<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Filed pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 10, 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 Number)
16 Campus Boulevard, Newtown Square, Pennsylvania 19073
(Address of principal executive offices)
(610) 325-5600
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events
(i) Axinn Transaction. On July 11, 1998, Brandywine Realty Trust (the
"Trust") and Brandywine Operating Partnership, L.P. (the "Operating Partnership"
and, collectively with the Trust, the "Company") entered into an agreement (the
"Acquisition Agreement") with Donald E. Axinn ("Axinn") and certain entities
controlled by Axinn (the "Axinn Entities") to acquire a portfolio of nine office
properties and 20 industrial facilities located in Long Island, New York and
Northern New Jersey that contain an aggregate of approximately 1.3 million net
rentable square feet (the "Axinn Transaction"). The aggregate purchase price for
the properties is approximately $103.5 million. The properties to be acquired
include seven office properties and 19 industrial facilities that contain an
aggregate of approximately 1.1 million net rentable square feet which are
expected to be acquired at the initial closing (collectively, the "Axinn
Properties"). The remaining two office properties and one industrial facility
containing an aggregate of approximately 222,250 square feet (collectively, the
"Additional Axinn Properties") are expected to be acquired by the Company after
the initial closing as discussed in the footnotes to the table below.
Approximately $83.4 million of the aggregate purchase price is payable at
closing for the Axinn Properties, and the balance of the price would be payable
when each of the Additional Axinn Properties to which such balance is allocable
is acquired by the Company.
Of the $83.4 million aggregate purchase price payable at closing for
the Axinn Properties, the Company expects to (i) satisfy approximately $19.3
million through the assumption of mortgage debt secured by six of the Axinn
Properties; (ii) defer approximately $10.4 million of the payment until the
fourth quarter of 1998; and (iii) satisfy the balance of the initial purchase
price through a combination of cash and Class A units of limited partner
interest ("Units") in the Operating Partnership. Axinn and the partners in the
Axinn Entities (collectively, the "Axinn Partners") have the right to elect the
mix of cash and Units, except that a minimum of approximately $24 million of the
purchase price is payable in Units. For purposes of the Acquisition Agreement,
potential Unit holders have agreed to value each Unit at $24.00. In the event
Axinn elects to receive more than 75% of his net equity position (computed as
gross purchase price net of mortgage debt assumed or discharged) in Units, each
recipient of Units will be entitled to receive a number of additional Units
equal to 3.5% of the number of Units such person would otherwise have received.
Each Unit will be 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 will also be subject to
earlier redemption upon a change in control of the Company or the death of the
applicable holder.
As of July 1, 1998, the Axinn Properties were approximately 86.0%
leased to 68 tenants. No tenant individually occupied more than 10% of the
aggregate net rentable square feet of the Axinn Properties. The following table
identifies the locations and net rentable square feet of the Axinn Properties
and the Additional Axinn Properties.
<PAGE>
<TABLE>
<CAPTION>
PROPERTY NET RENTABLE
IDENTIFICATION LOCATION SQUARE FEET
AXINN PROPERTIES
<S> <C> <C>
LONG ISLAND INDUSTRIAL
1. 111 Ames Court Plainview, NY 18,000
2. 55 Ames Court Plainview, NY 90,000
3. 10 Skyline Drive Plainview, NY 22,200
4. 11 Commercial Street Plainview, NY 17,548
5. 80 Skyline - Express Plainview, NY 28,822
6. 120 Express Street Plainview, NY 27,729
7. 163-167 S. Service Road Plainview, NY 27,423
8. 336 S. Service Road Melville, NY 43,600
9. 180 Central Ave. / 2 Engineers Lane Farmingdale, NY 23,715
10. 8 Engineers Lane Farmingdale, NY 15,000
11. 19 Engineers Lane Farmingdale, NY 10,000
12. 91 N. Industry Court Deer Park, NY 71,000
13. 100 Voice Road Carle Place, NY 25,000
14. 110 Voice Road Carle Place, NY 25,920
15. 1000 Axinn Avenue Garden City, NY 59,000
16. 645 Stewart Avenue Garden City, NY 35,552
------
Subtotal Long Island Industrial 540,509
-------
LONG ISLAND OFFICE
17. 125 Jericho Turnpike Jericho, NY 75,308
18. 131 Jericho Turnpike Jericho, NY 26,626
19. 245 Old Country Road Melville, NY 82,308
------
Subtotal Long Island Office 184,242
-------
NEW JERSEY INDUSTRIAL
20. 44 National Road Edison, NJ 50,000
21. 835 New Durham Road Edison, NJ 58,095
22. 837 Durham Road Edison, NJ 48,200
------
Subtotal New Jersey Industrial 156,295
-------
NEW JERSEY OFFICE
23. 102 Chestnut Ridge Road Montvale, NJ 49,671
24. 25 Phillips Parkway Montvale, NJ 51,155
25. 3 Paragon Drive (1) Montvale, NJ 96,000
26. 1255 Broad Street Bloomfield, NJ 37,478
------
Subtotal New Jersey Office 234,304
-------
TOTAL AXINN PROPERTIES 1,115,350
=========
</TABLE>
-3-
<PAGE>
<TABLE>
<S> <C> <C>
ADDITIONAL AXINN PROPERTIES
LONG ISLAND INDUSTRIAL
1. 31 Commercial Street (2) Plainview, NY 18,026
LONG ISLAND OFFICE
2. 263 Old Country Road (3) Melville, NY 62,500
NEW JERSEY OFFICE
3. 101 Paragon Drive (4) Montvale, NY 141,724
------
TOTAL ADDITIONAL AXINN PROPERTIES 222,250
=======
</TABLE>
- ---------------------------------------
(1) As provided in Section 14 of the Acquistion Agreement, this property will
be acquired by the Company on or before December 28, 1998.
(2) As provided in Section 14 of the Acquisition Agreement, this property will
be acquired only after certain environmental conditions affecting this
property have been satisfied, including a determination by the New York
State Department of Environmental Conservation that no further ground water
monitoring or other action under a consent order relating to this property
is required and the property is de-listed under the applicable New York
State environmental laws. If the environmental conditions are not satisfied
within two years from the closing date, then either the Company or Axinn
may terminate its obligation to purchase or sell, as applicable, this
property.
(3) As provided in Section 4 of the Acquisition Agreement, this property is
currently under construction and is expected to be acquired upon completion
of construction and the issuance of a certificate of occupancy. The Company
currently expects construction to be completed during the first quarter of
1999.
(4) As provided in and subject to the condition contained in Section 14 of the
Acquisition Agreement, this property is subject to acquisition by the
Company in September 2005.
