following:
(i) An Assignment of Partnership Interests of First Commercial
comprising the Subsequent Contribution;
(ii) An executed counterpart of an Amended and Restated Limited
Partnership Agreement of First Commercial which substitutes the Partnership
for the Members as the partners in First Commercial with respect to the First
Commercial Partnership Interests which are the subject of the Subsequent
Contribution;
(iii) Proof as to the due authorization and execution by the
Members of the documents executed and delivered by the members;
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(iv) An affidavit or affidavits of title in favor of the Title
Insurer on the form used by such Title Insurer, in form reasonably acceptable
to First Commercial to enable the Title Insurer to issue the Commitments
described in Paragraph 5(b)(i). The Partnership shall require affirmative
endorsements with respect to non-attribution to the Partnership and First
Commercial after the Subsequent Contribution of any knowledge or activities of
the Members on or before the Subsequent Contribution; and
(v) An update of the certificate set forth in Paragraph 9, but
only with respect to the matters set forth in Paragraphs 9(b) and 9(c)(1) and
(2) and then only insofar as such Paragraphs relate to the Members making the
Subsequent Contribution.
(d) At the making of the Subsequent Contribution, as a
condition of the obligation of the Members to make the Subsequent
Contribution, the Partnership shall deliver or cause to be delivered the
following:
(i) The Subsequent Consideration (in immediately available
funds or Units in accordance with Paragraph 3); and
(ii) An update of the certificate set forth in Paragraph 9.
7. Prorations And Closing Costs. All matters involving prorations or
adjustments to be made to the Consideration in connection with the Closing and
not specifically provided for in any other provision of this Agreement shall
be adjusted as provided below. Except as otherwise set forth herein, all items
to be prorated pursuant to this Paragraph shall be prorated as of the Closing
Date, in connection with the Initial Contribution, for purposes of prorations
of income and expenses, on the Closing Date.
(a) Real estate taxes and all other ad valorem taxes, if any,
with respect to the Real Property for the applicable fiscal or calendar year
in which the Closing occurs shall be prorated on a per diem basis. If the
amount of such taxes is not known on the Closing Date, taxes will be prorated
on the basis of the most recently ascertainable tax bill. There shall be no
proration of First Commercial's insurance premiums or assignment of First
Commercial's insurance policies and First Commercial shall be entitled to
cancel all of its existing policies as of the Closing Date with any unexpired
premiums, which are refunded by the insurers, being repaid to the Members. The
Partnership shall be obligated (at its own election) to obtain any replacement
policies. The amounts of all telephone, electric, sewer, water and other
utility bills, trash removal bills, janitorial and maintenance service bills
relating to the Property and allocable to the period prior to the Closing Date
shall be determined and paid by First Commercial before Closing, if possible,
or shall be paid promptly thereafter by the Members or adjusted between the
Partnership and the Members immediately after the same have been determined.
First Commercial shall attempt to have all utility meters read as of the
Closing Date. First Commercial shall further attempt to obtain from the
provider of same, all other service statements and bills of account adjusted
as of the Closing Date. The Members shall be entitled to
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refunds of all deposits, if any, paid by First Commercial or First
Commercial's predecessor-in-interest prior to Closing and held by entities
providing such service, or, at the option of the Members, the Members shall
agree that, First Commercial may retain such deposits after Closing in which
case the Members shall receive a full credit for the amount of such deposits.
All Contracts and other obligations in connection with the Property, to the
extent the same are intended to be assumed hereunder, shall be prorated as of
the Closing Date.
(b) Special assessments which have been filed as a lien against any of
the Real Property on or before the Closing Date and are not payable in
installments shall be paid by First Commercial on or before the Closing.
Special assessments which have been filed as a lien against any of the Real
Property, but which are payable in installments shall be adjusted based upon
the installment payment for the fiscal or calendar year in which Closing takes
place and the remaining unpaid assessments shall be assumed by the
Partnership. Special assessments which are or may be pending, but which have
not become a lien on the Real Property as of the Closing Date, and special
assessments which are filed as a lien after the Closing Date, shall be assumed
and paid by the Partnership.
(c) The parties intend that the transactions under this Agreement not be
subject to the real estate transfer tax or stamps of the Commonwealth of
Pennsylvania and East Pennsboro Township and Susquehanna Township. To the
extent that state and local transfer taxes or stamps are imposed in connection
with the transactions under this Agreement for any reason whatsoever, the cost
of such taxes or stamps shall be borne one-half by the Partnership and
one-half by the Members. The Partnership shall pay the expense of the title
searches, title premiums and any other title insurance costs on the owner's
title insurance policies and the cost of obtaining any surveys, if desired by
the Partnership. Each party agrees to pay the expense of the legal fees of its
own counsel. The cost of all of the Partnership's Due Diligence Activities (as
defined below) shall be borne solely by the Partnership.
(d) Any base, minimum or similar rents under the Leases collected by
First Commercial on or before the Closing for a rental period or portion
thereof from or after the Closing Date shall be credited to the Partnership at
Closing on a per diem basis. In addition, any security deposits held by First
Commercial for any Lease, together with the interest due thereon, if any and
if required under the terms of the Lease or as required by applicable law,
shall be credited to or transferred to the Partnership at Closing. If any
tenant is in arrears in the payment of rent or additional rent on the Closing
Date, rents received from such tenant within ninety (90) days after the
Closing Date shall be applied in the following order of priority: (a) to the
Partnership, for current unpaid rents and for so long as current rent is due
and payable and such tenant is in arrears for current or prior rent arising
after Closing, then (b) to the Members for all rent in arrears prior to the
Closing Date; and then (c) to the Partnership with no further claim by the
Members thereto.
(i) Except as herein provided, after Closing, First Commercial
and the Partnership are not under any obligation to collect rents in arrears
for the benefit of the
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Members. Any rents which are delinquent or otherwise not paid at the time of
Closing, and collected by the Partnership or First Commercial or the Members
within ninety (90) days after Closing shall be apportioned as aforesaid and
the portion to which the Members are entitled shall be promptly remitted by
the Partnership to the Members. Except as provided in Paragraph 7(d)(ii)
below, the Members shall have no claim to rents collected ninety (90) days
after the Closing Date. The Members retain the right to pursue their remedies
against Tenants after Closing for any delinquent rents or other amounts owed
to First Commercial which relate to the period prior to the Closing Date
(other than proceedings to evict a Tenant or terminate its lease). The
Partnership shall not enter into any agreement pursuant to which any sums owed
to the Members in respect of any Lease for periods prior to the Closing are
reduced, modified or waived. The obligations of the Partnership and First
Commercial to collect arrearages shall be limited to commercially reasonable
efforts, and First Commercial and the Partnership shall under no circumstance
be required to commence litigation against any Tenant to collect the same.
(ii) Notwithstanding the foregoing provisions of Paragraph
7(d): at least five (5) days prior to Closing, the Members shall deliver to
the Partnership a reasonably detailed statement setting forth, as of the date
of Closing (1) 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 (2) the amounts paid or incurred by First Commercial during
the appropriate fiscal year as aforesaid which First Commercial expects will
be paid or reimbursed by Escalation Payments made by Tenants. If First
Commercial 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 the Partnership 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 First
Commercial from Tenants after Closing, First Commercial will, upon collection,
remit to the Members the portion thereof to which the Members are entitled to
the date of Closing. After Closing, First Commercial shall have the right, in
good faith, to settle or adjust any amount of such Escalation Payments due
from any Tenant without the Members' prior consent, provided that such
settlement or adjustment applies ratably to all amounts of Escalation Payments
due from such Tenant.
(e) All leasing commissions due or to become due prior to the Closing
Date for any Leases entered into before the date hereof and all amendments,
renewals and modifications thereof entered into before the date hereof, shall
be paid by First Commercial prior to Closing without contribution by, or
reimbursement from, the Partnership. At Closing, the Partnership shall pay or
reimburse the Members for any leasing commissions due or to become due prior
to Closing for any Leases and for any amendments, modifications or renewals of
any Leases entered into after the date hereof which are entered into in
accordance with the provisions of Paragraph 15(e) hereof. Except with respect
to the commissions for the prospective Lease
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renewals set forth on Exhibit "M" , the Members shall be solely obligated to
pay all leasing commissions payable under all Leases entered into prior to the
date hereof (including all amendments, renewals and modifications thereof)
which are first due or payable on or after the Closing Date, regardless of the
date on which such Leases (including all amendments, renewals and
modifications thereof) were executed or any of the leasing commissions
therefor earned, subject only to the right of the Partnership to approve any
new Leases or amendments, discretionary renewals or modifications of any
Leases which are not otherwise permitted pursuant to Paragraph 15(e), below.
First Commercial shall be responsible for the costs of, and shall pay or
perform prior to Closing any tenant improvements and allowances for work
performed or required to be performed (or paid, as applicable) prior to the
Closing Date by or on behalf of First Commercial for all Leases (including all
amendments, renewals and modifications thereof) entered into on or before the
date of this Agreement for any of the Real Property. The Partnership shall
assume, pay or reimburse (as applicable) the Members on the Closing Date for
the costs of any tenant improvements and allowances for work to first be
performed after the Closing Date pursuant to Leases (including all amendments,
renewals and modifications thereof) entered into prior to the date of this
Agreement and all costs of tenant improvements and allowances incurred by or
on behalf of First Commercial in connection with any Leases (including all
amendments, renewals and modifications thereof) entered into after the date of
this Agreement for any of the Real Property, provided (i) the same were
approved by the Partnership or (ii) are permitted under Paragraph 15(e) hereof
or (iii) such costs are set forth on Exhibit "C" hereto.
(f) Amounts paid or payable as fees or expenses under any of the Licenses
shall be prorated as of the Closing Date but all amounts refundable under
Licenses shall belong to the Members.
(g) The Initial Members shall be solely responsible for the payment of
any "roll back taxes" assessed or imposed upon any of the Real Property under
the Pennsylvania Farmland and Forest Land Assessment Act of 1974, or Act 515,
as amended, or otherwise, which relate to any period prior to the Closing
Date, and the Initial Members agree to indemnify, defend and save First
Commercial and the Partnership harmless (including attorneys' fees) from and
against any claim for such taxes.
(h) Miscellaneous income including, without limitation, telephone and
vending machine income, if any, shall be prorated as of the Closing Date.
(i) All of the provisions of this Paragraph 7 and First Commercial's, the
Members' and the Partnership's respective rights and obligations hereunder
shall survive the Closing.
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8. Possession Of Property.
(a) Possession to the Real Property shall be delivered on the Closing
Date, subject only to the Permitted Exceptions.
(b) All of the provisions of this Paragraph 8 and First Commercial's,
the Member's and the Partnership's respective rights and obligations hereunder
shall survive the Closing.
(c) The Property is being acquired without any employees of First
Commercial. An affiliate of the Partnership, however, intends to hire or
retain (but is not obligated to hire or retain) for First Commercial three
individuals currently employed by First Commercial (and its affiliates) at
salary levels consistent with those currently provided by First Commercial,
with benefits consistent with that provided by such affiliate to other
employees at a location in the Harrisburg area. The salary levels of such
employees are as follows: Bookkeeper/Secretary - $640.85/week;
Receptionist/Secretary - $556.14/week; and Property Supervisor - $717.79/week.
It is anticipated that the responsibilities currently borne by the employees
will be subject to modification to insure consistency with the Partnership's
existing Asset Management/Tenant Services Program. Closing of the transactions
under this Agreement is not conditioned upon any or all of such First
Commercial employees accepting employment with an affiliate of the Partnership
or continuing with First Commercial after Closing.
(d) The Partnership shall cooperate with the Members and First
Commercial to insure good tenant retention at the Property and to utilize the
expertise of the Members in establishing a market presence and deal flow.
However, no restrictions whatsoever will be placed upon the Members after
Closing; rather, it is acknowledged that the Members will continue to develop
and lease real estate in the Central Pennsylvania market after the Closing,
even though such activities may directly or indirectly compete with the
Partnership or First Commercial. In no event, however, for a period of three
(3) years after Closing will the Members or any affiliate, employee,
representative, or agent of any of them, directly or indirectly approach,
canvas or solicit any existing tenant of the Property, without specific
written authorization from the Partnership (specifically excluding the ability
of the Members to respond to tenant initiated request for proposals). First
Commercial is currently responding to a request for proposal of Conrad M.
Siegel, Inc. for new office space in a building to be constructed by the
Members or certain of them. The Members, or certain of them, would be entitled
to brokerage commissions in amounts determined in accordance with local
practice for all leasing transactions secured by the Members or their
affiliates for the benefit of the Partnership after Closing, including current
renewals being negotiated by First Commercial or its affiliates (as detailed
in Exhibit "N" to this Agreement).
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9. Representations Of The Initial Members and The Partnership.
(a) The Initial Members hereby represent and warrant, as follows, all
of which shall be true and correct at, and as of, the Effective Date:
(1) First Commercial is a limited partnership duly organized
and validly existing under the laws of the Commonwealth of Pennsylvania, and
is in good standing in such state.
(2) First Commercial has all necessary power and authority to
enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby, without the consent or
authorization of, or notice to, any third party, except those third parties to
whom such consents or authorizations have been or will be obtained, or to whom
notices have been or will be given, prior to the Closing.
(3) Except as set forth in Exhibit "O" attached hereto and made
a part hereof, there is no litigation, proceeding or action pending or, to the
best of First Commercial's knowledge, threatened against or relating to First
Commercial or the Property which might materially and adversely affect First
Commercial or the Property or which questions the validity of this Agreement
or any action taken or to be taken by First Commercial pursuant hereto.
(4) Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will constitute a
violation or be in conflict with or constitute a default under any term or
provision of First Commercial's limited partnership agreement or any other
material agreement, instrument or lease to which First Commercial is a party,
subject to any required consents or authorizations of, or notices to, third
parties from whom such consents or authorizations will be obtained or to whom
notices will be given prior to Closing.
(5) True, correct and complete copies of all of the following,
together with any modifications or amendments thereof, but only if and to the
extent the same are in First Commercial's possession or control, have been or
will be delivered, or made available, to the Partnership within five (5) days
following the execution of this Agreement: (i) Leases and rent rolls; (ii)
Contracts; (iii) leases of equipment, vehicles and other tangible personal
property used by First Commercial in connection with the ownership and
operation of the Property (the "Personal Property Leases"); (iv) Licenses; (v)
surveys; (vi) title reports; (vii) engineering reports; and (viii)
environmental reports.
(6) To the best of First Commercial's knowledge, (i) all of the
Leases, Contracts and Personal Property Leases and Licenses, are in full force
and effect, (ii) there has been no action or failure to act by First
Commercial or any other party to any Lease, Contract or Personal Property
Lease or License which, with the giving of notice or the passage of
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time or both, would constitute a default in any material respect or a right to
terminate; and (iii) First Commercial has not received from any other party
written notice with respect to the condition of the Property or the use or
repair of the same or of any alleged default by First Commercial under any
such Lease, or Personal Property Lease or License. Except as set forth on
Exhibit "P", each of the Contracts is terminable at will without penalty or
cancellation fee upon no more than thirty (30) days prior written notice but,
except as hereinafter expressly provided, unless otherwise directed by the
Partnership, the Contracts shall not be terminated by First Commercial as of
Closing. Anything in this Agreement to the contrary notwithstanding, any and
all existing management agreements and brokerage or leasing agreements shall
be terminated as of Closing. First Commercial shall retain or the Partnership
shall assume all Contracts which are not terminated at Closing.
(7) As of the Closing, there are and shall be no liens against
the Real Property arising under the Employee Retirement Income Security Act of
1974, as amended, nor any other compensation or employment related lien or
liability or obligation that could become the responsibility of the
Partnership or continue to be the responsibility of First Commercial on or
after the Closing. The Partnership shall be under no obligation to assume any
of First Commercial's employees, it being the sole responsibility and
obligation of the Members to provide severance arrangements, if any, for all
such employees so that at Closing, there are no employees of First Commercial.
(8) To the best of First Commercial's knowledge, there are no
public improvements in the nature of off-site improvements or otherwise, which
have been ordered to be made and/or which have not heretofore been assessed
and, to First Commercial's actual knowledge, there are no special or general
assessments currently affecting or pending against the Real Property or any
portion thereof.
(9) Except as set forth on Exhibit "Q", First Commercial has
not been served with written notice that it has been named as a party in any
litigation, administrative proceeding or investigation naming First Commercial
as a responsible party or potentially responsible party for any liability for
clean-up costs, natural resource damages or other damages or liability for
prior disposal or release of Hazardous Substances, Hazardous Wastes or other
environmental pollutants or contaminants affecting the Real Property. For
purposes of this Agreement, "Hazardous Substances" means those elements and
compounds which are designated as such in Section 101(14) of the Comprehensive
Response, Compensation and Liability Act (CERCLA), 42 U.S.C. Section 9601
(14), as amended, all petroleum products and by-products, and any other
hazardous substances as that term may be further defined in any and all
applicable federal, state and local laws; and "Hazardous Wastes" means any
hazardous waste, residential or household waste, solid waste, or other waste
as defined in applicable federal, state and local laws. First Commercial has
not received any summons, citation, directive, letter or other written
communication, from any governmental or quasi-governmental authority
concerning any intentional or unintentional action or omission on First
Commercial's part which either (a) resulted in the releasing, spilling,
leaking, pumping, pouring, emitting, emptying or
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dumping of Hazardous Substances or Hazardous Wastes at the Real Property, or
(b) related in any way to the generation, storage, transport, treatment or
disposal of Hazardous Substances or Hazardous Wastes at the Real Property.
(10) The income and expense statements for the Property and the
current rent roll which have been delivered by the Members to the Partnership
are true, correct and complete in all material respects.
(11) First Commercial has received no written notice of any
violation of any of the licenses, permits, consents, authorizations,
approvals, and certificates of any regulatory, administrative or other
governmental agency or body, if any, issued to or held by the First Commercial
and related to the ownership or operation of the Property (collectively, the
"Permits"), and there is no pending or, to the best of First Commercial's
knowledge, threatened proceeding which could result in the revocation or
cancellation of, or inability of First Commercial to renew, any Permit.
(12) To the best of First Commercial's knowledge, except as set
forth in Exhibit "R" attached hereto and made a part hereof: (a) all
management fees, leasing commissions and tenant improvement allowances are
fully paid, (b) there are no brokerage commissions owing by First Commercial
with respect to any of the Leases or otherwise related to the Property which
have not been paid, and (c) there are no ongoing or prospective commission or
leasing fee obligations.
(13) First Commercial has received no written notice from any
insurance company which has issued a policy with respect to the Property or by
any board of fire underwriters (or other body exercising similar functions)
claiming any defects or deficiencies or requesting the performance of any
repairs, alterations or other work, and First Commercial will promptly notify
the Partnership of any such notice or requirement if such notice is received
prior to the Closing.
(14) First Commercial is not a "foreign person" and will
deliver to the Partnership, at the Closing, a statement certifying that it is
not a "foreign person" within the meaning of the Internal Revenue Code of
1986, as amended.
(15) First Commercial has not received written notice from any
governmental agency or authority of outstanding material violations issued by
governmental authorities having jurisdiction over the Real Property.
(16) Except as may be set forth in a Lease as specifically
noted on Exhibit "C", there are no options, rights of first refusal or
conditional sales agreements regarding the purchase and sale of the Real
Property.
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(17) There are no oral or written leases or rights of
occupancy or grants or claims of right, title or interest in any portion of
the Property other than the leases (the "Leases") listed on the rent roll
attached hereto as Exhibit "C". No tenant has advised First Commercial that
First Commercial is in default under any of the Leases, or asserted any claim
or basis for any claim for free or reduced rent or right of setoff against the
landlord or the rent under the Leases, and First Commercial has no actual
knowledge of any default or any event which has taken place which, with the
passage of time, or the delivery of notice, or both, could become an event of
default. First Commercial has the sole right to collect rents under the
Leases, and neither such right nor any of the Leases has been assigned,
pledged, hypothecated or otherwise encumbered by First Commercial except as
additional collateral for the Mortgage Debt. No holder of any such collateral
assignment has asserted or exercised any of its right to collect such rents.
Each of the Leases is valid and subsisting and in full force and effect, the
tenant is in actual possession in the normal course, and the rents set forth
in Exhibit "C" are the actual rents, income and charges being collected by
First Commercial under the Leases. Any tenant improvements which First
Commercial is obligated to complete pursuant to any Lease (or any unsigned
lease proposal or lease amendment) have been completed as of this date or
shall be completed as of Closing, and all costs therefore have been or shall
be paid by First Commercial, prior to Closing and all of First Commercial's
work has or shall have been accepted by the Tenant without exception on or
before Closing, other than routine punch list items, which items shall remain
the responsibility of First Commercial following Closing, and which obligation
shall expressly survive Closing. The amount of each security deposit contains,
where required by law or otherwise applicable, interest which has accrued in
accordance with law. No tenant of the Property under any of the Leases has,
and shall not at Closing have, prepaid any rent under any of the Leases for
more than one (1) month. Except as otherwise set forth on Exhibit "C", no
security deposits by tenants have heretofore been returned or applied to
charges against the tenants.
(18) To the best of First Commercial's knowledge: (i) the
Property and the continued operation and use thereof comply with all
applicable requirements of federal, state and local law, and all applicable
requirements of governmental bodies or agencies having jurisdiction thereof,
and (ii) except as disclosed on Exhibit "S", no portion of the Property lies
within a flood hazard area, flood plain or wetland.
(19) Except as specifically set forth on the environmental
reports attached hereto as Exhibit "T" to the best of First Commercial's
knowledge, (i) no Hazardous Substances (defined below) and no Hazardous Wastes
(defined below) are present on the Property including, without limitation,
asbestos, flammable substances, explosives, radioactive materials, hazardous
wastes, toxic substances, pollutants, pollution, contaminant, polychlorinated
byphenyls ("PCBs"), urea formaldehyde foam insulation, radon, corrosive,
irritant, biologically infectious materials, petroleum product, garbage,
refuse, sludge, hazardous or waste materials, and (ii) there has been no use
of the Property that may, under any federal, state or local environmental
statute, ordinance or regulation, require, at any time, any closure or
cessation of the use or occupancy of the Property and/or impose, at any time,
upon the owner of
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<PAGE>
the Property any clean-up or other monetary obligation. To the best of First
Commercial's knowledge, neither the Property nor any portion thereof, have
been identified on the federal CERLIS, the National Priorities List (40 C.F.R.
Part 300, App. B) or any state or local list of potential hazardous waste
disposal sites or as an industrial establishment. There are no underground
storage tanks located on the Property.
(20) To the best of First Commercial's knowledge, all adequate
utilities, useable public sanitary and storm sewers, public water facilities,
electric facilities and, if any, gas facilities (collectively, the
"Utilities"), are installed in, and are duly connected to, the Real Property,
and can be used without charge except the normal and usual metered utility
charges and water and sewer charges. To the best of First Commercial's
knowledge, all Utilities required for the operation of the Property either
enter the Property through adjoining public streets or, if they pass through
adjoining public land, do so in accordance with valid public easements or
private easements which will inure to the benefit of the Partnership at no
cost to the owner of the Property. All of said Utilities are installed and
operating and all installation, connection and "tap-in" charges have been paid
for in full.
(21) No work has been performed or is in progress at, and no
materials have been furnished to the Property which, though not presently the
subject of, might give rise to construction, mechanic's, materialmen's,
municipal or other liens against the Property or any portion thereof, except
that for which full and complete releases have been obtained. If any lien for
any such work is filed before Closing, First Commercial shall promptly
discharge the same prior to Closing.
(22) To the best of First Commercial's knowledge, none of the
artwork being a part of the Personal Property was prepared on a "work for
hire" basis and none of the artwork was commissioned after 1991.
(23) To the best of First Commercial's knowledge, all
applicable charges, fees and assessments (including condominium fees, to the
extent applicable) and any and all other sums due under declarations,
cross-easements and like agreements to which the Property or any portion
thereof may be subject, have been paid, and no special assessments thereunder
are pending, and all consents and approvals required to be obtained under any
such declarations, cross-easements and like agreements have been obtained
pursuant to the requirements of such documentation.
(24) To the best of First Commercial's knowledge, all
debts, liabilities, and obligations of First Commercial arising out of the
construction, ownership, and operation of the Property including, but not
limited to, construction costs, salaries, taxes, accounts payable and the
like, have been paid as they became due and payable and shall continue to be
so paid from the date hereof until the Closing Date.
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<PAGE>
(25) There are no equity, revenue, cash flow, profit or other
participations or similar rights of lenders, Tenants or other third parties,
which apply to the Real Property.
(b) Each of the Members who is acquiring Units, on its own behalf, hereby
represents and warrants as follows, all of which shall be true and correct on,
and as of, the Effective Date:
(1) That it has received a copy of the Trust's Annual Reports
on Form 10-K, as amended, for the fiscal years ended December 31, 1997 and
1996 (together, the "10-Ks"), the Trust's Quarterly Reports on Form 10-Q, as
amended, for the fiscal quarters ended March 31, 1997, June 30, 1997 and
September 30, 1997 (collectively, the "10-Qs"), and all Current Reports on
Form 8-K filed by the Trust during the period between January 1, 1997 and the
date hereof (collectively, the "8-Ks"), the Trust's proxy statement for its
annual meeting of shareholders held on May 12, 1997 and a copy of the
Partnership Agreement;
(2) That the Units and the Underlying Shares (collectively, the
"Securities"), are being acquired for its own account without a view to public
distribution or resale and that it has no contract, undertaking, agreement or
arrangement to sell or otherwise transfer or dispose of any Securities or any
portion thereof to any other person;
(3) That it understands that the Securities have not been
registered under the Securities Act or the securities laws of any state, and,
as a result thereof, the Securities are "restricted securities" as defined in
Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"),
and are subject to substantial restrictions on transfer;
(4) That it understands that the certificates evidencing the
Securities shall bear a legend indicating that such Securities have not been
registered under the Securities Act or any applicable state securities laws
and the transferability thereof is subject to compliance with the Securities
Act and applicable state securities laws;
(5) That it will not sell or otherwise transfer or dispose of
any Securities or any portion thereof unless the Securities are registered
under the Securities Act and any applicable state securities laws or it
obtains an opinion of counsel which is reasonably satisfactory to the
Partnership or the Trust, as appropriate, that the Securities may be sold in
reliance on an exemption from such registration requirements, and that the
Securities and certificates evidencing the same will bear a legend reflecting
such restrictions;
(6) That it understands that (i) except as expressly set forth
in the Registration Rights Agreement attached hereto as Exhibit "K", neither
the Partnership nor the Trust has any obligation or intention to register the
Securities for resale under any federal or state securities laws and (ii) it
therefore may be precluded from selling or
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otherwise transferring or disposing of any Securities or any portion thereof
for an indefinite period of time or at any particular time;
(7) That in determining to acquire the Securities, it has
relied solely upon its independent investigation, including the advice of its
legal counsel and accountants or other financial and tax advisers and has,
during the course of discussions concerning the acquisition of the Securities,
been offered the opportunity to ask such questions and inspect such documents
concerning the Partnership and the Trust and their respective businesses and
affairs as it has requested so as to more fully understand the nature of the
investment and to verify the accuracy of the information supplied;
(8) THAT IT UNDERSTANDS THAT THE ACQUISITION OF THE SECURITIES
INVOLVES CERTAIN RISKS, and that it can bear the economic risk of the
acquisition of the Securities, including the total loss of its investment;
(9) That (i) it has adequate means of providing for its current
needs and financial contingencies, (ii) it has no need for liquidity in this
investment, (iii) it has no debts or other obligations, and cannot reasonably
foresee any other circumstances, that are likely in the future to require it
to dispose of the Securities, (iv) all its investments in and commitments to
non-liquid investments are, and after its acquisition of the Securities will
be, reasonable in relation to its net worth and current needs, and (v) it was
not formed for the specific purpose of making an investment in the Securities;
(10) That it understands that no federal or state agency
has approved or disapproved the Securities, passed upon or endorsed the merits
of the offering of the Securities hereunder, or made any finding or
determination as to the fairness of the Securities for investment;
(11) That it is making an investment without the influence of
any general advertising or general solicitation by the Partnership or the
Trust;
(12) That it understands that the Securities are being
offered and distributed in reliance on specific exemptions from the
registration requirements of federal and state securities laws and that each
of the Partnership and the Trust is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings
set forth herein in order to determine the applicability of such exemption and
the suitability of First Commercial and the Members to acquire the Securities.
In this regard, it understands that Common Shares may only be issued upon the
redemption of the Units, if an exception from the registration requirements of
the Securities Act is then available for such issuance;
(13) It is an accredited investor, as defined in Rule 501(a) of
Regulation D adopted under the Securities Act; and
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<PAGE>
(14) The number of Common Shares which are owned by such Member
on the date hereof do not exceed that number that is equal to 1% of the number
of outstanding Common Shares of the Trust.
(c) The Initial Members hereby represent and warrant, as follows, all of
which shall be true and correct at, and as of, the Effective Date:
(1) Schedule "1" attached hereto is a true and correct list of
all existing partners of First Commercial as shown on the books of First
Commercial. Each existing Partner is the sole owner of the First Commercial
Partnership Interests to be contributed by he, she or it to the Partnership
and has good, valid and marketable title to such First Commercial Partnership
Interests, free and clear of all liens, except for those liens created by the
partnership agreement of First Commercial (which shall be discharged on or
before the Closing). The First Commercial Partnership Interests have been
issued in compliance with the partnership agreement (as then in effect) of
First Commercial, as applicable, and such interests were not issued in
violation of any federal or state securities laws;
(2) There are no rights, subscriptions, warrants, options,
rights of first refusal, conversion rights or agreements of any kind
outstanding to purchase or to otherwise acquire any securities or obligations
of any kind convertible into any partnership interest or other equity
interests or participation interests of any kind in First Commercial or the
Real Property (or any part thereof) except for those rights created by the
partnership agreement of First Commercial;
(3) The balance sheets of First Commercial as of December 31,
1996, 1995 and 1994, and the related combined statements of operations,
owners' deficit, and cash flows for each of the three years in the period
ended December 31, 1996, together with the notes thereto, present fairly in
all material respects the financial position of First Commercial and the
results of its operations and its cash flows for each of the three years in
the period ended December 31, 1996 in conformity with generally accepted
accounting principles.
i) When delivered to the Partnership not later than March 31,
1998, the balance sheets of First Commercial as of December 31, 1997 and
related combined statements of operations, owners' deficit and cash flows for
the period ended December 31, 1997 together with the notes thereto, and when
delivered to the Partnership not later than ten (10) days after the Effective
Date, the statement of operations, for the period ending February 28, 1998,
each present fairly in all material respects the financial position of First
Commercial and the results of its operations and its cash flows for the period
ended December 31, 1997 and for the period ending February 28, 1998, in
conformity with generally accepted accounting principles.
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<PAGE>
ii) There has been no material adverse change in the financial
position of First Commercial from December 31, 1997 to the date hereof.
(4) Except for (i) liabilities disclosed in the financial
statements referred to in Paragraph 9(c)(3) , (ii) liabilities arising in the
ordinary course of business which, if material (individually or in the
aggregate), are disclosed in Exhibit "U" attached hereto, (iii) liabilities at
the date hereof which are specifically disclosed in the Exhibits attached to
this Agreement and (iv) current liabilities incurred in the ordinary course of
business after the date hereof (consistent with the past practice), First
Commercial is 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 material adverse effect upon First
Commercial.
(5) First Commercial (i) has filed or has had filed on its
behalf all Tax Returns (as defined below) on a timely basis which are required
to be filed as of the date hereof, and such Tax Returns are correct and
complete in all material respects, (ii) has paid or has had paid on its behalf
on a timely basis all Taxes (as defined below) shown to be due on such Tax
Returns and (iii) with respect to any period for which Tax Returns have not
yet been filed, or for which Taxes are not yet due or owing, has made due and
sufficient current accruals for such Taxes in its books and records in
accordance with generally accepted accounting principles and shall pay all
such Taxes as they become due and owing. For purposes of this subsection,
"Tax" shall mean any Federal, state or local tax of any kind whatsoever,
including any interest or penalty, and "Tax Return" shall mean any return,
declaration, report, claim for refund, information return, statement or other
similar document relating to Taxes;
(6) All payments of principal and interest on all Mortgage Debt
are current as of the date hereof. First Commercial is not in default in any
material respect of any loan or any other agreement to which it is a party
and, no event has occurred which with the giving of notice or passage of time
would become a default in any material respect under any such loan or under
any such agreement;
(7) First Commercial has not engaged in any business other than
the ownership, development, leasing and management of the Real Property and
the Excluded Assets, the Other Properties and the activities listed on Exhibit
"V" and has no subsidiaries and has never owned stock, shares or interests of
any kind whatsoever in any entity.
(d) It is agreed and understood that the Partnership intends to perform
its own due diligence, investigation and analysis in connection with the
transaction contemplated by this Agreement. If and to the extent that the
Partnership determines prior to the Due Diligence Termination Date that any or
all of the representations and warranties made in this Agreement by the
Members shall be untrue as a result of such due diligence, investigation or
analysis, the Partnership shall not be entitled to rely on such
representation(s) and warranty(ies) contained in this Agreement and the same
shall be deemed to have been deleted from this Agreement as to
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such matters. Accordingly, in the event that the Partnership has now or
hereafter acquires prior to the Due Diligence Termination Date actual
knowledge that one or more of the representations and warranties of the
Members are not true, no such fact or circumstance known to the Partnership
shall be made the basis of a claim by the Partnership of a breach of
representation or warranty by a Member, as the case may be.
(e) Notwithstanding anything to the contrary contained in this Agreement,
in the event any representation, agreement or undertaking made by the Members
in this Agreement shall prove to be false and the cost or expense incurred or
likely to be incurred by the Partnership as a result thereof shall not exceed
$100,000 in the aggregate, such misrepresentation, agreement or undertaking
shall be deemed "immaterial" and shall not give rise to any right of the
Partnership to terminate or refuse to close under this Agreement or give rise
to any right of action for money damages or specific performance and the
Partnership hereby waives all its rights, claims and remedies relating
thereto. The Partnership's sole remedy in the event any representation,
agreement or undertaking of the Members which is discovered by the Partnership
at or prior to the Closing herein shall prove to be false and the cost or
expense incurred or likely to be incurred by the Partnership as a result
thereof exceeds $100,000 shall be to terminate this Agreement by written
notice given at or prior to Closing, which notice shall specify in detail the
nature of the misrepresentation and identify in detail the costs incurred or
likely to be incurred by the Partnership, and thereupon the Partnership shall
receive a refund of the Deposit, and First Commercial shall reimburse the
Partnership for the Partnership's Reasonable Costs and Due Diligence Costs. To
the extent the Partnership has actual knowledge that any representation,
agreement or undertaking is false at or prior to the Closing, and does not or
is not permitted to terminate this Agreement, the Partnership hereby waives
all of its rights, claims and remedies relating thereto.
(f) The Partnership hereby represents and warrants as follows, all of
which shall be true and correct at, and as of, the Effective Date:
(1) The Partnership is a limited Partnership duly formed and
validly existing under the laws of the State of Delaware, and is in good
standing with the State of Delaware. The Partnership is duly registered as a
limited partnership under the laws of the Commonwealth of Pennsylvania and as
presently subsisting under such laws. The Trust is a real estate investment
trust duly formed and validly existing under the laws of the State of
Maryland, and is in good standing with the State Department of Assessments and
Taxation of Maryland.
(2) Subject to Paragraph 9(f)(5), below, the Partnership has
all necessary power and authority to enter into this Agreement, to perform its
obligations hereunder, and to consummate the transactions contemplated hereby,
without the consent or authorization of, or notice to, any third party, except
those third parties to whom such consents or authorizations have been or will
be obtained, or to whom notices have been or will be given, prior to the
Closing. This Agreement constitutes, and the other documents and instruments
to be
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delivered by the Partnership and the Trust pursuant hereto when delivered will
constitute, the legal, valid and binding obligations of the Partnership and
the Trust, as the case may be, enforceable against the Partnership and the
Trust in accordance with their respective terms.
(3) Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will (a) violate any
provision of any organizational document of the Partnership or the Trust, or
(b) constitute a violation of or be in conflict with or constitute a default
under any term or provision of any material agreement, instrument or lease to
which the Partnership or the Trust is a party.
(4) There is no litigation, proceeding or action pending, or,
to the best of the Partnership's knowledge, threatened against or relating to
the Partnership or the Trust which might materially and adversely affect the
ability of the Partnership or the Trust to consummate the transactions
contemplated hereby or which questions the validity of this Agreement or any
action taken or to be taken by the Partnership or the Trust pursuant hereto.
(5) The execution and delivery of this Agreement shall have
been approved by the Board of Trustees of the Trust on or prior to the Due
Diligence Termination Date and no further action shall thereupon be required
on the part of the Partnership or the Trust to consummate the transaction
contemplated hereby. The signatories for the Partnership are authorized and
empowered to bind the Partnership to this Agreement.
(6) Except as otherwise set forth in Paragraph 9(f)(5) above,
in connection with the listing application with the NYSE pursuant to Paragraph
17(d) and the registration of the Underlying Shares pursuant to the
Registration Rights Agreement attached hereto as Exhibit "K" and as required
by any applicable state securities or "blue sky laws", no consent, approval or
authorization of, or declaration, filing or registration with, any
governmental agency is required in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereunder by the Trust or the Partnership.
(7) The Partnership has sufficient funds available to
consummate the transactions contemplated by this Agreement, without the
necessity of third-party financing other than the Partnership's existing
revolving credit facility administered by NationsBank, N.A. The Partnership
acknowledges that its obligations hereunder are not conditioned upon any third
party financing or capital infusion by another party.
(8) The Units and any Common Shares issuable upon redemption of
the Units, upon issuance, if any, will be duly and validly issued, fully-paid
and non-assessable.
(9) The information contained in the 10-Ks, 10-Qs and 8-Ks were
prepared in all material respects in accordance with and complied in all
material respects with the requirements of the rules of the Securities and
Exchange Commission, and did
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not at the time that they were filed contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(10) Since September 30, 1997, there has been no event or
development that has had a material adverse effect on the business, assets or
financial condition of the Trust and its subsidiaries taken as a whole.
(11) The consolidated balance sheet of the Company and
its subsidiaries at September 30, 1997 reflects all liabilities of the Company
and its subsidiaries that are of a nature required to be set forth as a
liability on a consolidated balance sheet prepared in accordance with
generally accepted accounting principles, and since September 30, 1997 and
except as disclosed in the Trust's Quarterly Report for the Quarter ended
September 30, 1997 and in Current Reports on Form 8-K filed by the Trust
subsequent to such Quarterly Report, neither the Trust nor any of its
consolidated subsidiaries has incurred any liabilities which, individually or
in the aggregate, could reasonably be expected to have a material adverse
effect on the Trust and its subsidiaries taken as a whole.
(12) The Trust meets the requirements for qualification as a
real estate investment trust under Sections 856 through 860 of the Internal
Revenue Code and the rules and regulations thereunder as currently in effect.
(g) The Initial Members hereby represent and warrant, as follows, all of
which shall be true and correct at, and as of, the Effective Date:
(1) There is no litigation, proceeding or action pending or, to
the best of First Commercial's knowledge, threatened against or relating to
the Excluded Assets or the Other Properties (collectively "Other Assets")
which might materially and adversely affect First Commercial;
(2) First Commercial has not been served with written notice
that it has been named as a party in any litigation, administrative proceeding
or investigation naming First Commercial as a responsible party or potentially
responsible party for any liability for clean-up costs, natural resource
damages or other damages or liability for prior disposal or release of
Hazardous Substances, Hazardous Wastes or other environmental pollutants or
contaminants affecting the Other Assets. First Commercial has not received any
summons, citation, directive, letter or other written communication, from any
governmental or quasi-governmental authority concerning any intentional or
unintentional action or omission on First Commercial's part which either (a)
resulted in the releasing, spilling, leaking, pumping, pouring, emitting,
emptying or dumping of Hazardous Substances or Hazardous Wastes at the Other
Assets, or (b) related in any way to the generation, storage, transport,
treatment or disposal of Hazardous Substances or Hazardous Wastes at the Other
Assets.
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(3) First Commercial has not received written notice from any
governmental agency or authority of outstanding material violations issued by
governmental authorities having jurisdiction over the Other Assets.
(4) To the best of First Commercial's knowledge, the Other
Assets and the continued operation and use thereof comply with all other
applicable requirements of federal, state and local law, and all applicable
requirements of governmental bodies or agencies having jurisdiction thereof.
(5) (i) To the best of First Commercial's knowledge, no
Hazardous Substances and no Hazardous Wastes are present on the Other Assets
including, without limitation, asbestos, flammable substances, explosives,
radioactive materials, hazardous wastes, toxic substances, pollutants,
pollution, contaminant, PCBs, urea formaldehyde foam insulation, radon,
corrosive, irritant, biologically infectious materials, petroleum product,
garbage, refuse, sludge, hazardous or waste materials, and (ii) there has been
no use of the Other Assets that may, under any federal, state or local
environmental statute, ordinance or regulation, require, at any time, any
closure or cessation of the use or occupancy of the Other Assets and/or
impose, at any time, upon the owner of the Other Assets any clean-up or other
monetary obligation. To the best of First Commercial's knowledge, neither the
Other Assets nor any portion thereof, have been identified on the federal
CERLIS, the National Priorities List (40 C.F.R. Part 300, App. B) or any state
or local list of potential hazardous waste disposal sites or as an industrial
establishment. To the best of First Commercial's knowledge, during the period
of ownership of the Other Assets by First Commercial, there were no
underground storage tanks located on the Other Assets except as set forth on
Exhibit "BB" hereto, and there are no underground storage tanks located on the
Other Assets.
(6) To the best of First Commercial's knowledge, all debts,
liabilities, and obligations of First Commercial arising out of the ownership
and operation of the Other Assets have been paid as they become due and
payable and shall continue to be so paid from the date hereof until the
Closing Date.
(7) First Commercial is not and will not, at Closing, be
subject to liabilities of any nature, with respect to the Other Assets,
whether matured or unmatured, fixed or contingent, which could reasonably be
expected to have, individually or in the aggregate, a material adverse effect
upon First Commercial.
(8) For the purpose of Paragraph 9(g), all representations and
warranties with respect to the Other Properties for the period after First
Commercial sold to third parties such Other Property shall be limited such
that knowledge shall be based solely on written notice received by First
Commercial from third parties.
(h) As to any representation or warranty made in this Agreement which is
qualified as being to the best knowledge of the Partnership, the Members or
First
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Commercial, it is agreed and understood that such party shall be under no
obligation to conduct any independent investigation or inquiry regarding the
matters covered by such representation and warranty.
(i) All of the representations and warranties set forth in this
Paragraph 9 shall be deemed renewed by the applicable Members and the
Partnership on the Closing Date of the Initial Contribution, but not on the
Closing Date of the Subsequent Contribution (except that the representation
and warranties set forth in Paragraphs 9(b) and 9(c)(1) and (2), insofar as
such Paragraphs relate to the Members making the Subsequent Contribution,
shall be deemed renewed on the Closing Date of the Subsequent Contribution),
and shall, as a condition to each party's obligation to close on such date, be
recertified by each party as being true and correct in all material respects
as of the Closing Date as if made at such time (it being understood that
specific, numbered representations and warranties that speak of a specified
date shall only continue to speak as of the date so specified).
10. Access To The Property.
(a) The Partnership and/or its agents and representatives,
during normal business hours and after reasonable advance notice to First
Commercial, may enter into the office of First Commercial where its books and
records are located and enter upon any of the Real Property from time to time
prior to the Closing Date, accompanied by an agent of First Commercial, for
purposes of conducting such inspections, investigations and/or studies as the
Partnership deems necessary, including, without limitation, financial,
operational and historical reviews of the Real Property and First Commercial,
physical inspections, lease reviews and environmental reviews and testing,
which activities may include test borings and soil samplings (the
"Partnership's Due Diligence Activities"). The Partnership's access to the
Real Property shall be subject to the rights of the Tenants of any of the Real
Property, who shall not be unreasonably disturbed during any such inspection
by the Partnership. The Partnership shall not engage in any activity in or
about the Real Property which directly or indirectly violates the terms of any
governmental or quasi-governmental statute, rule, regulation, order or
practice. The Partnership shall not make any physical changes to any of the
Real Property, except for test borings and soil samplings which shall be
performed only by licensed engineers reasonably acceptable to First Commercial
and only after three (3) business days' prior notice to First Commercial. The
Partnership may contact any governmental or quasi-governmental authorities
concerning the Property without the prior written approval of First
Commercial. First Commercial shall have the opportunity to observe any and all
action taken by the Partnership or its representatives, consultants, agents,
etc. pursuant to this Paragraph 10. All information set forth in any document
which First Commercial has granted to the Partnership the express right to
review, if any, shall be held in strict confidence until Closing and
thereafter in the event Closing does not occur. If the Partnership violates
its obligations under this Paragraph 10(a) or in the event of any physical
damage to any of the Real Property or any Personal Property resulting,
directly or indirectly, from the exercise by the Partnership of its rights
under this Paragraph 10(a), the Partnership hereby agrees to restore the Real
Property and Personal Property to their
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respective conditions prior to incurring such damage. The Partnership hereby
agrees to indemnify, defend and hold harmless First Commercial from and
against all physical damage to any of the Real Property and Personal Property,
personal injury and/or any other claims or liability which may occur as a
result of the Partnership's (or the Partnership's agents, employees, invitees
or licensees) entry or activities upon any of the Real Property. The
provisions of this Paragraph 10(a) shall survive Closing or other termination
of this Agreement.
(b) The Partnership, or any of the Partnership's consultants
performing physical tests on the Real Property shall maintain public liability
insurance policies (naming First Commercial as an additional named insured
with respect to any liability occurring on the Real Property), with combined
single limit coverage of at least $1,000,000, insuring against claims arising
as a result of the inspections of the Partnership, its agents, employees or
such contractors at any of the Real Property. A certificate of insurance
evidencing the foregoing coverage shall be delivered to First Commercial prior
to the Partnership's or any of the Partnership's consultants' entry on to any
of the Real Property.
(c) In the event Closing does not occur or this Agreement is
terminated, the Partnership shall promptly return to First Commercial any
documents obtained from First Commercial or First Commercial's agents and
deliver to First Commercial upon request by First Commercial, without charge,
copies of all written test results, studies, reports and similar materials
obtained by or on behalf of the Partnership relating to any of the Real
Property.
11. Due Diligence Period; Additional Provisions.
(a) During the period commencing on the Effective Date and
ending at 5:00 p.m. E.S.T. on the Due Diligence Termination Date, the
Partnership may, subject to the provisions set forth in Paragraph 10 above,
review the matters described in Paragraph 10 and all plans and specifications,
condition of title (including without limitation the Permitted Exceptions),
agreements relating to and the availability of utilities, environmental
conditions, the physical condition of the existing Improvements, compliance by
the Property with zoning, licensing and all other governmental requirements,
Leases for any of the Real Property, operating statements, service contacts,
other contracts, loan documentation, and janitorial company operations
pertaining to the Property and all other aspects and conditions of the
Property and pertaining to First Commercial and First Commercial's past and
present activities and operations, which the Partnership may decide to review
(collectively also, the "Partnership's Due Diligence Activities"), all as the
Partnership shall deem appropriate). The Partnership's Due Diligence
Activities may include environmental, mechanical and engineering inspections
deemed appropriate by the Partnership, including complete inspection of all
roofs and all mechanical systems. All inspections will be conducted by the
Partnership only when accompanied by a representative of First Commercial. All
such inspections will be scheduled so as to minimize tenant disruption. During
the due diligence period the Partnership plans on conducting tenant interviews
and agrees to obtain First Commercial's authorization prior to conducting such
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interviews. In connection with the Partnership's Due Diligence Activities,
First Commercial has delivered or will deliver to the Partnership various
documents, reports and materials (collectively, the "First Commercial Due
Diligence Materials"). THE PARTNERSHIP UNDERSTANDS AND HEREBY ACKNOWLEDGES AND
AGREES THAT THE FIRST COMMERCIAL DUE DILIGENCE MATERIALS ARE BEING DELIVERED
TO THE PARTNERSHIP WITHOUT ANY REPRESENTATION OR WARRANTY WHATSOEVER BY FIRST
COMMERCIAL, THE MEMBERS OR BY THE PREPARER OF SUCH FIRST COMMERCIAL DUE
DILIGENCE MATERIALS, WITH THE SOLE EXCEPTION OF ANY REPRESENTATION OR WARRANTY
AS TO THE CORRECTNESS, ACCURACY OR COMPLETENESS THEREOF WHICH IS EXPRESSLY SET
FORTH IN THIS AGREEMENT.
(b) If, as a result of the Partnership's Due Diligence
Activities or otherwise, the Partnership shall conclude, for any reason or for
no reason, that it does not wish to proceed with the transaction contemplated
by this Agreement, it may terminate this Agreement by written notice delivered
to and received by the Members on or before 5:00 P.M. E.S.T. on the Due
Diligence Termination Date (as to which date time shall be of the essence),
with a simultaneous copy thereof to the Escrow Agent. In the event of such
timely termination of this Agreement by the Partnership, the Escrow Agent
shall make the delivery of funds contemplated under Paragraph 1 of the Escrow
Terms, and this Agreement shall thereupon be null and void and of no further
force or effect, except as to those matters which expressly survive such
termination.
(c) First Commercial shall prepare certificates (the "Estoppel
Certificates") for execution by the Tenants which shall be either in the form
annexed hereto as Exhibit "W" or the form which the Tenants are required to
execute and deliver under their Leases. The Initial Members agree to send to
all Tenants initially certificates based on the form annexed hereto as Exhibit
"W". The Initial Members agree to deliver the Estoppel Certificates to the
Tenants promptly after the Effective Date and to use all reasonable and
diligent efforts to obtain executed copies of same from such Tenants prior to
the Closing. It shall be a condition to the Partnership's obligations
hereunder that, at or prior to Closing, Estoppel Certificates shall have been
obtained from at least 75% of the Tenants at each Property, including those
identified on Exhibit "X" annexed hereto and made a part hereof (the
"Identified Tenants").
(d) The Members shall deliver to the Partnership on or before
March 31, 1998, the balance sheets and related combined statement of
operations, owner's deficit and cash flows of First Commercial for the year
ending December 31, 1997 and on or before ten (10) days after the Effective
Date, the statement of operations for the period ending February 28, 1998.
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12. Condemnation. The Members covenant and warrant that First Commercial
has not received any written notice of any condemnation proceeding or other
proceeding in the nature of eminent domain in connection with the Real
Property, and First Commercial has no knowledge of any threatened
condemnation. As used herein, a "material taking" shall mean a taking of
either an entire Real Property, more than ten percent (10%) of a building or
more than 10% of the parking area of a single Real Property. If, prior to the
Closing, any such proceeding is commenced, First Commercial shall promptly
notify the Partnership thereof. In the event of a material taking or
commencement of proceedings in connection with such a taking, the Partnership
may, at its sole option exercised by delivery of written notice thereof within
ten (10) days after receipt of such written notice thereof, (x) proceed to
Closing as provided in this Paragraph 12 without an abatement of the
Consideration and at Closing, First Commercial shall assign to the
Partnership, without recourse, all condemnation proceeds paid or payable with
respect thereto; or (y) terminate this Agreement with respect to the Property
as to which a material taking has occurred, whereupon this Agreement shall
terminate with respect to such Real Property and this Agreement shall continue
in full force and effect with respect to all of the remaining Real Property,
and at Closing, the Partnership shall pay to the Members the Consideration
with respect to the remaining Real Property as the parties shall mutually
agree upon. Provided the Partnership shall have waived its right to terminate
this Agreement with respect to the Real Property so taken, as provided above,
First Commercial shall not, from and after the Due Diligence Termination Date,
settle or adjust any claims relating to a condemnation without the
Partnership's prior approval, which shall not be unreasonably withheld or
delayed.
13. Damage By Fire Or Other Casualty.
(a) First Commercial shall promptly notify the Partnership of
material damage to the Improvements occurring by reason of casualty during the
period between the Effective Date and the Closing Date. First Commercial shall
timely notify any insurance companies with respect to any damage and shall
promptly submit claims for such damage. Provided the Partnership shall have
waived its right to terminate this Agreement with respect to the Real Property
so damaged, as provided below, First Commercial shall not, from and after the
Due Diligence Termination Date, settle or adjust any claims relating to a
casualty without the Partnership's prior approval, which shall not be
unreasonably withheld or delayed.
(b) If (i) less than 10% of a building or less than 10% of a
parking area of a single Real Property is damaged by fire or casualty after
the Execution Date and the Improvements so damaged are not repaired or
restored on or before Closing to substantially the condition existing prior to
the damage, and (ii) at the time of Closing, there shall be no abatement or
adjustment in the Consideration and, provided the loss or damage is a covered
loss under First Commercial's insurance policy, the Partnership shall be
required to purchase all of the Real Property in accordance with the terms of
this Agreement and, at Closing, First Commercial shall assign to the
Partnership, without recourse, all insurance claims and proceeds with respect
thereto (less sums theretofore expended, if any, by First Commercial for
emergency repairs or barricades) and the Members shall credit the Partnership
at Closing with the amount of any
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applicable deductible. The Members shall have no liability or obligation with
respect to the condition of any of the Real Property as a result of any such
fire or casualty. If more than 10% of a building or 10% of a parking area of a
single Real Property is so damaged and the Improvements so damaged have not
been completed as aforesaid, the Partnership may, at its sole option, (x)
proceed to Closing as provided in this Paragraph 13(b) without an abatement of
the Consideration and at Closing the Members shall assign to the Partnership,
without recourse, all insurance claims and proceeds with respect thereto (less
sums theretofore expended, if any, by First Commercial for emergency repairs
or barricades) and the Members shall credit the Partnership at Closing with
the amount of any applicable deductible; or (y) terminate this Agreement with
respect to the Property which suffered such damage whereupon this Agreement
shall terminate with respect to such damaged Real Property(s) and this
Agreement shall continue in full force and effect with respect to all of the
remaining Real Property, and at Closing, the Partnership shall pay to the
Members the Consideration with respect to the remaining Real Property as the
parties shall mutually agree upon. The Partnership shall assign, without
recourse, all of its right, title and interest in and to any and all insurance
policies and insurance proceeds relating to such of the Real Property for
which this Agreement has been terminated.
14. Default.
(a) If the Partnership shall default in its obligations to pay
the Consideration and complete Closing in accordance with the terms of this
Agreement, then, as the Members' sole and exclusive remedy therefor, the
Members shall be entitled to retain the Deposit as liquidated and agreed upon
damages for the losses and injuries which the Members shall have sustained and
suffered as a result of the Partnership's default, and thereupon this
Agreement and the Partnership's obligations hereunder shall be terminated
except as expressly provided in this Agreement. It is agreed that the
provisions of this Paragraph 14(a) for liquidated and agreed upon damages are
a bona fide provision for such and are not a penalty, the parties
understanding that by reason of the withdrawal of the Real Property from sale
to the general public at a time when other parties would be interested in
purchasing such Real Property, that the Members shall have sustained damages
which will be substantial, but will not be capable of determination with
mathematical precision. Therefore, this provision for liquidated and agreed
upon damages has been incorporated as part of this Agreement as a provision
beneficial to both parties.
(b) If the Members shall default in their obligation to deliver
any of items described in Paragraph 5 hereof, upon the Partnership's (i)
tender of the Initial Consideration and (ii) compliance with all of the
material terms and conditions of this Agreement, the Partnership shall have
the sole options of (x) terminating this Agreement and receiving the return of
the Deposit, together with payment by the Initial Members of the Partnership
Reasonable Costs, not to exceed in the aggregate Forty-Five Thousand ($45,000)
or (Y) to seek specific performance of the obligations of the Members and
First Commercial under this Agreement with no reduction of the Consideration
which is to be paid to the Members. If the Partnership elects to terminate
this Agreement, upon payment of the sums described above,
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First Commercial and the Members shall be released and relieved of any further
liability and this Agreement shall thereupon be null and void.
15. Operations Between the Effective Date and the Closing. Between the
Effective Date and the Closing:
(a) First Commercial shall operate the Property in the same
general manner as First Commercial has operated the Property during the
immediately preceding six (6) month period, paying all costs and expenses as
they come due, and in any event prior to Closing, and maintaining all
insurance coverage currently in force.
(b) First Commercial shall comply with all of the obligations
of landlord under the Leases and all other agreements and contractual
arrangements affecting the Real Property by which First Commercial is bound or
to which the Real Property, or any of them, are subject.
(c) First Commercial shall notify the Partnership promptly of
First Commercial's receipt of any notice from any party alleging that First
Commercial is in default of its obligations under any of the Leases or any
Permit or agreement affecting the Real Property, or any portion or portions
thereof.
(d) No contract for or on behalf of or affecting the Real
Property shall be negotiated or entered into which cannot be terminated by First
Commercial upon the Closing without the payment of a specific charge, cost,
penalty or premium for such termination.
(e) Except with the prior written consent of the Partnership,
which the Partnership agrees it shall not unreasonably withhold, condition or
delay, First Commercial shall not enter into any new leases for any portion of
the Real Property. Any new lease shall be on the Partnership's customary form
(which may vary to reflect customary negotiated revisions thereto), or such
other form which is reasonably acceptable to the Partnership. Further, except
with the prior written consent of the Partnership, which the Partnership
agrees it shall not unreasonably withhold, condition or delay, or as set forth
above, First Commercial shall not amend, extend (except where required under
the terms of the Lease in question), terminate (except by reason of a tenant's
default), accept surrender of, or permit any assignments or subleases of, any
of the Leases (except as may be required under such Lease), nor accept any
rental more than one (1) month in advance (exclusive of any security deposit).
(f) First Commercial shall not make or permit to be made any
capital improvements or additions to the Real Property, or any portion
thereof, without the prior written consent of the Partnership, except those
made by First Commercial pursuant to the express requirements of this
Agreement, those made by tenants pursuant to the right to do so under their
Leases, or by First Commercial if required by applicable law or ordinance, or
as required under any Lease.
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(g) First Commercial shall timely bill all tenants for all rent billable
under Leases, and use commercially reasonable efforts to collect any rent in
arrears.
(h) First Commercial shall notify the Partnership of any tax assessment
disputes (pending or threatened) prior to Closing, and from and after the Due
Diligence Expiration Date, First Commercial agrees not to seek any changes in
the real estate tax assessment, nor settle, withdraw or otherwise compromise
any pending claims with respect to tax assessments relating to the current or
any subsequent year, without the Partnership's prior written consent, which
shall not be unreasonably withheld, delayed or conditioned. If any proceedings
shall result in any reduction of assessment and/or tax for the tax year in
which the Closing occurs, it is agreed that the amount of tax savings or
refund for such tax year, less the reasonable fees and disbursements in
connection with such proceedings, shall be apportioned between the parties as
of the date real estate taxes are apportioned under this Agreement. All
refunds relating to any tax year prior to the Closing shall be the sole
property of First Commercial, and all refunds relating to any year subsequent
to the year in which Closing occurs shall be the sole property of the
Partnership. Each party agrees to promptly remit to the other any refund
received by it which is the property of the other.
(i) First Commercial shall notify the Partnership promptly of the
occurrence of any of the following:
(i) Receipt of notice from any governmental or quasi-
governmental agency or authority or insurance underwriter relating to the
condition, use or occupancy of the Real Property, or any portion thereof;
(ii) Receipt of any notice of default from any tenant or from
the holder of any lien or security interest in or encumbering the Real
Property, or any portion thereof;
(iii) Notice of any actual or threatened litigation against
First Commercial or affecting or relating to the Real Property, or any portion
thereof which may materially and adversely affect the Real Property or First
Commercial's ability to consummate the transactions contemplated by this
Agreement; or
(iv) Vacancy of any demised Property by a tenant, other than in
accordance with a scheduled lease termination.
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16. PROPERTY CONVEYED "AS-IS, WHERE IS". IT IS UNDERSTOOD AND AGREED
THAT, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT, FIRST
COMMERCIAL AND THE MEMBERS ARE NOT MAKING AND SPECIFICALLY DISCLAIM ANY
WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE ECONOMICAL, FUNCTIONAL, ENVIRONMENTAL OR PHYSICAL
CONDITION OF ALL OF THE PROPERTY, INCLUDING, BUT NOT LIMITED TO: (I)
WARRANTIES OR REPRESENTATIONS AS TO MATTERS OF TITLE, ZONING, TAX
CONSEQUENCES, PHYSICAL OR ENVIRONMENTAL CONDITIONS, AVAILABILITY OF ACCESS,
INGRESS OR EGRESS, OPERATING HISTORY OR PROJECTIONS, VALUATION, GOVERNMENTAL
APPROVALS, GOVERNMENTAL REGULATION, (II) THE VALUE, CONDITION,
MERCHANTABILITY, MARKETABILITY, PROFITABILITY, SUITABILITY OR FITNESS FOR A
PARTICULAR USE OR PURPOSE OF ANY OF THE PROPERTY, (III) THE MANNER OR QUALITY
OF THE CONSTRUCTION OR MATERIALS INCORPORATED INTO ANY OF THE PROPERTY AND
(IV) THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF ANY OF THE
PROPERTY. THE PARTNERSHIP AGREES THAT WITH RESPECT TO THE PROPERTY, THE
PARTNERSHIP HAS NOT RELIED UPON AND WILL NOT RELY UPON, EITHER DIRECTLY OR
INDIRECTLY, ANY REPRESENTATION OR WARRANTY OF FIRST COMMERCIAL OR THE MEMBERS
OR ANY AGENT OF FIRST COMMERCIAL OR THE MEMBERS NOT EXPRESSLY SET FORTH IN
THIS AGREEMENT. THE PARTNERSHIP REPRESENTS THAT IT IS A KNOWLEDGEABLE
PURCHASER OF REAL ESTATE AND THAT IT IS RELYING SOLELY ON ITS OWN EXPERTISE
AND THAT OF THE PARTNERSHIP'S CONSULTANTS, AND THE REPRESENTATIONS AND
WARRANTIES OF THE MEMBERS CONTAINED IN THIS AGREEMENT, SUBJECT, HOWEVER, TO
THE LIMITATIONS CONTAINED HEREIN UPON SUCH REPRESENTATIONS AND WARRANTIES, AND
THAT THE MEMBERS AND FIRST COMMERCIAL HAVE OR SHALL HAVE AFFORDED THE
PARTNERSHIP WITH A FULL AND COMPLETE OPPORTUNITY TO MAKE ITS OWN INDEPENDENT
INVESTIGATION OF THE PROPERTY AND ALL MATTERS PERTAINING THERETO INCLUDING,
BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF AND,
UPON CLOSING, SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING, BUT NOT
LIMITED TO, ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN
REVEALED BY THE PARTNERSHIP'S INSPECTIONS AND INVESTIGATIONS. THE PARTNERSHIP
ACKNOWLEDGES AND AGREES THAT, UPON CLOSING, THE PROPERTY SHALL BE ACCEPTED "AS
IS, WHERE IS," WITH ALL FAULTS, AND THERE ARE NO ORAL AGREEMENTS, WARRANTIES
OR REPRESENTATIONS (EXCEPT AS HEREIN SPECIFICALLY PROVIDED), COLLATERAL TO OR
AFFECTING ANY OF THE PROPERTY BY FIRST COMMERCIAL, THE MEMBERS OR ANY AGENT OF
FIRST COMMERCIAL AND THE MEMBERS OR ANY THIRD PARTY. THE PARTNERSHIP EXPRESSLY
AGREES THAT THE TERMS AND CONDITIONS OF THIS PARAGRAPH 16 SHALL EXPRESSLY
SURVIVE THE CLOSING AND NOT MERGE THEREIN AND FIRST COMMERCIAL OR THE MEMBERS
ARE NOT
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LIABLE OR BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENTS,
REPRESENTATIONS, OR INFORMATION PERTAINING TO ANY OF THE PROPERTY FURNISHED BY
ANY REAL ESTATE BROKER, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON, UNLESS THE
SAME ARE SPECIFICALLY SET FORTH OR REFERRED TO IN THIS AGREEMENT.
17. Conditions Precedent to Closing.
(a) The obligations of the Partnership hereunder are subject to
the fulfillment of the following conditions prior to or on the Closing Date
(any one of which may be waived in whole or in part by the Partnership at or
prior to the Closing) and in the event any of the conditions are not complied
with, the Partnership may terminate this Agreement by notifying the Members
and Escrow Agent and thereupon the Deposit shall be returned and thereafter
this Agreement shall be null and void:
(i) Correctness of Warranties and Representations. The
warranties and representations made by the Members in this Agreement shall be
true and correct on the Closing Date as though such representations and
warranties were made on the Closing Date (except for changes in the Leases
permitted under the terms of this Agreement).
(ii) Compliance with Terms and Conditions. First Commercial and
the Members shall have performed and complied in all material respects with
all of the terms and conditions required by this Agreement, including, without
limitation, the delivery of all required documents pursuant to Paragraphs 6(a)
and 6(b), to be performed and complied with by them prior to or on the Closing
Date.
(iii) The Partnership's Satisfaction with Inspection. The
Partnership shall have notified the Members of the Partnership's satisfaction
with the inspections performed under Paragraph 11 of this Agreement, or shall
fail to notify First Commercial on or before the Due Diligence Expiration
Date, of the Partnership's dissatisfaction with the results of such review.
(iv) Shareholder Approval; NYSE Approval. The Partnership shall
have received confirmation that the issuance of the Securities will not
require approval of the Trust's security holders under the rules of the NYSE.
In addition the Common Shares issuable upon redemption of the Units shall have
been approved for listing by the NYSE.
(v) 9.8% Limitation. The number of Underlying Shares shall not
exceed that number that is equal to 9.8% of the number of outstanding Common
Shares of the Trust.
(vi) Issuance of the Units. The issuance of the Units, if any,
shall be (A) exempt from the registration requirements of the Securities Act
and (B) either
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exempt from, or registered pursuant to, any applicable state securities or
"blue sky" registration requirements.
(b) The obligations of the Members hereunder are subject to the
fulfillment of the following conditions prior to or on the Closing Date (any
one of which may be waived in whole or in part by the Members at or prior to
the Closing) and in the event any of the conditions are not complied with, the
Members may terminate this Agreement by notifying the Partnership and Escrow
Agent and thereupon the Deposit shall be returned and thereafter this
Agreement shall be null and void:
(i) Corrections of Warranties and Representatives. The
warranties and representations made by the Partnership in this Agreement shall
be true and correct on the Closing Date as though such representations and
warranties were made on the Closing Date.
(ii) Compliance with Terms and Conditions. The Partnership
shall have performed and complied with all of the terms and conditions
required by this Agreement, including, without limitation, the delivery of all
required documents pursuant to Paragraphs 6(b) and 6(d), to be performed and
complied with by it prior to or on the Closing Date.
18. Brokers.
(a) The Members represent to the Partnership that neither the
Members nor First Commercial has dealt with any real estate broker, dealer or
salesman in connection with the subject transaction, except for Legg Mason
Real Estate Services, Inc. ("Broker") whose commission, fee and compensation
shall be paid by the Members pursuant to a separate agreement ("Legg Mason
Agreement") between the First Commercial and Broker. The Legg Mason Agreement
shall be assigned by First Commercial to the Members on or before the Closing.
The Members shall and hereby each agree to indemnify, defend, and hold
harmless the Partnership from and against any loss, damage, or claim resulting
from (i) a breach of the representation of the Members set forth in Paragraph
18(a) hereof or (ii) the Legg Mason Agreement.
(b) The Partnership represents to the Members that the Partnership has
not dealt with any real estate broker, dealer or salesman in connection with the
subject transaction, except for Broker whose commission, fee and compensation
shall be paid by the Members pursuant to the Legg Mason Agreement. The
Partnership shall and hereby agrees to indemnify, defend, and hold harmless
the Members from and against any loss, damage, or claim resulting from a
breach of the representation of the Partnership set forth in Paragraph 18(b)
hereof.
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<PAGE>
(c) The provisions of this Paragraph 18 shall survive Closing
hereunder, or any other termination of this Agreement.
19. Notices. All notices, requests and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
delivered (i) in person, or (ii) by certified mail, return receipt requested,
or (iii) by recognized overnight delivery service providing positive tracking
of items (for example, Federal Express), or (iv) by confirmed telecopier, in
each case addressed as follows (or at such other address of which First
Commercial or the Partnership shall have given notice as herein provided):
If to the Partnership or First Commercial after Closing, addressed to:
Brandywine Operating Partnership, L.P.
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
Attn: Gerard H. Sweeney,
President and Chief Executive Officer
with a copy in each instance to:
Brad A. Molotsky, General Counsel
Brandywine Operating Partnership, L.P.
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
and to:
Norman B. Berlin, Esquire
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
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If to First Commercial prior to Closing or the Members, addressed to:
John S. Trogner, Jr.
P.O. Box 0779
Camp Hill, PA 17001-0779
and to:
Blair S. Trogner, Sr.
P.O. Box 0779
Camp Hill, PA 17001-0779
with a copy in each instance to:
Brad J. Gunnison, Esquire
Buchanan Ingersoll, Professional Corporation
30 North Third Street, 8th Floor
Harrisburg, PA 17101
If to Escrow Agent, addressed to:
M. Gordon Daniels, Vice President/Counsel
Commonwealth Land Title Insurance Company
1700 Market Street
Philadelphia, PA 19103
or to such other address or addresses and to the attention of such other
person or persons as any of the parties may notify the other in accordance
with the provisions of this Agreement. All such notices, requests and other
communications shall be deemed to have been sufficiently given for all
purposes hereof only if given pursuant to the foregoing requirements as to
both manner and address, and only upon receipt (or refusal to accept delivery)
by the party to whom such notice is sent. Notices by the parties may be given
on their behalf by their respective attorneys.
20. Successors And Assigns. The Partnership may not assign this Agreement
or any rights herein or any portion hereof without the prior written consent
of the Members, which may be withheld for any reason or for no reason, except
that no such consent shall be required to an assignment of this Agreement by
the Partnership to subsidiary or related party of the Partnership (other than
the Trust). The Members may not assign this Agreement or any rights herein or
any portion hereof without the prior written consent of the Partnership, which
may be withheld for any reason or for no reason. This Agreement shall apply
to, inure to the benefit of and be binding upon and enforceable against the
parties hereto and their respective permitted successors and assigns, to the
same extent as if specified at length throughout this Agreement.
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<PAGE>
21. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original and all of which counterparts
together shall constitute one and the same Agreement.
22. Time Of The Essence. Time is of the essence of each and every
provision in this Agreement. If any time period or date ends on a day or time
which is a weekend, legal holiday or bank holiday, such period shall be
extended to the same time on the next business day.
23. Judicial Interpretation. Should any provision of this Agreement
require judicial interpretation, it is agreed that the court interpreting or
construing the same shall not apply a presumption that the terms hereof shall
be more strictly construed against one party by reason of the rule of
construction that a document is to be construed more strictly against the
party who itself or through its agent prepared the same, it being agreed that
the agents of all parties have participated in the preparation of this
Agreement.
24. Captions And Recitals. The captions contained herein are not a part
of this Agreement and are included solely for the convenience of the parties.
25. Entire Agreement. This Agreement and the Exhibits and
Schedules attached hereto contain the entire agreement between the parties
relating to the acquisition of the Property, all prior negotiations between
the parties are merged by this Agreement and there are no promises,
agreements, conditions, undertakings, warranties or representations, oral or
written, express or implied, between them other than as herein set forth. No
change or modification of this Agreement shall be valid unless the same is in
writing and signed by the parties hereto. No waiver of any of the provisions
of this Agreement, or any other agreement referred to herein, shall be valid
unless in writing and signed by the party against whom it is sought to be
enforced.
26. Governing Law; Venue.
(a) This Agreement and the rights and duties of the parties
hereto and the validity, construction, enforcement and interpretation of this
Agreement shall be governed by the laws of the Commonwealth of Pennsylvania.
(b) With regard to any litigation arising out of or involving
this Agreement, each party hereto: (i) irrevocably submits to the jurisdiction
of the state and federal courts of the Commonwealth of Pennsylvania and agrees
and consents to service of process being made upon it in any legal proceeding
arising out of or in connection herewith by service of process provided by the
law of the Commonwealth of Pennsylvania; (ii) irrevocably waives, to the
fullest extent permitted by law, any objection which it now or hereafter may
have to the laying of venue of any litigation arising out of or in connection
with this Agreement brought in the Courts of the Commonwealth of Pennsylvania
where the Property is located or the United States District Court for the
Middle District of Pennsylvania; (iii) irrevocably waives any claims
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that any litigation brought in any such court has been brought in an
inconvenient forum; and (iv) irrevocably agrees that any legal proceeding
against any party hereto arising out of or in connection with this Agreement
shall be brought in either the State Courts of Pennsylvania or the United
States District Court in the District of Pennsylvania where the Property is
situate.
27. Confidentiality. Each of the parties to this Agreement covenants that
it shall not communicate the terms or any aspect of this transaction prior to
the Closing with any person or entity other than the other parties to this
Agreement, except for the Trust, and the Partnership's agents, consultants,
counsel and representatives in connection with the Partnership's Due Diligence
Activities and financing purposes, and except for the Members' agents,
consultants, counsel and representatives in connection with this Agreement,
unless the Trust is advised by its counsel that applicable securities laws and
regulations require disclosure. In addition, the Partnership covenants that if
it undertakes any investigation of the Property, it shall conduct such
investigation of the Property as described herein and with the same degree of
confidentiality as the Partnership would apply with respect to its own
proprietary information. Notwithstanding the foregoing the Partnership may
file this Agreement as an exhibit to any filings of the Partnership or the
Trust with the Securities and Exchange Commission, and, at any time after
expiration of the Due Diligence Period, the Partnership may issue one or more
press releases which shall not identify the individual Members or the amount
of consideration received by individual Members, if necessary or appropriate
to comply with applicable securities laws and regulations, which press
releases, shall be reasonably satisfactory to the Members (provided, the
Members deliver any comments to the Partnership within twenty-four hours of
the Members receipt of the draft press release).
28. Limitation Of Liability.
(a) No recourse shall be had for any obligation of the
Partnership or the Trust under this Agreement or under any document executed
in connection herewith or pursuant hereto, or for any claim based thereon or
otherwise in respect thereof, against any past, present or future trustee,
shareholder, partner, officer or employee 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 Members and all parties
claiming by, through or under the Member.
(b) The liability of each Member for any obligation of the
Members under this Agreement and any document executed in connection herewith
or pursuant hereto shall be limited to the portion of the Net Consideration
paid to such Member.
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<PAGE>
29. SEC Reporting Requirements. For the period of time commencing on the
date hereof and continuing through the first anniversary of the Closing Date,
First Commercial and the Members shall, from time to time, upon reasonable
advance written notice from the Partnership, provide the Trust and its
representatives, with access to all financial and other information then in
First Commercial's possession pertaining to the period of First Commercial's
ownership and operation of the Real Property, which information is relevant
and reasonably necessary, in the opinion of the Trust's outside, third party
accountants (the "Accountants"), to enable the Trust and its Accountants to
prepare financial statements in compliance with any or all of (a) Rule 3-05 or
3-14 of Regulation S-X of the Securities and Exchange Commission (the
"Commission"), as applicable; (b) any other rule issued by the Commission and
applicable to the Trust; and (c) any registration statement, report or
disclosure statement filed with the Commission by, or on behalf of the Trust.
First Commercial and the Members shall deliver to the Trust's accountants a
representation letter (the "Letter"), in the form of Exhibit "Y" attached
hereto. The Partnership acknowledges that First Commercial and the Members are
not making any representation or warranty regarding such information as is
delivered in accordance with the terms of this Paragraph except to the extent
set forth in the Letter or otherwise expressly set forth in this Agreement.
30. Partial Invalidity. If any term, covenant or condition of this
Agreement, or the application thereof, to any person or circumstance shall be
invalid or unenforceable at any time or to any extent, then the remainder of
this Agreement, or the application of such term, covenant or condition to
persons or circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby. Each term, covenant and
condition of this Agreement shall be valid and enforced to the fullest extent
permitted by law.
31. No Recordation. Except as set forth in Paragraph 27, the Partnership
shall not be entitled to record this Agreement or a memorandum or other notice
of this Agreement in any public office. This Paragraph shall be deemed to be a
specific directive to the officials of such public office NOT to accept this
Agreement or a memorandum or other notice of this Agreement for recordation in
any form whatsoever. Any violation of the provisions of this Paragraph 31
shall constitute an immediate default by the Partnership under this Agreement.
32. Tender. Formal tender of an executed assignment of partnership
interests and purchase money is hereby waived by the Partnership.
33. Further Assurances. After the Closing, the Members shall execute,
acknowledge and deliver, for no further consideration, all assignments,
transfers, deeds and other documents as the Partnership may reasonably request
to vest in the Partnership and perfect the Partnership's right, title and
interest in and to the First Commercial Partnership Interests and the
Property.
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<PAGE>
34. JURY TRIAL WAIVER. THE PARTNERSHIP AND THE MEMBERS HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE (TO THE EXTENT PERMITTED BY APPLICABLE LAW)
ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR
RELATING TO THIS AGREEMENT AND AGREE THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE
A JUDGE SITTING WITHOUT A JURY.
35. NO OFFER. THE DELIVERY OF THIS AGREEMENT DOES NOT CONSTITUTE AN OFFER
AND THIS AGREEMENT SHALL NOT BE BINDING AND SHALL HAVE NO FORCE AND EFFECT
UNLESS AND UNTIL A FULLY EXECUTED COUNTERPART HEREOF HAS BEEN DELIVERED TO
EACH OF THE PARTIES. IT IS EXPRESSLY UNDERSTOOD THAT THE PARTNERSHIP AND THE
MEMBERS HAVE NO OBLIGATION TO EXECUTE THIS AGREEMENT.
36. Indemnification. Subject to the limitations set forth in Paragraphs
14 and 28 of this Agreement:
(a) The Initial Members shall indemnify, defend and save and hold
harmless the Partnership and the Trust, and their respective partners,
trustees, directors, officers and employees, of, from and against any and all
loss, cost, expense, damage, claim, and liability, including reasonable
attorney's fees and court costs, including, without limitation, attorney's
fees and out-of-pocket costs associated with the enforcement of the Initial
Members' indemnification obligations (hereinafter collectively, "Losses")
which the Partnership or the Trust may suffer or incur, resulting from,
relating to, or arising in whole or in part, from or out of (A) any
misrepresentation or breach of a representation or warranty by the Members
contained in this Agreement; (B) any failure to fulfill any covenant or
agreement of the Members contained in this Agreement; (C) all litigation set
forth in this Agreement and on Exhibits hereto; (D) the Excluded Liabilities;
(E) the deposit, storage, disposal, burial, dumping, injecting, spilling,
leaking, or other placement or release in or on the Other Assets of Hazardous
Substances or Wastes during First Commercial's periods of ownership prior to
Closing; (F) Taxes of First Commercial relating to the period prior to
Closing; and (G) any and all actions, suits, investigations, proceedings,
demands, assessments, audits, judgments, and/or claims arising out of or
relating to any of the foregoing.
(b) The Partnership shall indemnify, defend and save and hold
harmless the Members 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 out-of-pocket costs
associated with the enforcement of the Partnership's indemnification
obligations (hereinafter collectively also, "Losses") which the Members may
suffer or incur, resulting from, relating to, or arising in whole or in part,
from or out of (A) any misrepresentation or breach of a representation or
warranty by the Partnership contained in this Agreement; (B) any failure to
fulfill any covenant or agreement of the Partnership contained in
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<PAGE>
this Agreement; and (C) any and all actions, suits, investigations,
proceedings, demands, assessments, audits, judgments, and/or claims arising
out of or relating to any of the foregoing.
(c) Promptly after receipt by the indemnified party (the
"Indemnified Party") of written notice of the commencement of any suit, audit,
demand, judgment, action, investigation or proceeding (a "Third Party Action")
or promptly after the Indemnified Party incurs a Loss or has knowledge of the
existence of a Loss, the Indemnified Party will, if a claim with respect
thereto is to be made against the indemnifying party (the "Indemnifying
Party") due to the Indemnifying Party's obligation to provide indemnification
hereunder, give the Indemnifying Party 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 the
Indemnifying Party of any of its obligations hereunder. Promptly after
receiving such notice, the Indemnifying Party will, upon notice to the
Indemnified Party, 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 the Indemnifying Party that the Indemnifying Party 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, the Indemnifying Party shall be responsible to satisfy
and discharge such Third Party Action. The Indemnifying Party shall not enter
into any resolution or other compromise of a Third Party Action without
obtaining the complete release of the Indemnified Party, as appropriate, for
any liability to all claimants under or pursuant to such Third Party Action.
The Indemnified Party shall have the right to participate in any such defense,
contest or other protective action at its own cost and expense.
(d) Notwithstanding the foregoing, the Indemnified Party shall
have the right to assume and control the defense and settlement of a Third
Party Action (a) if such action includes claims for equitable relief which, if
determined adversely to the Indemnified Party could reasonably be expected to
interfere with its intended business operations or damage its business
reputation or (b) if the Indemnifying Party fails to do so in a timely manner.
In any circumstances in which the Indemnified Party 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 the Indemnifying Party provided,
however that in the case of the Partnership or the Trust as the Indemnified
Party, such written consent may not be withheld if it would interfere with the
Partnership's or the Trust's, business operation and (ii) keep the
Indemnifying Party informed on an ongoing basis of the status of such Third
Party Action and shall deliver to the Indemnifying Party, copies of all
documents related to the Third Party Action reasonably requested by the
Indemnifying Party. The Indemnified Party shall act to assure that all
attorneys' fees and expenses incurred in connection therewith are reasonable.
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<PAGE>
(e) The indemnification obligations under this Agreement shall
survive the Closing, with respect to Claims (hereinafter defined) which occur
during the applicable survival period, as follows:
(i) with respect to representations and warranties of the
Members: all indemnification obligations relating to the matters set forth in
Paragraphs 9(a) (other than Paragraph 9(a)(7)) and 9(b) shall survive for the
period ending December 31, 1998;
(ii) all indemnification obligations relating to the matters
set forth in Paragraph 9(c) and Paragraph 9(a)(7) shall survive for the period
ending March 31, 2000;
(iii) all indemnification obligations under Paragraphs 18 and
36(a)(E) and with respect to Paragraph 2(b) and Paragraph 5(a) but only in
regard to transfer taxes, shall survive indefinitely; and
(iv) all indemnification obligations under Paragraph 36(a)(F)
shall survive for a period ending on the applicable statute of limitations.
(v) In circumstances where an indemnification obligation
relates to a representation or warranty in Paragraphs 9(c) and/or 9(g) which
covers the same subject matter as a representation and warranty regarding the
Property (as opposed to First Commercial) in Paragraph 9(a), such
indemnification obligation shall survive for the period ending December 31,
1998 insofar as it covers such common subject matter;
(vi) with respect to other indemnities of the Members under
this Agreement, the indemnification obligations shall survive for the period
ending December 31, 1998 insofar as such indemnification obligations relate to
the Property and for the period ending March 31, 2000 insofar as such
indemnification obligations relate to the Other Assets.
(vii) With respect to the indemnification obligations of the
Partnership, the indemnification obligations of the Partnership shall survive
for the period ending December 31, 1998;
(viii) Notwithstanding the other provisions of Paragraph 36,
insofar as the indemnification obligations under Paragraphs 36(a)(B) and
36(b)(B) relate solely to the payment of the Subsequent Consideration and the
making of the Subsequent Contribution, such indemnification obligations shall
survive for the period ending three months after the scheduled closing date of
the Subsequent Contribution; and
(ix) For the purpose of this Paragraph 36(e), the term "Claim"
shall mean any written or oral demand, claim, suit, action, expense, cause of
action or potential cause of action, investigation, or notice by any person or
entity alleging actual or potential
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<PAGE>
liability or losses which is the subject of a notice from the Indemnified
Party to the Indemnifying Party on or before the expiration of the applicable
survival period.
(x) Except in the case of fraud by the Partnership, Members, or
by First Commercial prior to Closing, the indemnification obligations under
this Agreement shall be the sole and exclusive recourse of a party to this
Agreement in the event of a breach or alleged breach of any representation,
warranty, covenant, agreement or undertaking of any nature whatsoever under
this Agreement.
(xi) The indemnification obligations set forth under Paragraph
36(a)(G) shall survive for the period applicable to the relevant substantive
indemnification obligation as set forth in this Paragraph 36(e).
37. Representative of the Members; Actions of the Members; Reliance by
the Partnership. The affirmative approval of John S. Trogner, Jr. and Blair S.
Trogner, Sr. shall be sufficient to fully authorize prior to, on, or after the
Closing, on behalf of the Members, the exercise of any rights and the
performance of any obligations under this Agreement. All of the Members and
the Partnership shall be entitled to rely upon a document, agreement, or
instrument (collectively, "Instrument") signed by John S. Trogner, Jr. and
Blair S. Trogner, Sr. with respect to the matters set forth in the Instrument
in connection with any action required or permitted to be taken by or on
behalf of the Members under this Agreement. The Instrument attached hereto as
Exhibit "Z" is irrevocable and may be relied upon by all of the Members and
the Partnership. The Instrument shall specify the person who may deliver or
receive notices or take actions in connection with the matters set forth in
the Instrument. Such delivery, receipt or action shall be conclusively deemed
to have been made or taken on behalf of the Members, and the Members and the
Partnership and all persons shall be entitled to rely thereon in taking or
refraining from taking any action under or in connection with this Agreement.