The table set forth below shows scheduled lease expirations for leases
in place at July 1, 1998, for the Axinn Properties and the Additional Axinn
Properties for each of the next ten years beginning July 1, 1998, assuming none
of the tenants exercise renewal options or termination rights, if any, at or
prior to scheduled expirations:
-4-
<PAGE>
<TABLE>
<CAPTION>
Final Annualized Percentage of Total
Base Final Annualized
Rent From Base Rent From
Year of Number of Leases Net Rentable Square Properties Under Properties Under
Lease Expiring Within Footage Subject to Expiring Expiring Cumulative
Expiration the Year Expiring Leases Leases(1) Leases %
<S> <C> <C> <C> <C> <C>
1998 12 83,200 $ 662,733 5.8% 5.8%
1999 9 38,672 410,845 3.6% 9.4%
2000 11 101,139 683,405 6.0% 15.3%
2001 9 301,066 2,765,729 24.1% 39.4%
2002 11 193,037 2,133,193 18.6% 58.0%
2003 8 77,587 819,938 7.1% 65.2%
2004 2 11,425 188,911 1.6% 66.8%
2005 6 213,147 1,823,163 16.0% 82.7%
2006 2 77,954 1,596,685 14.0% 96.7%
2007 - - - 0.0% 96.7%
2008 and thereafter 2 20,291 383,078 3.0% 100.0%
- ------ ------- ---- ------
Total 72 1,117,518 $ 11,467,680 100.0%
== ========= ============= ======
</TABLE>
- ---------------------
(1) "Final Annualized Base Rent" for each lease scheduled to expire
represents the cash rental rate of base rents, excluding tenant
reimbursements, in the final month prior to expiration multiplied by
twelve. Tenant reimbursements generally include payments on account of
real estate taxes, operating expense escalations and common area
utility charges.
The Company views the Long Island office and industrial acquisitions as
value added opportunities and anticipates establishing an ongoing program to
generally upgrade the properties and, in some cases undertake significant
renovations. To establish this program, the Company expects to invest
approximately $1 million shortly after the acquisition.
The Acquisition Agreement also provides that the Company may acquire a
property known as 885 Waverly Avenue, an industrial property containing
approximately 50,025 net rentable square feet, for a purchase price of
approximately $1.1 million. In the event the existing tenant of 885 Waverly
Avenue, which exercised its right to purchase the property, defaults in its
purchase, the Company would expect to acquire the property. Due to the tenant's
exercise of its option, the Company does not anticipate that it will acquire the
property.
The Acquisition Agreement provides that at closing, Donald E. Axinn,
Chairman and founder of the Axinn Company, will become a member of the Company's
Board of Trustees. In addition, Mark Hamer, President and Chief Operating
Officer of the Axinn Company, will become a Vice President of the Company. Upon
closing, Mr. Axinn and Mr. Hamer will each be awarded 100,000 10-year options.
Each option will be
-5-
<PAGE>
exercisable for one Common Share and will have a per share exercise price of
$24.00 in respect of 50,000 shares and $26.40 in respect of 50,000 shares.
In the Acquisition Agreement, the Company agreed not to take certain
actions, such as certain types of sales of Axinn Properties or Additional Axinn
Properties within either a five or 10-year period, or failing to maintain
approximately $42.5 million in debt allocable to the Axinn Partners. In the
event the Company were to take any such actions, the Company has agreed to pay
certain tax liabilities that might be incurred by the Axinn Partners.
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 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.
The Axinn Partners are unaffiliated with the Company. The Company based
its determination of the purchase price of the Axinn Properties and the
Additional Axinn Properties on the expected cash flow, physical condition,
location, existing tenancies and opportunities to retain and attract additional
tenants. The purchase price was determined by arm's-length negotiation between
the Company and Axinn. Consummation of the Axinn Transaction is subject to
customary closing conditions, including receipt of third party consents and
approval of the Axinn Partners. As indicated above, the Company's obligation to
acquire certain of the Axinn Properties is subject to additional conditions not
generally applicable to the entire portfolio. Accordingly, no assurance can be
given that all or part of the Axinn Transaction will be consummated or that, if
consummated, it would follow all of the terms set forth in the Acquisition
Agreement.
-6-
<PAGE>
(ii) 925 Harvest Drive. On June 24, 1998, the Operating Partnership
acquired a two-story office property known as 925 Harvest Drive. This property
contains approximately 63,000 net rentable square feet and is located in Blue
Bell, Montgomery County, Pennsylvania, and was purchased for approximately $8.1
million. The purchase price was funded from borrowings under the Company's
revolving credit facility. As of July 1, 1998, 925 Harvest Drive was
approximately 98.3% leased to 13 tenants.
The seller of 925 Harvest Drive, E.B. Realty, Inc. (the "Seller") is a
party unaffiliated with the Company. The Company based its determination of the
purchase price on the expected cash flow, physical condition, location,
competitive advantages, existing tenancies and opportunities to retain and
attract additional tenants. The purchase price was determined by arm's-length
negotiation between the Company and the Seller.
(iii) Sale of Kings Mill. On June 10, 1998, the Operating Partnership
sold a property known as Kings Mill. This property contains approximately
156,175 net rentable square feet and is located in Cincinnati, Ohio, and was
sold for approximately $14.9 million.
The buyer of Kings Mill, Hub Properties Trust (the "Purchaser") is a
party unaffiliated with the Company.
(iv) Financial Statements. Included under Item 7 of this Current Report
on Form 8-K are financial statements for the Axinn Properties and pro forma
financial information for the Company. After reasonable inquiry, the Company is
not aware of any material factors relating to the Axinn Properties that would
cause the reported financial information relating to such properties not to be
necessarily indicative of future operating results.
-7-
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements.
The audited combined statement of revenue and certain
operating expenses of the Axinn Properties for the year ended December 31, 1997
and the unaudited combined statement of revenue and certain operating expenses
of the Axinn Properties for the three months ended March 31, 1998 are included
on pages F-12 to F-15.
(b) Pro Forma Financial Information.
Pro forma financial information which gives effect to the
Company's pending acquisition of the Axinn Properties as of and for the year
ended December 31, 1997 and for the three months ended March 31, 1998 are
included on pages F-1 to F-11.
(c) Exhibits.
10.1 Acquisition Agreement
10.2 Form of Axinn Options
10.3 Form of Hamer Options
10.4 Form of Registration Rights Agreement
10.5 Form of Pledge Agreement
10.6 Form of Fourth Amendment to the Agreement of
Limited Partnership of the Operating
Partnership
23.1 Consent of Arthur Andersen LLP
-8-
<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: July 30, 1998 By: /s/ Gerard H. Sweeney
----------------------
Title: President and Chief
Executive Officer
-9-
<PAGE>
BRANDYWINE REALTY TRUST
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
I. UNAUDITED PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION
o Pro Forma Condensed Consolidating Balance Sheet as of March 31, 1998...............................F - 3
o Pro Forma Condensed Consolidating Statement of Operations for the
Year Ended December 31, 1997.........................................................................F - 4
o Pro Forma Condensed Consolidating Statements of Operations for the
Three Months Ended March 31, 1998....................................................................F - 5
o Notes and Management's Assumptions to Unaudited Pro Forma Condensed
Consolidating Financial Information..................................................................F - 6
II. AXINN PROPERTIES
o Report of Independent Public Accountants...........................................................F - 12
o Combined Statements of Revenue and Certain Expenses for the Three Months
Ended March 31, 1998 (unaudited) and the Year Ended December 31, 1997 (audited) .....................F - 13
o Notes to Combined Statements of Revenue and Certain Expenses.......................................F - 14
</TABLE>
F-1
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION
The following sets forth the pro forma condensed consolidating balance
sheet of Brandywine Realty Trust ("the Company") as of March 31, 1998 and the
pro forma condensed consolidating statements of operations for the three months
ended March 31, 1998 and 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 March 31, 1998 for balance
sheet purposes, and on January 1, 1997 for purposes of the statements 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 Brandywine Operating Partnership, L.P. (the
"Operating Partnership") in exchange for 2,375,500 units of general
partnership interest ("GP Units") in the Operating Partnership.
- - 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 Operating Partnership in exchange for 786,840 GP Units.
- - 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.
The pro forma condensed consolidating financial information is
unaudited and is not necessarily indicative of what the actual financial
position would have been at March 31, 1998, nor does it purport to represent the
future financial position and the results of operations of the Company.
F-2
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET
AS OF MARCH 31, 1998 (Notes 1 and 2)
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
SHARE OFFERINGS
BRANDYWINE --------------------------
REALTY TRUST USE OF PROPERTY
HISTORICAL PROCEEDS PROCEEDS ACQUISITIONS PRO FORMA
CONSOLIDATED (A) (B) (C) CONSOLIDATED
------------ ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Real estate investments, net $ 1,045,154 $ -- $ -- $ 168,411 $ 1,213,565
Cash and cash equivalents 38,042 14,175 (14,175) -- 38,042
Escrowed cash 1,241 -- -- -- 1,241
Accounts receivable 4,877 -- -- -- 4,877
Due from affiliates 348 -- -- -- 348
Investment in management company 109 -- -- -- 109
Investment in unconsolidated real estate ventures 7,276 -- -- -- 7,276
Deposits 100 -- -- -- 100
Deferred costs and other assets 9,197 -- -- -- 9,197
----------- ----------- ----------- ----------- -----------
Total assets 1,106,344 14,175 (14,175) 168,411 1,274,755
=========== =========== =========== =========== ===========
LIABILITIES:
Mortgages and notes payable 347,470 -- (14,175) 133,853 467,148
Accrued interest 1,164 -- -- -- 1,164
Accounts payable and accrued expenses 6,875 -- -- -- 6,875
Distributions payable 14,091 -- -- -- 14,091
Tenant security deposits and deferred rents 8,899 -- -- -- 8,899
----------- ----------- ----------- ----------- -----------
Total liabilities 378,499 -- (14,175) 133,853 498,177
----------- ----------- ----------- ----------- -----------
MINORITY INTEREST 14,074 -- -- 34,558 48,632
----------- ----------- ----------- ----------- -----------
BENEFICIARIES' EQUITY:
Common shares of beneficial interest 370 6 -- -- 376
Additional paid-in capital 740,071 14,169 -- -- 754,240
Share warrants 962 -- -- -- 962
Cumulative earnings 19,698 -- -- -- 19,698
Cumulative distributions (47,330) -- -- -- (47,330)
----------- ----------- ----------- ----------- -----------
Total beneficiaries' equity 713,771 14,175 -- -- 727,946
----------- ----------- ----------- ----------- -----------
Total liabilities and beneficiaries' equity $ 1,106,344 $ 14,175 $ (14,175) $ 168,411 $ 1,274,755
=========== =========== =========== =========== ===========
The accompanying condensed notes are an integral part of these consolidated financial statements
</TABLE>
F-3
<PAGE>
BRANDYWINE REALTY TRUST
PROFORMA 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 1997 EVENTS
REALTY ---------------------------
TRUST HISTORICAL PRO FORMA
HISTORICAL OPERATIONS ADJUST-
CONSOLIDATED (A) MENTS (B)
------------ ------------ ------------
<S> <C> <C> <C>
REVENUE
Base rents $ 49,928 $ 28,640 $ 918
Tenant reimbursements 9,396 3,954 --
Other 1,736 284 --
------------ ------------ ------------
Total Revenue 61,060 32,878 918
------------ ------------ ------------
OPERATING EXPENSE:
Interest 7,079 -- 4,303
Depreciation and amortization 15,589 -- 7,093
Property operating expenses 22,445 12,413 --
Administrative expenses 659 -- --
------------ ------------ ------------
Total operating expenses 45,772 12,413 11,396
------------ ------------ ------------
Income (loss) before equity in income of
management company and minority interest 15,288 20,465 (10,478)
Equity in income (loss) of management company 89 -- 422 (C)
------------ ------------ ------------
Income (loss) before minority interest 15,377 20,465 (10,056)
Minority interest in (income) loss (376) -- (374)(D)
------------ ------------ ------------
Net income (loss) 15,001 20,465 (10,430)
Income allocated to Preferred Shares (499) -- --
------------ ------------ ------------
Income (loss) allocated to Common Shares $ 14,502 $ 20,465 $ (10,430)
============ ============ ============
Diluted earnings (loss) per Common Share $ 0.95
============
Diluted weighted average number of
shares outstanding 15,793,329
============
</TABLE>
<PAGE>
[RESTUBBED FROM TABLE ABOVE]
<TABLE>
<CAPTION>
1998 PROPERTY
ACQUISITIONS
1998 ---------------------------
SHARE HISTORICAL PRO FORMA TOTAL
OFFERINGS OPERATIONS ADJUST- PRO FORMA
SUBTOTAL (E) (F) MENTS (G) CONSOLIDATED