38. Acts of First Commercial. Whenever this Agreement calls for certain
action to be undertaken by First Commercial on or before the Closing, the
Members shall have the obligation to cause First Commercial to undertake such
action and the failure of First Commercial to undertake such action shall
constitute a failure of the Members to perform their obligations under this
Agreement.
39. Acts of the Partnership. The Partnership hereby designates Gerard H.
Sweeney with respect to matters generally and George Hasenecz with respect to
leasing matters as its duly authorized communications representative for all
purposes of the transactions under this Agreement.
40. Facsimile Signatures. This Agreement may be executed by facsimile
signatures, which shall be followed by hard copy signatures as soon as is
practical. Facsimile signatures shall be sufficient to bind the signors to
this Agreement.
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<PAGE>
41. Knowledge of Members and First Commercial. For purposes of this
Agreement, the terms "knowledge," "best knowledge," and "actual knowledge" or
similar words or phrases, in the case of the Members and First Commercial,
shall relate only to John S. Trogner, Jr., Blair S. Trogner, Sr., and John S.
Trogner, Sr.
[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, intending to be legally bound hereby,
the parties have duly executed this Agreement as of the day and year first
above stated.
THE MEMBERS LISTED ON SCHEDULE "1"
TO THIS AGREEMENT
/s/John S. Trogner, Sr.
-------------------------------------------------------
John S. Trogner, Sr.
/s/John S. Trogner, Jr.
-------------------------------------------------------
John S. Trogner, Jr.
/s/Blair S. Trogner, Sr.
-------------------------------------------------------
Blair S. Trogner, Sr.
/s/Emma B. Trogner
-------------------------------------------------------
Emma B. Trogner
/s/Ronalee B. Trogner
-------------------------------------------------------
Ronalee B. Trogner
/s/Candis S. Trogner
-------------------------------------------------------
Candis S. Trogner
/s/John S. Trogner, III
-------------------------------------------------------
John S. Trogner, III
/s/Christopher D. Trogner
-------------------------------------------------------
Christopher D. Trogner
/s/Matthew A. Trogner/John S. Trogner, Jr. as
-------------------------------------------------------
Matthew A. Trogner Guardian for
/s/Blair S. Trogner, Jr.
-------------------------------------------------------
Blair S. Trogner, Jr.
/s/Franklin C. Trogner
-------------------------------------------------------
Franklin C. Trogner
[EXECUTIONS CONTINUED ON NEXT PAGE]
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<PAGE>
[EXECUTIONS CONTINUED FROM PREVIOUS PAGE]
/s/Kristen Trogner Barr
-------------------------------------------------------
Kristen Trogner Barr
/s/Steven A. Trogner
-------------------------------------------------------
Steven A. Trogner
[EXECUTIONS CONTINUED ON NEXT PAGE]
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[EXECUTIONS CONTINUED FROM PREVIOUS PAGE]
THE PARTNERSHIP:
BRANDYWINE OPERATING PARTNERSHIP,
L.P.
By: BRANDYWINE REALTY TRUST, its sole
general partner
By: /s/Gerard H. Sweeney
-------------------------------
Gerard H. Sweeney
President and Chief Executive Officer
The Undersigned Hereby Acknowledges
Receipt Of The Deposit And Agrees To
Hold And Apply The Same In Accordance
With The Provisions Of The Escrow Terms
Commonwealth Land Title Insurance Company
By: /s/M. Gordon Daniels
--------------------------------------------
M. Gordon Daniels, Vice President/Counsel
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<TABLE>
<CAPTION>
LIST OF EXHIBITS
<S> <C>
Exhibit A Description of Land
Exhibit B List of Contracts
Exhibit C Leases and Certified Rent Roll; Options and Rights of First Refusals
Exhibit D Additional Permitted Exceptions
Exhibit E Excluded Personal Property
Exhibit F-1 Certain Excluded Assets
Exhibit F-2 Other Properties
Exhibit G List of Mortgage Debt
Exhibit H Form of Guaranty
Exhibit I Amended and Restated Agreement of Limited Partnership
Exhibit J Form of Non-Foreign Person Certification
Exhibit K Registration Rights Agreement
Exhibit L Tax Indemnification Agreement
Exhibit M Brokerage Commission - Lease Renewals
Exhibit N Members - Brokerage Commissions
Exhibit O Pending Litigation
Exhibit P Contracts Not Terminable with 30 days Notice
Exhibit Q Environmental Notices
Exhibit R Outstanding Brokerage Commissions, TI and Management Fees
Exhibit S Violations of Applicable Requirements
Exhibit T Historic Environmental Reports
Exhibit U Disclosed Liabilities
Exhibit V Historical Business Activities and Operations of First Commercial
Exhibit W Form of Estoppel Certificate
Exhibit X Identified Tenants
Exhibit Y Representation Letter
Exhibit Z Instrument - Members
Exhibit AA RFR Letters
Exhibit BB Underground Storage Tank Removed from Other Assets
</TABLE>
<PAGE>
FIRST COMMERCIAL DEVELOPMENT COMPANY
COMMERCE PARK
CORPORATE CENTER 81
CAMP HILL CORPORATE CENTER
FIRST AMENDMENT TO
CONTRIBUTION AGREEMENT
AMONG
THE MEMBERS OF FIRST COMMERCIAL DEVELOPMENT
COMPANY LISTED ON SCHEDULE 1 TO THIS AGREEMENT
AND
BRANDYWINE OPERATING PARTNERSHIP, L.P.
Dated as of May 8, 1998
<PAGE>
FIRST AMENDMENT TO CONTRIBUTION AGREEMENT
THIS FIRST AMENDMENT TO CONTRIBUTION AGREEMENT ("Amendment") is made and
entered into as of the 8th day of May, 1998 by and among THE MEMBERS OF FIRST
COMMERCIAL DEVELOPMENT COMPANY LISTED ON SCHEDULE "1" HERETO (together, the
"Members") having the addresses set forth on Schedule "1" hereto and BRANDYWINE
OPERATING PARTNERSHIP, L.P., a Delaware limited partnership or its nominee,
having an address at Newtown Square Corporate Campus, 16 Campus Boulevard, Suite
150, Newtown Square, Pennsylvania 19073 (the "Partnership").
RECITALS
A. First Commercial Development Company ("First Commercial") is a
Pennsylvania limited partnership whose general partner and limited partners are
listed on Schedule "1" attached hereto (the general partner and the limited
partners are collectively the "Members").
B. First Commercial is the owner of a certain tract of land, together
with the buildings and improvements thereon, including four (4) office buildings
containing approximately 71,728 net rentable square feet in Commerce Park,
commonly known as 2401, 2404, 2405 and 2407 Park Drive, Harrisburg, Susquehanna
Township, Pennsylvania.
C. First Commercial is the owner of a certain tract of land, together
with the buildings and improvements thereon, including four (4) office buildings
containing approximately 61,821 net rentable square feet in Corporate Center 81,
commonly known as 600 and 800 Corporate Circle and 200 and 500 Nationwide Drive,
Harrisburg, Susquehanna Township, Pennsylvania.
D. First Commercial is the owner of a certain tract of land, together
with the buildings and improvements thereon, including three (3) office
buildings containing approximately 277,092 net rentable square feet in Camp Hill
Corporate Center, commonly known as 150, 200 and 300 Corporate Center Drive,
East Pennsboro Township, Pennsylvania.
E. The Members and the Partnership entered into a Contribution
Agreement ("Agreement"), dated as of April 7, 1998 under which the Members
agreed to contribute, and the Partnership agreed to acquire or accept, certain
of the Members' right, title and interest as partners in and to First Commercial
(the "First Commercial Partnership Interests"), subject to and on the terms and
conditions contained therein.
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F. The Members and the Partnership desire to amend the Agreement as
hereinafter set forth.
NOW THEREFORE, in consideration of the mutual promises and agreements
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Definitions Of Certain Terms. For all purposes of this Amendment,
the defined terms shall have the meanings set forth in the Agreement. The term
"Survival Agreements" shall mean the Survival Agreement, dated April 4, 1985,
among the Susquehanna Township Industrial Development Authority, (the
"Authority"), First Commercial and First Federal Savings and Loan Association of
Philadelphia ("Federal") and the Survival Agreement, dated September 24, 1984
between the Authority, First Commercial and First Federal.
2. Amendment of Agreement. The Agreement is hereby amended as follows:
(a) Unit Pricing. For the purpose of Paragraph 3(d), the parties
have agreed that the Computed Market Price shall mean $23.75
notwithstanding the formula for calculating the Computed Market
Price set forth in Paragraph 3(d).
(b) Restrictions of Units from Sale. Paragraph 3(g) is amended in
its entirety to read as follows:
(g) The Units to be issued to the Members will be restricted
from sale for one year as provided in the Partnership
Agreement of the Partnership.
(c) Guaranty of First Commercial Indebtedness - Paragraphs 3(e)(i)
and 3(e)(ii). Paragraphs 3(e)(i) and 3(e)(ii) are hereby amended
in their entirety to read as follows:
(e)(i) It is the intent of the parties to this Agreement that
the transaction qualify as a tax-deferred contribution by
the Members to the Partnership of the First Commercial
Partnership Interests under Section 721 of the Code with
respect to the receipt of Units by the Members.
(e)(ii) At the request of the Members, the Partnership shall
provide the Members with an allocation of additional debt
(through guarantees in the form attached hereto as Exhibit
"H" or otherwise) of both the Partnership and First
Commercial to provide the Members with sufficient tax basis
to defer at Closing income tax recognition in connection
with the Section 721 contribution to the Partnership and the
retention of continuing interests in First Commercial.
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(d) The Tax Indemnification Agreement attached as Exhibit "L" to the
Agreement, is replaced in its entirety by the Tax
Indemnification Agreement attached hereto as Exhibit " L " and
shall be known as Exhibit "L " to this Agreement.
(e) Paragraph 6(b) is amended to add the following new subsection
(vii) as follows:
(vii) Amendments to the guarantees issued at closing pursuant to
Paragraph 2(e)(ii) under which the total amount of the
guarantee shall increase to amounts aggregating in not
excess of $1,275,000.00.
(f) Indemnification - Paragraph 36(a). Paragraph 36(a) of the
Agreement is amended as follows:
(i) Subparagraph (G) shall become Subparagraph (H); and
(ii) A new Subparagraph (G) shall be inserted as follows:
"(G) the Survival Agreements;"
(g) Survival of Indemnification - Paragraph 36(e). Paragraph 36(e)
of the Agreement is amended as follows:
(i) Paragraph 36(e)(iii ) is amended by inserting the words "and
36(a)(G) after the words "Paragraph 36(a)(E)."
(ii) Paragraph 36(e)(xi) is amended by changing the reference
"Paragraph 36(a)(G)" to "Paragraph 36(a)(H)."
(3) Effect of Amendment. Except as set forth herein, the Agreement shall
continue unamended and in full force and effect.
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IN WITNESS WHEREOF, intending to be legally bound hereby, the parties
have duly executed this Amendment as of the day and year first above stated.
THE MEMBERS LISTED ON
SCHEDULE "1" TO THIS
AGREEMENT
/s/ John S. Trogner, Sr.
-------------------------------
John S. Trogner, Sr.
/s/ John S. Trogner, Jr.
-------------------------------
John S. Trogner, Jr.
/s/ Blair S. Trogner, Sr.
-------------------------------
Blair S. Trogner, Sr.
/s/ Emma B. Trogner
-------------------------------
Emma B. Trogner
/s/ Ronalee B. Trogner
-------------------------------
Ronalee B. Trogner
/s/ Candis C. Trogner
-------------------------------
Candis C. Trogner
The Members listed on Attachment 1 to this
Amendment
By: /s/ John S. Trogner, Jr.
---------------------------
John S. Trogner, Jr.
By: /s/ Blair S. Trogner, Sr.
---------------------------
Blair S. Trogner, Sr.
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THE PARTNERSHIP:
BRANDYWINE OPERATING
PARTNERSHIP, L.P.
By: /s/ Gerard H. Sweeney
---------------------------
BRANDYWINE REALTY TRUST,
its sole general partner
By: /s/Gerard H. Sweeney
---------------------------
Gerard H. Sweeney, President and
Chief Executive Officer
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Attachment 1
John S. Trogner, III
Christopher D. Trogner
Matthew A. Trogner
Blair S. Trogner, Jr.
Franklin C. Trogner
Kristen Trogner Barr
Steven A. Trogner
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<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of the 8th day of May,
1998, is entered into by and among BRANDYWINE REALTY TRUST, a Maryland real
estate investment trust (the "Trust"), BRANDYWINE OPERATING PARTNERSHIP, L.P.,
a Delaware limited partnership (the "Partnership"), and John S. Trogner, Sr.,
John S. Trogner, Jr., Blair S. Trogner, Sr., Emma B. Trogner, Ronalee B.
Trogner and Candis C. Trogner (collectively, the "Investors").
RECITALS
WHEREAS, the Investors hold ownership interests in certain
properties (the "Properties"). The ownership interests in the Properties will
be contributed to or at the direction of the Partnership in exchange for a
combination of cash and units of limited partnership interest ("Units") in the
Partnership in accordance with the terms of that certain Contribution
Agreement, dated as of April 7, 1998, by and among the Partnership, the
Investors and the other signatories thereto (the "Contribution Agreement");
WHEREAS, pursuant to the Partnership Agreement (as defined
below), the Units will be redeemable for cash or common shares of beneficial
interest, par value $.01 per share, of the Trust (the "Common Shares") upon
the terms and subject to the conditions contained therein.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, and for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. Definitions. In addition to the definitions set forth above, the
following terms, as used herein, have the following meanings:
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under common control with such
Person. For the purposes of this definition, "control", when used with respect
to any Person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement" means this Registration Rights Agreement, as it may be
amended, supplemented or restated from time to time.
"Business Day" means any day except a Saturday, Sunday or other
day on which commercial banks in New York, New York are authorized by law to
close.
"Commission" means the United States Securities and Exchange
Commission.
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"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Partnership Agreement" means the Amended and Restated Agreement
of Limited Partnership of the Partnership, dated as of November 18, 1997, as
previously amended and as the same may hereafter be amended, modified or
restated from time to time.
"Person" means an individual or a corporation, partnership,
limited liability company, association, trust, or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Registrable Securities" means any Common Shares issued or
issuable upon redemption of Units issued or issuable pursuant to the
Contribution Agreement; provided that such securities shall cease to
constitute Registrable Securities once: (i) a registration statement covering
such securities has been declared effective by the Commission and such
securities have been sold or transferred pursuant to such effective
registration statement; (ii) such securities may be sold pursuant to Rule
144(k) under the Securities Act; or (iii) such securities are sold pursuant to
Rule 144 under the Securities Act.
"Registration Expenses" means all expenses incident to the Trust's
performance of or compliance with Article 2, including, without limitation,
all registration and filing fees, all listing fees, all fees and expenses of
complying with securities or blue sky laws, and printing expenses, the fees
and disbursements of counsel for the Trust and of the Trust's independent
public accountants, but excluding fees and disbursements of counsel or other
advisors for the Investors and excluding any brokerage discounts or
commissions payable in connection with a sale of Registrable Securities.
"Rule 144" means Rule 144 under the Securities Act, as amended
from time to time (or any successor statute).
"Securities Act" means the Securities Act of 1933, as amended.
2. Registration Rights.
2.1 Registration Requirement.
2.1.1 Registration of Registrable Securities. Within 90 days
after the date hereof, the Trust shall prepare and file with the Commission,
and shall thereafter use its commercially reasonable efforts to cause to
become effective, a "shelf" registration statement under the Securities Act
covering the reoffer and resale of the Registrable Securities by the Investors
in an offering to be made on a continuous basis pursuant to Rule 415 under the
Securities Act.
2.1.2 Registration of Other Securities. Whenever the Trust
shall effect a registration pursuant to this Section 2.1, holders of
securities of the Trust who have
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registration rights may include all or a portion of such securities in such
registration and in the related registration statement.
2.1.3 Registration Statement Form S-3. Registrations under
this Section 2.1 shall only be required to be made on Form S-3, or any
successor form. In the event the Trust is not eligible to use Form S-3 to
register the Registrable Securities, it may delay the filing of the applicable
registration statement until that date on which the Trust is again eligible to
file a Form S-3. The Trust hereby represents and warranties to the Investors
that, as of the date hereof, the Trust is eligible to register the Registrable
Securities on Form S-3 and knows of no event that has occurred or is likely to
occur that will cause it to cease to remain so eligible.
2.1.4 Expenses. The Trust shall pay the Registration Expenses
in connection with the registration effected pursuant to this Section 2.1. If
a registration pursuant to this Section 2.1 is withdrawn or otherwise not
effected, other than at the request of Investors, the Trust shall pay the
Registration Expenses in connection therewith. If the registration is
withdrawn at the request of the Investors and if the Investors elect not to
have such registration count as their registration under this Section 2.1, the
Investors shall pay all the Registration Expenses of such registration, other
than the fees and expenses of counsel to the Trust or of any other holder of
Trust securities participating in the registration (a "Participating Holder").
2.1.5 Effective Registration Statement. A registration
pursuant to this Section 2.1 shall not be deemed to have been effected (i)
unless a registration statement with respect thereto has been declared
effective by the Commission or (ii) if after it has become effective, such
registration is interfered with by any stop order, injunction or other order
or requirement of the Commission or other governmental agency or court for any
reason and has not thereafter become effective.
2.1.6 Limitations on Registration.
(i) In no event shall the Trust be required to effect more
than one registration pursuant to this Section 2.1.
(ii) Notwithstanding anything herein, if the Trust
reasonably believes that the filing of a registration statement with the
Commission would adversely affect the contemplated activities of the Trust, then
the Trust may postpone the filing of the applicable registration statement for a
period not in excess of 30 days or, in the event the filing is being postponed
in connection with a proposed underwritten public offering of the Trust's
securities, for such longer period (not to exceed an additional 30 days) as may
be reasonably requested by the managing underwriter for such proposed offering.
(iii) Notwithstanding anything herein, if the filing of a
registration statement pursuant to this Agreement would require the Trust to
include in a filing with the Commission financial statements of probable or
completed acquisitions in order that such registration statement be in
compliance with rules and regulations of the Commission, then
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<PAGE>
the Trust may delay the filing of such registration statement until it has
included the requisite financial statements (including any necessary pro forma
financial information) in a filing with the Commission.
2.2 Registration Procedures.
2.2.1 In connection with the registration of any Registrable
Securities under the Securities Act as provided in Section 2.1, the Trust shall
as promptly as practicable (and in any event in compliance with the 90-day time
limit specified in Section 2.1):
(i) prepare and file with the Commission the requisite
registration statement to effect such registration and thereafter use
commercially reasonable efforts to cause such registration statement to become
and remain effective;
(ii) use commercially reasonable efforts to prepare and
file with the Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary to
keep such registration statement effective and to comply with provisions of the
Securities Act with respect to the disposition of all Registrable Securities
covered by such registration statement until all of such Registrable Securities
have been sold thereunder;
(iii) furnish to the Investors such number of conformed
copies of such registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of the
prospectus contained in such registration statement (including each preliminary
prospectus and any summary prospectus) and any other prospectus filed under Rule
424 under the Securities Act, in conformity with the requirements of the
Securities Act, and such number of copies of such other documents as the
Investors may reasonably request;
(iv) use commercially reasonable efforts (x) to register
or qualify all Registrable Securities under such other securities or Blue Sky
laws of such States of the United States of America where an exemption is not
available and as the Investors shall reasonably request, (y) to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and (z) to take any other action which may
reasonably be necessary or advisable to enable the Investors to consummate the
disposition in such jurisdictions of the Registrable Securities to be sold by
the Investors, except that the Trust shall not for any such purpose be required
to qualify generally to do business as a foreign trust in any jurisdiction
wherein it would not, but for the requirements of this paragraph (iv), be
obligated to be so qualified or to consent to general service of process in any
such jurisdiction;
(v) notify the Investors upon discovery that, or upon the
happening of any event as a result of which, the prospectus included in the
registration statement filed pursuant to this Agreement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the
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<PAGE>
statements therein not misleading, in the light of the circumstances under which
they were made, and at the request of the Investors, use its best efforts to
promptly prepare and furnish to the Investors such number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances under which they were made;
(vi) use commercially reasonable efforts to list all
Registrable Securities covered by such registration statement on any national
securities exchange or over-the-counter market, if any, on which Registrable
Securities covered by such registration statement are then listed.
(vii) use commercially reasonable efforts to (i) comply
with all applicable rules and regulations of the Commission and (ii) in
accordance with Section 11(a) of the Securities Act and Rule 158 thereunder,
make available to its securityholders, as soon as reasonable practicable, an
earnings statement covering the period of at least 12 months, but not more than
18 months, beginning with the first quarter after the effective date of the
registration statement covering the Registrable Securities.
The Investors agree that upon receipt of any notice from the
Trust of the happening of an event of the kind described in Section 2.2.1(v),
the Investors shall forthwith discontinue their disposition of Registrable
Securities pursuant to the registration statement relating to such Registrable
Securities until the Investors' receipt of the copies of the supplemented or
amended prospectus contemplated by Section 2.2.1(v).
2.2.2 The Trust will use commercially reasonable efforts during
the term of this Agreement to (i) file with the Commission such information as
is specified under Rule 144 for so long as there are holders of Registrable
Securities and (ii) take all other action as may be required as a condition to
the availability of Rule 144.
2.3. Holdback Agreements; Information Blackout.
2.3.1 Holdback Agreements. In connection with an underwritten
public offering of securities of the Trust, the Investors agree that, if
required by the underwriter or underwriters, they will not effect any public
sale or distribution, including any sale pursuant to Rule 144 under the
Securities Act, of any Registrable Securities, during the period commencing 10
days prior to the expected commencement of the offering and ending 30 days after
the closing of such offering.
2.3.2 Information Blackout. At any time when a registration
statement effected pursuant to this Section 2 relating to Registrable Securities
is effective, upon written notice from the Trust to the Investors that the Trust
has determined in good faith that sale of Registrable Securities pursuant to the
registration statement would require disclosure by the
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Trust of non-public material information not otherwise required, in the judgment
of the Trust, to be disclosed under applicable law, the Investors shall suspend
sales of Registrable Securities pursuant to such registration statement until
the earlier of (a) 30 days after the Trust makes such good faith determination
and (b) such time as the Trust notifies the Investors that such material
information has been disclosed to the public or has ceased to be material or
that sales pursuant to such registration statement may otherwise be resumed.
2.4 Preparation. In connection with the preparation and filing of
any registration statement under the Securities Act in which the Investors are
selling shareholders, the Trust shall give the Investors not less than 15 days
prior written notice of the preparation of such registration statement and give
the Investors and their counsel and accountants the opportunity to review and
comment on, at the Investors' expense, the applicable portions, relating to the
Investors (including the Selling Shareholder and Plan of Distribution sections),
of the registration statement, each prospectus included therein or filed with
the Commission, and each amendment thereof or supplement thereto (provided that
the Investors shall furnish the Trust with comments on any such amendment or
supplement as promptly as the Trust shall reasonably require).
2.5 Indemnification.
2.5.1 Indemnification by the Trust. In the event of any
registration of any securities of the Trust under the Securities Act in which
the Investors are or may be selling shareholders, the Trust shall, and hereby
does, indemnify and hold harmless, the Investors, insofar as losses, claims,
damages, or liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon (a) any untrue
statement or alleged untrue statement of any fact contained in any registration
statement under which such securities were registered under the Securities Act,
any preliminary prospectus, final prospectus, or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a fact required to be stated therein or necessary to
make the statements therein in light of the circumstances in which they were
made not misleading, or (b) any violation by the Trust, its trustees, officers,
employees or agents of this Agreement or any law applicable to and in connection
with such registration, and the Trust shall reimburse the Investors for any
legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability, action or proceeding
described in clauses (a) or (b); provided, however, that the Trust shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with information furnished to the Trust by the
Investors. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of the Investors and shall survive the
transfer of such securities by the Investors.
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<PAGE>
2.5.2 Indemnification by the Investors If any Registrable
Securities are included in any registration statement, the Investors shall
indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 2.5.1 above) the Trust and each trustee, officer and employee
of the Trust and each Person who controls the Trust within the meaning of the
Securities Act, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
information furnished to the Trust by the Investors; provided, however, that an
Investor's obligations hereunder shall be limited to an amount equal to the net
proceeds received by such Investor from the sale of Registrable Securities sold
pursuant to such registration statement.
2.5.3 Notice of Claims, Etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding paragraphs of this Section 2.5,
such indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party, immediately give written notice to the latter of
the commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of this
Section 2.5, except to the extent that the indemnifying party is materially
prejudiced by such failure. In case any such action is brought against an
indemnified party, unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may exist
in respect of such claim, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that the indemnifying
parties may agree, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party shall not
be liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable out of pocket costs related to the indemnified party's cooperation
with the indemnifying party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties arises in respect of such claim after the assumption of the defense
thereof. No indemnifying party shall be liable for any settlement of any action
or proceeding effected without its written consent, which consent shall not be
unreasonably withheld, delayed or conditioned. Consent of the indemnified party
shall be required for the entry of any judgment or to enter into a settlement
only when such judgment or settlement does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect such claim or litigation.
2.5.4 Contribution. If the indemnification provided for in this
Section 2.5 shall for any reason be held by a court to be unavailable to an
indemnified party under Section 2.5.1 or 2.5.2 hereof in respect of any loss,
claim, damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under Sections 2.5.1 or 2.5.2
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hereof, the indemnified party and the indemnifying party under Sections 2.5.1 or
2.5.2 hereof shall contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating the same), (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Trust on one hand and the
Investors on the other or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
the relative fault of the Trust on one hand and the Investors on the other that
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations; provided, however that
no Investor will be required to contribute any amount in excess of the net
offering proceeds received by such Investor with respect to the Registrable
Securities sold by such Investor pursuant to the registration statement. No
Person guilty of fraudulent misrepresentation (within the meaning of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. In addition, no Person shall be
obligated to contribute hereunder any amounts in payment for any settlement of
any action or claim, effected without such Person's written consent, which
consent shall not be unreasonably withheld.
3. Amendments. This Agreement may be modified or amended only with the
written consent of the Trust and holders of a majority of the then outstanding
Units. Except as otherwise specifically provided herein, no delay on the part of
any party hereto in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any waiver on the part of any party
hereto of any right, power or privilege hereunder operate as a waiver of any
other right, power or privilege hereunder nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any right, power or privilege
hereunder.
4. Entire Agreement. This Agreement represents the entire understanding
and agreement among the parties hereto with respect to the subject matter hereof
and supersedes all other prior and contemporaneous agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
5. Severability. If any provision of this Agreement, or the application
of such provision to any party or circumstance, shall be held invalid, the
remainder of this Agreement or the application of such provision to other
parties or circumstances, to the extent permitted by law, shall not be affected
thereby; provided, that the parties shall negotiate in good faith with respect
to an equitable modification of the provision or application thereof held to be
invalid.
6. Notices. All notices, requests and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
delivered (i) in person, (ii) by certified mail, return receipt requested, (iii)
by recognized overnight delivery service providing positive tracking of items
(for example, Federal Express), or (iv) by confirmed telecopier, in each case
addressed as follows:
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If to the Trust or the Partnership, addressed to:
c/o Brandywine Realty Trust
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
Attention: Gerard H. Sweeney, President and Chief Executive Officer
Fax: (610) 325-5622
with a copy in each instance to:
Brad A. Molotsky, General Counsel
Brandywine Operating Partnership, L.P.
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
Fax: (610) 325-5622
If to the Investors, addressed to:
c/o John S. Trogner, Jr.
P. O. Box 0779
Camp Hill, PA 17001-0779
Fax: (717) 761-7239
and
c/o Blair S. Trogner, Sr.
P. O. Box 0779
Camp Hill, PA 17001-0779
Fax: (717) 761-7239
with a copy in each instance to:
Brad J. Gunnison, Esquire
Buchanan Ingersoll
30 North Third Street, 8th Floor
Harrisburg, PA 17101
Fax: (717) 233-0852
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or to such other address or addresses and to the attention of such other person
or persons as any of the parties may notify the other in accordance with the
provisions of this Agreement. All such notices, requests and other
communications shall be deemed to have been sufficiently given for all purposes
hereof only if given pursuant to the foregoing requirements as to both manner
and address, and only upon receipt (or refusal to accept delivery) by the party
to whom such notice is sent. Notices by the parties may be given on their behalf
by their respective attorneys.
7. Successors and Assigns. This Agreement shall inure to the benefit of
and shall be binding upon the Trust and its successors and permitted assigns. At
any time prior to the initial effectiveness of a registration pursuant to
Section 2.1, the rights to register securities granted by the Trust under this
Agreement may be assigned by any Investor, provided that (a) any assignee or
transferee of the Registrable Shares (i) acquires at least 10% of the number of
Registrable Shares that such Investor holds, and (ii)(A) is not a competitor of
the Trust, or (B) is a corporation or general or limited partnership controlled
by the Investor, a member of the Investor's immediate family or an irrevocable
trust established by the Investor on behalf of any one of the foregoing or for
the Investor for estate planning purposes or other purposes; (b) such transfer
may otherwise be and is effected in accordance with applicable securities laws;
and (c) such assignee or transferee agrees in writing to be bound by all of the
provisions of this Agreement. In the event of any transfer of rights in
accordance with this Section 7, the transferee shall have all of the rights and
obligations of an Investor under the terms of this Agreement.
8. Counterparts. This Agreement may be executed in counterparts, each
of which for all purposes shall be deemed to be an original and all of which
together shall constitute the same agreement.
9. Headings. The Section headings in this Agreement are for convenience
of reference only, and shall not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.
10. Construction. This Agreement shall be governed, construed and
enforced in accordance with the laws of the Commonwealth of Pennsylvania without
regard to its principles of conflict of laws.
11. Recapitalizations, etc. In the event that any shares of beneficial
interest or other securities are issued in respect of, in exchange for, or in
substitution of, any Registrable Securities by reason of any reorganization,
recapitalization, reclassification, merger, consolidation, spin-off, partial or
complete liquidation, share dividend, split-up, sale of assets, distribution to
shareholders or combination of the shares of Registrable Securities or any other
similar change in the Trust's capital structure, appropriate adjustments shall
be made in this Agreement so as to fairly and equitably preserve, as far as
practicable, the original rights and obligations of the parties hereto under
this Agreement.
-10-
<PAGE>
12. Term. This Agreement shall continue in full force and effect until
the earlier of (i) six (6) years after the date hereof and (ii) the first date
on which the Investors may sell all of the Registrable Securities held by them
pursuant to Rule 144(k) under the Securities Act.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the date first above written and delivered by their respective duly
authorized officers.
/s/ John S. Trogner, Sr.
------------------------------------
John S. Trogner, Sr.
/s/John S. Trogner, Jr.
------------------------------------
John S. Trogner, Jr.
/s/Blair S. Trogner, Sr.
------------------------------------
Blair S. Trogner, Sr.
/s/Emma B. Trogner
------------------------------------
Emma B. Trogner
/s/Ronalee B. Trogner
------------------------------------
Ronalee B. Trogner
/s/Candis C. Trogner
------------------------------------
Candis C. Trogner
BRANDYWINE OPERATING
PARTNERSHIP, L.P.
By: BRANDYWINE REALTY
TRUST, its sole general partner
By: /s/Gerard H. Sweeney
----------------------------
Name: Gerard H. Sweeney
Title: President & CEO
BRANDYWINE REALTY TRUST
By: /s/Gerard H. Sweeney
---------------------------
Name: Gerard H. Sweeney
Title: President & CEO
-11-
<PAGE>
THIRD AMENDMENT TO AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
BRANDYWINE OPERATING PARTNERSHIP, L.P.
THIS THIRD AMENDMENT, dated as of May 8, 1998 (the
"Amendment"), amends the Amended and Restated Partnership Agreement (the
"Partnership Agreement") of BRANDYWINE OPERATING PARTNERSHIP, L.P., a Delaware
limited partnership (the "Partnership"). Capitalized terms used herein but not
defined herein shall have the meanings given such terms in the Partnership
Agreement.
BACKGROUND
A. Pursuant to the Partnership Agreement, Brandywine Realty Trust
(the "General Partner"), as the general partner of the Partnership, has the
power and authority to issue additional Partnership Interests to persons on
such terms and conditions as the General Partner may deem appropriate.
B. The General Partner, pursuant to the exercise of such power and
authority and in accordance with the Partnership Agreement, has determined to
execute this Amendment to the Partnership Agreement to evidence the issuance
of additional Partnership Interests and the admission of the other signatories
hereto as Limited Partners of the Partnership in exchange for certain
contributions of partnership interests in partnerships holding real estate and
real estate related assets that are being made to the Partnership on the date
hereof pursuant to a "contribution" agreement (relating, respectively, to
properties commonly known as Commerce Park, Corporate Center 81 and Camp Hill
Corporate Center [also sometimes known as the First Commercial Portfolio] )
among the Partnership, the General Partner and the Admitted Partners.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby amend the Partnership
Agreement as follows:
1. The Partnership Agreement is hereby amended to reflect
the admission as a Limited Partner on the date hereof of the Persons set forth
on Schedule A attached hereto (the "Admitted Partners") and the ownership by
such Persons of the number of Class A Units listed opposite each Person's name
on Schedule A. Attached as Schedule B is a list of the Partners of the
Partnership prior to the admission of the Admitted Partners, together with the
number and class of Partnership Interests owned by such partners.
2. The Partnership Interests issued hereby shall constitute
Class A Units; provided that any distribution to be received by the Admitted
Partners on the Class A Units issued
<PAGE>
to them on the date hereof on account of the fiscal quarter in which they are
admitted to the Partnership shall be pro-rated to reflect the portion of the
fiscal quarter of the Partnership for which the Admitted Partners held such
Class A Units and shall not be pro-rata in accordance with their then
Percentage Interests; provided further that the Redemption Right granted to
holders of Class A Units in Article XV of the Partnership Agreement shall not
be exercisable by the holders of the Class A Units issued on the date hereof
to the Admitted Partners until the first anniversary of the date hereof,
except that, (i) if the holder of any such Class A Units dies, such holder's
estate shall thereupon be permitted to exercise the Redemption Right with
respect to all of such Class A Units held by it notwithstanding the foregoing
restriction and (ii) if a Change of Control (as defined below) of the General
Partner occurs, the foregoing restriction on exercise of the Redemption Right
shall automatically terminate with respect to all of such Class A Units.
3. As used herein, the term "Change of Control" shall mean
Change of Control" means:
(i) the acquisition in one or more transactions by any
"Person" (as the term person is used for purposes of
Sections 13(d) or 14(d) of the Exchange Act) of
"Beneficial ownership" (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of
twenty-five percent (25%) or more of the combined
voting power of the General Partner's then
outstanding voting securities (the "Voting
Securities"), provided that for purposes of this
clause (i) Voting Securities acquired directly from
the General Partner by any Person shall be excluded
from the determination of such Person's Beneficial
ownership of Voting Securities (but such Voting
Securities shall be included in the calculation of
the total number of Voting Securities then
outstanding); or
(ii) approval by shareholders of the General Partner of:
(A) a merger, reorganization or consolidation
involving the General Partner if the shareholders
of the General Partner immediately before such
merger, reorganization or consolidation do not or
will not own directly or indirectly immediately
following such merger, reorganization or
consolidation, more than fifty percent (50%) of
the combined voting power of the outstanding
voting securities of the General Partner
resulting from or surviving such merger,
reorganization or consolidation in substantially
the same proportion as their ownership of the
Voting Securities
-2-
<PAGE>
outstanding immediately before such merger,
reorganization or consolidation; or
(B) a complete liquidation or dissolution of the
General Partner; or
(C) an agreement for the sale or other disposition of
all or substantially all of the assets of the
General Partner; or
(iii) acceptance by shareholders of the General Partner of
shares in a share exchange if the shareholders of the
General Partner immediately before such share
exchange do not or will not own directly or
indirectly immediately following such share exchange
more than fifty percent (50%) of the combined voting
power of the outstanding voting securities of the
entity resulting from or surviving such share
exchange in substantially the same proportion as
their ownership of the Voting Securities outstanding
immediately before such share exchange.
4. By execution of this Amendment to the Partnership
Agreement by the General Partner and the Admitted Partners, the Admitted
Partners agree to be bound by each and every term of the Partnership Agreement
as amended from time to time in accordance with the terms of the Partnership
Agreement. The General Partner confirms that the provisions in Section 18.1(a)
of the Partnership Agreement shall apply to the Admitted Partners
notwithstanding Section 18.7 of the Partnership Agreement.
5. On the date of this Amendment, each of the Admitted
Partners shall execute and deliver to Brandywine Realty Trust an Irrevocable
Proxy coupled with an Interest in the form set forth on Exhibit 1 hereto
attached.
6. Except as expressly set forth in this Amendment to the
Partnership Agreement, the Partnership Agreement is hereby ratified and
confirmed in each and every respect.
-3-
<PAGE>
IN WITNESS WHEREOF, this Amendment to the Partnership
Agreement has been executed and delivered as of the date first above written.
GENERAL PARTNER:
BRANDYWINE REALTY TRUST
By: /s/ Gerard H. Sweeney
---------------------------------
Gerard H. Sweeney
Its: President and CEO
ADMITTED PARTNERS:
/s/ John S. Trogner, Sr.
------------------------------------
John S. Trogner, Sr.
/s/ John S. Trogner, Jr.
------------------------------------
John S. Trogner, Jr.
/s/ Blair S. Trogner, Sr.
------------------------------------
Blair S. Trogner, Sr.
/s/ Emma B. Trogner
------------------------------------
Emma B. Trogner
/s/ Ronalee Trogner
------------------------------------
Ronalee Trogner
/s/ Candis C. Trogner
------------------------------------
Candis C. Trogner
-4-
<PAGE>
SCHEDULE "A"
NUMBER OF
ADMITTED PARTNERSHIP
PARTNERS INTERESTS
-------- -----------
-----------------------------------------------------------
John S. Trogner, Sr. 89,801.232
-----------------------------------------------------------
John S. Trogner, Jr. 73,048.310
-----------------------------------------------------------
Blair S. Trogner, Sr. 138,126.471
-----------------------------------------------------------
Emma B. Trogner 27,087.416
-----------------------------------------------------------
Ronalee Trogner 21,669.933
-----------------------------------------------------------
Candis C. Trogner 40,631.123
-----------------------------------------------------------
<PAGE>
SCHEDULE "B"
BRANDYWINE OPERATING PARTNERSHIP, L.P.
OUTSTANDING PARTNERSHIP INTERESTS
AS OF MAY 8, 1998
NUMBER OF
PARTNERSHIP
INTERESTS
LIMITED PARTNERS (ALL CLASS A UNITS)
- - ---------------- -------------------
The Nichols Company 2,742
Brian F. Belcher 7,245
Jack R. Loew 1,245
Craig C. Hough 1,245
Gary C. Bender 1,434
Werner A. Fricker 6,830
R. Randle Scarborough 59,578
M. Sean Scarborough 60,576
Steven L. Shapiro 1,902
Robert K. Scarborough 265,384
Raymond J. Perkins 2,536
Brandywine Holdings I, Inc. 5
Brandywine Realty Trust 415,786
Brookstone Investors, L.L.C. 57,126
Brookstone Holdings of Del.-4, L.L.C. 7,579
Brookstone Holdings of Del.-5, L.L.C. 80,445
Brookstone Holdings of Del.-6, L.L.C. 7,886
<PAGE>
NUMBER OF
PARTNERSHIP
INTERESTS
GENERAL PARTNER (ALL GP UNITS)
- - --------------- --------------
Brandywine Realty Trust 37,635,209
<PAGE>
EXHIBIT 1
IRREVOCABLE PROXY COUPLED WITH AN INTEREST
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
irrevocably constitutes and appoints the General Partner, any Liquidating
Trustee, and authorized officers and attorneys-in-fact of each, and each of
those acting singly, in each case with full power of substitution, as its true
and lawful agent and attorney-in-fact, with full power and authority in its
name, place and stead to: execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (i) all certificates, documents and
other instruments (including, without limitation, this Agreement and the
Certificate and all amendments or restatements thereof) that the General
Partner or the Liquidating Trustee deems appropriate or necessary to form,
qualify or continue the existence or qualification of the Partnership as a
limited partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware and in all other jurisdictions in
which the Partnership may conduct business or own property; (ii) all
instruments that the General Partner deems appropriate or necessary to reflect
any amendment, change, modification or restatement of this Agreement in
accordance with its terms; (iii) all conveyances and other instruments or
documents that the General Partner deems appropriate or necessary to reflect
the dissolution and liquidation of the Partnership pursuant to the terms of
this Agreement, including, without limitation, a certificate of cancellation;
and (iv) all instruments relating to the admission, withdrawal, removal or
substitution of any Partner pursuant to the provisions of this Agreement, or
the Capital Contribution of any Partner. The foregoing power of attorney is
irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying upon the power of the General
Partner to act as contemplated by this Agreement in any filing or other action
by it on behalf of the Partnership, and it shall survive the death, incapacity
or incompetency of a Limited Partner to the effect and extent permitted by law
and the Transfer of all or any portion of such Limited Partner's Partnership
Units and shall extend to such Limited Partner's heirs, distributees,
successors, assigns and personal representatives.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Proxy on this 8th day of May, 1998.
/s/ John S. Trogner, Sr.
-----------------------------------
John S. Trogner, Sr.
<PAGE>
EXHIBIT 1
IRREVOCABLE PROXY COUPLED WITH AN INTEREST
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
irrevocably constitutes and appoints the General Partner, any Liquidating
Trustee, and authorized officers and attorneys-in-fact of each, and each of
those acting singly, in each case with full power of substitution, as its true
and lawful agent and attorney-in-fact, with full power and authority in its
name, place and stead to: execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (i) all certificates, documents and
other instruments (including, without limitation, this Agreement and the
Certificate and all amendments or restatements thereof) that the General
Partner or the Liquidating Trustee deems appropriate or necessary to form,
qualify or continue the existence or qualification of the Partnership as a
limited partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware and in all other jurisdictions in
which the Partnership may conduct business or own property; (ii) all
instruments that the General Partner deems appropriate or necessary to reflect
any amendment, change, modification or restatement of this Agreement in
accordance with its terms; (iii) all conveyances and other instruments or
documents that the General Partner deems appropriate or necessary to reflect
the dissolution and liquidation of the Partnership pursuant to the terms of
this Agreement, including, without limitation, a certificate of cancellation;
and (iv) all instruments relating to the admission, withdrawal, removal or
substitution of any Partner pursuant to the provisions of this Agreement, or
the Capital Contribution of any Partner. The foregoing power of attorney is
irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying upon the power of the General
Partner to act as contemplated by this Agreement in any filing or other action
by it on behalf of the Partnership, and it shall survive the death, incapacity
or incompetency of a Limited Partner to the effect and extent permitted by law
and the Transfer of all or any portion of such Limited Partner's Partnership
Units and shall extend to such Limited Partner's heirs, distributees,
successors, assigns and personal representatives.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Proxy on this 8th day of May, 1998.