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUE
Base rents $ 79,486 $ -- $ 71,475 $ -- $ 150,961
Tenant reimbursements 13,350 -- 11,790 -- 25,140
Other 2,020 -- 997 -- 3,017
------------ ------------ ------------ ------------ ------------
Total Revenue 94,856 -- 84,262 -- 179,118
------------ ------------ ------------ ------------ ------------
OPERATING EXPENSES
Interest 11,382 (22,607) -- 46,006 34,781
Depreciation and amortization 22,682 -- -- 21,290 43,972
Property operating expenses 34,858 -- 31,241 -- 66,099
Administrative expenses 659 -- -- -- 659
------------ ------------ ------------ ------------ ------------
Total operating expenses 69,581 (22,607) 31,241 67,296 145,511
------------ ------------ ------------ ------------ ------------
Income (loss) before equity in income of
management company and minority interest 25,275 22,607 53,021 (67,296) 33,607
Equity in income (loss) of management company 511 -- -- 1,470 (C) 1,981
------------ ------------ ------------ ------------ -----------
Income (loss) before minority interest 25,786 22,607 53,021 (65,826) 35,588
Minority interest in (income) loss (750) (1,013)(D) -- (260)(D) (2,023)
------------ ------------ ------------ ------------ -----------
Net income (loss) 25,036 21,594 53,021 (66,086) 33,565
Income allocated to Preferred Shares (499) -- -- -- (499)
------------ ------------ ------------ ------------ ------------
Income (loss) allocated to Common Shares $ 24,537 $ 21,594 $ 53,021 $ (66,086) $ 33,066
============ ============ ============ ============ ============
Diluted earnings (loss) per Common Share $ 0.91
============
Diluted weighted average number of
shares outstanding 36,721,485
============
The accompanying condensed notes are an integral part of these consolidated financial statements
</TABLE>
F-4
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF
OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998
(Notes 1 and 3)
(Unaudited)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
1998 PROPERTY
BRANDYWINE ACQUISITIONS
REALTY 1998 ----------------------------
TRUST SHARE HISTORICAL PRO FORMA TOTAL
HISTORICAL OFFERINGS OPERATIONS ADJUST- PRO FORMA
CONSOLIDATED (E) (H) MENTS (I) CONSOLIDATED
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUE
Base rents $ 28,495 $ -- $ 10,532 $ -- $ 39,027
Tenant reimbursements 3,823 -- 2,364 -- 6,187
Other 784 -- 204 -- 988
------------ ------------ ------------ ------------ ------------
Total Revenue 33,102 -- 13,100 -- 46,202
------------ ------------ ------------ ------------ ------------
OPERATING EXPENSES:
4,387 (2,462) -- 6,722 8,674
Interest 7,713 -- -- 3,186 10,899
Depreciation and amortization 10,773 -- 4,623 -- 15,396
Property operating expenses 1,331 -- -- -- 1,331
------------ ------------ ------------ ------------ ------------
Total operating expenses 24,204 (2,462) 4,623 9,908 36,273
------------ ------------ ------------ ------------ ------------
Income (loss) before equity in income of
management company and minority interest 8,898 2,462 8,477 (9,908) 9,929
Equity in income (loss) of management company 35 -- -- 213 (C) 248
------------ ------------ ------------ ------------ ------------
Income (loss) before minority interest 8,933 2,462 8,477 (9,695) 10,177
Minority interest in (income) loss (130) (133)(D) -- (G) (244)(D) (507)
------------ ------------ ------------ ------------ ------------
Net income (loss) 8,803 2,329 8,477 (9,939) 9,670
Income allocated to Preferred Shares (858) -- -- -- (858)
------------ ------------ ------------ ------------ ------------
Income (loss) allocated to Common Shares $ 7,945 $ 2,329 $ 8,477 $ (9,939) $ 8,812
============ ============ ============ ============ ============
Diluted earnings (loss) per Common Share $ 0.25 $ 0.23
============ ============
Diluted weighted average number of
shares outstanding 31,540,412 37,726,775
============ ============
The accompanying condensed notes are an integral part of these consolidated financial statements
</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 July 20, 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 July 20, 1998, the Company held
an approximately 97.6% interest in the Operating Partnership.
These pro forma financial statements should be read in conjunction with
the historical financial statements and notes thereto of the Company, the
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, One Christina Centre and the Axinn Properties.
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,
One Christina Centre and 925 Harvest Drive, and the probable acquisition of the
Axinn Properties by the Company have been made.
F-6
<PAGE>
2. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET:
(A) Reflects the proceeds received from the Company's recent public
share offerings, as summarized below:
Net Common Additional
Proceeds Shares Paid In
to Company At Par Capital
---------- ------- -------
April 1998 Offering $14,175 $ 6 $14,169
------- ------- -------
Total $14,175 $ 6 $14,169
======= ======= =======
(B) Reflects the use of the proceeds received from the Company's recent public
share offerings, as detailed in footnote (A) above, to repay indebtedness, as
summarized below:
Use of Debt
Cash Repayments
-------- --------
April 1998 Offering $(14,175) $(14,175)
-------- --------
Total $(14,175) $(14,175)
======== ========
(C) Reflects the Company's recent property acquisitions and probable property
acquisition as follows:
<TABLE>
<CAPTION>
Cost Consideration
-------------------------------------------- -----------------------------------------------
Mortgage Operating
Credit Facility Debt Partnership
Acquisition Purchase Price Closing Costs Total Borrowings Assumption Units
----------- -------------- ------------- ----- -----------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First Commercial Properties 48,500 227 48,727 38,169 - 10,558
One Christina Centre 41,625 740 42,365 42,365 - -
925 Harvest Drive 8,050 349 8,399 8,399 - -
Sale of Kings Mill (15,177) 228 (14,949) - (14,949) -
Axinn Properties (i) 83,444 425 83,869 40,530 19,339 24,000
-------------------------------------------- ----------------------------------------------
Total $ 166,442 $ 1,969 $ 168,411 $ 129,463 $ 4,390 $ 34,558
============================================ ==============================================
</TABLE>
(i) This acquisition has not been consumated by the Company at the date of this
filing; however, the Company has determined the likelihood of the transaction
being completed as probable.
F-7
<PAGE>
3. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS:
(A) Reflects the historical 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, Bala
Pointe Office Centre and the Scarborough Properties. The historical statements
reflected below include the operating results for 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.