/s/ John S. Trogner, Jr.
----------------------------------
John S. Trogner, Jr.
<PAGE>
EXHIBIT 1
IRREVOCABLE PROXY COUPLED WITH AN INTEREST
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
irrevocably constitutes and appoints the General Partner, any Liquidating
Trustee, and authorized officers and attorneys-in-fact of each, and each of
those acting singly, in each case with full power of substitution, as its true
and lawful agent and attorney-in-fact, with full power and authority in its
name, place and stead to: execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (i) all certificates, documents and
other instruments (including, without limitation, this Agreement and the
Certificate and all amendments or restatements thereof) that the General
Partner or the Liquidating Trustee deems appropriate or necessary to form,
qualify or continue the existence or qualification of the Partnership as a
limited partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware and in all other jurisdictions in
which the Partnership may conduct business or own property; (ii) all
instruments that the General Partner deems appropriate or necessary to reflect
any amendment, change, modification or restatement of this Agreement in
accordance with its terms; (iii) all conveyances and other instruments or
documents that the General Partner deems appropriate or necessary to reflect
the dissolution and liquidation of the Partnership pursuant to the terms of
this Agreement, including, without limitation, a certificate of cancellation;
and (iv) all instruments relating to the admission, withdrawal, removal or
substitution of any Partner pursuant to the provisions of this Agreement, or
the Capital Contribution of any Partner. The foregoing power of attorney is
irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying upon the power of the General
Partner to act as contemplated by this Agreement in any filing or other action
by it on behalf of the Partnership, and it shall survive the death, incapacity
or incompetency of a Limited Partner to the effect and extent permitted by law
and the Transfer of all or any portion of such Limited Partner's Partnership
Units and shall extend to such Limited Partner's heirs, distributees,
successors, assigns and personal representatives.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Proxy on this 8th day of May, 1998.
/s/ Blair S. Trogner, Sr.
-----------------------------------
Blair S. Trogner, Sr.
<PAGE>
EXHIBIT 1
IRREVOCABLE PROXY COUPLED WITH AN INTEREST
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
irrevocably constitutes and appoints the General Partner, any Liquidating
Trustee, and authorized officers and attorneys-in-fact of each, and each of
those acting singly, in each case with full power of substitution, as its true
and lawful agent and attorney-in-fact, with full power and authority in its
name, place and stead to: execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (i) all certificates, documents and
other instruments (including, without limitation, this Agreement and the
Certificate and all amendments or restatements thereof) that the General
Partner or the Liquidating Trustee deems appropriate or necessary to form,
qualify or continue the existence or qualification of the Partnership as a
limited partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware and in all other jurisdictions in
which the Partnership may conduct business or own property; (ii) all
instruments that the General Partner deems appropriate or necessary to reflect
any amendment, change, modification or restatement of this Agreement in
accordance with its terms; (iii) all conveyances and other instruments or
documents that the General Partner deems appropriate or necessary to reflect
the dissolution and liquidation of the Partnership pursuant to the terms of
this Agreement, including, without limitation, a certificate of cancellation;
and (iv) all instruments relating to the admission, withdrawal, removal or
substitution of any Partner pursuant to the provisions of this Agreement, or
the Capital Contribution of any Partner. The foregoing power of attorney is
irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying upon the power of the General
Partner to act as contemplated by this Agreement in any filing or other action
by it on behalf of the Partnership, and it shall survive the death, incapacity
or incompetency of a Limited Partner to the effect and extent permitted by law
and the Transfer of all or any portion of such Limited Partner's Partnership
Units and shall extend to such Limited Partner's heirs, distributees,
successors, assigns and personal representatives.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Proxy on this 8th day of May, 1998.
/s/ Emma B. Trogner
----------------------------------
Emma B. Trogner
<PAGE>
EXHIBIT 1
IRREVOCABLE PROXY COUPLED WITH AN INTEREST
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
irrevocably constitutes and appoints the General Partner, any Liquidating
Trustee, and authorized officers and attorneys-in-fact of each, and each of
those acting singly, in each case with full power of substitution, as its true
and lawful agent and attorney-in-fact, with full power and authority in its
name, place and stead to: execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (i) all certificates, documents and
other instruments (including, without limitation, this Agreement and the
Certificate and all amendments or restatements thereof) that the General
Partner or the Liquidating Trustee deems appropriate or necessary to form,
qualify or continue the existence or qualification of the Partnership as a
limited partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware and in all other jurisdictions in
which the Partnership may conduct business or own property; (ii) all
instruments that the General Partner deems appropriate or necessary to reflect
any amendment, change, modification or restatement of this Agreement in
accordance with its terms; (iii) all conveyances and other instruments or
documents that the General Partner deems appropriate or necessary to reflect
the dissolution and liquidation of the Partnership pursuant to the terms of
this Agreement, including, without limitation, a certificate of cancellation;
and (iv) all instruments relating to the admission, withdrawal, removal or
substitution of any Partner pursuant to the provisions of this Agreement, or
the Capital Contribution of any Partner. The foregoing power of attorney is
irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying upon the power of the General
Partner to act as contemplated by this Agreement in any filing or other action
by it on behalf of the Partnership, and it shall survive the death, incapacity
or incompetency of a Limited Partner to the effect and extent permitted by law
and the Transfer of all or any portion of such Limited Partner's Partnership
Units and shall extend to such Limited Partner's heirs, distributees,
successors, assigns and personal representatives.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Proxy on this 8th day of May, 1998.
/s/ Ronalee Trogner
----------------------------------
Ronalee Trogner
<PAGE>
EXHIBIT 1
IRREVOCABLE PROXY COUPLED WITH AN INTEREST
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
irrevocably constitutes and appoints the General Partner, any Liquidating
Trustee, and authorized officers and attorneys-in-fact of each, and each of
those acting singly, in each case with full power of substitution, as its true
and lawful agent and attorney-in-fact, with full power and authority in its
name, place and stead to: execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (i) all certificates, documents and
other instruments (including, without limitation, this Agreement and the
Certificate and all amendments or restatements thereof) that the General
Partner or the Liquidating Trustee deems appropriate or necessary to form,
qualify or continue the existence or qualification of the Partnership as a
limited partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware and in all other jurisdictions in
which the Partnership may conduct business or own property; (ii) all
instruments that the General Partner deems appropriate or necessary to reflect
any amendment, change, modification or restatement of this Agreement in
accordance with its terms; (iii) all conveyances and other instruments or
documents that the General Partner deems appropriate or necessary to reflect
the dissolution and liquidation of the Partnership pursuant to the terms of
this Agreement, including, without limitation, a certificate of cancellation;
and (iv) all instruments relating to the admission, withdrawal, removal or
substitution of any Partner pursuant to the provisions of this Agreement, or
the Capital Contribution of any Partner. The foregoing power of attorney is
irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying upon the power of the General
Partner to act as contemplated by this Agreement in any filing or other action
by it on behalf of the Partnership, and it shall survive the death, incapacity
or incompetency of a Limited Partner to the effect and extent permitted by law
and the Transfer of all or any portion of such Limited Partner's Partnership
Units and shall extend to such Limited Partner's heirs, distributees,
successors, assigns and personal representatives.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Proxy on this 8th day of May, 1998.
/s/ Candis C. Trogner
-----------------------------------
Candis C. Trogner
<PAGE>
TAX INDEMNIFICATION AGREEMENT
This Tax Indemnification Agreement (the "Agreement") is made
as of the 8th day of May, 1998, by and among Brandywine Operating Partnership,
L.P., a Delaware limited partnership (the "Partnership") and those of the
Members of First Commercial Development Company who are listed on Schedule 1
hereto (together, the "Members").
WITNESSETH:
WHEREAS, the Members have executed that certain Amendment to
Amended and Restated Agreement of Limited Partnership of Brandywine Operating
Partnership, L.P., dated as of the 8th day of May, 1998 (the "Partnership
Agreement"); and
WHEREAS, the Members received their limited partnership
interests in the Partnership in exchange for the contribution to or at the
direction of the Partnership of certain assets listed on Schedule 2 hereto
(the "Contributed Property") in a transaction to which Section 721 of the
Internal Revenue Code of 1986, as amended (the "Code") applied; and
WHEREAS, at the time of the contribution, the Members had
unrealized built-in gain (as defined in Treasury Regulation Section
1.704-3(a)(3)) in each Asset as set forth on Schedule 3 hereto; and
WHEREAS, the Partnership is willing to reimburse and
indemnify each of the Members for possible tax on the built-in gain of any
Member in the Assets under the limited circumstances set forth herein;
WHEREAS, at the time of the contribution, the Members had
negative tax capital accounts in First Commercial Development Company, a
Pennsylvania limited partnership ("First Commercial"); and
WHEREAS, the Partnership is willing to reimburse and
indemnify each of the Members for possible tax on the negative tax capital
account of any Member in the Partnership or First Commercial under the limited
circumstances set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the
covenants and agreements set forth herein, the parties hereto, intending to be
legally bound hereby, agree as follows:
AGREEMENT
1. Definitions. As used in this Agreement, the capitalized
terms shall have the respective meanings ascribed to them in this Section 1.
Capitalized terms not defined herein, shall have the meanings ascribed to them
in the Partnership Agreement.
<PAGE>
"Assets" means the Contributed Property and the Real
Properties, collectively.
"Built-in Gain" means the unrealized built-in gain of the
Members in the Assets, individually and cumulatively, as determined from time
to time in accordance with Section 704(c) of the Code and Treasury Regulation
Section 1.704-3(a)(3) and the Partnership Agreement and consistent with the
information set forth on Schedule 3 hereto.
"Covered Sale Tax Liabilities" means any Incremental federal,
state and local taxes (collectively "Taxes") imposed on any realized and
recognized Built-in Gain of a Member that is caused by a sale or distribution
by the Partnership of one or more of the Assets (other than a distribution to
one or more Members) during the Sale Event Period and to which Section 704(c)
of the Code applies.
"Covered Capital Account Tax Liabilities" means any
Incremental Taxes imposed on any realized and recognized Section 731(a) Gain
of a Member which is caused by a repayment during the Repayment Event Period
of indebtedness of the Partnership, whether or not currently outstanding or by
a repayment by First Commercial during the Repayment Event Period of
indebtedness of First Commercial, whether or not currently outstanding.
"First Commercial" means First Commercial Development Company.
"Incremental" means the additional Taxes imposed as a result
of a Sale Event or a Repayment Event as compared with the individual tax
liability determined without taking into account the Sale Event or Repayment
Event which gave rise to the Taxes.
"Qualified Liabilities of the Partnership" means indebtedness
under any of the Revolving Credit Facility, Replacement Debt, or Other Debt,
each as defined under the Guaranty and Indemnification instruments of even
date herewith which have been executed by each of the Members who are parties
to this Agreement for the benefit of Brandywine Realty Trust, the general
partner of the Partnership.
"Qualified Liabilities of First Commercial" means indebtedness
under any of the Credit Facility, Replacement Debt, or Other Debt, each as
defined under the Guaranty and Indemnification instruments of even date
herewith which have been executed by certain of the Members who are parties to
this Agreement for the benefit of Brandywine F.C., L.L.C., the general partner
of First Commercial.
"Real Properties" means the real properties listed on
Schedule 4 hereto.
-2-
<PAGE>
"Repayment Event Period" means with respect to a given Member
the period ending the earliest to occur of (i) the tenth anniversary of this
Agreement or (ii) the death of the Member.
"Sale Event Period" means the period ending December 31,
2002.
"Section 731(a) Gain" means the gain of the Members,
individually and cumulatively, as determined from time to time on December
31st of each year during the Repayment Event Period, in accordance with
Section 731(a) and Treasury Regulation 1.731-1 and the Partnership Agreement,
which arises from the lack of Qualified Liabilities of the Partnership and/or
Qualified Liabilities of First Commercial on such December 31st allocable to
the Members under Section 752 and Treasury Regulation 1.752.
2. Indemnification for Tax on Built-in Gain.
a. Within 90 days following the occurrence of a sale or
distribution by the Partnership (collectively "Sale Event") of one of more of
the Assets during the Sale Event Period, other than a distribution to a
Member, to which Section 704(c) of the Code applies, which causes the Covered
Sale Tax Liabilities to become fixed and determined, the Partnership agrees
that it shall make a payment to each applicable Member (other than
distributions to the partners of the Partnership pursuant to Section 6.1 of
the Partnership Agreement) such that such Member shall receive, as payment
pursuant to this Section 2.a, an amount equal to the sum of (i) Covered Sale
Tax Liabilities incurred by such Member which arise from such Sale Event plus
(ii) any additional federal, state and local taxes (excluding interest and all
penalties other than a Section 6662 tax penalty, as defined in the Internal
Revenue Code of 1986, which was caused by the Partnership) which may be
imposed on the payment to such Member under clause (i) of this sentence.
b. Within 90 days following December 31st of a given year
during the Repayment Event Period in which the Covered Capital Account Tax
Liabilities become fixed and determined so that a Member becomes liable for
all or any part of the Covered Capital Account Tax Liabilities ("Repayment
Event"), the Partnership agrees that it shall make a payment to such Member
(other than distributions to the partners of the Partnership pursuant to
Section 6.1 of the Partnership Agreement) such that such Member shall receive,
as payment pursuant to this Section 2.b, an amount equal to the sum of (i)
Covered Capital Account Tax Liabilities incurred by such Member which arise
from such Repayment Event plus (ii) any additional federal, state and local
taxes (excluding interest and all penalties other than a Section 6662 tax
penalty, as defined in the Internal Revenue Code of 1986, which was caused by
the Partnership) which may be imposed on the payment to such Member under
clause (i) of this sentence.
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<PAGE>
c. Notwithstanding Section 2.a above, Taxes on the
Built-in Gain of any Member arising as a result of (i) the sale or
distribution of the Assets after the Sale Event Period or (ii) the
disposition, transfer or conversion by any Member of its limited partnership
interest in the Partnership at any time (including during the Sale Event
Period), shall be the sole obligation of such Member, and the Partnership
shall not have any obligation to make a payment under this Section 2 and shall
have no other liability therefor under this Agreement or otherwise.
d. Notwithstanding Section 2.b above, Taxes on the
Section 731(a) Gain of any Member arising as a result of (i) a Repayment Event
after the Repayment Event Period or (ii) a Repayment Event which occurs after
a Sale Event (whether or not the Sale Event occurs during or after the Sale
Event Period) which results in the Member no longer having a negative capital
account, or (iii) the disposition, transfer or conversion by any Member of its
limited partnership interest in the Partnership or its limited partnership
interest in First Commercial at any time (including during the Repayment Event
Period), shall be the sole obligation of such Member, and the Partnership
shall not have any obligation to make a payment under this Section 2 and shall
have no other liability therefor under this Agreement or otherwise.
3. Initial Determination of its Built-in Gain and Capital
Accounts. The Members estimate that as of the date of their initial
contribution to the Partnership, the aggregate of the Built-in Gain of all of
the Members in the Assets is approximately $18,000,000, the aggregate of the
negative capital accounts in the Partnership and First Commercial collectively
is approximately $11,000,000, and the aggregate Built-in-Gain of all the
Members and the negative capital account of each of the Members are as set
forth on Schedule 3 hereto.
4. Term. The term of this Agreement shall commence as of the
date of this Agreement and shall expire, with respect to a Member, on the
earliest to occur of the following: (i) the death of the Member, (ii) a Sale
Event after the Sale Event Period which involves all of the remaining Assets,
and (iii) the disposition, transfer or conversion by any Member of its limited
partnership interest in the Partnership at any time (including during the Sale
Event Period).
5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania,
without regard to the conflict of law principles thereof.
6. Counterparts. This Agreement may be executed in one or
more counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts together constituting the same
Agreement.
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<PAGE>
IN WITNESS WHEREOF, this Tax Indemnification Agreement has
been duly executed and delivered by the respective parties on the date first
above written.
PARTNERSHIP:
BRANDYWINE OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership
By: Brandywine Realty Trust, its sole general
partner
By: /s/ Gerard H. Sweeney
-----------------------------------------
Gerard H. Sweeney
President and Chief Executive Officer
THE MEMBERS OF FIRST COMMERCIAL
DEVELOPMENT COMPANY AS LISTED ON
SCHEDULE 1 HERETO
/s/ John S. Trogner, Sr. (Seal)
-------------------------------------
John S. Trogner, Sr., individually
/s/ John S. Trogner, Jr. (Seal)
-------------------------------------
John S. Trogner, Jr., individually
/s/ Blair S. Trogner, Sr. (Seal)
-------------------------------------
Blair S. Trogner, Sr., individually
/s/ Emma B. Trogner (Seal)
-------------------------------------
Emma B. Trogner, individually
/s/ Ronalee B. Trogner (Seal)
-------------------------------------
Ronalee B. Trogner, individually
/s/ Candis C. Trogner (Seal)
-------------------------------------
Candis C. Trogner, individually
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<PAGE>
SCHEDULE 1
1. John S. Trogner, Sr.
2. John S. Trogner, Jr.
3. Blair S. Trogner, Sr.
4. Emma B. Trogner
5. Ronalee B. Trogner
6. Candis C. Trogner
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<PAGE>
SCHEDULE 4
REAL PROPERTIES
A. 150 Corporate Center Drive, East Pennsboro Township, Cumberland County,
Pennsylvania (Lot 1A, CAMP HILL CORPORATE CENTER), Tax Parcel No.
09181304132B;
B. 200 Corporate Center Drive, East Pennsboro Township, Cumberland County,
Pennsylvania (Lot 2, CAMP HILL CORPORATE CENTER), Tax Parcel No.
09181304132;
C. 300 Corporate Center Drive, East Pennsboro Township, Cumberland County,
Pennsylvania (Lot 3, CAMP HILL CORPORATE CENTER), Tax Parcel No.
09181304132C;
D. 500 Nationwide Drive, Harrisburg, Susquehanna Township, Dauphin County,
Pennsylvania (Lot 2-B, CORPORATE CENTER 81), Tax Parcel No. 62-23-57;
E. 600 Corporate Circle, Harrisburg, Susquehanna Township, Dauphin County,
Pennsylvania (Lot 3-D, CORPORATE CENTER 81), Tax Parcel No. 62-23-61;
F. 800 Corporate Circle, Harrisburg, Susquehanna Township, Dauphin County,
Pennsylvania (Lot 4-C, CORPORATE CENTER 81), Tax Parcel No. 62-23-64;
G. 200 Nationwide Drive, Harrisburg, Susquehanna Township, Dauphin County,
Pennsylvania (Lot 3-A, CORPORATE CENTER 81), Tax Parcel No. 62-23-59;
H. 2401 Park Drive, Harrisburg, Susquehanna Township, Dauphin County,
Pennsylvania (Lot 22, COMMERCE PARK, Plan 5), Tax Parcel No. 62-21-161;
I. 2404 Park Drive, Harrisburg, Susquehanna Township, Dauphin County,
Pennsylvania (Lot 16, COMMERCE PARK, Plan 5), Tax Parcel No. 62-21-160;
J. 2405 Park Drive, Harrisburg, Susquehanna Township, Dauphin County,
Pennsylvania (Lot 21, COMMERCE PARK, Plan 6), Tax Parcel No. 62-21-166; and
K. 2407 Park Drive, Harrisburg, Susquehanna Township, Dauphin County,
Pennsylvania (Lot 20, COMMERCE PARK, Plan 9), Tax Parcel No. 62-21-182.
<PAGE>
PROMISSORY NOTE
$150,000,000 May 7, 1998
FOR VALUE RECEIVED, Brandywine Realty Trust ("BRT") and Brandywine
Operating Partnership, L.P. ("BOP") (collectively, BRT and BOP referred to
herein as the "Borrowers"), jointly and severally, hereby unconditionally
promise to pay to NationsBank, N.A. ("Lender"), at its offices located in
Charlotte, North Carolina or such other place as designated by the Lender, the
principal sum of ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000) or such lesser
principal amount as may be outstanding from time to time hereunder, in lawful
money of the United States of America and in immediately available funds,
together with interest on such principal amount and such other amounts as may be
due and owing hereunder in accordance with the terms hereof.
This Note is issued upon, and the undersigned acknowledge and agree to,
the following terms and conditions:
1. Definitions. As used herein the following terms shall have the
meanings herein specified unless the context other requires.
"Business Day" means any day other than a Saturday, a Sunday, a
legal holiday or a day on which banking institutions are authorized or required
by law or other governmental action to close in Bethesda, Maryland, Charlotte,
North Carolina or New York, New York; provided that in the case of Eurodollar
Loans, such day is also a day on which dealings between banks are carried on in
U.S. dollar deposits in the London interbank market.
"Default" means any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Eurodollar Loan" means a Loan bearing interest based at a rate
determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for each Eurodollar
Loan comprising part of the same borrowing (including conversions, extensions
and renewals), a per annum interest rate determined pursuant to the following
formula:
London Interbank Offered Rate
Eurodollar Rate = ---------------------------------
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means, for any day, that percentage
(expressed as a decimal) which is in effect from time to time under Regulation D
of the Board of Governors of
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<PAGE>
the Federal Reserve System (or any successor), as such regulation may be amended
from time to time, or any successor regulation, as the maximum reserve
requirement (including, without limitation, any basic, supplemental, emergency,
special, or marginal reserves) applicable with respect to Eurodollar liabilities
as that term is defined in Regulation D (or against any other category of
liabilities that includes deposits by reference to which the interest rate of
Eurodollar Loans is determined), whether or not the Lender has any Eurodollar
liabilities subject to such reserve requirement at that time. Eurodollar Loans
shall be deemed to constitute Eurodollar liabilities and as such shall be deemed
subject to reserve requirements without benefits of credits for proration,
exceptions or offsets that may be available from time to time to a Lender. The
Eurodollar Rate shall be adjusted automatically on and as of the effective date
of any change in the Eurodollar Reserve Percentage.
"Event of Default" means any of the events or circumstances
described in Section 7 hereof.
"Final Maturity Date" means January 7, 1999.
"Guarantors" has the meaning set forth in the Senior Revolving
Credit Agreement.
"Initial Maturity Date" means November 7, 1998.
"Interest Period" means, as to Eurodollar Loans, a period of one
months' duration commencing, in each case, on the date of the borrowing
(including continuations and conversions thereof); provided, however, (a) if any
Interest Period would end on a day which is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day (except that where
the next succeeding Business Day falls in the next succeeding calendar month,
then on the next preceding Business Day), (b) no Interest Period shall extend
beyond the Maturity Date, (c) with respect to Eurodollar Loans, where an
Interest Period begins on a day for which there is no numerically corresponding
day in the calendar month in which the Interest Period is to end, such Interest
Period shall end on the last Business Day of such calendar month, and (d) no
Interest Period shall extend beyond the Initial Maturity Date unless the
Maturity Date has been extended pursuant to Section 4(c) hereof.
"Interest Payment Date" means (a) as to Prime Rate Loans, the last
Business Day of each month and on the Maturity Date and (b) as to Eurodollar
Loans on the last day of the applicable Interest Period and on the Maturity
Date.
"London Interbank Offered Rate" means, for any Eurodollar Loan for
any Interest Period therefor, the rate per annum (rounded upwards, if necessary,
to the nearest 1/16 of 1%) appearing on Telerate Page 3750 (or any successor
page) as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Telerate Page 3750, the
applicable rate shall be the arithmetic mean
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<PAGE>
of all such rates. If for any reason such rate is not available, the term
"London Interbank Offered Rate" shall mean, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/16 of 1%) appearing on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in U.S. dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided, however, if more than
one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be
the arithmetic mean of all such rates.
"Maturity Date" means the Initial Maturity Date or if the Initial
Maturity Date is extended in accordance with the terms hereof, the Final
Maturity Date.
"Notice of Borrowing" means a request by the Borrowers for a Loan,
in the form of Exhibit 2(b) attached hereto.
"Notice of Continuation/Conversion" means a request by the Borrowers
to continue an existing Eurodollar Loan to a new Interest Period or to convert a
Eurodollar Loan to a Prime Rate Loan or to convert a Prime Rate Loan to a
Eurodollar Loan, in the form of Exhibit 2(c) attached hereto.
"Prime Rate" means the per annum rate of interest established from
time to time by the Lender at its principal office in Charlotte, North Carolina
(or such other principal office of the Lender as communicated in writing to the
Borrowers) as its Prime Rate. Any change in the interest rate resulting from a
change in the Prime Rate shall become effective as of 12:01 a.m. of the Business
Day on which each change in the Prime Rate is announced by the Lender. The Prime
Rate is a reference rate used by the Lender in determining interest rates on
certain loans and is not intended to be the lowest rate of interest charged on
any extension of credit to any debtor.
"Prime Rate Loan" means a Loan bearing interest based at a rate
determined by reference to the Prime Rate.
"Senior Revolving Credit Agreement" means that certain Amended and
Restated Credit Agreement, dated as of January 5, 1998 (as amended, modified,
supplemented, restated or replaced from time to time), among the Borrowers,
certain Subsidiaries of the Borrowers as Guarantors, the Lender, as
Administrative Agent, and the other lenders party thereto.
2. The Loans.
(a) Commitment. Subject to the terms and conditions set forth
herein, including, without limitation, Section 6(b) hereof, the Lender agrees to
make loans (each a "Loan" and collectively the "Loans") to the Borrowers, in
U.S. dollars, at any time and from time to time,
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<PAGE>
from the date hereof to but not including the Maturity Date; provided that the
aggregate principal amount of Loans advanced hereunder cannot exceed
$150,000,000.
(b) Method of Borrowing for Loans. By no later than 11:00 a.m. (i)
one Business Day prior to the date of the requested borrowing of Loans that will
be Prime Rate Loans or (ii) three Business Days prior to the date of the
requested borrowing of Loans that will be Eurodollar Loans, the Borrowers shall
submit a written Notice of Borrowing in the form of Exhibit 2(b) attached hereto
to the Lender setting forth (A) the amount requested, (B) whether such Loans
shall be Prime Rate Loans or Eurodollar Loans, and (C) certification that the
Borrowers have complied in all respects with Section 6(b) hereof. The Lender
will make the requested Loan to the Borrowers on the date set forth in the
Notice of Borrowing by crediting the account of the Borrowers on the books of
the Lender.
(c) Continuations and Conversions. The Borrowers shall have the
option, on any Business Day, to continue existing Eurodollar Loans for a
subsequent Interest Period, to convert Prime Rate Loans into Eurodollar Loans,
or to convert Eurodollar Loans into Prime Rate Loans; provided, however, that
(i) each such continuation or conversion must be requested by the Borrowers
pursuant to a written Notice of Continuation/Conversion, in the form of Exhibit
2(c) attached hereto, in compliance with the terms set forth below, (ii)
Eurodollar Loans may only be continued or converted on the last day of the
Interest Period applicable thereto, (iii) Eurodollar Loans may not be continued
nor may Prime Rate Loans be converted into Eurodollar Loans during the existence
and continuation of a Default or Event of Default and (iv) any request to
continue a Eurodollar Loan that fails to comply with the terms hereof or any
failure to request a continuation of a Eurodollar Loan at the end of an Interest
Period shall result in a conversion of such Eurodollar Loan to a Prime Rate Loan
on the last day of the applicable Interest Period. Each continuation or
conversion must be requested by the Borrowers no later than 11:00 a.m. (A) one
Business Day prior to the date for a requested conversion of a Eurodollar Loan
to a Prime Rate Loan or (B) three Business Days prior to the date for a
requested continuation of a Eurodollar Loan or conversion of a Prime Rate Loan
to a Eurodollar Loan, in each case pursuant to a written Notice of
Continuation/Conversion submitted to the Lender.
(d) Minimum Amounts/Restrictions on Loans. Each request for a
borrowing, conversion or continuation shall be subject to the requirements that
(i) each Eurodollar Loan shall be in a minimum amount of $1,000,000 and in
integral multiples of $100,000 in excess thereof, (ii) each Prime Rate Loan
shall be in a minimum amount of $500,000 (and integral multiples of $100,000 in
excess thereof) or the remaining amount available under this Note, (iv) no more
than four Loans shall be made during any one month and (v) no more than six
Eurodollar Loans shall be outstanding at any one time. For the purposes of this
Section, all Eurodollar Loans with the same Interest Periods beginning on the
same date shall be considered as one Eurodollar Loan, but Eurodollar Loans with
different Interest Periods, even if they begin on the same date, shall be
considered as separate Eurodollar Loans.
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<PAGE>
(e) Appointment of BOP. BRT hereby appoints BOP to act as its agent
for all purposes under this Note (including, without limitation, with respect to
all matters related to the borrowing and repayment of Loans) and agrees that (i)
BOP may execute such documents on behalf of BRT as BOP deems appropriate in its
sole discretion and BRT shall be obligated by all of the terms of any such
document executed on its behalf, (ii) any notice or communication delivered by
the Lender to BOP shall be deemed delivered to BRT and (iii) the Lender may
accept, and be permitted to rely on, any document, instrument or agreement
executed by BOP on behalf of a Borrower or BRT.
3. Interest.
(a) Interest Rate. From the date hereof until the Initial Maturity
Date, (i) all Prime Rate Loans shall accrue interest at the Prime Rate plus .25%
and all Eurodollar Loans shall accrue interest at the Eurodollar Rate plus
1.50%. If the Maturity Date is extended pursuant to the terms hereof, then from
the day after the Initial Maturity Date until the Final Maturity Date, all Prime
Rate Loans shall accrue interest at the Prime Rate plus .50% and all Eurodollar
Loans shall accrue interest at the Eurodollar Rate plus 1.75%.
(b) Default Rate of Interest. Upon the occurrence, and during the
continuance, of an Event of Default, the principal of and, to the extent
permitted by law, interest on the Loans and any other amounts owing hereunder
(including without limitation fees and expenses) shall bear interest, payable on
demand, at a per annum rate equal to four percent (4%) plus the rate which would
otherwise be applicable (or if no rate is applicable, then the rate for Prime
Rate Loans plus four percent (4%) per annum).
(c) Interest Payments. Interest on Loans shall be due and payable in
arrears on each Interest Payment Date. If an Interest Payment Date falls on a
date which is not a Business Day, such Interest Payment Date shall be deemed to
be the succeeding Business Day, except that in the case of Eurodollar Loans
where the succeeding Business Day falls in the succeeding calendar month, then
on the preceding Business Day.
(d) Computation of Interest. Except for Prime Rate Loans which shall
be calculated on the basis of a 365 or 366 day year as the case may be, all
computations of interest hereunder shall be made on the basis of the actual
number of days elapsed over a year of 360 days. Interest shall accrue from and
include the date of borrowing (or continuation or conversion) but exclude the
date of payment. It is the intent of the Lender and the Borrowers to conform to
and contract in strict compliance with applicable usury law from time to time in
effect. All agreements between the Lender and the Borrowers are hereby limited
by the provisions of this paragraph which shall override and control all such
agreements, whether now existing or hereafter arising and whether written or
oral.
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<PAGE>
4. Payments.
(a) Place of Payments. All payments of principal, interest, fees,
expenses and other amounts to be made by a Borrower under this Note shall be
received not later than 2:00 p.m. on the date when due, in U.S. dollars and in
immediately available funds, by the Lender at its offices in Charlotte, North
Carolina. Payments received after such time shall be deemed to have been
received on the next Business Day. Whenever any payment hereunder shall be
stated to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day (subject to accrual of
interest and fees for the period of such extension), except that in the case of
Eurodollar Loans, if the extension would cause the payment to be made in the
next following calendar month, then such payment shall instead be made on the
next preceding Business Day.
(b) Voluntary Prepayments. The Borrowers shall have the right to
prepay Loans in whole or in part from time to time without premium or penalty;
provided, however, that Eurodollar Loans may only be prepaid on three Business
Days' prior written notice to the Lender and any prepayment of Eurodollar Loans
will be subject to Section 4(d) below. Prepayments shall be applied first to
Prime Rate Loans and then to Eurodollar Loans in direct order of Interest Period
maturities. Loans repaid hereunder may not be reborrowed.
(c) Payment in full at Maturity; Extension of Maturity.
(i) On the Maturity Date, the entire outstanding principal
balance of all Loans, together with accrued but unpaid interest and all other
sums owing with respect thereto, shall be due and payable in full, unless
accelerated sooner pursuant to Section 8 hereof.
(ii) If on the Initial Maturity Date (A) no Default or Event of
Default exists and is continuing and (B) the Borrowers pay to the Lender an
extension fee equal to one-fourth of one percent (.25%) of the then principal
amount outstanding under this Note, the Borrowers may elect to extend the
Maturity Date to the Final Maturity Date. The Borrowers shall give written
notice to the Lender of its desire to effect such election at least 20 days, but
no more than 45 days, prior to the Initial Maturity Date.
(d) Compensation. The Borrowers promise to indemnify the Lender and
to hold the Lender harmless from any loss or expense which the Lender may
sustain or incur as a consequence of (i) default by the Borrowers in making a
borrowing of, conversion into or continuation of Eurodollar Loans after the
Borrowers have given a notice requesting the same in accordance with the
provisions of this Note, (ii) default by the Borrowers in making any prepayment
of a Eurodollar Loan after the Borrowers have given a notice thereof in
accordance with the provisions of this Note and (iii) the making of a prepayment
of Eurodollar Loans on a day which is not the last day of an Interest Period
with respect thereto. Such indemnification may include an amount equal to (A)
the amount of interest which would have accrued on the amount
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<PAGE>
so prepaid, or not so borrowed, converted or continued, for the period from the
date of such prepayment or of such failure to borrow, convert or continue to the
last day of the applicable Interest Period (or, in the case of a failure to
borrow, convert or continue, the Interest Period that would have commenced on
the date of such failure) in each case at the applicable rate of interest for
such Eurodollar Loans provided for herein minus (B) the amount of interest (as
reasonably determined by the Lender) which would have accrued to the Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank Eurodollar market. The agreements in this section
shall survive the termination of this Note and the payment of the Loans and all
other amounts payable hereunder. Notwithstanding the foregoing, any prepayment
of a Eurodollar Loan made in connection with repayment of all or any portion of
this Note pursuant to funds received from (x) a permanent mortgage financing or
(y) an equity offering shall not be subject to this Section 4(d).
5. Incorporation by Reference.
(a) Yield Protection. Sections 3.9, 3.10, 3.11 and 3.12 of the
Senior Revolving Credit Agreement are incorporated herein by reference
(including any defined terms contained therein), to the extent applicable, and
shall be binding on the Borrowers as if set forth herein.
(b) Representations and Warranties. All of the representations and
warranties set forth in Section 6 of the Senior Revolving Credit Agreement are
incorporated herein by reference (including any defined terms contained therein)
and made and affirmed by the Borrowers to the Lender as of the date of this Note
(except to the extent they expressly refer to an earlier date) and as of such
dates as required pursuant to Section 6(b) hereof.
(c) Covenants.
(i) All of the covenants set forth in Section 7 and Section 8 of
the Senior Revolving Credit Agreement are incorporated herein by
reference (including any defined terms contained therein) and shall
be binding on the Borrowers as if set forth herein, including,
without limitation, the requirement that any new Material
Subsidiaries (as defined in the Senior Revolving Credit Agreement)
formed or acquired shall become Guarantors hereunder.
(ii) The Borrowers also covenant and agree that:
(A) the Borrowers shall furnish to the Lender, (1) within
45 days after the date of this Note, an executed permanent
mortgage commitment in an amount not less than $105 million and
(2) within 90 days after the date of this Note, a written
engagement from an investment bank, acceptable to the Lender (it
being understood that the Lender agrees that Solomon Smith
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Barney, Merrill Lynch, Legg Mason, Donaldson Lufkin & Jenrette
and NationsBanc Montgomery Securities LLC are acceptable to the
Lender), for an equity offering in an amount sufficient such
that the net proceeds therefrom (plus the proceeds from the
permanent mortgage commitment referenced above) will repay all
amounts owing under this Note in full.
(B) if for any consecutive period of 30 days or more,
Eurodollar Loans constitute less than 75% of the aggregate
principal amount of all Loans, then the Borrowers shall enter
into interest rate protection agreements in form and substance
reasonably acceptable to the Lender.
(C) the proceeds of the Loans shall be used solely (1) to
acquire office and industrial properties, (2) to repay the First
Union mortgage loans due on June 1, 1998 and August 1, 1998 and
to fund construction and development projects at Park 80,
Highlander Business Park, Newtown 13, Horsham 17 & 18, Cherry
Hill #5 and #6, Pulver and Realen, in an aggregate amount not to
exceed $35 million and (3) for general working capital in the
ordinary course (but in no event shall the proceeds of the Loan
be used to repay any existing Indebtedness of the Borrowers or
their Subsidiaries or for the development of existing or future
projects, except as set forth in clause (2) above).
6. Conditions Precedent.
(a) Closing Conditions. The obligation of the Lender to make the
initial Loan under this Note is subject to satisfaction of the following
conditions (in form and substance acceptable to Lender):
(i) Executed Documents. Receipt by the Lender of a duly executed
copy of this Note.
(ii) Guaranty Agreement. Receipt by the Lender of a guaranty
agreement, in form and substance acceptable to the Lender, executed
by the Guarantors (the "Guaranty Agreement").
(iii) Authority Documents. Receipt by the Lender of documents
and certificates from the Borrowers and Guarantors in the same form
and in the same manner as required by Sections 5.1(b), (c), (d) and
(e) of the Senior Revolving Credit Agreement.
(iv) Legal Opinion. Receipt by the Lender of opinions from
counsel to the Borrowers and Guarantors, in form and substance
acceptable to the Lender, addressed to the Lender and dated as of
the date hereof.
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(v) Fees and Expenses. All fees and expenses required to be paid
by the Borrowers to the Lender under this Note have been paid in
full, including, without limitation, payment to the Lender of an
origination fee in the amount of $300,000; provided that it is
understood that the Lender will refund $90,000 to the Borrower if
the lenders under the Senior Revolving Credit Agreement decline to
consent to permit the Borrowers' next equity offering to prepay this
Note.
(b) Conditions to Loans. In addition to the conditions precedent
stated elsewhere herein, the Lender shall not be obligated to make Loans unless:
(i) Delivery of Notice. The Borrowers shall have delivered a
Notice of Borrowing, duly executed and completed, by the time
specified in Section 2(b) hereof.
(ii) Representations and Warranties. The representations and
warranties made by the Borrowers as incorporated herein by reference
are true and correct in all material respects at and as if made as
of such date except to the extent they expressly relate to an
earlier date.
(iii) No Default. No Default or Event of Default shall exist or
be continuing either prior to or after giving effect thereto.
(iv) Availability. After giving effect to the making of the
requested Loan, (A) on or before the date the requisite lenders
under the Senior Revolving Credit Agreement consent to permit the
proceeds from the Borrowers' next Equity Issuance (as defined in the
Senior Revolving Credit Agreement) to be used to repay this Note,
the aggregate principal amount of Loans advanced under this Note
shall be less than or equal to $105,000,000 and (B) subsequent to
the date the requisite lenders under the Senior Revolving Credit
Agreement consent to permit the proceeds from the Borrowers' next
Equity Issuance (as defined in the Senior Revolving Credit
Agreement) to be used to repay this Note, the aggregate principal
amount of Loans advanced under this Note shall be less than or equal
to $150,000,000.
The delivery of each Notice of Borrowing shall constitute a representation and
warranty by the Borrowers of the correctness of the matters specified in
subsections (ii) and (iii) above.
7. Events of Default. An Event of Default shall exist upon the
occurrence of any of the following:
(a) Payments. The Borrowers shall default in the payment (i) when
due of any principal amount of any Loans or (ii) within three days of when due
of any interest on the Loans or any fees or other amounts owing hereunder.
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<PAGE>
(b) Senior Revolving Credit Agreement. An Event of Default shall
exist under the terms of the Senior Revolving Credit Agreement.
(c) Guaranty Agreement. An Event of Default shall exist under the
terms of the Guaranty Agreement.
(d) Covenants. The Borrowers shall default in the due performance of
any of the covenants set forth in Section 5(c)(ii) of this Note.
8. Remedies. Upon the occurrence of an Event of Default, the Lender may
(a) declare any commitment to advance Loans under this Note to be terminated,
(b) declare all unpaid principal, accrued but unpaid interest and all other sums
owing under this Note to be immediately due and payable in full without
presentation, demand, protest or notice of any kind, all of which are hereby
waived by the Borrowers and/or (c) enforce any and all rights and interests in
accordance with applicable law, including, without limitation, all rights
against the Guarantors and all rights of set-off.
9. Miscellaneous.
(a) Notices. Except as otherwise expressly provided herein, all
notices and other communications shall have been duly given and shall be
effective (i) when delivered by hand, (ii) when transmitted via telecopy (or
other facsimile device), (iii) the Business Day following the day on which the
same has been delivered prepaid to a reputable national overnight air courier
service, or (iv) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address or telecopy numbers set forth below, or at
such other address as such party may specify by written notice to the other
parties hereto; provided, however, that if any notice is delivered on a day
other than a Business Day then such notice shall not be effective until the next
Business Day:
if to the Borrowers: [name of Borrower]
c/o Brandywine Operating Partnership, L.P.
Newtown Square Corporate Campus
16 Campus Boulevard, Suite 150
Newtown Square, Pennsylvania 19073
Attention: Gerard H. Sweeney
President and Chief Executive Officer
if to the Lender: Cheryl Fitzgerald
NationsBank Real Estate
Structured Debt Group
6610 Rockledge Drive
6th Floor
Bethesda, Maryland 20817
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<PAGE>
Phone:(301) 571-9036
Fax: (301) 493-2885
(b) Set-Off. In addition to any rights now or hereafter granted
under applicable law or otherwise, and not by way of limitation of any such
rights, upon the occurrence of an Event of Default and the commencement of
remedies described in Section 8 hereof, the Lender is authorized at any time and
from time to time, without presentment, demand, protest or other notice of any
kind (all of which rights being hereby expressly waived), to set-off and to
appropriate and apply any and all deposits (general or special) and any other
indebtedness at any time held or owing by the Lender (including, without
limitation, branches, agencies or affiliates of the Lender wherever located) to
or for the credit or the account of any Borrower against obligations and
liabilities of such Borrower to the Lender hereunder, irrespective of whether
the Lender shall have made any demand hereunder and although such obligations,
liabilities or claims, or any of them, may be contingent or unmatured, and any
such set-off shall be deemed to have been made immediately upon the occurrence
of an Event of Default even though such charge is made or entered on the books
of the Lender subsequent thereto. The Borrowers hereby agree that any person
purchasing a participation in the Loans hereunder may exercise all rights of
set-off with respect to its participation interest as fully as if such Person
were the Lender hereunder.
(c) Benefit of Agreement. This Note shall be binding upon and inure
to the benefit of and be enforceable by the respective successors and assigns of
the parties hereto; provided that the Borrowers may not assign and transfer any
of their interests without the prior written consent of the Lender; and provided
further that the Lender may transfer, assign or grant participations in its
rights and/or obligations hereunder as it deems necessary or appropriate.
(d) No Waiver; Remedies Cumulative. No failure or delay on the part
of the Lender in exercising any right, power or privilege hereunder and no
course of dealing between the Borrowers and the Lender shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder. The rights and
remedies provided herein are cumulative and not exclusive of any rights or
remedies which the Lender would otherwise have. No notice to or demand on the
Borrowers in any case shall entitle the Borrowers to any other or further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of the Lender to any other or further action in any circumstances without notice
or demand.
(e) Expenses and Indemnification. The Borrowers agree to: (a) pay
all reasonable out-of-pocket costs and expenses of the Lender in connection with
(i) the negotiation, preparation, execution and delivery and administration of
this Note (including, without limitation, the reasonable fees and expenses of
Moore & Van Allen, special counsel to the Lender, (ii) any amendment, waiver or
consent relating hereto and thereto including, but not limited to, any such
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<PAGE>
amendments, waivers or consents resulting from or related to any work-out,
renegotiation or restructure relating to the performance by the Borrowers under
this Note, (iii) the enforcement of this Note, including, without limitation,
the reasonable fees and disbursements of counsel for the Lender, and (iv) any
bankruptcy or insolvency proceeding of a Borrower or any of its Subsidiaries,
and (b) indemnify the Lender, its officers, directors, employees,
representatives and agents from and hold each of them harmless against any and
all losses, liabilities, claims, damages or expenses incurred by any of them as
a result of, or arising out of, or in any way related to, or by reason of, any
investigation, litigation or other proceeding (whether or not the Lender is a
party thereto) related to the entering into and/or performance of this Note or
the use of proceeds of any Loans (including other extensions of credit)
hereunder or the consummation of any other transactions contemplated in this
Note, including, without limitation, the reasonable fees and disbursements of
counsel incurred in connection with any such investigation, litigation or other
proceeding (but excluding any such losses, liabilities, claims, damages or
expenses to the extent incurred by reason of gross negligence or willful
misconduct on the part of the person to be indemnified).
(f) Amendments, Waivers and Consents. Neither this Note nor any of
the terms hereof may be amended, changed, waived, discharged or terminated
unless such amendment, change, waiver, discharge or termination is in writing
signed by the Borrowers and the Lender.
(g) Survival of Indemnification and Representations and Warranties.
All indemnities set forth herein and all representations and warranties made
herein shall survive the execution and delivery of this Note and the making of
the Loans.
(h) Counterparts. This Note may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall constitute one and the same instrument.
(i) Headings. The headings of the sections and subsections hereof
are provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Note.
-12-
<PAGE>
(j) Governing Law; Venue.
(i) THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA. Any legal
action or proceeding with respect to this Note may be brought in the
courts of the State of North Carolina in Mecklenburg County, or of
the United States for the Western District of North Carolina, and,
by execution and delivery of this Note, each Borrower hereby
irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of such courts. Each
Borrower further irrevocably consents to the service of process out
of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified mail,
postage prepaid, to it at the address for notices pursuant to
Section 9(a). Nothing herein shall affect the right of the Lender to
serve process in any other manner permitted by law or to commence
legal proceedings or to otherwise proceed against a Borrower in any
other jurisdiction.
(ii) Each Borrower hereby irrevocably waives any objection which
it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection
with this Note brought in the courts referred to in subsection (i)
hereof and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.
(k) Waiver of Jury Trial. EACH OF THE UNDERSIGNED HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS NOTE, ANY OF THE OTHER DOCUMENTS EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(l) Severability. If any provision of this Note is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
(m) Entirety. This Note, together with the other documents referred
to herein, represent the entire agreement of the parties hereto and thereto, and
supersede all prior
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<PAGE>
agreements and understandings, oral or written, if any, including any commitment
letters or correspondence.
(n) Non-Recourse. Notwithstanding anything herein to the contrary,
no recourse shall be had against the Brandywine Realty Services Partnership or
any past, present or future shareholder, officer, director or trustee of BRT for
any obligation of the Borrowers hereunder, or for any claim based thereon or
otherwise in respect thereof; provided, however, that this subparagraph (n)
shall not restrict or limit any claim against any such person arising out of or
occurring with respect to fraud or any intentional misrepresentation or any act
or omission that is willful or wanton or constitutes gross negligence or willful
misconduct.
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<PAGE>
This Note is executed as of the date first set forth above.
BRANDYWINE REALTY TRUST, a Maryland
real estate investment trust
By: /s/ Gerard H. Sweeney
-------------------------------------
Name: Gerard H. Sweeney
Title: President and Chief Executive Officer
BRANDYWINE OPERATING PARTNERSHIP, L.P.,
a Delaware limited partnership
By: Brandywine Realty Trust, a Maryland real
estate investment trust, its general partner
By: /s/ Gerard H. Sweeney
--------------------------------------------
Name: Gerard H. Sweeney
Title: President and Chief Executive Officer
ACKNOWLEDGED AND AGREED
AS OF THE DATE FIRST
SET FORTH ABOVE
NATIONSBANK, N.A.
By: /s/ Cheryl D. Fitzgerald
------------------------
Name: Cheryl D. Fitzgerald
Title: Vice President
<PAGE>
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
TWO TOWER BRIDGE ASSOCIATES
Dated as of May 11, 1998
<PAGE>
TABLE OF CONTENTS
Page
----
BACKGROUND STATEMENT...........................................................1
ARTICLE I
DEFINITIONS...........................................................2
1.01. Act..........................................................2
1.02. Additional Capital Balance...................................2
1.03. Additional Capital Contributions.............................2
1.04. Administrative General Partner...............................2
1.05. Book Value...................................................2
1.06. BOP Preference Capital.......................................2
1.07. BOP Preferred Cumulative Return..............................2
1.08. Building.....................................................3
1.09. Capital Accounts.............................................3
1.10. Capital Balance..............................................3
1.11. Capital Contributions........................................3
1.12. Certificate..................................................3
1.13. Code.........................................................3
1.14. Contribution Percentage......................................3
1.15. Cumulative Net Loss..........................................4
1.16. Cumulative Net Profit........................................4
1.17. Depreciation.................................................4
1.18. Fiscal Year..................................................4
1.19. Hypothetical Capital Account.................................4
1.20. Land.........................................................4
1.21. Managing General Partner.....................................4
1.22. Minimum Gain.................................................4
1.23. Minimum Gain Share...........................................5
1.24. Net Cash Flow................................................5
1.25. Net Refinancing Proceeds.....................................5
1.26. Net Sale Proceeds............................................5
1.27. Nonrecourse Deductions.......................................5
1.28. Operating Budget.............................................5
1.29. Participation Percentage.....................................5
1.30. Partner or Partners..........................................6
1.31. Partner Minimum Gain.........................................6
1.32. Partner Nonrecourse Debt.....................................6
1.33. Partner Nonrecourse Deductions...............................6
1.34. Partners' Loans..............................................6
i
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Page
----
1.35. Partners' Priority Loans.....................................6
1.36. Preferred Cumulative Return..................................6
1.37. Profits or Losses............................................7
1.38. Project......................................................7
1.39. Project Costs................................................8
ARTICLE II
GENERAL PROVISIONS....................................................8
2.01. Admission of Partners........................................8
2.02. Continuation and Term........................................8
2.03. Name.........................................................8
2.04. Purpose......................................................8
2.05. Places of Business...........................................9
2.06. Nature of Partners' Interests; Non-Partition.................9
2.07. Partnership Income...........................................9
ARTICLE III
CAPITAL CONTRIBUTIONS; LOANS.........................................10
3.01. Capital Contributions.......................................10
3.02. Capital Accounts............................................11
3.03. Capital Calls...............................................11
3.04. Additional Capital Contributions; Partners' Loans...........12
3.05. Procedures Upon a Failure to Make an Additional
Capital Contribution; Partners' Priority Loans..............12
3.06. Partner Affiliate Guaranties; Partners' Priority Loans......13
ARTICLE IV
MANAGEMENT OF THE PARTNERSHIP........................................13
4.01. Duties and Powers of the General Partners...................13
4.02. Fees, Compensation and Reimbursement of Expenses............17
4.03. Concerning the Limited Partners.............................17
4.04. Sale or Refinancing.........................................17
4.05. Bank Accounts...............................................18
4.06. Consents and Approvals......................................18
4.07. Concerning Persons Other Than Partners......................18
4.08. Indemnification of the General Partners.....................19
4.09. Representations and Warranties of the Managing General
Partner.....................................................19
ii
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Page
----
4.10. Representations and Warranties of the Administrative
General Partner.............................................26
4.11. Certain Definitions.........................................28
4.12. Pledges.....................................................28
ARTICLE V
DISTRIBUTIONS AND ALLOCATIONS........................................29
5.01. Distributions of Net Cash Flow..............................29
5.02. Distributions of Net Refinancing Proceeds and Net
Sale Proceeds...............................................29
5.03. Availability of Funds.......................................30
5.04. Tax Withholding.............................................30
5.05. Allocation of Profits and Losses............................31
ARTICLE VI
BOOKS AND RECORDS; TAX MATTERS.......................................34
6.01. Accounting..................................................34
6.02. Statements..................................................34
6.03. Inspection..................................................35
6.04. Tax Matters.................................................35
ARTICLE VII
TRANSFER OF PARTNERSHIP INTERESTS;
WITHDRAWAL OF PARTNERS;
REMOVAL OF THE MANAGING GENERAL PARTNER..............................37
7.01. Transfer of General Partnership Interests...................37
7.02. Transfer of Limited Partnership Interests...................40
7.03. Expenses....................................................41
7.04. Withdrawal of Partners......................................41
7.05. Death, Incompetency, Dissolution or Bankruptcy of a
Limited Partner.............................................41
7.06. Deadlock of the General Partners............................41
7.07. Right of First Refusal......................................43
7.08. Status of Interests Transferred.............................44
7.09. Removal of the Managing General Partner.....................45
7.10. Deadlock on Sale............................................47
7.11. Arbitrable Disputes.........................................48
7.12. Right of Contribution in Favor of Managing General Partner..51
iii
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Page
----
ARTICLE VIII
ADDITIONAL LIMITED PARTNERS..........................................55
8.01. Additional Limited Partners and Their Contributions.........55
ARTICLE IX
INSURANCE............................................................55
9.01. Coverage....................................................55
9.02. Certificates; Notices.......................................56
9.03. Concerning Liability Insurance..............................57
9.04. Miscellaneous...............................................57
ARTICLE X
DISSOLUTION AND TERMINATION..........................................57
10.01. Dissolution.................................................57
10.02. Appointment of Liquidating Partner..........................58
10.03. Distributions and Other Matters.............................59
10.04. Distributions of Property...................................60
10.05. Actions of the Liquidating Partner; Statements of
Account.....................................................60
ARTICLE XI
NOTICES AND COMMUNICATIONS...........................................60
11.01. Notices.....................................................60
11.02. Change of Address...........................................61
11.03. Time of Communications......................................61
ARTICLE XII
MISCELLANEOUS........................................................62
12.01. Filings.....................................................62
12.02. Power of Attorney...........................................62
12.03. Inspections.................................................63
12.04. Other Remedies..............................................63
12.05. Partners as Creditors.......................................63
12.06. Independent Ventures........................................63
12.07. Partial Invalidity..........................................64
12.08. Governing Law; Parties in Interest..........................64
iv
<PAGE>
12.09. Amendment...................................................64
12.10. Execution in Counterpart....................................64
12.11. Computation of Time.........................................64
12.12. Table of Contents; Titles and Captions......................64
12.13. Pronouns and Plurals........................................64
12.14. Approval by General Partners................................64
12.15. Exhibits....................................................64
12.16. Entire Agreement............................................65
12.17. Filing with Securities Exchange Commission..................65
12.18. Non-Recourse................................................65
EXHIBITS
Exhibit "A" - Schedule of Partnership Participation and Capital
Exhibit "B" - Land Description
Exhibit "C" - Leasing Agency Agreement Form
Exhibit "D" - Management Agreement Form
Exhibit "D-1" - Operating Budget
Exhibit "E" - Schedule of Subordinate Debt
Exhibit "F" - Balance Sheet
Exhibit "F-1" - Balance Sheet of BOP
Exhibit "G" - Liabilities not in the Ordinary Course in excess of $1,000
individually since the date of Exhibit "F"
Exhibit "H" - Litigation
Exhibit "I" - Schedule of Contracts not terminable on 30 days' notice
Exhibit "J" - Schedule of Service Contracts
Exhibit "K" - Rent Roll
Exhibit "K-1" - Parking Deck Agreement
Exhibit "L" - Certificate of Insurance
Exhibit "M" - Brokerage Commissions
Exhibit "N" - Schedule of Taxes, insurance, utilities, fuel oil and trash
collection
Exhibit "O" - Rights of Refusal, Options, etc.
Exhibit "P" - Development Agreements
v
<PAGE>
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
TWO TOWER BRIDGE ASSOCIATES
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP (this "Agreement") is made and entered into as of _______________,
1998, by and among TWO OLIVER TOWER ASSOCIATES, a Pennsylvania limited
partnership with offices at c/o Oliver Tyrone Pulver Corporation, One Tower
Bridge, 100 West Front Street, West Conshohocken, Pennsylvania 19428, as
Managing General Partner ("Managing General Partner"), BRANDYWINE TB II, L.P.,
a Pennsylvania limited partnership with offices at c/o Brandywine Realty
Trust, Newtown Corporate Campus, 16 Campus Boulevard, Suite 150, Newtown
Square, Pennsylvania 19073, as Administrative General Partner ("Administrative
General Partner"), and DONALD W. PULVER, with offices at c/o Oliver Tyrone
Pulver Corporation, One Tower Bridge, 100 West Front Street, West
Conshohocken, Pennsylvania 19428 ("Limited Partner"). Managing General Partner
and Administrative General Partner are sometimes hereinafter referred to
collectively as the "General Partners" or individually as a "General Partner."
The General Partners and the Limited Partner are sometimes hereinafter
referred to collectively as the "Partners," or individually as a "Partner."
BACKGROUND STATEMENT
A. Two Tower Bridge Associates (the "Partnership") is an existing
Pennsylvania limited partnership formed pursuant to the Act (hereinafter
defined) and that certain Agreement of Limited Partnership dated as of August
13, 1990, as amended and restated in accordance with an Amended and Restated
Agreement of Limited Partnership dated as of January 1, 1991 (such agreement,
as so amended and restated, the "Original Agreement") and a Certificate of
Limited Partnership, dated as of August 13, 1990 (the "Original Certificate"),
as filed in the Department of State of the Commonwealth of Pennsylvania on
March 27, 1991. At the time of its formation, the partnership's sole partners
were Managing General Partner, as general partner, and Limited Partner, as
limited partner.
B. The parties hereto desire to admit Administrative General Partner
as a general partner to the Partnership; to provide for the reconstitution of
the Partnership as the result of the admission of Administrative General
Partner as aforesaid, to provide for the continuation of the Partnership as so
reconstituted, and to reflect the agreements and understandings among the
Partners in respect of the conduct of the business of the Partnership and the
relationship among the Partners -- all of the foregoing on the terms and
conditions hereinafter set forth.
<PAGE>
NOW, THEREFORE, in consideration of the mutual covenants and premises
hereinafter set forth, the parties hereto, intending to be legally bound,
hereby agree as follows:
ARTICLE I
DEFINITIONS
Certain terms when used in this Agreement shall have the meanings set
forth in the context hereof. The following terms when used in this Agreement
shall have the respective meanings set forth below:
1.01. Act. The Pennsylvania Uniform Limited Partnership Act, 59 Pa.
C.S.A. Section 3.01 et seq., as amended.
1.02. Additional Capital Balance. The Additional Capital
Contributions of a Partner; in each case as reduced from time to time by all
cash distributions to such Partner which are in reduction of a Partner's
Additional Capital Balance; and in each case as increased from time to time by
any contributions by such Partner which are Additional Capital Contributions.
1.03. Additional Capital Contributions. Any additional cash
contributions of a Partner to the capital of the Partnership made pursuant to
Sections 3.03 hereof.
1.04. Administrative General Partner. The entity identified as
Administrative General Partner in the caption hereof.
1.05. Book Value. With respect to any asset, the asset's adjusted
basis for federal income tax purposes, except that (i) where an asset has been
revalued on the books of the Partnership the Book Value of such asset shall be
adjusted to reflect such revaluation; (ii) where an asset has been contributed
by a Partner to the Partnership or distributed by the Partnership to a Partner
its Book Value shall be its agreed fair market value; and (iii) the Book Value
of Partnership assets shall be adjusted to reflect the Depreciation taken into
account with respect to such assets for purposes of determining Profits or
Losses.
1.06. BOP Preference Capital. The Capital Contribution made by
Administrative General Partner as reflected on Exhibit "A" attached hereto and
made a part hereof. BOP Preference Capital shall be part of the Administrative
General Partner's Capital Balance and Capital Account.
1.07. BOP Preferred Cumulative Return. The cumulative right given to
Administrative General Partner, which right is hereby granted, to receive in
respect of each quarter of each Fiscal Year a sum equal to ten percent (10%)
per annum, compounded annually, of such Partner's then aggregate, outstanding
BOP Preference Capital (computed from time to time during any such Fiscal Year
to reflect reductions in or additions to such BOP Preference Capital); and if
such BOP
2
<PAGE>
Preference Capital shall at any time be reduced to zero, then the BOP
Preferred Cumulative Return shall thereupon cease and shall not be renewed by
virtue of any future capital. The BOP Preferred Cumulative Return shall begin
on the date the BOP Preference Capital is advanced. Any amounts to be
distributed in connection with the foregoing during the first Fiscal Year in
which the BOP Preferred Cumulative Return begins shall be reduced ratably in
the same ratio as the number of days remaining in such first Fiscal Year bears
to 365, and all amounts to be distributed on other than the last day of a
Fiscal Year shall be computed ratably based on the elapsed portion of such
Fiscal Year. The BOP Preferred Cumulative Return shall be payable as specified
in this Agreement only from funds available to the Partnership from Net Cash
Flow, Net Refinancing Proceeds, Net Sale Proceeds or proceeds upon the
Partnership's liquidation, and shall not (i) create a debt of the Partnership
to any Partner to the extent that any such funds are not available for
distribution, or (ii) constitute a guaranteed payment as defined in Section
707(c) of the Code.
1.08. Building. The office building known as Two Tower Bridge,
consisting of an office building consisting of approximately 82,705 square
feet, with the structured parking area immediately adjacent thereto.
1.09. Capital Accounts. The capital accounts of the Partners, as
described in Section 3.01 hereof and Exhibit "A".
1.10. Capital Balance. The Capital Contributions and Additional
Capital Contributions of a Partner; in each case as reduced from time to time
by all cash distributions to such Partner which are in reduction of a
Partner's Capital Balance or a Partner's Capital Account; and in each case as
increased from time to time by any contributions by such Partner which are
Capital Contributions or Additional Capital Contributions. With respect to
Managing General Partner and Limited Partner, the Capital Balance shall
initially be as stated on Exhibit "A" hereof by reason of the adjustment of
fair market value as set forth in Section 3.01 hereof.
1.11. Capital Contributions. The cash capital contributions of the
Partners as described in Section 3.01 hereof and in Exhibit "A" hereto.
1.12. Certificate. The Original Certificate, or, if required by the
Act, any amended and restated certificate with respect to the Partnership,
which is executed now or hereafter by the General Partners and is filed for
record as required by the Act.
1.13. Code. The Internal Revenue Code of 1986, as amended from time
to time, and all successors thereto.
1.14. Contribution Percentage. The Contribution Percentages of the
Partners, as set forth in Exhibit "A" hereto.
3
<PAGE>
1.15. Cumulative Net Loss. For any Partner, the extent (if any) to
which the aggregate amount of Losses and other items of loss or deduction
allocated to such Partner in the current and all prior Fiscal Years shall
exceed the aggregate amount of Profits and other items of income or gain
allocated to such Partner in the current and all prior Fiscal Years.
1.16. Cumulative Net Profit. For any Partner, the extent (if any) to
which the aggregate amount of Profits and other items income or gain allocated
to such Partner in the current and all prior Fiscal Years shall exceed the
aggregate amount of Losses and other items of loss or deduction allocated to
such Partner in the current and all prior Fiscal Years.
1.17. Depreciation. For each Fiscal Year or other period, an amount
equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that
if the Book Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such Fiscal Year (as a result of the
revaluation of such asset or its contribution to the Partnership by a
Partner), Depreciation shall be an amount which bears the same ratio to such
beginning Book Value as the federal income tax depreciation, amortization or
other cost recovery deduction for such Fiscal Year or other period bears to
such beginning adjusted tax basis; provided that if the beginning adjusted tax
basis is zero, Depreciation for such Fiscal Year or other period shall be
determined with reference to such beginning Book Value using any reasonable
method selected by the Managing General Partner.
1.18. Fiscal Year. The calendar year.
1.19. Hypothetical Capital Account. With respect to any Partner, such
Partner's Capital Account, after giving effect to the following adjustments:
(i) Such Capital Account shall be reduced to reflect the
items described in clauses (4), (5) and (6) of Regulation
Section 1.704-1(b)(2)(ii)(d); and
(ii) Such Capital Account shall be increased by any amount
such Partner is obligated to restore or is treated as being obligated to
restore for purposes of Regulation Section 1.704-1(b)(2)(ii)(d), including such
Partner's Minimum Gain Share and such Partner's share of Partner Minimum Gain.
1.20. Land. The real estate described in Exhibit "B" hereto.
1.21. Managing General Partner. Two Oliver Tower Associates, a
Pennsylvania limited partnership.
1.22. Minimum Gain. An amount determined by computing, with respect
to each nonrecourse liability of the Partnership, the amount of gain (of
whatever character), if any, that would be realized by the Partnership if it
disposed of (in a taxable transaction) the Partnership property subject to
such liability in full satisfaction thereof, and by then aggregating the
amounts
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so computed. Such amount shall be determined in a manner consistent with
Regulation Section 1.704-2(d).
1.23. Minimum Gain Share. For each Partner, such Partner's share of
any Minimum Gain for the Fiscal Year (after taking into account any decrease
in the Minimum Gain for such year), as determined under Regulation
Section 1.704-2(g).
1.24. Net Cash Flow. Net Cash Flow of the Partnership with respect to
any calendar period shall mean gross receipts from the ownership or operation
of the Project (excluding Net Refinancing Proceeds and Net Sale Proceeds),
reduced by (i) cash disbursements, including, but not limited to, any payment
to any creditor of the Partnership (other than on account of a Partners' Loan
or Partners' Priority Loan) or any tenant entitled to a share of any such
receipts, and (ii) a reasonable amount for, and any additions to, a reserve
for contingencies, working capital, repairs, improvements, tenant
improvements, tenant concessions, replacements, expenses and the payment of
Partnership obligations, the amount of and any additions to such reserve to be
established by the Managing General Partner and as approved by the
Administrative General Partner.
1.25. Net Refinancing Proceeds. The proceeds realized by the
Partnership upon any refinancing of a Partnership indebtedness, net of
expenses incident to such refinancing and satisfaction of any indebtedness
being refinanced and any right of any other creditor of the Partnership (other
than on account of a Partners' Loan or Partners' Priority Loan) or any tenant
to receive such proceeds or a portion thereof for repayment of indebtedness or
as additional interest.
1.26. Net Sale Proceeds. The proceeds realized by the Partnership
upon the sale of any Partnership asset, net of expenses incident to such sale,
the payment of any Partnership indebtedness secured by or related to such
asset and satisfaction of any right of any other creditor of the Partnership
(other than on account of a Partners' Loan or Partners' Priority Loan) or any
tenant to receive such proceeds or a portion thereof for repayment of
indebtedness or as additional interest.
1.27. Nonrecourse Deductions. For each Fiscal Year, the Partnership
deductions that are characterized as "nonrecourse deductions" under Regulation
Section 1.704-2(b)(1).
1.28. Operating Budget. A budget proposed by the Managing General
Partner and approved by the Administrative General Partner for each fiscal
year of the Partnership, and reviewed each calendar quarter, all in accordance
with Section 4.0l.C(8) and Section 4.01(D) hereof.
1.29. Participation Percentage. The Participation Percentages of the
Partners, as set forth in Exhibit "A" hereto.
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1.30. Partner or Partners. Individually, a General Partner or a
Limited Partner, and collectively, the General Partners and Limited Partner,
including Persons admitted to the Partnership after the date hereof in
accordance with the terms hereof.
1.31. Partner Minimum Gain. An amount determined by computing, with
respect to each Partner Nonrecourse Debt, the Minimum Gain that would result
if such Partner Nonrecourse Debt were treated as a nonrecourse liability,
determined in accordance with Regulation Section 1.704-2(i)(3).
1.32. Partner Nonrecourse Debt means nonrecourse Partnership debt for
which one or more Partners bears an economic risk of loss, determined in
accordance with Regulation Section 1.704-2(b)(4).
1.33. Partner Nonrecourse Deductions means, for each Fiscal Year, the
Partnership deductions which are attributable to Partner Nonrecourse Debt and
are characterized as "partner nonrecourse deductions" under Regulation
Section 1.704-2(i)(1).
1.34. Partners' Loans. All amounts loaned by the Partners to the
Partnership pursuant to Section 3.04. hereof or in satisfaction of a Partner's
own obligation under Section 3.05. hereof. Partners' Loans shall be payable,
as set forth in this Agreement, from and out of Partnership assets, but
otherwise shall be made on a "no-recourse" basis and no Partner shall have any
personal liability in respect of any thereof.
1.35. Partners' Priority Loans. All amounts loaned by a Partner to
the Partnership on behalf of another Partner pursuant to Section 3.05 hereof
and all amounts loaned by a Partner to the Partnership by reason of
satisfaction of a Guaranty by a Partner Affiliate as set forth in Section 3.06
hereof. Partners' Priority Loans shall be payable, as set forth in this
Agreement, from and out of Partnership assets, but otherwise shall be made on
a "no-recourse" basis and no Partner shall have any personal liability in
respect of any thereof.
1.36. Preferred Cumulative Return. The cumulative right given to each
Partner, which right is hereby granted, to receive in respect of each quarter
of each Fiscal Year a sum equal to ten percent (10%) per annum, compounded
annually, of such Partner's Additional Capital Balance (computed from time to
time during any such Fiscal Year to reflect reductions in or additions to such
Additional Capital Balance; and if such Partner's Additional Capital Balance
shall at any time be reduced to zero, then the Preferred Cumulative Return
shall thereupon be suspended until such time as such Partner's Additional
Capital Balance returns to a positive figure). The Preferred Cumulative Return
shall begin on the date of the first Additional Capital Contribution. Any
amounts to be distributed in connection with the foregoing during the first
Fiscal Year in which the Preferred Cumulative Return begins shall be reduced
ratably in the same ratio as the number of days remaining in such first Fiscal
Year bears to 365, and all amounts to be distributed on other than the last
day of a Fiscal Year shall be computed ratably based on the elapsed portion of
such Fiscal Year. The Preferred Cumulative Return shall be payable as
specified in this Agreement
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only from funds available to the Partnership from Net Cash Flow, Net
Refinancing Proceeds, Net Sale Proceeds or proceeds upon the Partnership's
liquidation, and shall not (i) create a debt of the Partnership to any Partner
to the extent that any such funds are not available for distribution, or (ii)
constitute a guaranteed payment as defined in Section 707(c) of the Code.
1.37. Profits or Losses. The Partnership's net taxable income or loss
for a Fiscal Year, as computed for federal income tax purposes (including all
items of Partnership income, gain, loss or deduction regardless of whether
such items are required to be separately stated under Section 702(a) of the
Code), with the following adjustments:
(i) Any income of the Partnership that is exempt from
federal income tax and not otherwise taken into account in determining Profits
or Losses shall be added to such Profits or Losses;
(ii) Any expenditures of the Partnership described in
Section 705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B)
expenditures pursuant to Regulation Section 1.704-1(b)(2)(iv)(i) and not
otherwise taken into account in computing Profits or Losses shall be subtracted
from such Profits or Losses;
(iii) In any case where, in accordance with Regulation
Section 1.704-1(b)(2)(iv)(e) or (f), Partnership property is revalued on the
books of the Partnership to reflect its fair market value, the amount of such
upward or downward adjustment (to the extent not previously taken into
account) shall be taken into account as gain or loss from a taxable
disposition of such property for purposes of computing Profits or Losses;
(iv) Gain or loss resulting from any disposition of
Partnership property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the Book Value
of the property disposed of, notwithstanding that the adjusted tax basis of
such property differs from such Book Value;
(v) In lieu of the depreciation, amortization and other
cost recovery deductions taken into account for federal income tax purposes,
Depreciation as defined herein shall be taken into account in computing
Profits or Losses; and
(vi) Notwithstanding any other provision of this
definition, Nonrecourse Deductions, Partner Nonrecourse Deductions and any
items of income, gain, loss or deduction which are specially allocated
pursuant to subsections C, E or F of Section 5.05(a) below shall not be taken
into account in computing Profits or Losses.
1.38. Project. That certain Land and office building known as Two
Tower Bridge consisting of approximately 82,705 square feet, as the same may
be modified from time to time, together with all right, title and interest of
the Partnership to all related improvements, parking and amenities, including,
but not limited to, that certain parking facility which is structurally part
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of the Project and the top deck of which is currently leased to the Borough of
Conshohocken or a public authority for public parking.
1.39. Project Costs. All costs and expenses associated with the
carrying of the Project and leasing of the Project, any future improvements,
whether for tenants or otherwise, which have been or are incurred or committed
to by the Partnership prior to or after the date hereof, including, without
limitation, all costs and expenses hereafter incurred in design fees, permit
fees and non-refundable deposits; fees (including, without limitation,
financing fees, fees paid for or in connection with any loans to the
Partnership, origination or other fees paid in connection with any loan of the
Partnership); debt service payments, including, but not limited to, interest,
principal and other costs and charges, on all loans to or borrowings by the
Partnership (excluding Partners' Loans and Partners' Priority Loans); costs of
closing loans to the Partnership; real estate taxes; insurance premiums;
promotional, legal, accounting, management and other incidental fees and
expenses incurred or committed to by the Partnership; costs incurred in
leasing space in or maintaining and operating the Project (including, but not
limited to, brokerage fees or commissions paid to brokers); and all other
costs or expenses paid, incurred or committed to by the Partnership after the
date hereof relating to the Project.
ARTICLE II
GENERAL PROVISIONS
2.01. Admission of Partners. Administrative General Partner is hereby
admitted as a General Partner of the Partnership. Upon the admission of
Administrative General Partner as aforesaid, the Participation Percentages and
Contribution Percentages of the Partners are and shall be as set forth on
Exhibit "A" hereto.
2.02. Continuation and Term. The Partners hereby agree to continue
the business of the Partnership pursuant to the provisions of the Act and on
the terms set forth in this Agreement. The term of the Partnership commenced
on the date on which the Partnership's Original Certificate of Limited
Partnership was filed for record as provided by the Act, and shall continue
until the Partnership is dissolved pursuant to Article X hereof.
2.03. Name. The business of the Partnership shall be carried on under
the name "Two Tower Bridge Associates" or under such other name as the General
Partners (acting by their unanimous consent) may from time to time designate.
2.04. Purpose. The purpose and character of the business of the
Partnership shall be to (i) acquire, control and own the Project in accordance
with the terms of this Agreement, (ii) operate and maintain the Project and
lease space in the Project to others, and (iii) do all things necessary or
appropriate to effect any part or all of the foregoing.
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2.05. Places of Business. The Partnership's principal place of
business shall be at c/o Oliver Tyrone Pulver Corporation, One Tower Bridge,
Suite 900, Conshohocken, Pennsylvania 19482, or at such other principal office
of the Managing General Partner as it may from time to time establish.
The Partnership may have such other or additional places of
business within or without the Commonwealth of Pennsylvania as the General
Partners (acting by their unanimous consent) may from time to time designate.
2.06. Nature of Partners' Interests; Non-Partition. The interests of
the Partners in the Partnership shall be personal property for all purposes.
All property owned by the Partnership, whether real or personal, tangible or
intangible, shall be owned by the Partnership as an entity, and no Partner
individually shall have any ownership of such property. No Partner shall be
entitled to seek partition of any Partnership property.
2.07. Partnership Income. Managing General Partner acknowledges and
agrees that Brandywine Realty Trust, the general partner of Brandywine
Operating Partnership, L.P. ("BOP"), a limited partner in Administrative
General Partner, is a real estate investment trust, as defined in the Code. So
long as BOP is a partner in Administrative General Partner, the Partnership
shall endeavor to manage its affairs such that the Partnership does not
intentionally earn any income for tax purposes or intentionally acquire any
assets other than income and assets as follows:
(i) at least 95% of the Partnership's annual gross income
is to be derived from (A) dividends; (B) interest; (C) rents from real
property; (D) gain from the sale or other disposition of stock, securities and
real property (including interests in real property and interests in mortgages
on real property) which is not property described in section 1221(1); (E)
abatements and refunds of taxes on real property; (F) income and gain derived
from foreclosure property (as defined in subsection (e)); (G) amounts (other
than amounts the determination of which depends in whole or in part on the
income or profits of any person) received or accrued as consideration for
entering into agreements (a) to make loans secured by mortgages on real
property or on interests in real property or (b) to purchase or lease real
property (including interests in real property and interests in mortgages on
real property); and (H) gain from the sale or other disposition of a real
estate asset which is not a prohibited transaction solely by reason of Code
Section 857(b)(6);
(ii) at least 75% of the Partnership's annual gross income
(excluding gross income from prohibited transactions as defined for purposes
of Code Section 865(c)(3)) is to be derived from (A) rents from real property;
(B) interest on obligations secured by mortgages on real property or on
interests in real property; (C) gain from the sale or other disposition of
real property (including interests in real property and interest in mortgages
on real property) which is not property described in Code Section 1221(1); (D)
dividends or other distributions on, and gain (other than gain from prohibited
transactions) from the sale or other disposition of, transferable
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shares (or transferable certificates of beneficial interest) in other real
estate investment trusts which meet the requirements of Code Section 856; (E)
abatements and refunds of taxes on real property; (F) income and gain derived
from foreclosure property (as defined in Code Section 856(e)); (G) amounts
(other than amounts the determination of which depends in whole or in part on
the income or profits of any person) received or accrued as consideration for
entering into agreements (a) to make loans secured by mortgages on real
property or on interests in real property or (b) to purchase or lease real
property (including interests in real property and interests in mortgages on
real property); (H) gain from the sale or other disposition of a real estate
asset which is not a prohibited transaction solely by reason of Code Section
857(b)(6); and (I) qualified temporary investment income; and
(iii) at the close of each quarter of each taxable year (A)
at least 75% of the value of its total assets is represented by real estate
assets, cash and cash items (including receivables), and Governmental
securities; and (B) not more than 25 percent of the value of its total assets
is represented by securities (other than those includible in calculating the
75% test in the preceding clause) for purposes of this calculation limited in
respect of any one issuer to an amount not greater in value than 5 percent of
the value of the total assets of the Partnership and to not more than 10
percent of the outstanding voting securities of such issuer.
Notwithstanding anything to the contrary contained herein,
the Partnership may have income and assets which do not comply with the above
subsections (i),(ii) and (iii) if the effect of such noncompliance does not
and would not reasonably be expected to cause Brandywine Realty Trust to
violate the provisions of Code Section 856. All terms used in this section
2.07 shall have the meaning ascribed to them for purposes of Code Section 856.
Receipt of income or acquisition of assets which does not satisfy the criteria
set forth in this Section 2.07 shall not give rise to any claim for damages,
consequential or otherwise.
ARTICLE III
CAPITAL CONTRIBUTIONS; LOANS
3.01. Capital Contributions.
A. Prior to the date hereof, the Managing General Partner
and the Limited Partner have contributed cash to the Partnership in the
amounts set forth opposite their names on Exhibit "A" hereto. The Partners
further agree that the Project shall be revalued on the books of the
Partnership to reflect its fair market value as of the date hereof and that
the Capital Accounts and Capital Balances of the Managing General Partner and
the Limited Partner as of the date hereof shall be restated as set forth on
Exhibit "A" hereto.
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B. Upon its execution of this Agreement, the Administrative
General Partner shall contribute to the capital of the Partnership the amount
of cash set opposite its name on Exhibit "A" attached hereto.
3.02. Capital Accounts. A Capital Account shall be determined and
maintained for each Partner on the books and records of the Partnership in
accordance with the following provisions:
A. As of the date of this Agreement, each Partner's Capital
Account shall be as set forth on Exhibit "A" hereto. After the date hereof,
each Partner's Capital Account shall (i) be increased by the amount of money
contributed by it to the Partnership, by the fair market value of property
contributed by it to the Partnership (net of liabilities secured by such
contributed property) and the amount of Profits and other items of Partnership
income or gain allocated to such Partner under Section 5.05, and (ii) be
decreased by the amount of money distributed to it by the Partnership, by the
fair market value of property distributed to it by the Partnership (net of
liabilities secured by such distributed property) and the amount of Losses and
other items of Partnership deduction, loss or expense allocated to such
Partner under Section 5.05.
B. Except as otherwise expressly provided herein, it is
intended that the Capital Accounts shall be determined and maintained
throughout the full term of the Partnership in accordance with the capital
accounting rules of Regulation Section 1.704-1(b)(2)(iv), and that all
provisions in this Agreement of the Regulations relating to the maintenance of
Capital Accounts shall be interpreted and applied in a manner consistent with
such Regulations. In the event the General Partners shall determine that it is
prudent to modify the manner in which the Capital Accounts, or any credits or
charges thereto, are computed in order to comply with such Regulations, the
General Partners shall make such modification, provided that it is not likely
to have a material effect on the amounts distributable to the Limited Partner
upon the dissolution and liquidation of the Partnership.
C. In the event of a transfer of an interest in the
Partnership, the Capital Account of the transferor Partner that is
attributable to the transferred interest shall be carried over to the
transferee of such interest and adjusted as provided in the Regulations under
section 704 of the Code.
3.03 Capital Calls.
A. Whenever any General Partner determines that additional
capital is required by the Partnership for Project Costs, such General Partner
may, by written notice to all Partners, call for Additional Capital
Contributions from all partners (each, a "Capital Call"). These Additional
Capital Contributions shall be payable in cash or, if such General Partner
making the Capital Call so permits, a note to the Partnership no later than
the date specified in the notice, which date shall be no sooner than fifteen
(15) days after notice is given. Each Partner shall contribute the sum
required based upon such Partner's Contribution Percentage in the Partnership.
In the event of a failure of any Partner to make a requested Additional
Capital
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Contribution the rights of the Partners and the Partnership shall be governed
by Section 3.04 and 3.05 hereof.
B. The Capital Contributions of the Partners, all
Partnership borrowings, and any Additional Capital Contributions, Partners'
Loans and Partners' Priority Loans made pursuant to this Agreement shall be
used and applied only (i) in accordance with an Operating Budget, (ii) Project
Costs, or (iii) for any other Partnership purpose as determined and agreed to
by all of the General Partners.
3.04. Additional Capital Contributions; Partners' Loans.
A. Except as expressly set forth in this Article III, no
Partner shall be required to make any Additional Capital Contributions,
Partners' Loans or Partners' Priority Loans to the Partnership.
B. If any Partner advances any funds to the Partnership
after the date of this Agreement (except as provided for in Section 3.03.
above or 3.05 below), which advances are not otherwise specifically designated
as Capital Contributions, Additional Capital Contributions, or Partners'
Priority Loans, such advances will be treated as Partners' Loans, will not
increase such Partner's Participation Percentage, and the amount thereof will
be a debt due from the Partnership to such Partner, entitled to the priorities
described in Article V and Section 10.03 hereof, to be repaid with such
interest as will be expressly agreed upon by all of the General Partners, or,
in the absence of agreement, with interest at a rate equal to ten percent
(10%) per annum.
C. Except as set forth in Section 3.05 hereof, in no event
may any Partner advance any funds to the Partnership after the date of this
Agreement and have such advances treated as Partners' Loans unless such
advances are approved by each of the General Partners.
3.05. Procedures Upon a Failure to Make an Additional Capital
Contribution; Partners' Priority Loans.
A. In the event any Partner (a "Non-Contributing Partner")
shall fail for any reason, in accordance with the provisions of Section 3.03
hereof, to provide all or any part of the advances due the Partnership from it
hereunder within the period provided by such notice, then each Partner which
has made the advance, if any, required to be made by it pursuant to such
Section (a "Contributing Partner") shall have and is hereby given the right
and election, but not the obligation, in all cases exercisable within ten (10)
consecutive days following expiration of the period provided by such notice as
aforesaid, (i) to withdraw the advance so made by it, or (ii) not to withdraw
the advance so made and, at its election, thereupon to advance all or any part
of the deficiency. The amount to be contributed by each Partner electing to
contribute such non-contributed funds shall be as agreed among such electing
Partners or, in the absence of an agreement, shall be in proportion to their
respective relative Contribution Percentage in the Partnership. The amount
contributed by the Contributing Partner in satisfaction of its own
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obligation shall be treated as a Partner Loan, and any deficiency amounts
advanced on behalf of a Non-Contributing Partner shall be treated as a
Partners' Priority Loan to the Partnership. Neither such Partner Loan nor such
Partners' Priority Loan will increase such Contributing Partner's
Participation Percentage or Contribution Percentage, and the amount thereof
will be a debt due from the Partnership to such Contributing Partner, entitled
to the priorities described in Article V and Section 10.03 hereof, to be
repaid with such interest as will be expressly agreed upon by all of the
General Partners, or in the absence of agreement, with interest at a rate
equal to ten percent (10%) per annum.
B. The rights, powers and remedies set forth in the foregoing
provisions of this Section 3.05 shall be the sole and exclusive remedies in
the event of a failure or series of failures to fund Capital Calls provided
for in Section 3.03.