<TABLE>
<CAPTION>
Tenant Property
reimburse- operating
Acquisition / Offering Rents ments Other expenses
- ---------------------------------------- ----------------------------------------------------------
<S> <C> <C> <C> <C>
Columbia Acquisition Properties $ 338 $ 24 $ 25 $ 130
Main Street Acquisition Properties 542 60 - 379
1336 Enterprise Drive 78 13 - 19
Kings Manor 105 27 - 43
Greentree Executive Campus 602 17 - 272
Five Eves Drive 103 12 - 45
TA Properties 2,053 299 6 698
Emmes Properties 2,570 1,130 2 1,332
748 & 755 Springdale Drive 414 - - 99
1974 Sproul Road 354 54 - 225
Berwyn Park Properties 2,492 376 36 1,073
Green Hills Properties 4,567 - - 1,393
500/501 Office Center Drive 1,106 919 48 971
Christiana Corporate Center 615 22 45 218
Metropolitan Industrial Center 1,395 306 33 472
Atrium 1 994 34 26 573
5 & 6 Cherry Hill Executive Campus 127 - - 140
220 Commerce Drive 594 - - 186
Provident Place 644 90 7 283
Bala Pointe Office Centre 3,523 34 35 1,544
Scarborough Properties 5,424 537 21 2,318
--------------------------------------------------
Total $ 28,640 $ 3,954 $ 284 $ 12,413
==================================================
</TABLE>
(B) Reflects the Company's pro forma adjustments relative to the
acquisitions 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 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 pro forma adjustments below 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-8
<PAGE>
<TABLE>
<CAPTION>
Depreciation
and
amortization
Acquisition / Offering Rents Interest (i) (ii)
- ----------------------------------- --------------------------------------------
<S> <C> <C> <C>
Columbia Acquisition Properties $ - $ 110 $ 66
Main Street Acquisition Properties - - 109
1336 Enterprise Drive - - 21
Kings Manor - - 29
Greentree Executive Campus - 249 106
Five Eves Drive - 75 32
TA Properties - 1,241 530
Emmes Properties - 2,049 874
748 & 755 Springdale Drive - 171 73
1974 Sproul Road - - 61
Berwyn Park Properties - - 700
Green Hills Properties - 690 745
500/501 Office Center Drive - 700 340
Christiana Corporate Center - 308 132
Metropolitan Industrial Center - 926 395
Atrium 1 - 597 255
5 & 6 Cherry Hill Executive Campus - 218 93
220 Commerce Drive - 345 147
Provident Place - 411 175
PECO Building (iii) 918 652 278
Bala Pointe Office Centre - 1,891 807
Scarborough Properties - 1,957 1,125
March 1997 Offering - (91) -
July 1997 Offering - (6,905) -
September 1997 Offering - - -
December 1997 Offering - (1,291) -
--------------------------------------------
Total $ 918 $ 4,303 $ 7,093
============================================
</TABLE>
(i) Pro forma interest expense is presented assuming an effective rate of 7.5%
on borrowings under the Company's revolving credit facility. The adjustment
for the Columbia Acquisition Properties also reflects an effective interest
rate of 9.5% on assumed debt.
(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 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) Pro forma equity in income of management company is based on
management fees less incremental costs estimated to be incurred.
(D) Pro forma minority interest in income represents the incremental
pro forma earnings allocable to minority partners.
(E) 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.
F-9
<PAGE>
Interest savings Interest savings
For the Year Ended For the Three Months
12/31/97 Ended 3/31/98
Offering (i) (i)
----------------------------------------------------------------------
January 1998 Offering $(18,748) $ (1,798)
February 18, 1998 Offering (1,729) (232)
February 28, 1998 Offering (1,067) (170)
April 1998 Offering (1,063) (262)
-------- --------
Total $(22,607) $ (2,462)
======== ========
(i) Pro forma interest expense is presented assuming an effective rate of 7.5%
on borrowings under the Company's revolving credit facility.
(F) Reflects the historical operations of the GMH Portfolio, the RREEF
Portfolio, Three Christina Centre, 920 Harvest Drive, Norriton Business Center,
the DKM Portfolio, the First Commercial Properties, One Christina Centre, 925
Harvest Drive, Kings Mill and the Axinn Properties for the year ended December
31, 1997.
<TABLE>
<CAPTION>
Tenant Property
reimburse- operating
Acquisition Rents ments Other expenses
- ------------------------------ -----------------------------------------------------------------
<S> <C> <C> <C> <C>
GMH Portfolio $ 25,049 $ 1,937 $ 174 $ 10,935
RREEF Portfolio 4,160 705 - 1,252
Three Christina Centre 4,635 2,427 22 2,830
920 Harvest Drive 1,658 63 - 724
Norriton Business Center 1,161 - - 276
DKM Portfolio 15,182 4,135 24 7,164
First Commercial Properties 6,235 719 116 2,307
One Christina Centre 4,789 519 569 2,241
925 Harvest Drive 946 - 92 329
Sale of Kings Mill (2,675) - - (683)
Axinn Properties 10,335 1,285 - 3,866
-----------------------------------------------------------
Total $ 71,475 $ 11,790 $ 997 $ 31,241
===========================================================
</TABLE>
(G) Reflects the Company's pro forma adjustments relative to the acquisitions of
the GMH Portfolio, the RREEF Portfolio, Three Christina Centre, 920 Harvest
Drive, Norriton Business Center, the DKM Portfolio, the First Commercial
Properties, One Christina Centre, 925 Harvest Drive and the Axinn Properties and
the sale of Kings Mill for the year ended December 31, 1997.
Depreciation and
Acquisition Interest (i) amortization (ii)
- ------------------------------ --------------------------------------
GMH Portfolio $ 16,391 $ 7,382
RREEF Portfolio 4,212 1,797
Three Christina Centre 3,875 1,653
920 Harvest Drive 912 389
Norriton Business Center 658 257
DKM Portfolio 10,016 4,422
First Commercial Properties 2,863 1,559
One Christina Centre 3,177 1,356
925 Harvest Drive 630 269
Sale of Kings Mill (1,121) (478)
Axinn Properties 4,393 2,684
--------------------------------------
Total $ 46,006 $ 21,290
======================================
(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.
F-10
<PAGE>
(ii)Pro forma depreciation expense is presented assuming an 80% building and
20% land allocation of the purchase price and capitalized closing costs and
assumes a useful life of 25 years.
(H) Reflects the historical operations of the GMH Portfolio,
the RREEF Portfolio, Three Christina Centre, 920 Harvest Drive, Norriton
Business Center, the DKM Portfolio, the First Commercial Properties, One
Christina Centre, 925 Harvest Drive and the Axinn Properties through the earlier
of the respective acquisition dates or March 31, 1998. Operating results from
those dates forward are included in the historical results of the Company. Also
reflects the exclusion of the historical operations of Kings Mill which was sold
by the Company.