3.06. Partner Affiliate Guaranties; Partners' Priority Loans. In the
event any person or entity which owns an interest in, directly or indirectly,
any of the General Partners (a "Partner Affiliate") guarantees or agrees to
become surety for payment or performance under any loan (other than a
Partners' Loan or Partners' Priority Loan) to the Partnership, and any amount
which is required to be advanced by such Partner Affiliate under such guaranty
is advanced by or for the benefit of the Partnership, then the sum so advanced
shall be deemed to be a Partners' Priority Loan of such Partner. Such
Partners' Priority Loan will not increase such contributing Partner's
participation percentage or contribution percentage, and the amount thereof
will be a debt due from the Partnership to such contributing Partner, entitled
to priorities described in Article V and Section 10.03 hereof, to be repaid
with such interest as will be expressly agreed upon by all of the General
Partners, or in the absence of agreement, with interest at a rate equal to ten
percent (10%) per annum.
ARTICLE IV
MANAGEMENT OF THE PARTNERSHIP
4.01. Duties and Powers of the General Partners.
A. The Partnership will be managed and the conduct of its
business will be controlled solely by the General Partners. Any action to be
taken or determination to be made by the General Partners shall mean action
taken or determination made by the General Partners acting by their unanimous
approval.
B. Each General Partner, subject to the terms, conditions,
restrictions and limitations contained herein, will possess all of the powers
and rights of a general partner under the Act.
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C. Except as otherwise provided in this Agreement, the
Managing General Partner shall have the following powers and duties and the
Managing General Partner is authorized on behalf of the Partnership to do or
cause to be done the following at Partnership expense (subject, however, to
the terms, conditions, restrictions and limitations contained herein):
(1) obtain title insurance on Partnership property, and
execute all affidavits and other documents necessary in connection therewith
(the identity of the title insurer and the amount, extent, nature, terms and
conditions of the insurance coverage shall in all cases be subject to the
approval of the Administrative General Partner);
(2) prepare and distribute, or cause to be prepared and
distributed, the statements and reports described in Article VI hereof;
(3) with the prior approval of all General Partners,
enter into agreements for long term, standby and any other loans to or
borrowings by the Partnership; execute, with the prior approval of all of the
General Partners and in the name and on behalf of the Partnership, all notes,
mortgages and other agreements, instruments or documents necessary in
connection therewith; and confess judgment against the Partnership as part of
or in connection with any loan or borrowing by the Partnership approved by the
General Partners; it being understood and recognized that unless the General
Partners shall expressly agree to the contrary, every mortgage, note or other
evidence of indebtedness, and every lease, sublease, contract or other
agreement of any kind entered into by or on behalf of the Partnership shall
contain a provision, satisfactory to the General Partners, limiting the claims
of all third parties to the assets of the Partnership and expressly waiving
all rights of such third parties to proceed against any Partner individually,
or against any officer, director, shareholder or partner of a corporate or
partnership Partner, except to the extent of their interest in the
Partnership;
(4) with the prior approval of all General Partners, pay
to any person or persons placing the same, in respect of the placing of any
loans to or borrowings by the Partnership, a mortgage brokerage, placement or
similar fee;
(5) enter into a leasing agency contract with Oliver
Tyrone Pulver Corporation substantially in the form of Exhibit "C" hereto,
which may be modified only with the consent of the Administrative General
Partner. No other contract for leasing agency shall be entered into except
with the consent of the Administrative General Partner.
(6) purchase and maintain fire and extended coverage;
liability, workmen's compensation, rental loss and other insurance with
respect to the Land, Project and other property of the Partnership, or
otherwise, all in accordance with the provisions of Article IX hereof;
(7) enter into a management contract substantially in the
form of Exhibit "D" attached hereto between the Partnership and Oliver Tyrone
Pulver Corporation,
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which may be modified only with the consent of the Administrative General
Partner. No other management contract shall be entered into except with the
consent of the Administrative General Partner.
(8) prepare and deliver to each General Partner for its
approval, on the date hereof and thereafter at least thirty (30) days prior to
the beginning of each calendar year, an Operating Budget with respect to such
calendar year. An Operating Budget containing budget categories for the
current calendar year is attached hereto as Exhibit "D-1" (and, if the current
calendar year is 1998, such categories have been completed). Each Operating
Budget shall set forth all receipts projected for the period of such Operating
Budget, all expenses, by category, of owning and operating the Project
(including capital improvements not included in Project Costs) projected to be
incurred during such period and a contingency reserve in an amount of not less
than 10% of the other budgeted expenses. Each General Partner shall have
fifteen (15) business days next following receipt to respond to such Operating
Budget, and its failure so to respond within such fifteen day period shall be
deemed an acceptance and approval of such Operating Budget. Following the
approval of an Operating Budget by all General Partners, the Managing General
Partner shall have the power to do all of the following with respect to the
period covered by such approved Operating Budget without the consent or
joinder of any other Partner, so long as the aggregate of expenditures for all
items included (i) within the entire Operating Budget approved for such period
does not exceed the total amount allocated therein, and (ii) within each
category in the Operating budget approved for such period does not exceed (x)
the total amount allocated therein for such category, plus (y) the amount of
any unused contingency, plus (z) the amount unused or unneeded from any other
category if the work or services covered in such other category have been
fully performed to the satisfaction of all General Partners (and provided
further that if the General Partners are unable to agree on an Operating
Budget for any specific period, then the Managing General Partner shall be
permitted to act under the most recently approved Operating Budget (without
restriction for the amounts allocated for taxes, insurance and utilities)
until the new Operating Budget is approved or unless the provisions of Section
7.06 hereof have become operative):
(a) effect normal operating repairs, replacements or
improvements to the Project, as needed, and, subject to subsection (b) below
and the approved Operating Budget, any such work required by a tenant of the
Project in connection with the leasing or releasing of space in the Project in
the ordinary course of business;
(b) enter into leases for the occupancy of space in
the Project by tenants (including Partners or their affiliates), at rentals no
less than those set forth in the then approved Operating Budget and on such
lease form and within such leasing guidelines as may then have been approved
by all General Partners;
(c) make all required payments of principal and
interest with respect to any indebtedness of the Partnership;
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(d) pay all taxes and assessments levied against the
Land, Project and other property of the Partnership, or any part thereof;
(e) employ and dismiss from employment any and all
employees and agents, and obtain all legal, leasing, accounting and other
services necessary in connection with the operation or management of the
Project or other property of the Partnership; provided, however, that Managing
General Partner shall have no right to dismiss the asset manager of the
Project without the consent of Administrative General Partner; and
(f) generally, and except as expressly prohibited
herein, do all things in connection with any of the foregoing, generally
manage and administer the day-to-day business and affairs of the Partnership
and execute all documents on behalf of the Partnership in connection
therewith, pay as a Partnership expense all costs or expenses connected with
the operation or management of the Partnership or the Project (except as
otherwise provided herein), and sign or accept all checks, notes and drafts on
the Partnership's behalf except as otherwise provided herein all in a manner
consistent with the Operating Budget.
D. The Managing General Partner shall meet with designated
representatives of the Administrative General Partner on a quarterly or such
other periodic basis as the General Partners may agree, at the offices of the
Managing General Partner, to report on the operations of the Partnership and
to report on and, if appropriate, jointly revise the Operating Budget, the
development and marketing plans, and to consider and pass upon other matters
which have been submitted to the Partners for their review or approval. In
amplification of the foregoing, it is expressly recognized, acknowledged and
agreed that all General Partners shall be permitted to, and intend to,
participate actively in the management of the Partnership and its operations,
including specifically, but without limitation, participation in: the review
and approval of Operating Budgets; the review and revision of leasing plans
and guidelines, and leasing and marketing plans and strategies; and the review
of capital improvement plans for the Project.
E. No principal or other affiliate of the Managing General
Partner shall be obligated to devote his or their exclusive time and effort to
the affairs of the Partnership, but each shall devote so much of his or their
time and effort to the management and other affairs of the Partnership as may
be reasonably required to promote the purposes of the Partnership in an
efficient, effective and diligent manner.
Notwithstanding anything to the contrary contained herein,
the Managing General Partner shall be obligated to employ and maintain such
employees and agents as shall be necessary in order to fully perform the
duties described herein, including, but not limited to, the creation and
distribution of monthly cash flow reports and balance sheets. The Partnership
shall reimburse the Managing General Partner for the expenses of such
employees and agents allocated to the affairs of the Partnership.
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F. No General Partner shall be liable, responsible or
otherwise accountable to the Partnership or to any Partner for any acts or
omissions in good faith performed or omitted by it or on its behalf in
furtherance of the interests of the Partnership and within the scope of the
authority hereunder, unless such acts or omissions were fraudulent, in bad
faith or a result of wanton and willful misconduct or gross negligence. In
amplification of the foregoing, no General Partner shall be deemed to have
violated any of its responsibilities or duties hereunder if the performance of
such responsibilities or duties shall require the consent or approval of
another Partner or Partners and if such consent or approval shall have been
withheld.
4.02. Fees, Compensation and Reimbursement of Expenses. Except as
expressly set forth herein or in Exhibit "C" or "D" hereto, or as approved in
writing by all the General Partners, no Partner, no affiliate of a Partner, no
shareholder, officer, director or partner of a Partner or any affiliate, and
no corporation or any other entity owned or controlled by a Partner or by any
affiliate shall be entitled to any fees or other compensation, including
without limitation any brokerage or other commission or any other payment or
compensation on account of the leasing, operations, management, financing,
refinancing or sale of the Land or the Project or of any interest therein or
part thereof.
4.03. Concerning the Limited Partners. The Limited Partners shall not
take part in the management or control of the business of the Partnership, nor
shall the Limited Partners have any personal liability with respect to
liabilities and obligations of the Partnership. Each Limited Partner, by its
execution hereof and without in any way limiting the powers and authority of
the General Partners contained elsewhere herein, hereby expressly consents to
the sale, mortgaging, leasing, exchange or other disposition of the Project or
any interest therein or part thereof and to any confession of judgment against
the Partnership, each of the foregoing to be on such terms and conditions as
the General Partners may approve.
4.04. Sale or Refinancing. No General Partner shall have the power or
authority, without the written joinder, consent and approval of all the
General Partners: (i) to sell, exchange, lease or otherwise dispose of (or
enter into any contracts for any such sale, exchange, lease or other
disposition of) all or any portion of the Land, Project or other Partnership
property, or modify any of the terms of any of the foregoing; or (ii) to
borrow, whether such loans are secured or unsecured, any funds on behalf of
the Partnership or refinance, increase, consolidate, extend or otherwise
modify any of the terms of any Partnership indebtedness. None of the foregoing
limitations shall require the consent, approval or any other action by any
Limited Partner; nor shall such limitations be applicable to the lease of
space in the Project in the ordinary course of Partnership business, and the
Managing General Partner, on behalf of the Partnership, shall be permitted
from time to time to enter into such leases without the approval of any other
General Partner if such leases are in accordance with the then approved
Operating Budget and schedule of rents, and are on the other terms and
conditions, required by Section 4.0l.C(8)(b) above.
4.05. Bank Accounts. All funds of the Partnership will be deposited in
a bank located in Philadelphia, Pennsylvania, in such Partnership bank account
or accounts as designated from time
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to time by the General Partners. Withdrawals from any such bank account or
accounts will be made upon such signature or signatures as the General
Partners may from time to time designate.
4.06. Consents and Approvals.
A. Except as otherwise expressly provided for in Section
4.06(B) hereof or elsewhere in this Agreement, whenever a Partner desires to
take any action which requires the consent or approval of any or all of the
Partners, the requesting Partner shall give written notice thereof (delivered
in accordance with the requirements of Article XI hereof) to each Partner from
whom any such consent or approval is required, describing the proposed action
in sufficient detail to enable such Partner or Partners to exercise an
informed judgment with respect thereto. As soon as practicable thereafter,
each such Partner shall give the requesting Partner written notice (delivered
in accordance with the requirements of Article XI hereof) that it either
consents to or approves, or does not consent to or approve the proposed action
(setting forth its reasons therefor if it does not so consent or approve). In
the event that any such Partner fails to respond (as provided herein) on or
before the fifteenth (15th) business day following notice (as provided herein)
of any such proposed action by a Partner, that Partner shall be conclusively
presumed to have consented to or approved such action.
B. Whenever the Managing General Partner shall require on an
expedited basis the consent of the other General Partner in connection with a
proposed deviation from the adopted leasing terms or lease form not permitted
by the leasing guidelines established pursuant to Subsection 4.01.C(8) (b)
hereof, or a proposed deviation from an Operating Budget adopted by the
General Partners pursuant to Subsection 4.0l.C(8) hereof, the Managing General
Partner shall notify the Administrative General Partner of such proposed
change or deviation in writing. If Administrative General Partner shall fail
to approve or disapprove of such deviation within forty-eight (48) hours after
receipt by Administrative General Partner of written request therefor,
Administrative General Partner shall be conclusively presumed to have
consented to or approved such action.
4.07. Concerning Persons Other Than Partners. The limitations on the
actions of the General Partners contained in this Article IV shall be
effective only as among the Partners themselves, and shall not be binding upon
or have any effect on persons other than Partners dealing with the General
Partners, including without limitation any lender or mortgagee, all of whom
shall be entitled to presume (without the necessity of any inquiry whatsoever)
that any General Partner has complete, unlimited and exclusive authority to
borrow money and to manage, supervise, control, transfer, sell, convey,
pledge, mortgage, encumber, lease or otherwise dispose of, or contract with
respect to, all or any part of the Partnership's property.
4.08. Indemnification of the General Partners. The Partnership shall
indemnify, defend and hold harmless each General Partner, each officer or
director of a corporate General Partner and each partner of a partnership
General Partner and each trustee or officer of any such partner, and any other
person acting as agent of any General Partner of the Partnership and to which
agent
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the General Partners shall specifically and in writing have conferred rights
under this Section 4.08, against any loss, expense, damage, claim, liability,
obligation, judgment or injury suffered or sustained by him, it, them or any
of them by reason of any act, omission or alleged act or omission by him, it,
them or any of them arising out of his, its or their activities on behalf of
the Partnership or in furtherance of the interests of the Partnership,
including, without limitation, any judgment, award, settlement, reasonable
attorney's fees and other costs or expenses as incurred in connection with the
defense of any actual or threatened actions, proceedings or claims, all costs
of which shall be charged to and paid by the Partnership as incurred;
provided, however, that the acts, omissions or alleged acts or omissions upon
which such actual or threatened actions, proceedings or claims are based were
performed or omitted in good faith and were not fraudulent, in bad faith or as
a result of wanton and willful misconduct or gross negligence by the party to
be indemnified, defended and held harmless under this Section.
4.09. Representations and Warranties of the Managing General
Partner.
A. To induce Administrative General Partner to become a
Partner of the Partnership, the Managing General Partner hereby represents,
warrants and certifies to Administrative General Partner that it has no actual
knowledge contrary to any of the following:
(1) The Partnership is a limited partnership duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. The Partnership conducts no business other than
the ownership, management and operation of the Project. The Partnership has
the power and authority to own its property, and to carry on its business as
presently conducted or contemplated. The Partnership is not in violation of
any term of the Original Agreement, as amended to date. The Partnership has
not, to the knowledge of the Managing General Partner, committed any material
default in the obligation to pay money under any indenture, mortgage,
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to it, nor has the Partnership received any notice that
it has committed any other material default under any of the foregoing.
(2) (A) Except as set forth in subsections 2(B) and 2(C)
hereof, the execution and delivery of this Agreement (including the admission
of the Administrative General Partner as a Partner of the Partnership) will
not result in the violation of any of the terms of the Original Agreement, as
amended to date, and will not result in a breach of, or constitute a default
under, any indenture, mortgage or agreement to which the Partnership is a
party or by which its assets are bound, or any decree, order or rule of any
court or governmental agency or any provision of applicable law which is
binding on the Partnership or on any of its assets, or result in the creation
or imposition of any mortgage, lien, charge, assessment, encumbrance, claim or
restriction on such assets or give to others any interest or rights therein or
create in any third party the right to modify, terminate, accelerate or
otherwise declare a default under any instrument or contract to which the
Partnership is a party or by which its assets are bound.
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(B) Notwithstanding anything to the contrary
contained in herein, Administrative General Partner acknowledges that Managing
General Partner has provided Administrative General Partner with copies of (1)
a Promissory Note in the original principal amount of Two Hundred Seventy-Two
Thousand Nine Hundred Dollars ($272,900.00) increased to Five Hundred Thousand
Dollars ($500,000.00), from the Partnership to the Redevelopment Authority of
the County of Montgomery (the "RDA"), (2) a Promissory Note in the stated
principal amount of One Hundred Fifty Thousand Dollars ($150,000.00) from the
Partnership to the RDA and (3) a Promissory Note in the stated principal
amount of Three Million Three Hundred Thirty Thousand Dollars ($3,330,000.00)
from the Partnership to the Borough of Conshohocken (the "Borough"), together
with the loan agreements, mortgages, assignment of leases, mortgage
subordination agreements and all other agreements executed in connection
therewith as listed on Exhibit "E" attached hereto and made a part hereof (all
such documents, collectively, the "Subordinate Debt Documents").
Administrative General Partner acknowledges and agrees that, except as
specifically set forth in the following sentence, Managing General Partner
makes no representations with respect to the effect, if any, of this Agreement
upon, or the correctness of the representations and warranties contained in
this Agreement with respect to, such notes, loan agreements, mortgages,
mortgage subordination agreements or other agreements or the loans evidenced
thereby. Managing General Partner represents and warrants that (i) there are
no material Subordinate Debt Documents except those which have been delivered
to Administrative General Partner and (ii) Managing General Partner has
received no notice that the execution and delivery of this Agreement
(including the admission of the Administrative General Partner as a Partner of
the Partnership) will result in a breach of, or constitute a default under any
of the Subordinate Debt Documents or result in the creation or imposition of
any additional lien, charge, assessment, encumbrance, claim or restriction on
the Project, or any portion thereof, or give to the holders of the Subordinate
Debt Documents any additional interest or rights in the Project or create any
right to modify, terminate, accelerate or otherwise declare a default under
the Subordinate Debt Documents.
(C) Notwithstanding anything to the contrary herein,
Administrative General Partner acknowledges that the Partnership intends,
immediately following the execution and delivery of this Agreement, to prepay
all sums due and payable under that certain Note (the "AFL Loan") in the
original principal amount of Eight Million Six Hundred Seventy-Three Thousand
Dollars ($8,673,000.00) in favor of Mercantile-Safe Deposit & Trust Company,
dated August 17, 1992, which Note is secured by a mortgage recorded August 26,
1992 in Mortgage Book 6952, Page 27 in the Office for the Recording of Deeds
and Mortgages in and for Montgomery County, Pennsylvania. The prepayment of
such indebtedness shall be governed by the terms and conditions of a certain
Project Participation Agreement dated as of November 3, 1997 by and among,
among other parties, Brandywine Operating Partnership, L.P., Managing General
Partner, Administrative General Partner Four Oliver Tower Associates and
Limited Partner.
(3) Except for: (i) liabilities disclosed in the balance
sheet (the "Balance Sheet") attached as Exhibit "F" hereto (which Balance
Sheet (a) has been prepared in accordance
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with the books and records of the Partnership and (b) fairly presents the
Partnership's financial position as of its date), (ii) liabilities arising in
the ordinary course of business since the date of the Balance Sheet consistent
with past practice, including, but not limited to, liabilities to tenants, and
(iii) liabilities of the Partnership not disclosed in the Balance Sheet which
have arisen since the date of the Balance Sheet (A) which are less than One
Thousand Dollars ($1,000) individually or (B) which exceed One Thousand
Dollars ($1,000.00) and are identified on Exhibit "G" hereto, the Partnership
is not subject to liabilities of any nature, whether matured or unmatured,
fixed or contingent. Such Balance Sheet reflects that current assets exceed
current liabilities (other than any liability which arises in connection with
the prepayment of the first mortgage loan intended to be repaid at the time
this Agreement is executed by both parties).
(4) All federal, state and local tax returns and reports
of the Partnership required by law to be filed have been duly and timely filed
(or extensions of the same have been timely filed), and all taxes,
assessments, fees and other governmental charges on or against the Partnership
or upon its properties, assets, income or franchises which are shown thereon
and for which a penalty or interest would be payable if such tax were not paid
prior to the date hereof have been paid.
(5) Since the date of the Balance Sheet, there has not
been any (i) material adverse change in the financial condition or in the
operations, business or property of the Partnership or (ii) damage,
destruction or loss, whether covered by insurance or not, adversely affecting
the operations, business or property of the Partnership. Administrative
General Partner acknowledges and agrees that the termination of the Lease with
Bryn Mawr Trust approximately three (3) months prior to its scheduled
expiration does not constitute a material adverse change and that
Administrative General Partner is executing this Agreement with the
understanding that the Partnership's liabilities may include commissions,
tenant fit-up allowances and tenant inducements for Hayden Real Estate, Inc.
entering into Bryn Mawr Trust's space, all as disclosed in other Exhibits
hereto.
(6) Except as set forth on Exhibit "H" attached hereto
and made a part hereof, there is no suit, action or legal, administrative,
arbitration or other proceeding or governmental investigation, pending or, to
the best of its knowledge, threatened, which might adversely affect the
business or property of the Partnership other than claims which are covered by
insurance.
(7) The Partnership is not a party to, and is not bound
by, any material contract, agreement or other paper regarding the Project
which is not terminable by the Managing General Partner at will without
further liability, upon not more than thirty (30) days' notice, except as
specifically identified in Exhibit "I" and the service contracts listed on
Schedule "J" hereto. Where copies of any agreements have been delivered by the
Managing General Partner or the Partnership to Administrative General Partner,
whether prior to or pursuant to this Agreement, in each case, such copies: (i)
are exact copies of the originals of said documents, as executed and delivered
by all of the parties thereto; (ii) to the best of Managing General Partner's
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knowledge, constitute, in each case, the entire agreement between the parties
thereto with respect to the subject matter thereof, and the original
instruments in the form delivered to Administrative General Partner are now in
full force and effect, and valid and enforceable in accordance with their
respective terms, and no party thereto has issued any notice of default, and
no claim of default by any party has been made or is now pending; and (iii)
have not been changed or amended except for amendments, if any, specifically
referred to therein.
(8) No proceeding is now pending or, to the best of
Managing General Partner's knowledge, threatened, for the acquisition or
condemnation of the Building or any access thereto or any parking area, by
eminent domain for any public or quasi-public use or purpose.
(9) There are no persons employed by the Managing General
Partner or the Partnership in connection with the operation and maintenance of
the Project.
(10) Exhibit "J" attached hereto is a complete list of
all existing service, equipment, supply and maintenance contracts with respect
to or affecting the Project (the "Service Contracts"). The Partnership has
performed all obligations then due and not contested under all of the Service
Contracts. Any amount subject to dispute in excess of $2,500 is listed on
Exhibit "I" hereto.
(11) There are no public improvements in the nature of
off-site improvements, or otherwise, which have been ordered to be made and of
which Managing General Partner has received notice and which have not
heretofore been assessed, and, to the Managing General Partner's actual
knowledge, there are no special or general assessments currently affecting or
pending against the Project other than the reassessment of properties
generally in Montgomery County. Administrative General Partner acknowledges
and agrees that Managing General Partner has advised the Administrative
General Partner that the tenant under the Parking Deck Agreement has obtained
an exemption of the premises leased under the Parking Deck Agreement, as
hereinafter defined, from real estate taxes. The tenant under such agreement
previously had been responsible for approximately 3.15% of the real estate
taxes on the Project. Managing General Partner makes no representation or
warranty as to the effect, if any, of such tax exemption on the taxes
otherwise applicable to the Project or the portion thereof which is required
to be reimbursed by other tenants.
(12) There are no oral or written leases or rights of
occupancy in any portion of the Property other than the leases (the "Leases")
listed on the rent roll attached hereto as Exhibit "K" and the Parking Deck
Agreement referenced on Exhibit "K-1" (the "Parking Deck Agreement"). Exhibit
"K" or the copies of the leases identified therein previously delivered to
Administrative General Partner identify as of the date of such rent roll with
respect to all Leases other than the Parking Deck Agreement: (i) each tenant
of the Property, (ii) the date that tenant commenced occupancy under the
Lease, (iii) the expiration date of that tenant's Lease, (iv) the annual base
rent, (v) arrearages, if any, in the payment of base rent, (vi) the amount of
base rent
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prepaid more than forty-five (45) days in advance, if any, (vii) a description
of the documents constituting said tenant's Lease, including all amendments,
modifications, and letter agreements; and (viii) any options to renew, extend,
purchase, cancel or terminate. Except as set forth in Exhibit "K", no tenant
has notified the Managing General Partner or the Partnership that the
Partnership is in default under any of the Leases, or asserted any claim or
basis for any right of setoff against the landlord or the rent under the
Leases. Except as assigned to the RDA and the Borough under the mortgages and
lease assignments previously delivered to Administrative General Partner (as
well as the AFL Loan to the extent the same has not been discharged), the
Partnership has the sole right to collect rents under the Leases with respect
to its Property, and neither such right nor any of the Leases has been
assigned, pledged, hypothecated or otherwise encumbered by the Partnership
except as additional collateral for the existing mortgage upon the Property
which shall be satisfied immediately upon the execution of this Agreement. No
holder of any such collateral assignment has exercised any of its right to
collect such rents. Each of the Leases is in the form of lease previously
delivered to Administrative General Partner, is valid and subsisting and in
full force and effect; except for subleases noted on the rent roll and except
for licensees and occupants under the Parking Deck Agreement, the Landlord has
not received notice of any other subleases or assignments; and the rents set
forth in Exhibit "K", except as noted thereon, are the actual base and net
rents, respectively, scheduled to be collected by the Partnership for the
current lease year under the respective Leases. Except for approximately 1,250
square feet of space which may be occupied by Hayden Real Estate and which is
being vacated by Bryn Mawr Trust approximately three (3) months prior to the
expiration of the term of the lease of Bryn Mawr Trust, any tenant
improvements which the Partnership is obligated to complete pursuant to any
Lease (or any unsigned lease proposal or lease amendment) have been completed
as of this date, all costs therefor have been or shall be paid by the
Partnership, and all of the Partnership's work has or shall have been accepted
by the Tenant without exception, other than routine punch list items. Except
as expressly set forth in the Leases, no tenant or other person has any right
or option to acquire the Project or to terminate any of the rights currently
appurtenant to the Project, or any part thereof. There are no security
deposits being held with regard to any tenant's Lease.
(13) The Managing General Partner has received no written
notice from any governmental authority stating that the Property does not
comply with any law, and there are no outstanding written notices of
violations issued by any governmental authority having jurisdiction over such
Property.
(14) The Managing General Partner has received no
summons, citation, directive, letter or other communication, written or oral,
from any governmental or quasi-governmental authority concerning any
intentional or unintentional action or omission on Managing General Partner's
(or the Partnership's) part which (a) resulted in the releasing, spilling,
leaking, pumping, pouring, emitting, emptying or dumping of Hazardous
Substances or Hazardous Wastes, or (b) related in any way to the generation,
storage, transport, treatment or disposal of Hazardous Substances or Hazardous
Wastes.
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(15) Exhibit "L" attached hereto contains a true and
correct certificate regarding the insurance affecting the Project and the
operation thereof. The Managing General Partner has not received any written
notice from any insurance company, board of fire underwriters or rating
organization (or other body exercising similar functions) (i) claiming any
defects or deficiencies which have not been addressed and fully cured or
corrected, or (ii) requesting the performance of any repairs, alterations or
other work which have not been performed, or (iii) claiming any default which,
if not corrected, would result in a cancellation of insurance coverage.
(16) No brokerage or leasing commission or other
compensation will be due or payable to any person, firm, corporation, or other
entity with respect to or on account of any of the Leases, or any extensions
or renewals thereof except as set forth on Exhibit "M" hereto.
(17) The Partnership does not constitute a "foreign
person" as such term is defined in Section 1445(f)(3) of the Internal Revenue
Code of 1954, as amended (the "Code").
(18) Exhibit "N" is a correct and complete list of all
real estate taxes, insurance, water and sewer rents and heat, electric, gas,
fuel oil and trash collection charges applicable to the Project and paid by
the Partnership for calendar year 1996.
(19) Except as granted to Administrative General Partner
under this Agreement or listed on Exhibit "O", the Partnership has granted no
agreements, options, rights of first refusal, conditional sales agreements or
other agreements or arrangements, whether oral or written, regarding the
purchase and sale of any portion of the Project or of any interests therein or
in the ownership thereof, or which otherwise affect any portion of the
Project.
(20) The highway occupancy permit required for vehicular
access to and from the Project to adjoining public streets has been obtained
and fully paid for.
(21) Any and all applicable charges, fees and assessments
(including, without limitation, condominium fees, association fees and the
like, to the extent applicable) and any and all other sums due under
declarations, cross-easements and like agreements to which the Property may be
subject and of which Managing General Partner has knowledge, have been paid,
and no special assessments thereunder are pending, and all consents and
approvals required to be obtained under any such declarations, cross-easements
and like agreements have been obtained pursuant to the requirements of such
documentation. Notwithstanding the foregoing, the Partnership has agreed to
contribute a portion of the cost of maintenance of common areas maintained by
the various buildings known as Tower Bridge, including, but not limited to
street sweeping certain streets within the Borough of West Conshohocken and
maintenance of landscaping in area bounded by Matsonford Road and the on ramps
to 76 and 476, and similar types of maintenance. The rate of such maintenance
is approximately one-half of the rate per square foot charged to cooperating
buildings located in West Conshohocken. There is no written
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evidence of this agreement. The portion of the cost of such maintenance
charged to the Partnership for 1997 was approximately $3,000.
(22) Except as set forth on Exhibit "P" hereto, if any,
the Partnership is not party to any material development, tri-party or similar
agreement with any county, municipal and other governmental and
quasi-governmental agencies and authorities respecting the ownership,
development and operation of the Property and all portions thereof.
(23) The Managing General Partner is a limited
partnership duly organized, validly existing and in good standing under the
laws of the Commonwealth of Pennsylvania. The Partnership conducts no business
other than its interest as a Partner of the Partnership. The Managing General
Partner has the power and authority to own its property, and to carry on its
business as presently conducted or contemplated. The Managing General Partner
is not in violation of any term of the Original Agreement, as amended to date.
The Managing General Partner has not, to its knowledge, committed any material
default in the obligation to pay money under any indenture, mortgage,
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to it, nor has the Managing General Partner received any
notice that it has committed any other material default under any of the
foregoing.
(24) The execution and delivery of this Agreement
(including the admission of the Administrative General Partner as a Partner of
the Partnership) will not result in a breach of, or constitute a default
under, any indenture, mortgage or agreement to which the Managing General
Partner is a party or by which its assets are bound, or any decree, order or
rule of any court or governmental agency or any provision of applicable law
which is binding on Managing General Partner or on any of its assets, or
result in the creation or imposition of any mortgage, lien, charge,
assessment, encumbrance, claim or restriction on such assets or give to others
any interest or rights therein or create in any third party the right to
modify, terminate, accelerate or otherwise declare a default under any
instrument or contract to which the Managing General Partner is a party or by
which its assets are bound. Notwithstanding anything to the contrary contained
herein, Administrative General Partner acknowledges that Managing General
Partner has provided Administrative General Partner with copies of the
Subordinate Debt Documents, as defined above, and that Managing General
Partner's representations with respect thereto are limited as set forth in
subsection (2), above.
(25) Donald W. Pulver owns at least fifty-one percent of
the partnership interests in capital and profits of Managing General Partner.
B. The foregoing representations, warranties and covenants
shall survive for a period of one (1) year after the date hereof, including,
but not limited to, any portion of such period following the withdrawal by or
removal of the Managing General Partner as a Partner of the Partnership.
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C. The Managing General Partner shall indemnify and hold
Administrative General Partner harmless from and against any losses, claims,
damages or expenses, including reasonable attorneys' fees, resulting either
directly or indirectly from any breach of a warranty or representation during
the period of its survival contained in this Section 4.09.
D. Notwithstanding anything to the contrary contained
herein, Administrative General Partner shall have no claim for damages for a
breach of any representation or warranty under this Section 4.09 unless such
damages exceed $10,000 for any one breach (in which case recovery shall be
permitted on account of such breach) or $30,000 for the aggregate of all
breaches (in which case recovery shall be permitted on account of all such
breaches).
E. Administrative General Partner acknowledges and agrees
that Managing General Partner makes no representation or warranty with respect
to the physical condition of the Project, the structural or environmental
condition thereof, any repairs or replacements required thereto or the Net
Cash Flow, Net Refinancing Proceeds or Net Sales Proceeds which will be
generated by the Project. Any projections of cash flow used in negotiations
are meant purely as an example of possible outcomes and do not constitute a
representation or warranty of future profitability of the Project.
4.10. Representations and Warranties of the Administrative General
Partner.
A. To induce Managing General Partner and Limited Partner to
execute this Second Amended and Restated Agreement of Limited Partnership, the
Administrative General Partner hereby represents, warrant and certifies to
Managing General Partner, that it has no actual knowledge contrary to any of
the following:
(1) Administrative General Partner is a limited
partnership duly organized, validly existing and in good standing under the
laws of the Commonwealth of Pennsylvania. The Administrative General Partner
has the power and authority to own its property, and to carry on its business
as presently conducted or contemplated. The Administrative General Partner has
not, to its knowledge, committed any material default in the obligation to pay
money under any indenture, mortgage, agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to it, nor has the
Administrative General Partner received any notice that it has committed any
other material default under any of the foregoing.
(2) The execution and delivery of this Agreement
(including the admission of the Administrative General Partner as a Partner of
the Partnership) has been authorized by all necessary action of its general
partner and will not result in a breach of, or constitute a default under, any
indenture, mortgage or agreement to which the Administrative General Partner
is a party or by which its assets are bound, or any decree, order or rule of
any court or governmental agency or any provision of applicable law which is
binding on the Administrative General Partner or on any of its assets, or
result in the creation or imposition of
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any mortgage, lien, charge, assessment, encumbrance, claim or restriction on
the Project or any of Administrative General Partner's such assets or give to
others any interest or rights therein or create in any third party the right
to modify, terminate, accelerate or otherwise declare a default under any
instrument or contract to which the Administrative General Partner is a party
or by which its assets are bound.
(3) Since the date of the balance sheet included in the
Annual Report on Form 10-K for the year ended December 31, 1997, there has
been no material adverse change in the financial condition of Brandywine
Operating Partnership, L.P. ("BOP").
(4) All federal, state and local tax returns and reports
required by law to be filed by Administrative General Partner and BOP have
been duly and timely filed (or extensions of the same have been timely filed),
and all taxes, assessments, fees and other governmental charges on or against
the Administrative General Partner or upon their respective properties,
assets, income or franchises for which a penalty or interest would be payable
if such tax were not paid prior to the date hereof.
(5) There is no suit, action or legal, administrative,
arbitration or other proceeding or governmental investigation, pending or, to
the best of its knowledge, threatened, which might materially and adversely
affect the business or property of the Administrative General Partner of BOP.
(6) Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated herein in the manner
herein provided will violate any agreement to which the Administrative General
Partner or BOP is a party or by which either of them is bound, or any law,
order or decree.
B. The foregoing representations, warranties and covenants
shall survive for a period of one (1) year after the date hereof, including,
but not limited to, any portion of such period following any withdrawal by or
removal of the Administrative General Partner as a Partner of the Partnership.
C. The Administrative General Partner shall indemnify and
hold the Partnership, Managing General Partner and Limited Partner harmless
from and against any losses, claims, damages or expenses, including reasonable
attorneys' fees, resulting either directly or indirectly from any breach of a
warranty or representation during the period of its survival contained in this
Section 4.10.
D. Notwithstanding anything to the contrary contained
herein, Managing General Partner shall have no claim for damages for a breach
of any representation or warranty under this Section 4.10 unless such damages
exceed $10,000 for any one breach (in which case recovery shall be permitted
on account of such breach) or $30,000 for the aggregate of all breaches (in
which case recovery shall be permitted on account of all such breaches).
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4.11. Certain Definitions. Where representations are made to the
"knowledge," "actual knowledge," "or best of actual knowledge," or equivalent
words are used, unless specifically otherwise stated herein, such
representations are intended to reflect that the president of the general
partner of the Managing General Partner, as to Managing General Partner, and
the president of the member of the limited liability company which is the
general partner of the Administrative General Partner, as to Administrative
General Partner, have no actual knowledge to the contrary, but (a) shall not
mean such individuals are charged with the knowledge of the acts, omissions or
knowledge of any agents or employees of the entities making such
representations; and (b) shall not mean information or material which may be
in the position of the entity generally or incidentally, but which is not
actually known to the individuals described above. None of the individuals
described above shall have any personal liability based upon this Agreement,
including, but not limited to, the representations and warranties contained
herein.
4.12. Pledges.
A. Upon the terms hereof, Managing General Partner hereby
grants to Administrative General Partner a security interest in and to the
Managing General Partner's interest under this Agreement as security for
Managing General Partner's obligations arising under Section 4.09 of this
Agreement. Administrative General Partner shall have no right to sell, convey,
assign, pledge, hypothecate, or otherwise dispose of or encumber all or any
part of the security interest granted hereby. Such security interest shall
expire automatically by its terms on the date which is one (1) year after the
date hereof unless prior to that time Administrative General Partner shall
have commenced a proceeding in law or in equity against Managing General
Partner pursuant to which Administrative General Partner, in good faith, seeks
damages by reason of a breach of the representations, warranties and
certifications contained in Section 4.09 hereof.
B. Upon the terms hereof, Administrative General Partner
hereby grants to Managing General Partner a security interest in and to the
Administrative General Partner's interest under this Agreement as security for
Administrative General Partner's obligations arising under Section 4.10 of
this Agreement. Managing General Partner shall have no right to sell, convey,
assign, pledge, hypothecate, or otherwise dispose of or encumber all or any
part of the security interest granted hereby. Such security interest shall
expire automatically by its terms on the date which is one (1) year after the
date hereof unless prior to that time Managing General Partner shall have
commenced a proceeding in law or in equity against Administrative General
Partner pursuant to which Managing General Partner, in good faith, seeks
damages by reason of a breach of the representations, warranties and
certifications contained in Section 4.10 hereof.
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ARTICLE V
DISTRIBUTIONS AND ALLOCATIONS
5.01. Distributions of Net Cash Flow. All Net Cash Flow, if any,
realized by or available to the Partnership for or during each Fiscal Year
shall be paid or distributed no less frequently than quarterly in the
following order of priority to the extent available:
A. To the Partners in repayment of the entire principal
amounts of any outstanding Partners' Priority Loans, together with all accrued
but unpaid interest thereon, first on account of accrued interest thereon (in
proportion to the interest so accrued) and then in repayment of the principal
amounts thereof (in proportion to the respective outstanding amounts of
principal);
B. Next, to Administrative General Partner, in satisfaction of
the unpaid BOP Preferred Cumulative Return;
C. Next, to the Partners in repayment of the entire
principal amounts of any outstanding Partners' Loans, together with all
accrued but unpaid interest thereon, first on account of accrued interest
thereon (in proportion to the interest so accrued) and then in repayment of
the principal amounts thereof (in proportion to the respective outstanding
amounts of principal);
D. Next, to the Partners, in proportion to the respective
accrued amounts of their Preferred Cumulative Returns, in satisfaction of
their then unpaid Preferred Cumulative Return;
E. Next, to the Partners, in proportion to their respective
Additional Capital Balances, in reduction of their Additional Capital
Balances, until such time as their respective Additional Capital Balances
shall have been reduced to zero (but if such Additional Capital Balances shall
at any time thereafter be increased, then this paragraph E shall again be
operative); and, thereafter,
F. To all Partners in accordance with their respective
Participation Percentages,
5.02. Distributions of Net Refinancing Proceeds and Net Sale
Proceeds. All Net Refinancing Proceeds and Net Sale Proceeds, if any, realized
by or available to the Partnership shall be distributed in the following order
of priority to the extent available:
A. To the Partners in repayment of the entire principal
amounts of any outstanding Partners' Priority Loans, together with all accrued
but unpaid interest thereon, first on account of accrued interest thereon (in
proportion to the interest so accrued) and then in
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repayment of the principal amounts thereof (in proportion to the respective
outstanding amounts of principal);
B. Next, to Administrative General Partner in satisfaction of
the then unpaid BOP Preferred Cumulative Return;
C. Next, to Administrative General Partner in reduction of
its then outstanding BOP Preference Capital until such time as the BOP
Preference Capital is reduced to zero;
D. Next, to the Partners in repayment of the entire principal
amounts of any outstanding Partners' Loans, together with all accrued but
unpaid interest thereon, first on account of accrued interest thereon (in
proportion to the interest so accrued) and then in repayment of the principal
amounts thereof (in proportion to the respective outstanding amounts of
principal);
E. Next, to the Partners, in proportion to the respective
accrued amounts of their Preferred Cumulative Return, in satisfaction of their
then unpaid Preferred Cumulative Return;
F. Next, to the Partners, in proportion to their respective
Additional Capital Balances, in reduction of their Additional Capital
Balances, until such time as their respective Additional Capital Balances
shall have been reduced to zero (but if such Additional Capital Balances shall
at any time thereafter be increased, then this paragraph F shall again be
operative); and, thereafter,
G. To all Partners in accordance with their respective
Participation Percentages,
5.03. Availability of Funds. The distributions to which the Partners
are entitled pursuant to this Article V are conditioned upon the availability
of funds to the Partnership, and such distributions do not and shall not
constitute interest, nor is there any guarantee or obligation by the
Partnership to make any distributions under this Agreement, except to the
extent that the Managing General Partner determines, in accordance with the
Operating Budget, that cash in excess of the requirements of the Partnership
is available for distribution to the Partners.
5.04 Tax Withholding. To the extent the Partnership pays any amount
to any federal, state or local taxing authority as a result of any obligation
to collect, pay over or withhold taxes with respect to any Partner's allocable
share of Partnership income or gain, the amount so collected, paid over or
withheld shall be treated for all purposes of this Agreement as having been
paid or distributed to such Partner and shall reduce, on a dollar for dollar
basis, amounts otherwise payable or distributable to such Partner under this
Article V. The Partnership may, in
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the discretion of either General Partner, require each Partner to reimburse
the Partnership, for any tax withholding payments made by the Partnership on
behalf of such Partner.