<TABLE>
<CAPTION>
Tenant Property
reimburse- operating
Acquisition Rents ments Other expenses
- ------------------------------ ------------------------------------------------------------
<S> <C> <C> <C> <C>
GMH Portfolio $ 343 $ 27 $ 2 $ 150
RREEF Portfolio 570 97 - 172
Three Christina Centre 800 419 4 488
920 Harvest Drive 341 13 - 149
Norriton Business Center 251 - - 60
DKM Portfolio 3,744 1,020 6 1,766
First Commercial Properties 1,537 177 29 569
One Christina Centre 1,181 128 140 553
925 Harvest Drive 233 - 23 81
Sale of Kings Mill (660) - - (168)
Axinn Properties 2,192 483 - 803
-----------------------------------------------------------
Total $ 10,532 $ 2,364 $ 204 $ 4,623
===========================================================
</TABLE>
(I) Reflects the Company's pro forma adjustments relative to the acquisitions of
the GMH Portfolio, the RREEF Portfolio, Three Christina Centre, 920 Harvest
Drive, Norriton Business Center, the DKM Portfolio, the First Commercial
Properties, One Christina Centre, 925 Harvest Drive and the Axinn
Properties for the three months ended March 31, 1998. Also reflects the
exclusion of the historical operations of Kings Mill which was sold by the
Company.
Depreciation and
Acquisition Interest (i) amortization (ii)
- ------------------------------ ----------------------------------
GMH Portfolio $ 225 $ 101
RREEF Portfolio 577 246
Three Christina Centre 669 285
920 Harvest Drive 187 80
Norriton Business Center 143 56
DKM Portfolio 2,470 1,090
First Commercial Properties 706 384
One Christina Centre 783 334
925 Harvest Drive 155 66
Sale of Kings Mill (276) (118)
Axinn Properties 1,083 662
--------------------------------
Total $ 6,722 $ 3,186
================================
(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.
F-11
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Brandywine Realty Trust:
We have audited the combined statement of revenue and certain expenses of Axinn
Properties, described in Note 1, for the year ended December 31, 1997. This
financial statement is the responsibility of management. Our responsibility is
to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The combined statement of revenue and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the Current Report on Form 8-K of
Brandywine Realty Trust as described in Note 1 and is not intended to be a
complete presentation of Axinn 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 Axinn Properties for
the year ended December 31, 1997, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
May 15, 1998
F-12
<PAGE>
AXINN PROPERTIES
COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES (NOTE 1)
For the For the Three
Year Ended Months Ended
December 31, March 31,
1997 1998
----------- -------------
(unaudited)
REVENUE:
Base rents (Note 2) $10,335,000 $ 2,192,000
Tenant reimbursements 1,285,000 483,000
----------- -----------
Total revenue 11,620,000 2,675,000
----------- -----------
CERTAIN EXPENSES:
Maintenance and other operating expenses 1,203,000 186,000
Utilities 487,000 73,000
Real estate taxes 2,176,000 544,000
----------- -----------
Total certain expenses 3,866,000 803,000
----------- -----------
REVENUE IN EXCESS OF CERTAIN EXPENSES $ 7,754,000 $ 1,872,000
=========== ===========
The accompanying notes are an integral part of these financial statements.
F-13
<PAGE>
AXINN PROPERTIES
NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 1997
1. BASIS OF PRESENTATION:
The accompanying combined statement of revenue and certain expenses reflects the
operations of nineteen industrial buildings and seven office buildings (the
"Axinn Properties") owned by Donald E. Axinn ("Axinn") and certain entities
controlled by Axinn located in New Jersey and New York. Brandywine Realty Trust
("BRT") and Brandywine Operating Partnership, L.P. (the "Operating Partnership")
entered into an agreement (the "Acquisition Agreement) on July 11, 1998 with
Axinn and certain entities controlled by Axinn to acquire the above mentioned
properties for an aggregate purchase price of approximately $83.4 million. The
Axinn Properties have an aggregate net rentable area of approximately 1,115,000
square feet and were 90% leased as of December 31, 1997.
In addition to the above properties, the Acquisition Agreement includes
provisions to acquire three other properties subject to certain terms and
contingencies. Such properties are excluded from the accompanying financial
statements. These properties are as follows:
31 Commercial Street
This property will be acquired only after certain environmental conditions
affecting the property have been satisfied. If the environment conditions are
not satisfied within two years from the closing date, then either the Operating
Partnership or Axinn may terminate its obligations to buy or sell, as
applicable, this property.
263 Old Country Road
This property will be acquired once construction is completed and a certificate
of occupancy is issued which is expected to occur in 1999.
101 Paragon Drive
The Operating Partnership will pay $500,000 to Axinn at the initial closing and,
subject to certain terms and conditions, will be required to acquire this
property in the year 2005 for $11,000,000. The Operating Partnership will be
entitled to receive $50,000 each year through the year 2005 subject to certain
terms and conditions. The tenant has a priority option to acquire the property
for $11,000,000 which is exercisable through the year 2005.
This combined statement of revenue and certain expenses is to be included in the
Company's Current Report on Form 8-K, pursuant to the rules and regulations of
the Securities and Exchange Commission.
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles and exclude certain expenses such as
interest, depreciation and amortization, and other costs not directly related to
the future operations of the Axinn Properties.
The combined statement of revenue and certain expenses for the three months
ended March 31, 1998 is unaudited. In the opinion of management, all adjustments
(consisting solely of normal recurring adjustments) necessary to present fairly
the revenue and certain expenses of Axinn for the three months ended March 31,
1998 have been included. The combined revenue and certain expenses for such
interim period are not necessarily indicative of the results for the full year.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities during the reporting
period. The ultimate results could differ from those estimates.
F-14
<PAGE>
2. OPERATING LEASES:
Base rents for the year ended December 31, 1997, and for the three months ended
March 31, 1998, include straight-line adjustments for rental revenue decreases
in accordance with generally accepted accounting principles. The aggregate
rental revenue decreases resulting from the straight-line adjustments for the
year ended December 31, 1997, and for the three months ended March 31, 1998 were
approximately ($36,000) and ($16,000), (unaudited), respectively.
Sony Corporation's and Volvo Corporation's minimum rental payments were
$1,405,000 and $1,189,000, respectively, and represented greater than 10% of the
total base rents in 1997. Sony's lease expired at the end of 1997 and was not
renewed, and the space has not been leased as of March 31, 1998.
The Axinn Properties are leased to tenants under operating leases with
expiration dates extending to the year 2013. Future minimum rentals under
noncancelable operating leases, excluding tenant reimbursements of operating
expenses as of December 31, 1997, are as follows:
1998 $ 8,452,000
1999 8,009,000
2000 7,798,000
2001 5,290,000
2002 3,432,000
Thereafter 9,770,000
---------------------
Total $ 42,751,000
=====================
Certain leases also include provisions requiring tenants to reimburse Axinn for
management costs and other operating expenses up to stipulated amounts.
3. RELATED PARTY TRANSACTIONS:
Axinn Properties have an agreement with an affiliate, which provides Axinn
Properties with certain property management and related services. The aggregate
costs incurred for these services and included in maintenance and other
operating expenses for the year ended December 31, 1997, and for the three
months ended March 31, 1998 were approximately $529,000 and $93,000,
(unaudited), respectively.
4. GROUND LEASES:
One of the Properties is subject to a ground lease which expires on November 30,
2026. Obligations under the ground lease are as follows:
1998 $ 22,000
1999 23,000
2000 23,000
2001 23,000
2002 23,000
Thereafter 777,000
---------------------
Total $ 891,000
=====================
F-15
<PAGE>
CONTRIBUTION AGREEMENT
AMONG
BRANDYWINE OPERATING PARTNERSHIP, L.P.,
BRANDYWINE REALTY TRUST,
AND
DONALD E. AXINN
AND
THE OTHER CONTRIBUTORS NAMED HEREIN
Dated as of July 10, 1998
<PAGE>
CONTRIBUTION AGREEMENT
----------------------
THIS CONTRIBUTION AGREEMENT (this "Agreement") is made and
entered into as of the 10th day of July, 1998 by and among BRANDYWINE
OPERATING PARTNERSHIP, L.P., a Delaware limited partnership, having an address
at Newtown Square Corporate Campus, 16 Campus Boulevard, Suite 150, Newtown
Square, Pennsylvania 19073 (the "Partnership"), BRANDYWINE REALTY TRUST, a
Maryland real estate investment trust, having an address at Newtown Square
Corporate Campus, 16 Campus Boulevard, Suite 150, Newtown Square, Pennsylvania
19073 (the "Trust"), DONALD E. AXINN, having an address c/o Donald E. Axinn
Companies, 131 Jericho Turnpike, Jericho, New York 11743 ("Axinn"), and the
other Contributors (the "Other Contributors" and, together with Axinn, the
"Contributors") set forth on Schedule 1 attached hereto.
RECITALS
--------
A. Each property, commonly identified by the street address set forth
on Schedule 1 hereto, together with the building and improvements thereon, as
more fully described on "Exhibit A" attached hereto (each, a "Parcel"), is
owned by the corporation, limited partnership, limited liability company,
general partnership or individual listed opposite the name of such Parcel on
Schedule 1 under the caption "Contributor (Record Owner)";
B. The shareholders, partners or members of each Contributor that is
not an individual, and any other person having a contractual entitlement to
share in any of the Consideration (as defined below) are set forth opposite
the name of such Contributor on Schedule 1 under the caption "Participants"
(collectively, the "Participants"); and
C. Each Contributor desires and hereby agrees to sell or contribute,
and the Partnership desires and hereby agrees to acquire or accept, all of
each such Contributor's right, title and interest in and to the applicable
Property (as hereinafter defined) or (as specified below) all of the
applicable Participants' right, title and interest in and to the Entity
Interests (as hereinafter defined), subject to and on the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of these premises, 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, intending to be legally bound, 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:
"3 Paragon Drive Property" shall mean the Property
specifically relating to the Parcel located at 3 Paragon Drive, Montvale, New
Jersey.
2
<PAGE>
"31 Commercial Street Property" shall mean the Property
specifically relating to the Parcel located at 31 Commercial Street,
Plainview, New York.
"101 Paragon Drive Property" shall mean the Property
specifically relating to the Parcel located at 101 Paragon Drive, Montvale,
New Jersey.
"263 Old Country Road Property" shall mean the Property
specifically relating to the Parcel located at 263 Old Country Road, Melville,
New York.
"Accredited Investor" shall have the meaning given to that
term under Rule 501(a) of Regulation D under the Securities Act of 1933, as
amended.
"ADI Lease" shall mean the lease dated August 8, 1997
between Ademco Distribution, Inc. ("ADI") and Axinn, as assigned to AML by
assignment dated November 17, 1997, relating to the 263 Old Country Road
Property.
"Affiliate" shall mean, as to any Person, any Person or
entity controlling, controlled by or under common control with such Person.
"Agreement" shall mean this document entitled "Agreement,"
all exhibits and Schedules attached hereto or made a part hereof and all
amendments to this Agreement which are agreed to in writing and signed by all
of the parties hereto.
"AML" shall mean Axinn Melville, LLC, the current owner of
the 263 Old Country Road Property.
"Assignments" shall have the meaning specified in Paragraph
5(g) hereof.
"Assumed Debt Differential" shall mean in respect of an
Assumed Mortgage Loan the lesser of: (a) the spread between the interest costs
of the Assumed Mortgage Loan and a rate of 7% on the principal amount of such
Assumed Mortgage Loan discounted at a rate of 10% over the remaining term of
the Assumed Mortgage Loan from the Applicable Closing Date to the sooner of
(i) the Assumed Mortgage Loan's earliest prepayment date on which no
prepayment premium or penalty shall be due or (ii) the Maturity Date for the
Assumed Mortgage Loan; or (b) the prepayment penalty on such Assumed Mortgage
Loan (computed as of the Closing Date) . There shall be no Assumed Debt
Differential for any Assumed Mortgage Loan that bears interest at a per annum
rate equal to or below 7%. The Assumed Debt Differential as of June 30, 1998
for each Assumed Mortgage Loan is as set forth in Schedule "5" annexed hereto
and made a part hereof.
"Assumed Mortgage Loan" shall mean an outstanding mortgage
loan that the Partnership assumes and agrees to be liable for at any of the
Closings denominated as an Assumed Mortgage Loan on Schedule 5.
3
<PAGE>
"Axinn Participants" shall mean Donald E. Axinn and members
of his immediate family who share the same household as Mr. Axinn. The Axinn
Participants consist of Mr. Axinn and Joan Axinn.
"Axinn Participant Percentage" shall mean the amount,
expressed as a percentage, set forth under such caption on Schedule 1 hereto.
The Axinn Participant Percentage is, in respect of each Property and Entity
Interest, the ratio of the amount of the Purchase Price allocated touch
Property and Entity Interest paid to Axinn Participants divided by the
Purchase Price for each such Property and Entity Interest.
"Closing" shall mean any of the Initial Closing, the 31
Commercial Street Closing, the 101 Paragon Drive Closing or the Old Country
Road Closing.
"Closing Date" shall mean, as applicable, any of the Initial
Closing Date, the 31 Commercial Street Closing Date, the 101 Paragon Drive
Closing Date or the Old Country Road Closing Date.
"Common Shares" shall mean the common shares of beneficial
interest, par value $.01 per share, of the Trust.
"Consideration" shall have the meaning given to it in
Paragraph 3(b) hereof.