5.05 Allocation of Profits and Losses.
a. Profits. Profits for any Fiscal Year shall be allocated
among the Partners in the following order of priority:
A. First, if any Partner has a deficit balance in his or
its Capital Account, to the Partners in accordance with and to the extent of
such deficit balances, until no Partner has a deficit balance in his or its
Capital Account;
B. Next, if any Partner has a Cumulative Net Loss, to the
Partners in accordance with and to the extent of their Cumulative Net Losses,
until no Partner has a Cumulative Net Loss;
C. Next, if any Partner has received a payment on account
of a BOP Preferred Cumulative Return, to such Partner until such Partner has a
Cumulative Net Profit equal to the aggregate amount of such Partner's
aggregate BOP Preferred Cumulative Return as of the end of the Fiscal Year to
which such allocation relates;
D. Next, to the Partners entitled to receive payment on
account of a Preferred Cumulative Return, until each such Partner has a
Cumulative Net Profit equal to the aggregate amount of such Partner's
aggregate Preferred Cumulative Return as of the end of the Fiscal Year to
which such allocation relates;
E. Thereafter, to the Partners in accordance with their
respective Participation Percentages.
b. Losses. Losses for any Fiscal Year shall be allocated
among the Partners in the following order of priority:
A. If any Partner has a Cumulative Net Profit, then
Losses shall be allocated to the Partners with Cumulative Net Profit, until no
Partner has a Cumulative Net Profit, in the following order of priority:
i. First, Losses in an amount up to the amount of any
Profits previously allocated under Section 5.05(a)(E) above shall be allocated
among the Partners in the same manner as such Profits were previously
allocated under Section 5.05(a)(E).
ii. Next, Losses in an amount up to the amount of any
Profits previously allocated under Section 5.05(a)(D) above shall be allocated
among the Partners in the same manner as such Profits were previously
allocated under Section 5.05(a)(D);
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iii. Next, Losses in an amount up to the amount of any
Profits previously allocated under Section 5.05(a)(C) above shall be allocated
among the Partners in the same manner as such Profits were previously
allocated under Section 5.05(a)(C);
B. Next, if no Partner has a Cumulative Net Profit,
Losses shall be allocated to the Partners in accordance with their respective
Contribution Percentages; provided, however, that no Losses shall be allocated
to a Partner under this Section 5.05(b)(B) to the extent that such allocation
would cause or increase a deficit balance in such Partner's Hypothetical
Capital Account;
C. Any remaining Losses shall be allocated (i) first, to
the Partners (if any) with positive balances in their Hypothetical Capital
Accounts, in proportion to and to the extent of such positive balances and
(ii) thereafter, any remaining Losses shall be allocated among the Partners in
accordance with their respective interests in the Partnership, in accordance
with Treasury Regulation Section 1.704-1(b)(3).
c. Allocations Upon Sale of Project. Gain or loss recognized
upon the sale of all or substantially all of the assets of the Partnership
shall be determined based upon the Book Value of the Partnership's assets and
shall be allocated so that, to the maximum extent possible, (i) no Partner has
a negative balance in its Capital Account and (ii) the positive balance in
each Partner's Capital Account (as determined immediately prior to the
distribution of Net Sales Proceeds) equals the aggregate amount of liquidating
distributions such Partner is entitled to receive upon the liquidation of the
Partnership under Section 10.03 below.
d. Changes in Interests. If the respective interests of the
Partners in the Partnership change during any Fiscal Year, then the amount of
all items to be allocated, credited or charged to the Partners for such entire
Fiscal Year (other than items of gain or loss from a sale of all or
substantially all of the Partnership's assets, which shall be allocated under
the interim closing of the books method) shall be allocated to the portion of
such Fiscal Year which precedes the date of each such change and to the
portion of the Fiscal Year which occurs on and after the date of each such
change, in proportion to the number of days in each such portion, and the
amounts of the items so allocated to each such portion shall be allocated,
credited or charged to each of the Partners in proportion to their respective
interests during each such portion of the Fiscal Year in question.
Notwithstanding the foregoing, the Managing General Partner may elect to use
the closing of the books method or any other method allowed by the Treasury
Regulations in the event that a new Partner is admitted to the Partnership or
an existing Partner is redeemed during a Fiscal Year.
e. Regulatory Allocations. Notwithstanding any other
provisions to the contrary in this Agreement, the following provisions shall
apply:
A. All Nonrecourse Deductions for each Fiscal Year shall
be allocated to the Partners in proportion to their respective Contribution
Percentages. For purposes of
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Regulation Section 1.752-3, all excess nonrecourse liabilities of the
Partnership will be allocated among the Partners in proportion to their
respective Contribution Percentages.
B. All Partner Nonrecourse Deductions for each Fiscal
Year shall be allocated to the Partners who bear the economic risk of loss
with respect to the Partner Nonrecourse Debt giving rise to such deductions,
in accordance with Treasury Regulation Section 1.704-2(i)(1).
C. Any Partner who unexpectedly receives an adjustment,
allocation or distribution described in clauses (4), (5) or (6) of Treasury
Regulation Section 1.704-1(b)(2)(ii)(d) which produces a deficit in its
Hypothetical Capital Account shall, to the extent required by the Treasury
Regulations, be allocated items of income and gain in amount and manner
sufficient to eliminate the deficit in its Hypothetical Capital Account as
quickly as possible. This Section 5.05(e)(C) is intended to comply with the
"qualified income offset" requirement in Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(3), and shall be interpreted consistently therewith.
D. If there is a net decrease in Minimum Gain during a
Fiscal Year, then before any other allocation is made for such year, the
Partners shall be allocated items of income and gain for such year (and, if
necessary, subsequent years) in the amount and in the proportions necessary to
satisfy the requirements of a "minimum gain chargeback" under Treasury
Regulation Section 1.704-2(f).
E. If there is a net decrease in Partner Minimum Gain
during a Fiscal Year, then before any other allocation is made for such year,
the Partners shall be allocated items of income and gain for such year (and,
if necessary, subsequent years) in the amount and in the proportions necessary
to satisfy the requirements of a partner nonrecourse debt minimum gain
chargeback under Treasury Regulation Section 1.704-2(i)(4).
F. The allocations set forth in subsections A through E
above (the "Regulatory Allocations") are intended to comply with certain
requirements of Treasury Regulation Sections 1.704-1(b) and 1.704-2.
Notwithstanding any other provision of this Section 5.05 (other than the
Regulatory Allocations), the Regulatory Allocations shall be taken into
account in allocating other items of income, gain, loss and deduction among
the Partners so that, to the extent possible, the net amount of such
allocation of other items and the Regulatory Allocations to each Partner
should be equal to the net amount that would have been allocated to each such
Partner if the Regulatory Allocations had not occurred.
f. Contributed/Revalued Property. If any property is
contributed to the Partnership in kind, or if the Book Value of any
Partnership property is adjusted pursuant to applicable Regulations under
section 704(b) of the Code and this Agreement, all income, gain, loss and
deduction with respect to such contributed or revalued property shall, solely
for tax purposes, be allocated among the Partners so as to take account of any
variation between the adjusted basis of such property to the Partnership for
federal income tax purposes and its initial or
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revalued Book Value, in such manner as the General Partner may determine in
accordance with section 704(c) of the Code, the Treasury Regulations
promulgated thereunder and Treasury Regulation Section 1.704-1(b)(4)(i).
Allocations pursuant to this Section 5.05(f) are solely for purposes of
federal and state taxes and shall not affect, or in any way be taken into
account in computing, any Partner's Capital Account or share of Profit, Loss
or distributions pursuant to any provision of this Agreement.
g. Knowledge of Tax Consequences. The Partners are aware of
and consent to the income tax consequences of the allocations made by this
Section 5.05. The Partners hereby agree to be bound by the provisions of this
Section 5.05 in reporting their shares of Partnership income and loss for
income tax purposes. Upon the advice of an outside accountant or of legal
counsel to the Partnership, this Section 5.05 may be amended from time to time
by the Managing General Partner as may be necessary to comply with Section 704
of the Code and the Treasury Regulations promulgated thereunder; provided,
however, that no such amendment shall become effective without the consent of
those Partners who would be materially adversely affected thereby.
ARTICLE VI
BOOKS AND RECORDS; TAX MATTERS
6.01. Accounting. Except as may be otherwise directed by all General
Partners, the Partnership shall maintain its books and records on a cash basis
and shall prepare (i) financial statements on the accrual basis used for
federal income tax purposes, and (ii) income tax returns on the accrual method
of accounting and on a calendar year basis. Appropriate records will be kept
so that upon each closing of the Partnership books it is possible to
determine, among other items defined in this Agreement: (i) the amount of
capital actually contributed by each Partner; (ii) the amount of cash or other
property distributed to each Partner; (iii) the effect, if any, of all
Partnership items of income, gain, loss, deduction or credit on each Partner's
Capital Account; and (iv) the amount of Partners' Priority Loans, Partners'
Loans, Additional Capital Contributions, Capital Balances (including, but not
limited to, BOP Preference Capital), Net Cash Flow, Net Refinancing Proceeds,
Net Sale Proceeds, and Preferred Cumulative Returns.
6.02. Statements.
A. Within thirty (30) days after the close of each calendar
year, the Managing General Partner shall endeavor to furnish, at Partnership
expense, to each Partner, with respect to such calendar year, (i) a profit and
loss statement, (ii) a statement of source and application of funds, (iii) a
Partnership balance sheet as of the close of such fiscal year, and (iv) such
other statements showing in detail each Partner's interest in each of the
items described in Section 6.01. hereof. The foregoing statements shall be
audited by certified public accountants acceptable to all
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of the General Partners, and the cost of preparing the statements and the cost
of each such audit shall be paid for by the Partnership.
B. The Managing General Partner shall have prepared (at
Partnership expense) and shall provide the other General Partners with the
following additional materials: (i) quarterly reports, submitted not later
than the twentieth (20th) day following the close of each calendar quarter,
which shall include a rent roll indicating tenants, lease term, monthly rent
and space or suite identification, and space available for lease; (ii) at the
specific request of any of the other General Partners (a) copies of the
disbursements ledger detailing payees, dates, and amounts of disbursements,
(b) copies of the cash receipts ledger detailing the tenant, and other
receipts, date of deposit, and amount of the receipt, (c) copies of bank
statements and cash reconciliations for all bank accounts, (d) journal entries
and explanations thereof, and (e) trial balances; (iii) a quarterly
reconciliation form (in form and in detail reasonably satisfactory to the
requesting General Partner) detailing all Partnership distributions of cash
flow; and (iv) quarterly unaudited balance sheets and income statements
prepared on the cash method of accounting, to be received within twenty (20)
days of the close of the fiscal quarter.
6.03. Inspection. All books of account and all other records of the
Partnership (including an executed counterpart of this Agreement and all
amendments hereto, and an executed counterpart of the Certificate and all
amendments thereto) shall at all times be kept by the Managing General Partner
at the Partnership's place of business and may be inspected at any reasonable
time by any Partner.
6.04. Tax Matters.
A. The Managing General Partner shall cause, at Partnership
expense, to be prepared and filed all income tax returns for the Partnership
on an accrual basis and shall furnish copies thereof to all Partners. At least
thirty (30) days prior to the filing of any tax return for the Partnership
with the Internal Revenue Service), the Managing General Partner shall deliver
to each other General Partner for its review and written approval before such
filing a draft copy of the Partnership's U.S. Partnership Return of Income for
such fiscal year (which copy shall be prepared by the Partnership's regular
certified public accountants, shall be delivered in accordance with the
requirements of Article XI hereof, and shall be accompanied by (i) a
reconciliation, prepared by such accountants, between the Partnership's
financial statements and tax returns; and (ii) a breakdown, prepared by such
accountants, of Project components qualifying for investment tax credit).
B. The Managing General Partner shall, within five (5) days
of receipt thereafter, forward to each General Partner a photocopy of any
correspondences (excluding routine correspondence relating to administrative
forms) relating to the Partnership received from the Internal Revenue Service.
The Managing General Partner shall, within five (5) days thereafter, advise
each General Partner in writing of the substance of any conversation held with
any representative of the Internal Revenue Service. Any reasonable costs
incurred by the
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Managing General Partner for retaining accountants or lawyers on behalf of the
Partnership in connection with any Internal Revenue Service audit or state tax
audit of the Partnership shall be expenses of the Partnership. Without the
consent of all of the General Partners, no Partner shall (a) take or assert
any position in connection with any Internal Revenue Service audit, state tax
audit, or administrative or court proceeding, which is inconsistent with any
item or position reflected in the Partnership's U.S. Partnership Return of
Income with respect to the fiscal period in question, (b) commence or
prosecute any proceeding in any court for the adjustment of any item reflected
in such return, or (c) take or suffer any action which would impair the
authority of any General Partner to bind the Partnership or the Partners. In
connection with the foregoing, any General Partner shall be permitted to
condition its consent hereunder on the agreement of the Partner requesting the
consent to (i) proceed, or refrain from proceeding, in one or more specified
administrative or judicial forums, (ii) conduct any such proceeding in a
particular manner, or (iii) abide by any other terms or restrictions which the
General Partner may impose in the best interests of the Partnership as a
condition of granting its consent hereunder. The Managing General Partner
shall notify all Partners of any settlement offers from the Internal Revenue
Service, and shall not, in any case, enter into any settlement with the
Internal Revenue Service on behalf of the Partnership without the approval of
all of the General Partners.
C. In connection with the assignment of a Limited Partner's
interest in the Partnership permitted by Article VII hereof, any General
Partner shall have the right, but shall not be obligated, on behalf of the
Partnership and at the time and in the manner provided by Section 754 of the
Code (or any successor section thereto) and the Regulations thereunder, to
make an election to adjust the basis of Partnership property in the manner
provided in Sections 734(b) and 743(b) of the Code (or any successor sections
thereto). All expenses incurred by the Partnership to make such an election
shall be paid by the transferee benefitted by such election.
D. Should the Managing General Partner fail to fulfill or
perform any of its obligations under this Article VI, then any General
Partner, in addition to any other rights or remedies it may have pursuant to
this Agreement, may (i) engage such certified public accountants as it may
select to cure the default at Partnership expense unless such default is
beyond the Managing General Partner's reasonable control; or (ii) cause the
Managing General Partner to request an extension of the filing date of any
income tax return for a period ending at least thirty (30) days beyond the
date on which such return and all accompanying documentation were received by
all of the General Partners pursuant to Section 6.04.A. above.
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ARTICLE VII
TRANSFER OF PARTNERSHIP INTERESTS;
WITHDRAWAL OF PARTNERS;
REMOVAL OF THE MANAGING GENERAL PARTNER
7.01. Transfer of General Partnership Interests.
A. During the entire term of the Partnership, except as
hereinafter permitted in subsection 7.01(B) or 7.01(C) hereof, none of the
following shall be permitted without the prior written consent of all General
Partners, such consent to be given or withheld by the General Partners in
their sole discretion: (i) no General Partner shall directly or indirectly
sell, convey, assign, pledge, hypothecate, transfer or otherwise dispose of or
encumber all or any part of its interest in the Partnership; (ii) no present
general partner of the Managing General Partner shall directly or indirectly
sell, convey, assign, pledge, hypothecate, transfer or otherwise dispose of or
encumber all or any part of its interest in the Managing General Partner; nor
shall any such general partner withdraw or retire from the Managing General
Partner, as the case may be; and (iii) no present general partner of the
Administrative General Partner shall directly or indirectly sell, convey,
assign, pledge, hypothecate, transfer or otherwise dispose of or encumber all
or any part of its interest in the Administrative General Partner, nor shall
any such general partner withdraw or retire from the Administrative General
Partner as the case may be; provided, however, that following the receipt of
the cash Capital Contribution required by Section 3.01(B), the general partner
of Administrative General Partner may be an entity, all of which is owned
directly or indirectly by Brandywine Operating Partnership, L.P. and/or
Brandywine Realty Trust and which otherwise satisfies the qualifications set
forth in subsections (1)-(4) of subsection (B) hereof.
B. At any time following the receipt by the Partnership of
the cash Capital Contribution required by Section 3.01(B) hereof, the
Partnership interest of Administrative General Partner may be assigned to an
entity, all of which is owned, directly or indirectly, by Brandywine Operating
Partnership, L.P., a Delaware limited partnership, and/or Brandywine Realty
Trust, which entity shall be admitted as a substituted Administrative General
Partner of the Partnership, provided that the following conditions are met in
each instance:
(1) A duly executed and acknowledged instrument of
assignment and Power of Attorney, setting forth the intention of the assignor
that the assignee become a substituted Administrative General Partner in its
place and confirming and restating the appointment and powers contained in
Section 12.02. hereof, is delivered to the Managing General Partner; and
(2) The Managing General Partner, at its request, shall
have been provided, at the expense of the transferor, with an opinion of
counsel in form and substance satisfactory to the Managing General Partner and
from counsel satisfactory to the Managing
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General Partner to the effect that such transfer or assignment will not
violate the registration provisions of the Securities Act of 1933, as amended,
or the rules and regulations thereunder or the applicable state securities or
"Blue Sky" law or laws and the rules and regulations thereunder; and
(3) The assignor and assignee execute and acknowledge
such other instruments as any Managing General Partner reasonably may deem
necessary or desirable to effect such admission, including the written
acceptance and adoption by the assignee of the provisions of this Agreement
and the assumption of any unperformed obligation of the assignor (provided
that such assignor shall not thereby be released from any of its unperformed
obligations hereunder); and
(4) The entity shall have the following characteristics:
(a) It shall be formed for the sole purpose of
acquiring interests in the various partnerships formed to hold all or portions
of the area known as Tower Bridge, located in Conshohocken and West
Conshohocken, Montgomery County, Pennsylvania, in partnerships formed with
Managing General Partner or affiliates thereof;
(b) It shall have no liabilities except those
incurred in connection with its obligations as a partner in such partnerships
and no other assets constituting real property;
(c) The Managing General Partner shall consent to the
admission of such substitute Administrative General Partner, which consent
shall not be unreasonably withheld.
(d) All Partners will if required by the Act, no
later than thirty (30) days after the date of compliance with the provisions
of this Section 7.01(B), amend the Certificate to reflect the admission of any
such assignee as a substituted limited partner.
C. Notwithstanding anything to the contrary contained
herein, but subject to Section 7.07 hereof, either General Partner shall have
the right to sell, transfer or assign all but not part (except as set forth in
subsection 7.01(C)(6) hereof), of its interest in the Partnership, provided
that the following conditions are met in each instance:
(1) If the transferor is Administrative General Partner,
a duly executed and acknowledged instrument of assignment and Power of
Attorney, setting forth the intention of the assignor that the assignee become
a substituted Administrative General Partner in its place and confirming and
restating the appointment and powers contained in Section 12.02 hereof, shall
have been delivered to the Managing General Partner; and
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(2) The other General Partner, at its request, shall have
been provided, at the expense of the transferor, with an opinion of counsel in
form and substance satisfactory to the other General Partner and from counsel
satisfactory to the other General Partner to the effect that such transfer or
assignment will not violate the registration provisions of the Securities Act
of 1933, as amended, or the rules and regulations thereunder or the applicable
state securities or "Blue Sky" law or laws and the rules and regulations
thereunder; and
(3) The assignor and assignee execute and acknowledge
such other instruments as any General Partner reasonably may deem necessary or
desirable to effect such admission, including the written acceptance and
adoption by the assignee of the provisions of this Agreement and the
assumption of any unperformed obligation of the assignor (provided that such
assignor shall not thereby be released from any of its unperformed obligations
hereunder); and
(4) The entity shall have the following characteristics:
(a) It shall be formed for the sole purpose of
acquiring an interest in the Partnership;
(b) It shall have no liabilities except those
incurred in connection with its obligations as a Partner in the Partnership
and no other assets constituting real property;
(c) All Partners will, if required by the Act, no
later than thirty (30) days after compliance with the provisions of this
Section 7.01(C), amend the Certificate to reflect the admission of any such
assignee as a substituted general partner; and
(d) The transferee shall be one hundred percent
(100%) owned, directly or indirectly, by an "Institutional Investor," as
hereinafter defined. The term "Institutional Investor," as used herein, shall
mean an entity which has a net worth in excess of $25 million other than an
entity which the parties have agreed in writing is not a permitted transferee;
and
(5) The transferee shall not be an entity with which, or
controlled by, under common control with or controlling any entity or person
with which, the remaining General Partner has engaged in any actual pending or
threatened litigation previously; and
(6) In the judgment of the non-transferring General
Partner, the transfer of the transferring General Partner's interests, either
individually or in combination with other transfers which have previously
occurred or which are then contemplated pursuant to good faith negotiations
which have commenced, will not result in any other negative tax consequences
for any Partner or the Partnership. Notwithstanding the foregoing, if it is
possible, in the judgment of the non-transferring General Partner, to
structure the transfer in a lawful manner at no cost to the Partnership and
the other Partners so as to avoid all negative tax consequences, the
non-transferring General Partner shall cooperate with such a transfer provided
the remaining
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requirements of this Subsection 7.01(C) are met and provided that such
transfer shall not result in the transferring General Partner's interest being
held by two general partners of the partnership. By way of example and not
limitation, if the negative tax consequences could be avoided by transferring
the General Partner's interests in stages over time, the transferring General
Partner shall initially transfer only so much of such transferring General
Partner's interest as will not, in the non-transferring General Partner's
judgment, result in such negative tax consequences, with the remaining
interest of such transferring General Partner being converted to a limited
partnership interest automatically upon such event. The remaining partnership
interest of the transferring Partner would then be transferred one (1) day
after the expiration of any period required, in the judgment of the
non-transferring General Partner, to avoid the negative tax consequence. Such
procedure is referred to herein as a "Tax Staggered Transfer." In all
instances requiring judgment of the non-transferring General Partner under
this Section 7.01(C)(6), the judgment of such General Partner shall be deemed
to permit the requested action of the transferring General Partner unless the
non-transferring General Partner does not notify the transferring General
Partner of an objection (and the general basis therefor) within thirty (30)
days after written notice from the transferring General Partner of its
proposed action.
7.02. Transfer of Limited Partnership Interests.
A. Subject to Section 7.05 hereof, the Partnership interest
of a Limited Partner, or any part thereof, may not be transferred or assigned,
and no such transferee or assignee may be admitted as a substituted limited
partner of the Partnership, unless in each instance:
(1) A duly executed and acknowledged instrument of
assignment and Power of Attorney, setting forth the intention of the assignor
that the assignee become a substituted limited partner in its place and
confirming and restating the appointment and powers contained in Section
12.02. hereof, is delivered to the General Partners; and
(2) The General Partners, if any or all of them shall so
request, shall have been provided, at the expense of the transferor, with an
opinion of counsel in form and substance satisfactory to the requesting
General Partner(s) and from counsel satisfactory to the requesting General
Partner(s) to the effect that such transfer or assignment will not violate the
registration provisions of the Securities Act of 1933, as amended, or the
rules and regulations thereunder or the applicable state securities or "Blue
Sky" law or laws and the rules and regulations thereunder; and
(3) The assignor and assignee execute and acknowledge
such other instruments as any General Partner reasonably may deem necessary or
desirable to effect such admission, including the written acceptance and
adoption by the assignee of the provisions of this Agreement and the
assumption of any unperformed obligation of the assignor ( provided that such
assignor shall not thereby be released from any of its unperformed obligations
hereunder).
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B. All Partners will if required by the Act, no later than
thirty (30) days after the date of compliance with the provisions of this
Section 7.02., amend the Certificate to reflect the admission of any such
assignee as a substituted limited partner.
7.03. Expenses. Expenses of the Partnership or of any Partner (other
than the transferee) occasioned by transfers of interests held by Partners
shall be reimbursed to the Partnership or Partner, as the case may be, by the
transferring Partner.
7.04. Withdrawal of Partners.
A. Except for permitted transfers under Section 7.01, no
General Partner may voluntarily withdraw or retire from the Partnership
without the prior written consent of the other General Partner, such consent
to be given or withheld by the other General Partner in its sole discretion.
B. No Limited Partner may voluntarily withdraw or retire
from the Partnership except upon the assignment of its entire interest in the
Partnership (if and as permitted by this Article VII) or upon the surrender,
abandonment or other voiding of its interest pursuant to the next succeeding
sentence hereof. Any Limited Partner may at any time, by at least thirty (30)
days prior written notice delivered to all General Partners, renounce its
interest in all current and future profits, losses and distributions of the
Partnership, and abandon to the Partnership its capital contributions and its
interest in all Partner's Loans and Partner's Priority Loans made by it;
provided, however, that any such surrender, abandonment or other voiding shall
not in any case affect the withdrawing Partner's obligations hereunder.
7.05. Death, Incompetency, Dissolution or Bankruptcy of a Limited
Partner. Upon the death, legal incompetency, dissolution or bankruptcy of a
Limited Partner, its or his personal representative will have all the rights
of such deceased, incompetent, dissolved or bankrupt Limited Partner for the
purpose of settling or managing its estate, and such power as the deceased,
incompetent, dissolved or bankrupt Limited Partner possessed to constitute a
successor as an assignee of its interest in the Partnership and to join with
such assignee in making application to substitute such assignee as a
substituted limited partner.
7.06. Deadlock of the General Partners.
A. At any time after the date hereof, if the General
Partners become deadlocked on a material issue which, in the opinion of any
one of them is essential for the successful operation or prudent conduct of
the Partnership's business, or if in the opinion of any General Partner the
Managing General Partner has taken unauthorized action on behalf of the
Partnership or has failed to take action which is authorized hereby or which
the General Partners have authorized and has failed to correct such action or
inaction within fifteen (15) days after written notice from any General
Partner to the Managing General Partner specifying such action or inaction,
then in either case the provisions of this Section 7.06. shall apply and
either of the
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aggrieved General Partners (the "Declaring Partner(s)") shall be permitted to
pursue the rights provided for below.
B. For purposes of this Section 7.06., the following
definitions and other provisions shall apply:
(i) If the Declaring Partner is the Administrative
General Partner, then the "Offeror" shall be the Administrative General
Partner and the "Offeree" shall be the Managing General Partner and (so long
as the Limited Partner is Donald W. Pulver, an entity at least fifty-one
percent (51%) owned by him or a transferee from him which has not been
approved or which is not required to be approved by Administrative General
Partner) the Limited Partner;
(ii) If the Declaring Partner is the Managing General
Partner, then the "Offeror" shall be the Managing General Partner and (so long
as the Limited Partner is Donald W. Pulver, an entity at least fifty-one
percent (51%) owned by him or a transferee from him which has not been
approved or which is not required to be approved by Administrative General
Partner), the Limited Partner, and the "Offeree" shall be the Administrative
General Partner; and
(iii) An "Offer" or the "Offers" shall mean the offer(s)
to sell or purchase partnership interests pursuant to the provisions of this
Section 7.06.
C. In the event of a deadlock described in the foregoing
Section 7.06.A., the Declaring Partner shall have the right to deliver to the
other General Partner(s) a written demand that the requested action be taken
or that the deadlocked issue be resolved in favor of the Declaring Partner,
but if such other General Partner does not, within ninety (90) days following
the delivery of such demand, respond affirmatively to the demand and commence
and thereafter continue diligently to perform the action requested or the
resolution of the issue as requested, then the Declaring Partner shall have
the right to pursue the compulsory buy-sell provisions appearing below in
Section 7.06.D.
D. A Declaring Partner, at any time within thirty (30) days
following expiration of the ninety (90) day period established in Section
7.06.C. above if the other General Partner does not respond affirmatively to
the demand and commence and thereafter continue diligently to perform the
action requested, shall be permitted to institute the following compulsory
buy-sell provisions:
(i) The Offeror may make to the Offeree an Offer to sell
the entire interests in the Partnership of the Offeror, and to purchase the
entire interests in the Partnership of the Offeree. Except as expressly
provided in clause (ii) of this Section 7.06.D., no Offer shall be subject to
the provisions of this Section 7.06. unless such Offer is both an Offer to
sell the entire interests of the Offeror and an Offer to purchase the entire
interests of the Offeree, and such Offer must specify that the price of the
interests to be so transferred is payable by bank certified, cashier's or
treasurer's check. The selling price and the purchase price specified in such
Offer
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must be identical in amount for each percent of interest in the Partnership
and must be, except as provided for in the parenthetical below, proportionate
to the respective Participation Percentages of the Offeree (that is, the
selling price and the purchase price so specified must be identical as to each
other and for each percent of interest in the Partnership which is subject to
such Offer, except that such price shall be appropriately adjusted to reflect,
on a dollar-for-dollar basis the difference, if any, between (a) the
Additional Capital Balances and BOP Preference Capital of the respective
Offeror and Offeree plus (b) the accrued and unpaid Preferred Cumulative
Returns and BOP Preferred Cumulative Return of the respective Offeror and
Offeree, plus (c) the aggregate amount of principal and interest, if any,
owing to the respective Offeror and Offeree by reason of advances made
hereunder as Partners' Loans or Partners' Priority Loans). Such Offer shall be
irrevocable for a period of thirty (30) days, and the Offeree may, on or
before the thirtieth (30th) day after the date of such offer, accept either
the Offer to sell or the Offer to purchase (but not both), and upon acceptance
the Offeror shall be required to sell or to purchase, as the case may be. If
the Offeree fails within such thirty (30) day period to accept either of such
Offers, then the Offer shall automatically expire and be of no further force
or effect; provided, however, that the Offeror shall thereupon have the right,
on or before the fifteenth (15th) day after the expiration of such thirty (30)
day period, to purchase the interests of the Offeree, at the applicable price
specified in the original Offer, and if the Offeror exercises such right the
Offeree shall be required to sell its interests herein. If the Offeror fails
to exercise its right to buy within the time specified, either General Partner
may thereafter make a new Offer pursuant to this Section 7.06.
(ii) If the Offeror or Offeree, as the case may be,
exercises its rights hereunder to buy or sell, a closing thereunder shall be
held at the time and place and on the date specified by the purchaser by
written notice to the seller(s), which date shall in any case be on or prior
to the expiration of the forty-fifth (45th) day after the Offer to buy or sell
has been made. At such closing, upon payment of the purchase price required by
subsection D(i) hereof, the purchasing party shall have the right to designate
a substitute transferee.
7.07. Right of First Refusal.
A. Notwithstanding the consent of the Partners under
Sections 7.01. and 7.02. hereof or the absence of a need for consent under
Section 7.01(C) hereof, no Partner may transfer or assign its partnership
interest herein, or any part thereof, unless such interest shall first be
offered to the other Partners for a period of thirty (30) days at a price (the
"Refusal Right Purchase Price") equal to that offered to the selling Partner
pursuant to a bona fide offer arrived at upon arm's length dealing, the terms
of which and the identity of the offeror having been disclosed to all of the
Partners. If any Partner or Partners elect to exercise the right of first
refusal granted hereby, they collectively must accept all of the interest
being offered. If more than one Partner elects to accept all of the interest
being offered, such interest shall be allocated according to the ratio of the
respective Participation Percentages of the accepting Partners. If the
offering Partner has not received written acceptance of its offer within such
thirty (30) day period, it shall then be free, subject to the provisions of
this Article VII, to dispose of the interest offered to the other Partners on
the terms of the bona fide offer and to the offeror previously disclosed to the
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Partners. If the offering Partner fails to do so within one hundred twenty
(120) days, following expiration of such 30-day period, the first refusal
procedure established by this Section 7.07 shall be reinstated.
B. The Refusal Right Purchase Price payable hereunder, in
the event one or more Partners elects to exercise the right of first refusal
granted hereby, shall be payable in the manner and on the terms of the third
party offer, except that such Partner may elect to pay cash in the same amount
as and in lieu of any non-cash consideration.
C. The provisions of this Section 7.07 shall not apply to
(i) any transfer occurring by operation of law as a result of the incompetency
or incapacity of a Partner; or (ii) any transfer occurring by operation of law
or by bequest as a result of the death of a Partner; or (iii) any transfer
occurring by reason of the exercise of or a closing under the calls described
in Section 7.06. above; or (iv) any transfers permitted by Section 7.01(B);
but the provisions of this Section 7.07 shall in all cases be subject to the
prohibitions, consents and approvals and other conditions required by Sections
7.01. and 7.02. hereof.
D. Notwithstanding anything set forth in subsection A
hereof, in the event the selling Partner proposes to transfer or assign its
partnership interest pursuant to Section 7.01(C) hereof, the offering Partner
shall give the other Partners ninety (90) days prior written notice rather
than thirty (30) days provided above, and if the right of first refusal is
exercised, the exercising Partner shall have a period of two hundred seventy
(270) days within which to close the acquisition; provided, however, that in
the event of a Tax Staggered Transfer as required by Section 7.01(C), the
exercising Partner shall have such additional period of time as shall be
necessary to make such event a Tax Staggered Transfer.
7.08. Status of Interests Transferred. In any transfer, assignment or
conveyance of a general or limited partnership interest herein by a Partner to
any other Partner or other person, by the express terms of this Agreement or
by operation of law, subject to Article V hereof, the transferee or assignee
shall succeed to the same share of profits and losses of the Partnership and
the same Contribution Percentages, Participation Percentages, distribution
priorities and ownership rights as were incident to the interest so
transferred, assigned or conveyed.
7.09. Removal of the Managing General Partner.
A. Subject to the provisions of this Section 7.09, at any
time after the date hereof the Managing General Partner may be removed as a
General Partner of the Partnership upon the direction of the Administrative
General Partner if the Managing General Partner has:
(1) willfully, or as a result of its negligence, failed
in any year to distribute Net Cash Flow, Net Refinancing Proceeds or Net Sale
Proceeds as and to the extent required hereunder; or
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(2) willfully, or as a result of its negligence, failed
in any year to deliver the statements and reports required by Article VI
hereof; failed to carry out any of its duties or obligations under Article IV
hereof (including, without limitation, any failure to devote sufficient time
or attention to the management and other affairs of the Partnership or any
failure to curtail other activities or projects as provided in Section 4.01.
hereof); or otherwise violated in a material respect any other provision of
this Agreement or any provision of applicable law, including, without
limitation, if any of its representations or warranties set forth herein shall
have been wrong or incorrect when made; in each instance under this clause (2)
if such failure, violation or misstatement has a material adverse effect on
the Partnership or on any Partner; or
(3) transferred or attempted to transfer its partnership
interest in the Partnership or other interests in or assets of the Partnership
or withdrawn or retired or attempted to withdraw or retire as a General
Partner, other than in accordance with the provisions of this Agreement; or
(4) suffered the transfer of interests in Managing
General Partner or in its corporate general partner such that Donald W. Pulver
or an individual or entity who obtains an interest by the death or incapacity
of Donald W. Pulver shall no longer retain effective control over Managing
General Partner but only if any of the foregoing described grounds for removal
has not been completely and fully cured in its entirety, to the satisfaction
of the Administrative General Partner, within thirty (30) consecutive days
following the Managing General Partner's receipt of written notice specifying
such grounds.
B. Notice of intended removal (citing the failure to cure
the cause or causes for removal) (the "Removal Notice") shall be sent to the
Managing General Partner signed by or on behalf of the Administrative General
Partner. Within ten (10) consecutive days after such Removal Notice is
received by the Managing General Partner, the Managing General Partner shall
send written notice to the Administrative General Partner admitting or denying
the grounds for removal. If such grounds for removal are admitted, or if the
Managing General Partner fails timely to respond to the Removal Notice from
any General Partner required hereby, then the Managing General Partner shall
be removed as of a date which is one (1) day after the expiration of such ten
(10) day period. If the grounds for removal are denied, then the matter shall
be handled as follows:
At the election of any General Partner, the matter shall
be an "Arbitrable Dispute" and shall be subject to the process set forth in
Section 7.11 hereof, in which event the Managing General Partner shall retain
all rights, powers and duties hereunder as a General Partner, all authority in
respect of the Partnership and the conduct of its business until a final
determination of the matter has been rendered by the Arbitrator, as
hereinafter defined. If such determination is made to the effect that grounds
for removal exist, then (a) such determination, at the election of the
Managing General Partner exercised within sixty (60) days of the rendering
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thereof, shall not be binding on the Managing General Partner or the
Partnership, (b) the matter shall be litigated, at the election of the
Managing General Partner exercised within sixty (60) days of the rendering of
such determination, in any competent state or federal court in the
Commonwealth of Pennsylvania and in accordance with the rules of court then
obtaining, and (c) the Managing General Partner, on the date on which such
determination was made and thereafter during the period prior to the Removal
Date (the "Suspension Period") shall become divested of all powers and duties
hereunder as the Managing General Partner and all authority in respect of the
Partnership shall become vested in Administrative General Partner. If such
determination is made to the effect that no grounds for removal exist, then
(x) such determination, at the election of Administrative General Partner
exercised within sixty (60) days of the rendering thereof, shall not be
binding upon the Administrative General Partner or the Partnership, (y) the
Managing General Partner shall retain all rights, powers and duties hereunder
as a General Partner and all authority in respect of the Partnership and the
conduct of its business shall continue to be vested in the Managing General
Partner in accordance with the terms of this Agreement until such date, if
any, as a final, unappealable judicial decision is rendered to the effect that
grounds for removal exist (or if an appealable decision to that effect is
rendered, the date on which any period to appeal therefrom has expired without
an appeal therefrom having been taken) and (z) the matter shall be litigated,
at the election of the Administrative General Partner exercised within sixty
(60) days of the rendering of such determination, in any competent state or
federal court in the Commonwealth of Pennsylvania and in accordance with the
rules of court then obtaining.
C. The term "Removal Date," as used herein, shall mean the
date, if any, on which a decision (whether by the Arbitrator or a court of
competent jurisdiction) to the effect that grounds for removal exist becomes
final and unappealable. In addition to and not in limitation of any rights
under Section 7.06 hereof, at any time after the Removal Notice and until the
Removal Date, Administrative General Partner shall have the right to implement
the buy-sell procedures set forth in Section 7.06. hereof.
D. On the Removal Date, the Managing General Partner shall
thereupon become a Limited Partner pursuant to, and with the rights,
privileges and priorities described in, Section 4.03 hereof. The removed or
suspended Managing General Partner shall not be liable or responsible for any
actions taken or for any contracts or other obligations entered into by any
other General Partner (on behalf of the Partnership) during the Suspension
Period or on the Removal Date and thereafter.
E. Upon any removal of the Managing General Partner, as
promptly as practicable following the Removal Date, the Administrative General
Partner shall select a Successor Managing General Partner. Once selected, the
successor shall assume all of the duties, responsibilities and obligations,
and shall succeed to the rights and powers of, the Managing General Partner
hereunder. Any such successor Managing General Partner may, at the election
and direction of Administrative General Partner, be Administrative General
Partner or be any person or entity affiliated with or otherwise related to
Administrative General Partner in any
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capacity; provided, however, that the manager of the Project may be any
unaffiliated or unrelated person or entity.
F. If, following the divesting of Managing General Partner
of its powers and duties as set forth in subsection B and C hereof, a final
and unappealable determination is made that no grounds for removal exist,
Managing General Partner shall be revested in all its powers and duties as
Managing General Partner immediately upon the date such determination becomes
final and unappealable.
7.10. Deadlock on Sale.
A. If at any time after the date hereof the Managing General
Partner receives a bona fide written offer (the "Purchase Offer") to purchase
all or any portion of the Project, the Managing General Partner shall have the
right, but not the obligation, to transmit the same to the other Partners. If,
at any time after the date which is the fourth (4th) anniversary of the date
hereof, any General Partner receives a bona fide written offer to purchase all
or any portion of the Project, the General Partner receiving such offer shall
transmit the same to the other Partners. Each General Partner shall
communicate whether it desires to accept or reject any such transmitted
Purchase Offer to the other Partners within ten (10) days of its receipt of
the Purchase Offer; and, in the absence of communication within such ten-day
period, any non-communicating Partner shall be deemed to have communicated its
desire to reject the Purchase Offer. If any General Partner wishes to accept
the Purchase Offer, then the General Partner who desires to reject the
Purchase Offer shall have the option, but shall be required, either (i) to
accept the Purchase Offer, or (ii) to purchase the Partnership interests of
the General Partner who desires to accept the Purchase Offer, and, if the
Managing General Partner desires to accept such Purchase Offer, Administrative
Partner's offer must also be to purchase the Partnership interest of Limited
Partner so long as the Limited Partner is Donald W. Pulver, an entity at least
51% owned by him or a transferee from him which has not been approved or which
is not required to be approved by Administrative General Partner. Any such
purchase by Administrative General Partner or Managing General Partner shall
be on the terms and conditions set forth in this Section 7.10. For purposes of
this Section 7.10., the following definitions and other provisions shall
apply: (1) the Partner who wishes to accept the Purchase Offer (together with,
if such Partner is Managing General Partner, Limited Partner) shall be the
"Accepting Partners", and (2) the "Nonaccepting Partner" shall be the General
Partner who wishes to reject the Purchase Offer.
B. The terms and conditions of the option provided for
herein shall be as follows: (i) the option period shall commence on the date
the Nonaccepting Partner notifies the Accepting Partners that it does not wish
to accept the Purchase Offer (or on the date the Nonaccepting Partner is
deemed to have rejected the Purchase Offer), and the option period shall
expire ten (10) days after such commencement date; (ii) the purchase price
(the "Sale Purchase Price") for the partnership interests of the Accepting
Partners shall, for purposes of computing such Sale Purchase Price, be the
total amount that would be distributed in cash to the Accepting Partners in
accordance with Section 5.02 hereof if the Partnership sold the Project
pursuant to the
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Purchase Offer in an all cash transaction; (iii) at the time of its or their
exercise of the option granted herein, the Nonaccepting Partner shall deliver
to the Accepting Partners its bank certified, treasurer's or cashier's check
in amount equal to ten percent (10%) of the Sale Purchase Price (the
"Deposit"), which Deposit shall be forfeited to the Accepting Partners if a
closing hereunder shall not timely occur (except for non-occurrence by reason
of a default by the Accepting Partners in their obligation so to close); (iv)
a closing of the sale by the Accepting Partners to the Nonaccepting Partner
shall be held within eighty (80) days of the Nonaccepting Partner's notice to
the Accepting Partners of the Nonaccepting Partner's exercise of its option to
purchase hereunder; (v) at the closing, the partnership interests of the
Accepting Partners shall be assigned, transferred and conveyed to the
Nonaccepting Partner, or its nominee(s), free and clear of all liens, charges,
security interests and other encumbrances; and (vi) at the closing, the
Nonaccepting Partner, or its nominee(s), shall deliver to the Accepting
Partners cash or a bank certified, treasurers or cashier's check in the
aggregate amount of the Sale Purchase Price less the Deposit.
C. If the Nonaccepting Partner shall not exercise the option
granted it by the foregoing provisions of this Section 7.10. by written notice
(accompanied by the Deposit) to the Accepting Partners within the option
period provided for hereby, it then shall be obligated to accept the Purchase
Offer and conclude the sale and purchase of the Project on the terms and
conditions provided for thereby; but if such Purchase Offer (and any agreement
of sale executed in connection therewith) is not consummated in accordance
with its terms, then the deadlock procedure established by this Section 7.10.
shall be reinstated.
7.11 Arbitrable Disputes.
A. (i) All disputes and claims under this Agreement which
are designated as "Arbitrable Disputes" shall follow the dispute resolution
mechanism set forth in this Section.
(ii) Where no procedure for invoking this mechanism is
set forth in the section in which a particular dispute is designated as an
Arbitrable Dispute, such procedure shall be invoked as follows: any party to
the dispute (hereinafter, an "Arbitration Party") may invoke the process set
forth in this Section 7.11 by written notice (each, an "Arbitration Notice")
to the other Arbitration Party, which Arbitration Notice shall set forth in
reasonable detail the nature of the Arbitrable Dispute, including, without
limitation, the monetary sums which are in dispute. Within ten (10) days from
the date of the Arbitration Notice, the other Arbitration Party shall set
forth a summary of its version of the dispute ("Answer") in a notice to the
Arbitration Party sending the Arbitration Notice.
(iii) The Arbitration Parties agree to first attempt to
settle any Arbitrable Dispute by mediation ("Mediation") administered in
accordance with the Commercial Mediation Rules of the American Arbitration
Association, prior to any Arbitration pursuant to Section 7.11(B).
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(iv) The Mediation shall take place on a date or dates
(each, a "Mediation Date") mutually agreed to by the Arbitration Parties,
which date(s), unless the Arbitration Parties otherwise agree in writing,
shall be no later than thirty (30) days after the date of the Answer. The
Mediation shall take place at the office of the Managing General Partner or
such other location in the Philadelphia Metropolitan Area as the Arbitration
Parties shall mutually agree.
(v) The Mediation shall be conducted by a mediator
selected by the mutual agreement of the Arbitration Parties (provided, if the
Arbitration Parties are unable to agree as to a mediator, the mediator may be
selected by a third party meeting the qualifications set forth in Section
7.11(B)(ii) for a third party selecting an arbitrator in the event of a
dispute) meeting the qualifications for an Arbitrator (defined later) as set
forth in Section 7.11(B)(ii) below.
B. (i) In the event the Arbitrable Dispute is not finally
resolved by mutual written agreement of the Arbitration Parties within ten
(10) days from the Mediation Date ("Arbitration Commencement Date"), the
Arbitrable Dispute shall be resolved by Arbitration pursuant to the provisions
of this Section 7.11(B).
(ii) Within ten (10) days after the Arbitration
Commencement Date, if the Arbitration Parties have not agreed upon an
Arbitrator, the General Partners shall each (a) appoint one lawyer actively
engaged in the licensed and full-time practice of law (including experience in
resolving partnership disputes) in the Philadelphia Metropolitan area for a
continuous period immediately preceding the Arbitration Commencement Date of
not less than ten (10) years, but who has at no time ever represented or acted
on behalf of any of the Arbitration Parties, and (b) deliver written notice of
the identity of such lawyer to the other Arbitration Party. In the event that
any Arbitration Party fails to so act, such lawyer shall be appointed pursuant
to the same procedure that is followed when agreement cannot be reached as to
the Arbitrator (as set forth below). Within ten (10) days after such
appointment and notice, such lawyers shall appoint a third lawyer of the same
qualification and background and shall deliver written notice of the identity
of such lawyer and notice of the acceptance by such lawyer of such appointment
to each of the Arbitration Parties. Such third lawyer shall be deemed to be
the "Arbitrator" as used herein. In the event that agreement cannot be reached
on the appointment of an Arbitrator within such period, such appointment and
notification shall be made as quickly as possible by any court of competent
jurisdiction, by any licensing authority, agency or organization having
jurisdiction over such lawyers, by any professional association of lawyers in
existence for not less than ten (10) years at the time of such dispute or
disagreement and the geographical membership boundaries of which extend to the
Philadelphia metropolitan area, or by any arbitration association or
organization in existence for not less than ten (10) years at the time of such
dispute or disagreement and the geographical boundaries of which extend to the
Philadelphia Metropolitan area, as determined by the Arbitration Party giving
such Notice of Dispute and simultaneously confirmed in writing delivered by
such Arbitration Party to the other Arbitration Party. Any such court,
authority, agency, association or organization shall be entitled
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either to directly select such third lawyer or to designate in writing,
delivered to each of the Arbitration Parties, an individual who shall do so.
In the event of any subsequent resignation or inability to perform by the
Arbitrator, the Arbitrator shall be replaced in accordance with the provisions
of this Section 7.11(B)(ii) as if such replacement was an initial appointment
to be made under this Section 7.11(B)(ii) within the time constraints set
forth in this Section 7.11(B)(ii), measured from the date of notice of such
resignation or inability to the person or persons required to make such
appointment, with all the attendant consequences of failure to act timely if
such appointed person is an Arbitration Party hereto.
(iii) Consistent with the provisions of this Section 7.11,
the Arbitrator shall utilize his utmost skill and shall apply himself
diligently so as to hear and decide the outcome and resolution of any
Arbitrable Dispute submitted to the Arbitrator as promptly as possible, but in
any event on or before the expiration of ninety (90) days after the
appointment of the Arbitrator. The Arbitrator shall not have any liability
whatsoever for any acts or omissions performed or omitted in good faith
pursuant to the provisions of this Section 7.11(B).
(iv) The Arbitrator shall, having in mind the ninety (90)
day time limitation set forth above for resolving disputes, (a) enforce and
interpret the rights and obligations set forth in this Agreement with respect
to the Arbitrable Dispute to the extent not prohibited by law, (b) fix and
establish any and all rules as it shall consider appropriate, in its
discretion, to govern the proceedings before it, including any and all rules
of procedure and/or evidence, and (c) make and issue any and all orders, final
or otherwise, and any and all awards, as a court of competent jurisdiction
sitting at law or in equity could make and issue, and as it shall consider
appropriate in its sole and absolute discretion, including the awarding of
monetary damages (but shall not award punitive damages except in situations
involving knowing fraud), the awarding of reasonable attorneys' fees and costs
to the prevailing Arbitration Party as determined by the Arbitrator, in his
discretion, and the issuance of injunctive relief.
(v) The Arbitration Parties shall allow and participate in
discovery in accordance with the Federal Rules of Civil Procedure for a period
of forty-five (45) days after the Arbitration Commencement Date. Unresolved
discovery disputes may be brought to the attention of, and resolved by, the
Arbitrator.
(vi) The Arbitrator shall be compensated for any and all
services rendered under this Section 7.11(B) at a rate of compensation equal
to the then-prevailing rate for arbitrators of similar experience and
qualifications as the Arbitrator, plus reimbursement for any and all expenses
incurred in connection with the rendering of such services, payable in full
promptly upon conclusion of the proceedings before the Arbitrator. Such
compensation and reimbursement shall be borne by the nonprevailing Arbitration
Party as determined by the Arbitrator in its sole and absolute discretion.
7.12 Right of Contribution in Favor of Managing General Partner. At any
time during the term of this Partnership Agreement after the third anniversary
hereof and subject to
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compliance with federal and state securities laws applicable to private
placements of securities, the Managing General Partner and Limited Partner, or
any successor to their respective interests herein, shall have the right, in
their sole discretion, to contribute all of their respective interests in and
to the Partnership to Brandywine Operating Partnership, L.P., and in exchange
to receive Equivalent Units, as hereinafter defined, of Brandywine Operating
Partnership, L.P. (such contribution right, hereinafter, the "Contribution
Election"). The Contribution Election shall be exercised in accordance with
the following procedure:
A. At any time after the date which is the third anniversary
hereof, and from time to time but no more than once in any Fiscal Year,
Managing General Partner shall have the right, by notice to Administrative
Partner, to request that the Fair Market Value of the Project be determined in
accordance with Section 7.12(F) hereof.
B. Managing General Partner and Limited Partner shall
jointly notify Administrative General Partner of their exercise of the
Contribution Election not less than thirty (30) days prior to the Closing
Date, as hereinafter defined (such notice hereinafter being referred to as the
"Election Notice"), but in any event leaving such time as is necessary, if
any, to determine the Fair Market Value of the Project as set forth herein. If
the Fair Market Value has not yet been determined and no request by Managing
General Partner in accordance with Section 7.12(A) has been made, immediately
upon the giving of the Election Notice, the parties shall determine the Fair
Market Value of the Project in accordance with Section 7.12(F) hereof.
C. On the Closing Date, as hereinafter defined, Managing
General Partner and Limited Partner shall deliver to Administrative General
Partner or its designee an assignment, without recourse, but with a
representation that the partnership interest is free of liens except those
disclosed to and consented to by Administrative General Partner of all of
Managing General Partner's and Limited Partner's right, title and interest in
and to the Partnership, including, but not limited to, all of Managing General
Partner's and Limited Partner's interest as partners in the Partnership, and
Administrative General Partner shall deliver to Managing General Partner and
Limited Partner or their respective designees an assignment, without recourse,
of the Equivalent Units in Brandywine Operating Partnership, L.P., convertible
into common shares of beneficial interest of Brandywine Realty Trust as
aforesaid. The Partners agree that they shall execute such other instruments
as shall be necessary to effect such assignments as any of them may reasonably
request.
D. In no event shall Brandywine Operating Partnership, L.P.
be required to issue upon contribution by the Managing General Partner and the
Limited Partner of their respective interests in the Partnership a number of
Equivalent Units which are convertible into a number of common shares of
beneficial interest of Brandywine Realty Trust in excess of the Stock Exchange
Limit. The term "Stock Exchange Limit" means the maximum number of common
shares of beneficial interest which Brandywine Realty Trust would be permitted
to issue upon conversion of Equivalent Units without obtaining prior
shareholder approval under New York Stock Exchange Rules (or the rules of any
other stock exchange on which the common shares of
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beneficial interest of Brandywine Realty Trust are then listed). In addition,
in no event shall the Managing General Partner and Limited Partner (or any
successor to their respective interests) have the right to contribute their
respective interests in the Partnership to Brandywine Operating Partnership,
L.P. unless the Fair Market Value is a positive number.
E. The term "Closing Date," as used above, shall mean the
date mutually agreed upon by the Administrative General Partner and the
Managing General Partner or, if no such date is agreed upon, upon the date
which is thirty (30) days following the later of the date the Election Notice
is deemed delivered or the date upon which the Fair Market Value has been
determined as set forth in subsection 7.12(F) hereof. Notwithstanding anything
to the contrary contained herein, at any time prior to the Closing Date,
Managing General Partner may withdraw the Contribution Election provided that
Managing General Partner pays all fees and expenses of the appraiser or
appraisers who perform(s) the appraisal identified in subsection (F) hereof.
F. "Fair Market Value," as used in this Section 7.12, shall
mean, as of any date, the amount a willing buyer would pay to a willing
seller, as of such date, for the Project in an arms length transaction in
which neither party is compelled to buy or sell, as the case may be. If
Managing General Partner and Administrative General Partner cannot agree on
the Fair Market Value, or if either Managing General Partner or Administrative
General Partner elects by written notice to the other within ten (10) days
after the date the Contribution Notice is delivered in accordance with Article
11 hereof, the Fair Market Value shall be determined by an appraisal of the
Project conducted by independent MAI appraisers or members of the American
Society of Real Estate Appraisers in accordance with the following appraisal
procedures:
(1) In determining Fair Market Value, it is understood
and agreed by Managing General Partner and Administrative General Partner that
the Project shall be appraised free and clear of all indebtedness, Partners'
Loans and Partners' Priority Loans and excluding other liabilities of the
Partnership and that the appraiser or appraisers may, in connection with its
or their appraisal, take into account such factors affecting Fair Market
Value, including, without limitation, the present value of any benefit of the
indebtedness secured by the Subordinate Debt Documents in relation to the
then-current market-rate indebtedness (net of (a) any principal, if any,
payable upon an acceleration of such indebtedness, if any, by reason of the
transfer but otherwise assuming that the Subordinate Debt Documents would be
repaid at maturity and otherwise according to the terms and (b) the present
value of any future participation payments to the holders of the Subordinate
Debt Documents based upon the then-current cash flow and then-current value of
the Project, assuming that the Project will be refinanced at the end of the
then-current term of the first mortgage but not sold prior to maturity of the
Subordinate Debt Documents), the identity and creditworthiness of the tenants
of the Project, the terms and expiration dates of such tenants' leases,
prevailing rental rate and rental concession and tenant build-out terms,
prevailing leasing commission rates on lease renewals and new leases, general
market conditions in the Conshohocken/West Conshohocken submarket, prevailing
capitalization and discount rates, and comparable sales, as well as the
various assets and liabilities of the
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Partnership (excluding the liabilities to be subtracted from Fair Market Value
under subsection H(1)) hereof as such appraiser or appraisers deem necessary
or appropriate; and
(2) Within ten (10) days after Managing General Partner's
or Administrative General Partner's election by written notice to the other to
determine Fair Market Value of the Project by appraisal, Managing General
Partner and Administrative General Partner each shall select one appraiser who
satisfies the requirements for appraisers referenced above and notify the
other of the appraiser within such 10-day time period, the appraiser selected
by it. If Managing General Partner or Administrative General Partner fails to
select such an appraiser within such 10-day time period, the appraiser
selected by the other shall act alone. The appraiser or appraisers so selected
shall appraise the Fair Market Value of the Project within thirty (30) days
after their selection. If one appraiser acts, the Fair Market Value of the
Project shall be the amount determined by such appraiser. If two appraisers
act, the Fair Market Value of the Project shall be the average of the amounts
so determined, so long as the higher appraisal exceeds the lower appraisal by
ten percent (10%) of the amount of the lower appraisal or less. If, however,
the higher appraisal exceeds the lower appraisal by in excess of such ten
percent (10%), the two appraisers shall appoint a third appraiser who
satisfies the requirements for appraisers referenced above within fifteen (15)
days. If the two appraisers fail to do so, then either Managing General
Partner or Administrative General Partner may request that the American
Arbitration Association or any successor organization thereto appoint a third
appraiser who satisfies the requirements for appraisers referenced above. If a
third appraiser has not been appointed by the American Arbitration Association
or its successor within fifteen (15) days after Managing General Partner's or
Administrative General Partner's request for it to do so, then either Managing
General Partner or Administrative General Partner may apply to any court of
competent jurisdiction for the appointment of such third appraiser. Such third
appraiser, whether appointed by the original two appraisers, the American
Arbitration Association or its successor, or a court of competent
jurisdiction, shall appraise the Fair Market Value of the Project within
thirty (30) days after his or her appointment. If the third appraisal exceeds
the amount of the first two appraisals, the Fair Market Value of the Project
shall be the higher of the first two appraisals; if the third appraisal is
less than the lower of the first two appraisals, the Fair Market Value of the
Project shall be the lower of the first two appraisals; and, in all other
cases, the Fair Market Value of the Project shall be equal to the amount of
the third appraisal. The provisions of this Section 7.12(F) for determination
of the Fair Market Value of the Project shall be specifically enforceable to
the extent such remedy is available under applicable law and the determination
of such Fair Market Value hereunder shall be final and binding upon Managing
General Partner, Administrative General Partner and Brandywine Operating
Partnership for a one-year period. Each of Managing General Partner and
Administrative General Partner shall pay the fees and expenses of the
appraiser selected by it. The fees and expenses of the third appraiser, if
any, shall be paid one-half (1/2) each by Managing General Partner and
Administrative General Partner. If only one appraiser is used, the fees and
expenses of such appraiser shall be paid one-half (1/2) each by Managing
General Partner and Administrative General Partner.
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G. The term "Equivalent Units" shall mean the number of
limited partnership units of Brandywine Operating Partnership which are
convertible, at the time of issuance, into that number of common shares of
beneficial interest of Brandywine Realty Trust having an aggregate Market
Value (as defined below) equal to the Contributing Partners' Proportionate
Share of Fair Market Value of the Project as of the date which is three (3)
days prior to the scheduled Closing Date. If there is more than one class of
interest in Brandywine Operating Partnership, the class to be issued shall be
the class which meets the requirements of the foregoing sentence and which is
designated by Brandywine Operating Partnership.
H. The term "Contributing Partners' Share of Fair Market
Value" is determined, with respect to each of the Managing General Partner and
Limited Partner, by (1) subtracting from the Fair Market Value of the Project
(a) all principal outstanding and accrued and unpaid interest as of the
Closing Date on the indebtedness of the Partnership (other than additional or
contingent interest payable, if any, on the indebtedness evidenced by the
Subordinate Debt Documents by reason of the transfer and considered by the
appraisers in determining Fair Market Value), but including principal and
interest outstanding as of the Closing Date on the Partners' Loans and
Partners' Priority Loans; and (b) due and unpaid Preferred Cumulative Returns
and BOP Preferred Cumulative Return, and the Additional Capital Balances of
all Partners; (2) multiplying the resulting number by the respective
Participation Percentages of the Managing General Partner and Limited Partner,
respectively; and (3) adding to the result obtained in item (2) the sum of the
following: (a) outstanding principal and interest on any Partners' Loans and
Partners' Priority Loans made by each of such Partners, respectively (b) the
Preferred Cumulative Returns due each of such partners, respectively, and (c)
the Additional Capital Balances of each of such Partners, respectively.
I. The term "Market Value" shall mean, as of a given date,
the average of the Closing Price (as defined below) of the common shares of
beneficial interest of Brandywine Realty Trust for the twenty (20) consecutive
trading days ending on such date. The term "Closing Price" on any date shall
mean the last sale price of the common shares of beneficial interest, regular
way, or, in case no such sale takes place on such date, the average of the
closing bid and ask prices of the common shares of beneficial interest,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to which such securities are listed
or admitted to trading on the New York Stock Exchange, or such other national
securities exchange or the NASDAQ Stock Market on which the common shares of
beneficial interest are then listed or admitted to trading.
J. The right of contributions set forth in this Section 7.12
is subject to the following: (1) the filing of an Additional Listing
Application with the New York Stock Exchange and approval of such Application
by the New York Stock Exchange. Administrative General Partner shall use its
best efforts to file such Additional Listing Application and obtain the
approval thereof prior to the third anniversary of the date of this Agreement;
and (2) confirmation with the New York Stock Exchange that no shareholder
approval is required for the granting of the rights
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set forth herein. Administrative General Partner will use its best efforts to
obtain confirmation that no such shareholder approval is required.
ARTICLE VIII
ADDITIONAL LIMITED PARTNERS
8.01. Additional Limited Partners and Their Contributions.
A. Additional limited partners may be admitted to the
Partnership only upon the written consent of all General Partners.
B. Each such additional limited partner will make such
contribution to the capital of the Partnership and will receive by reason of
his or its contribution such percentage of the income, gains, profits, credits
and other rights of the Partnership as will be set forth in the instrument
evidencing the written consent thereto by all of the General Partners.
ARTICLE IX
INSURANCE
9.01. Coverage. The Managing General Partner shall, during all times
while the Partnership is actively engaged in the operation of the Project, or
in any development or construction operations or other similar activities,
cause the Partnership to carry at the expense of the Partnership, and require
all of its contractors and subcontractors to carry, insurance in amounts, with
deductibles and in companies satisfactory to both General Partners. The
General Partners shall evaluate and decide from time to time as necessary
respecting the coverages then in effect or which should be in effect, and may
add, eliminate, expand or reduce any of the same. Without limiting the
generality of the foregoing, the Managing General Partner shall maintain on
behalf of the Partnership at least the following minimum coverages, unless
otherwise agreed to in writing by all the General Partners:
A. Insurance which shall comply with the Workers'
Compensation and employer's liability laws of all states in which the
Partnership shall have employees;
B. Comprehensive general liability insurance covering all
operations of the Partnership, having a combined single limit of not less than
$1,000,000 per occurrence for bodily injury (including death) and property
damage;
C. Automobile liability insurance covering all owned,
non-owned and hired vehicles used in the operations of the Partnership, having
limits for bodily injury (including death)
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not less than $2,000,000 per occurrence and limits for property damage not less
than $1,000,000 per occurrence;
D. Umbrella liability insurance, concurrent with the
coverages named in Sections 9.0l.A., 9.0l.B. and 9.0l.C. above, in such
amount, if any, as any first mortgagee of the Project shall require or such
other amount as Managing General Partner shall deem prudent;
E. During construction activities at the Project, builders
all-risk extended coverage insurance (such to be maintained in an appropriate
amount until replaced by the coverage described in Section 9.0l.F below);
F. Fire, extended coverage, vandalism and malicious mischief
insurance in an amount based upon the replacement value of the Project
(excluding roads, foundations, parking areas, paths, walkways and like
improvements), including coverage for loss of contents and further coverage
for loss of rentals;
G. Title insurance with respect to the Land, Project, and
all other real estate of the Partnership; and
H. Boiler and machinery insurance, including coverage for
loss of rentals.
9.02. Certificates; Notices.
A. The Managing General Partner shall furnish to the General
Partners duplicate copies of policies and/or certificates of insurance
certifying to the insurance then in effect (i) on or before the execution of
this Agreement, (ii) upon the renewal or replacement of existing coverage or
the obtaining of additional coverage, and (iii) at any other time upon the
request of any General Partner on ten (10) days prior written notice.
B. Each insurance policy of the Partnership shall contain a
provision requiring the insurer to notify the Partnership, in writing and at
least thirty (30) days in advance, of any material change in the policy and of
any notice of cancellation; and upon its receipt of any such notice the
Managing General Partner shall promptly forward a copy of the same to each
General Partner.
9.03. Concerning Liability Insurance. With respect to all liability
policies of the Partnership, the Managing General Partner shall obtain such
liability policies or endorsements thereto naming not only the Partnership as
insured, but also naming all Partners and the manager or managing agent of the
Project as additional insureds.
9.04. Miscellaneous. The Managing General Partner, on behalf of the
Partnership, shall use its best efforts and take such steps as are within its
control to (i) secure an endorsement or endorsements on all of the insurance
policies referred to herein to the effect that all insurance
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coverage of any Partner, carried by such Partner in its individual capacity,
will be considered excess coverage, (ii) require all of the Partnership's
architects, engineers and other design professionals to maintain errors and
omissions coverage, (iii) require all of the Partnership's contractors and
subcontractors to comply fully with the Occupational, Safety and Health Act of
1970, as amended from time to time, and (iv) require all of the Partnership's
contractors to indemnify the Partnership and save it harmless and to submit
evidence of contractual liability insurance in amounts sufficient, in its
reasonable opinion, to secure such indemnity; all with the understanding,
nevertheless, that the Managing General Partner shall be obligated to secure
and obtain all or any portion of the foregoing to the extent the same are, in
the Managing General Partner's judgment, available at reasonable cost.
ARTICLE X
DISSOLUTION AND TERMINATION
10.01. Dissolution.
A. The Partnership will be dissolved:
(i) upon the death, retirement, withdrawal, legal
incompetency, removal, or bankruptcy of an individual General Partner or the
retirement, bankruptcy, withdrawal, removal or dissolution of a corporate or
partnership General Partner, unless (a) all remaining General Partners (if any
remain) unanimously elect to continue the business of the Partnership, or (b)
if no General Partner remains, the Limited Partners unanimously consent to the
continuation of the business of the Partnership and unanimously select a
successor general partner; or
(ii) upon the affirmative vote or written consent of all
of the General Partners; or
(iii) upon the sale of the Project and all of the Land,
and the repayment and satisfaction in full of any financing undertaken by the
Partnership in respect thereof; or
(iv) at 12:00 midnight on July 1, 2050; provided,
however, that the Partnership shall not terminate until its affairs have been
wound up and its assets distributed as provided herein.
B. If the business of the Partnership is continued pursuant
to Section 10.01.A.(i) above, (i) the Partnership will continue until the end
of the term for which it is formed (as set forth in Section 10.0l.A. above),
or until the subsequent death, legal incompetency, removal, bankruptcy,
retirement, withdrawal or dissolution of a remaining or successor general
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partner, in which event the election to continue, as above set forth, will
again be effective; and (ii) in any such case the incompetent, removed,
retired, withdrawn or bankrupt General Partner (or his or its legal
representative), or the successor in interest of a deceased or dissolved
General Partner, will become a Limited Partner with the same share of profits
and losses of the Partnership and the same Participation Percentage and
distribution priorities as before such event and, except as expressly provided
elsewhere herein, will have all the rights of a Limited Partner.
C. As used in Sections 10.0l.A. and 10.0l.B. above, the term
"bankruptcy" shall mean (i) the commencement by a General Partner of a
voluntary case under any Chapter of the Bankruptcy Code (Title 11 of the
United States Code), as now or hereafter in effect, or the taking by a General
Partner of any equivalent or similar action by the filing of a petition or
otherwise under any other federal or state law in effect at the time relating
to bankruptcy or insolvency, (ii) the filing of a petition against a General
Partner under any Chapter of the Bankruptcy Code (Title 11 of the United
States Code), as now or hereafter in effect, or the filing of a petition
seeking any equivalent or similar relief against a General Partner under any
other federal or state law in effect at the time relating to bankruptcy or
insolvency, and in either case the failure by such General Partner to secure
the discharge of any such petition within sixty (60) consecutive days from the
date of filing, (iii) the making by a General Partner of a general assignment
for the benefit of his, its or any of their creditors, (iv) the appointment of
a receiver, trustee, custodian or similar officer for a General Partner or for
the property of a General Partner and the failure by such General Partner to
secure the discharge of such receiver, trustee, custodian or similar officer
within sixty (60) consecutive days from the date of appointment,.or (v) the
admission in writing by a General Partner of any inability to pay debts
generally as they become due.
10.02. Appointment of Liquidating Partner.
A. Upon the dissolution of the Partnership, if the
Partnership's business is not continued pursuant to Section 10.01. hereof, the
Managing General Partner (provided it then is a General Partner hereof and is
not in breach or default of any of its obligations under this Agreement) shall
act as Liquidating Partner on the terms hereinafter set forth; or if it no
longer is a General Partner hereof or is in breach or default of any of its
obligations under this Agreement, then Administrative General Partner (or its
successors or assigns) shall select a Partner (the "Liquidating Partner") to
wind up the affairs of the Partnership and distribute its assets. Another
Partner shall be selected (in the same manner and for the same purpose) to
succeed the Partner originally selected or any subsequently selected successor
whenever the Partner originally selected or any such subsequently selected
successor, as the case may be, fails for any reason to carry out such purpose.
The Partner so selected and acting hereunder from time to time may be any
General Partner or any other individual, corporation, or general or limited
partnership, shall be compensated for his or its services hereunder (as and to
the extent authorized by Administrative General Partner, but no compensation
shall be payable if the Liquidating Partner is a Partner or is affiliated,
directly or indirectly, with a Partner), and shall proceed diligently to wind
up the affairs of the Partnership and distribute its assets in the manner
hereinafter provided.
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B. No Partner (other than the Managing General Partner)
shall be required to accept appointment as Liquidating Partner. If no Partner
is willing to accept such appointment, the General Partners shall select a
third person to act in that capacity, and the person so selected shall for all
purposes of this Agreement have the rights, powers and obligations of
Liquidating Partner.
10.03. Distributions and Other Matters. Promptly upon the dissolution
of the Partnership, if the Partnership's business is not continued pursuant to
Section 10.01. hereof, the Partners (or their legal representatives, heirs,
successors, or assigns) will cause the cancellation of the Certificate, and
the Liquidating Partner will liquidate the assets of the Partnership and apply
and distribute the proceeds of such liquidation in the following order of
priority to the extent available:
A. To payment of secured debts and liabilities of the
Partnership (other than Partner Loans or Partners Priority Loans) in the order
of priority provided by law; provided that the Liquidating Partner shall first
pay, to the extent permitted by law, liabilities with respect to which any
Partner is or may be personally liable;
B. To payment of unsecured debts and liabilities of the
Partnership (other than Partner Loans or Partners' Priority Loans) in the
order of priority provided by law; provided that the Liquidating Partner shall
first pay, to the extent permitted by law, liabilities with respect to which
any Partner is or may be personally liable;
C. To payment of the expenses of liquidation of the
Partnership in the order of priority provided by law; provided that the
Liquidating Partner shall first pay, to the extent permitted by law, expenses
with respect to which any Partner is or may be personally liable;
D. To the setting up of such reserves as the Liquidating
Partner may deem reasonably necessary for any contingent or unforeseen
liabilities or obligations of the Partnership arising out of or in connection
with the Partnership business; provided that any such reserve shall be held by
the Liquidating Partner for the purposes of disbursing such reserves in
payment of any of the aforementioned contingencies and, at the expiration of
such period as the Liquidating Partner shall deem advisable (but in no case to
exceed eighteen (18) months from the date of dissolution unless an extension
of time is consented to by the General Partners), to distribute the balance
thereafter remaining in the manner hereinafter provided; and
E. To the Partners in the order set forth in Section 5.02,
above.
10.04. Distributions of Property. No Partner may demand or receive
property other than cash in return for its contributions, loans or advances or
upon dissolution as provided herein, except upon the written approval of both
General Partners.
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10.05. Actions of the Liquidating Partner; Statements of Account.
A. During the period of liquidation (which will be such
reasonable time as may be required for the orderly completion of liquidation
and distribution as set forth above), the Liquidating Partner, as trustee for
the benefit of all Partners as tenants-in-common, shall take any and all
action necessary or appropriate to complete such liquidation and distribution
as provided in this Article, having for such purpose all of the powers
enumerated in Article IV of this Agreement necessary or appropriate to
accomplish the same.
B. The Liquidating Partner will prepare a final statement of
the accounts of the Partnership as of the date of termination, and, as
promptly as possible thereafter, a copy thereof will be furnished to each
Partner. Such statement shall set forth the actual or contemplated application
and distribution of the assets of the Partnership. Upon completion of
distribution as required hereby, a further statement for the period of
liquidation will be so prepared by the Liquidating Partner and furnished to
each Partner.
ARTICLE XI
NOTICES AND COMMUNICATIONS
11.01. Notices. All notices, demands, requests, calls and other
communications required by or permitted under this Agreement shall be in
writing (whether or not a writing is expressly required hereby), and shall be
directed as follows:
A. If to the Managing General Partner:
Two Oliver Tower Associates
c/o Oliver Tyrone Pulver Corporation
One Tower Bridge
100 West Front Street
West Conshohocken, PA 19428
B. If to Administrative General Partner:
c/o Brandywine Realty Trust
Newtown Corporate Campus
16 Campus Boulevard, Suite 150
Newtown Square, PA 19073
Attn: Anthony A. Nichols, Chairman
Gerard H. Sweeney, President and Chief Executive
Officer
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C. If to Limited Partner:
Mr. Donald W. Pulver
c/o Oliver Tyrone Pulver Corporation
One Tower Bridge
100 West Front Street
West Conshohocken, PA 19428
D. If to the Partnership, in care of each General Partner at
its respective address stated above.
E. Any notice, demand, request, call or other communication
required or permitted to be given or made under this Agreement will be deemed
given or made (i) when delivered by hand delivery at its address set forth
above, or (ii) three business days following its deposit in the U.S. Mail,
addressed to such address, postage prepaid, registered or certified, return
receipt requested (with a copy by regular U.S. mail, first class, postage
prepaid), or (iii) on the next business day following its deposit with Federal
Express or another nationally recognized express delivery service, addressed
to such address (with a copy by regular U.S. mail, first class, postage
prepaid).
11.02. Change of Address. Any Partner may specify a different address
by sending to the Partnership a notice as hereinabove provided of such
different address. If the address of the Partnership is changed, a written
notice of such change of address shall be sent by the Managing General Partner
by registered or certified mail to each other Partner.
11.03. Time of Communications. Any notice, demand, request, call or
other communication required or permitted to be given or made to a Partner or
to the Partnership under this Agreement will be deemed given or made (i) when
delivered to such Partner or the Partnership, as the case may be, at its
address set forth in Section 11.01. above, or (ii) three business days
following its deposit in the U.S. Mail, addressed to such address, postage
prepaid, registered or certified, return receipt requested (with a copy by
regular U.S. mail, first class, postage prepaid), or (iii) on the next
business day following its deposit with Federal Express or another nationally
recognized express delivery service, addressed to such address (with a copy by
regular U.S. mail, first class, postage prepaid).
ARTICLE XII
MISCELLANEOUS
12.01. Filings. The Partners agree that (i) a signed and acknowledged
certificate shall be filed promptly in such offices as are required by the Act
for the continuation of the Partnership as contemplated by this Agreement;
(ii) they shall sign, acknowledge and file from time to time in
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such offices (and elsewhere) all writings to amend the Certificate as are
required by the Act for the carrying out of the terms and provisions of this
Agreement; (iii) upon dissolution and termination of the Partnership, they
shall sign, acknowledge and file in such offices (and elsewhere) the writing
required by the Act to cancel the Certificate; and (iv) they shall from time
to time sign, acknowledge and file any other certificates, instruments and
documents, as well as amendments thereto, under the laws of the Commonwealth
of Pennsylvania or of any state or other jurisdiction in which the Partnership
is doing or intends to do business in connection with the use of the name of
the Partnership by the Partnership.
12.02. Power of Attorney.
A. Each Partner, by his or its execution of this Agreement,
hereby irrevocably constitutes, empowers and appoints the Managing General
Partner (for so long as it or its nominee shall remain a General Partner of
the Partnership) and, in the absence of any General Partner, the person
designated as Liquidating Partner pursuant to Section 10.02. hereof, as its
true and lawful agent and attorney-in-fact to make, prepare, execute, sign,
acknowledge, certify under oath and file and record, in its name, place and
stead:
(1) the Certificate, as well as amendments thereto and a
statement of cancellation thereof, under the Act, or which may be required by,
or be appropriate under, the laws of any other state or other jurisdiction;
(2) any certificates, instruments and documents
(including fictitious name applications), as well as amendments thereto and
statements of cancellation thereof, as may be required by, or be appropriate
under, the laws of any state or other jurisdiction in which the Partnership is
doing or intends to do business in connection with the use of the name of the
Partnership by the Partnership;
(3) without limiting the generality of the foregoing, any
amendment to the Certificate which is necessary to reflect: (i) a change in
the name or address of the Partnership or in the amount or character of the
Capital Contributions or Additional Capital Contributions of any Partner; (ii)
the admission of a substituted limited partner pursuant to the provisions of
Article VII hereof; (iii) the admission of a general partner or additional
limited partner pursuant to the provisions of Article VII or Article VIII
hereof; (iv) the correction or clarification of any incorrect statement in the
Certificate (or in any amendment thereto); or (v) a change in the time stated
in the Certificate (or in any amendment thereto) for the expiration of the
term hereof or for the return of the contributions of any Partner; and
(4) any other instrument which may be required to be
filed by the Partnership under the laws of the United States, any state, or
any political subdivision thereof, or by any governmental or
quasi-governmental agency, or which any General Partner shall deem it
advisable to file.
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B. Each Partner further agrees, whenever requested so to do,
personally to sign, certify under oath and acknowledge any of the foregoing
and to execute whatever further instruments or other documents as shall be
necessary or appropriate in the reasonable judgment of any Partner.
C. The foregoing powers of attorney are coupled with an
interest, are irrevocable and, to the extent permitted by law, shall survive
the death, dissolution, bankruptcy or legal incompetency of a Partner. The
foregoing powers of attorney shall survive the sale, assignment or transfer by
a Partner of any part or all of his interest in the Partnership.
12.03. Inspections. Any Partner shall have the full right and
privilege at any time, at its own cost and expense, to inspect all or any part
of the Land, Project or other Partnership property.
12.04. Other Remedies. Subject to the provisions of Section 4.0l.E.
hereof and Section 12.06 hereof, any Partner shall have and shall maintain all
rights or remedies it may have against any other Partner, at law or in equity
or by this Agreement, including, without limitation, rights or remedies for or
in respect of conduct constituting a fraud on the Partnership or on any
Partner, or for or in respect of a breach of any fiduciary obligation.
12.05. Partners as Creditors. Any Partner who is a bona fide creditor
of the Partnership as a lender thereto or by reason of any other
debtor/creditor relationship therewith (including, without limitation,
creditor status arising by reason of the making of any Partners' Loan or
Partners' Priority Loan) shall be permitted, in the event of any breach
thereof or default thereunder, to take such action and to exercise and pursue
such other rights, powers or remedies against the Partnership and/or against
any other obligor, which rights, powers or remedies are available to such
Partner by law, in equity or by contract; and the taking of any such action,
the exercise and pursuit of any such right, power or remedy, and the execution
or foreclosure on any Partnership property in connection therewith, shall each
be understood to be for the benefit of the creditor-Partner only and shall not
be deemed or understood to cause or permit a reconstitution of the Partnership
for the benefit of any other Partner.
12.06. Independent Ventures. Any Partner and any affiliate of any
Partner may engage in or possess interests current or future in other business
ventures of every nature and description, independently or with others, and
whether such ventures compete with the Project or not, including, without
limitation, the ownership, financing, leasing, operation, management,
syndication, brokerage and development of real property; and neither the
Partnership nor any Partner will have any rights by virtue of this Agreement
or the existence of this Partnership in or to such independent ventures or to
the income or profits derived therefrom.
12.07. Partial Invalidity. The invalidity or unenforceability of a
portion of this Agreement will not affect the validity or enforceability of the
remainder hereof.
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12.08. Governing Law; Parties in Interest. This Agreement will be
governed by and construed according to the laws of the Commonwealth of
Pennsylvania, and will bind and inure to the benefit of the Partners and each
of their respective heirs, successors, assigns, executors, administrators and
personal representatives.
12.09. Amendment. This Agreement may be amended only by the unanimous
written consent of all General Partners; provided, however, that no amendment
to this Agreement which adversely affects the rights or liabilities of the
Limited Partner shall be made without the Limited Partner's prior written
consent.
12.10. Execution in Counterpart. This Agreement may be executed in
counterparts, all of which taken together shall be deemed one original.
12.11. Computation of Time. In computing any period of time pursuant
to this Agreement, the day of the act, date of notice, event or default from
which the designated period of time begins to run will not be included. The
last day of the period so computed will be included, unless it is a Saturday,
Sunday or a legal holiday in the Commonwealth of Pennsylvania, in which event
the period runs until the end of the next day which is not a Saturday, Sunday
or such legal holiday.
12.12. Table of Contents; Titles and Captions. The Table of Contents
preceding this Agreement and all article, section or subsection titles or
captions contained herein are for convenience only and are not deemed part of
the context hereof.
12.13. Pronouns and Plurals. All pronouns and any variations thereof
are deemed to refer to the masculine, feminine, neuter, singular or plural as
the identity of the person or persons may require.
12.14. Approval by General Partners. In respect of all provisions of
this Agreement, any reference to approval of the General Partners or consent
of the General Partners shall mean, unless the context hereof shall expressly
require otherwise, the unanimous approval or consent of all of the General
Partners.
12.15. Exhibits. The Exhibits attached hereto form a part of this
Agreement and each is hereby incorporated herein by reference.
12.16. Entire Agreement. This Agreement and the Exhibits hereto
contain the entire understanding and agreement among the Partners, and
supersede any prior understandings and agreements between them respecting the
subject matter hereof. Without limiting the foregoing, this Agreement amends,
supersedes and restates the Original Agreement in its entirety and the
Certificate amends, supersedes and restates the Original Certificate in its
entirety.
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12.17. Filing with Securities Exchange Commission. The parties hereto
acknowledge and agree that Brandywine Realty Trust, the general partner of the
sole member of the general partner of the Administrative General Partner, may
make such filings as it deems necessary to comply with securities laws with
the Securities Exchange Commission disclosing this transaction.
12.18. Non-Recourse.
A. No recourse shall be had for any of the obligations of
the Administrative General Partner hereunder or for any claim based thereon or
otherwise in respect thereof against any past, present or future trustee,
shareholder, officer or employee of Brandywine Realty Trust, whether by virtue
of any statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise, all of such liability being expressly waived and
released by each of the other Partners.
B. No recourse shall be had for any of the obligations of
the Managing General Partner hereunder or for any claim based thereon or
otherwise in respect thereof against any past, present or future trustee,
shareholder, officer or employee of Two Oliver Tower Corporation, whether by
virtue of any statute or rule of law, or by the enforcement of any
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assessment or penalty or otherwise, all of such liability being expressly
waived and released by each of the other Partners.
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amended and Restated Agreement of Limited Partnership the day and year first
above written.
TWO OLIVER TOWER ASSOCIATES,
a Pennsylvania limited partnership
By: TWO OLIVER TOWER CORPORATION,
a Pennsylvania corporation, its duly
authorized general partner
By: /s/ Donald W. Pulver
----------------------------
Donald W. Pulver, President
BRANDYWINE TB II, L.P., a Pennsylvania limited
partnership
By: BRANDYWINE TB II, L.L.C., a
Pennsylvania limited liability company
By: /s/ Anthony A. Nichols, Sr.
---------------------------------
Anthony A. Nichols, Sr., Chairman
JOINDER
BRANDYWINE OPERATING PARTNERSHIP, L.P. hereby joins in this Agreement
for the purpose of confirming that it will perform the obligations required of
Brandywine Operating Partnership, L.P. under Section 7.12 hereof.
BRANDYWINE OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership
By: BRANDYWINE REALTY TRUST, its duly
authorized general partner
By: /s/ Anthony A. Nichols, Sr.
---------------------------------
Anthony A. Nichols, Sr., Chairman
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
TWO TOWER BRIDGE ASSOCIATES
Exhibit "A"
[Blanks to be completed]
Schedule of Partners' Capital Contributions,
Capital Balances, Capital Accounts, Contribution Percentages and
Participation Percentages, all as of May 11, 1998
------------
<TABLE>
<CAPTION>
Capital Balances
Capital and Contribution Participation
Contributions Capital Accounts Percentages Percentages
------------- ---------------- ------------ -------------
GENERAL PARTNERS
- - -----------------
<S> <C> <C> <C> <C>
Administrative General
Partner $2,709,889(1) $2,709,889(1) 35% 35%
---------- ----------
Managing General Partner $1,200,000 $1,200,000 64% 64%
LIMITED PARTNERS
- - ----------------
Limited Partner $ 0 $ 1% 1%
</TABLE>
- - ---------------------
(1) To be equal to the amount of the prepayment of the AFL-CIO Debt (as
defined in the Project Participation Agreement) plus actual costs associated
with such prepayment (including, but not limited to, all actual costs in
refinancing such AFL-CIO Debt and any commitment fee to the new lender), less
the net proceeds of the Two T.B. Mortgage Loan, as defined in the Project
Participation Agreement.
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated April 27, 1998 in this Form 8-K on the combined statement of
revenue and certain expenses of the First Commercial Properties and our report
dated May 1, 1998 in this Form 8-K on the statement of revenue and certain
expenses of One Christina Centre into the Company's previously filed
Registration Statements on Forms S-3 (File No. 333-46647, File No. 333-39155 and
File No. 333-20999) and Forms S-8 (File No. 333-14243 and File No. 333-28427).
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
May 13, 1998