"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
Real Property, to the extent assignable by each Contributor to the Partnership
and approved by the Partnership, all as described on "Exhibit B" attached
hereto.
"Deposit" shall mean the deposits to be delivered by the
Partnership to the 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 July 10, 1998.
"Effective Date" shall mean the date on which this Agreement
has been fully executed and delivered by all parties hereto to each other.
"Entity Interests" shall mean all of the outstanding equity
interests in and to the respective partnerships and limited liability
companies that own one or more of the New Jersey Property as set forth in
Schedule 1.
"Escrow Terms" shall mean the terms and conditions of the
escrow agreement to be entered into of even date herewith between the Escrow
Agent, each Contributor and the Partnership.
4
<PAGE>
"Escrow Agent" shall mean Commonwealth Land Title Insurance
Company, 1700 Market Street, Philadelphia, Pennsylvania 19103.
"Improvements" shall mean those certain buildings and other
improvements constructed and located on the each Parcel, as described on
"Exhibit A" attached hereto.
"Initial Closing" shall have the meaning ascribed to that
term in Paragraph 4(a) hereof. The date upon which the Initial Closing
actually occurs shall be the "Initial Closing Date."
"Leases" shall mean those certain leases (and guarantees
thereof, if any) listed on "Exhibit C" attached hereto (with reference to each
applicable Parcel), or hereafter entered into by the applicable Contributor,
as landlord, in accordance with the terms of this Agreement, for any space
within any of the Improvements located on any Parcel. The term "Leases"
includes any leases that have been executed for space at the 263 Old Country
Road Property.
"Licenses" shall mean the licenses, permits, approvals and
agreements affecting any of the Real Property of such Contributor listed on
"Exhibit C-1" attached hereto.
"New Jersey Property" means the Property described on
"Exhibit A" located in the State of New Jersey.
"New York Property" means the Property described on "Exhibit
A" located in the State of New York.
"NYSE" means the New York Stock Exchange, Inc.
"Old Country Road Closing" shall have the meaning specified
in Paragraph 4(b) hereof. The date upon which the Old Country Road Closing
occurs shall be the "Old Country Road Closing Date."
"31 Commercial Street Closing" shall have the meaning
specified in Paragraph 4(c) hereof. The date upon which the 31 Commercial
Street Closing occurs shall be the "31 Commercial Street Closing Date."
"101 Paragon Drive Closing" shall have the meaning specified
in 4(d) hereof. The date upon which the 101 Paragon Drive Closing occurs shall
be the "101 Paragon Drive Closing Date."
"Partnership Agreement" means the Amended and Restated
Agreement of Limited Partnership, as amended, of the Partnership.
"Permitted Exceptions" shall mean, with respect to any of
the Real Property: (i) liens of real estate taxes, water rent and sewer
charges that are not due and payable on the Closing Date with respect to such
Real Property, (ii) the printed exclusions, conditions and
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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 with respect to such Real Property, (v) such other
title matters existing on the Closing Date with respect to such Real Property
which are accepted or deemed accepted by the Partnership pursuant to Paragraph
5 hereof (vii) the rights of Tenants of any of the Real Property set forth in
the Leases for all or any portion of any of the Real Property; and (viii) the
mortgage liens with respect to each Assumed Mortgage Loan.
"Person" means any natural person, corporation, limited
partnership, limited liability company, limited liability partnership, general
partnership, joint stock company, joint venture, real estate investment trust,
association, company, trust, bank, trust company, land trust, vehicle trust,
business trust or other organization irrespective of whether it is a legal
entity, or any government or agency or political subdivision thereof.
"Personal Property" shall (except as specifically excluded
on "Exhibit E-1" attached hereto) mean, as to each Contributor, such
Contributor's right, title and interest in and to the tangible personal
property including, without limitation, artwork, furniture, furnishings,
equipment, machinery and fixed and movable fixtures, together with all
component and replacement parts, owned by such Contributor, situated on any of
the Real Property on the date hereof or on the Closing Date, all as set forth
on "Exhibit E" attached hereto; and all artwork, renderings, flags, awnings
and trade dress; and 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 such Contributor's possession and are not proprietary in nature,
and all building names and such Contributor's rights, if any, to the names
"Long Island Office Park" (125-131 Jericho Turnpike), "Chestnut Ridge Plaza"
(102 Chestnut Ridge Road), "Montvale II" (101 Paragon Drive), "Montvale III"
(3 Paragon Drive), "Montvale IV" (25 Phillips Parkway) and "Brookdale Plaza"
(1255 Broad Street).
"Property" shall mean the Real Property, Contracts, Leases,
Licenses, Personal Property and any other rights, titles and interests which
pertain to the Real Property and are to be contributed, conveyed, sold or
otherwise transferred to the Partnership (or its designee) by the applicable
Contributor pursuant to this Agreement.
"Purchase Price" shall mean the dollar amount set forth
under the caption "Purchase Price" on Schedule 2.
"Real Property" shall mean the Parcel and the Improvements.
"Registration Rights Agreement" shall mean the Registration
Rights Agreement in substantially the form of "Exhibit J" attached hereto
between the Trust and the Contributors and Participants that will be
receiving, at the Initial Closing, all or a portion of the Consideration
hereunder payable in Units.
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"Rent Commencement Date" shall mean the date on which ADI
first commences to pay rent under the ADI Lease.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Tenants" shall mean the tenants under the Leases.
"Total Axinn Equity" shall mean the aggregate quantities
obtained by multiplying: (a) the Consideration for each Parcel (whether to be
transferred by Deed or Entity Interest Contribution) by (b) the Axinn
Participant Percentage for each such Parcel.
"Underlying Shares" shall mean the Common Shares issuable
upon redemption of Units that are issued hereunder.
"Units" shall mean Class A units of limited partner interest
of the Partnership.
2. Contribution of the Property and Entity Interests.
(a) On the Initial Closing Date, and subject to the
terms and conditions set forth in this Agreement, the respective Contributors
shall sell or contribute, assign, transfer and convey to the Partnership (or
its designee) (provided, however, that if the Partnership requests that any
Property or Entity Interests be transferred to a designee the transfer will be
treated as a contribution by the Contributors and/or the Participants to the
Partnership followed by a subsequent transfer by the Partnership to any such
designee and any reference in this Agreement to a transfer to a designee of
the Partnership shall so be treated) and the Partnership shall purchase or
accept, as the case may be, from the respective Contributors the following:
(i) All right, title and interest of the
Contributors in and to the New York Property of such Contributors other than
the 263 Old Country Road Property and the 31 Commercial Street Property;
(ii) All right, title and interest of the
Contributors, if any, in any land lying in the bed of any street, road, avenue
or alley, open or closed, in front of or adjoining any Parcel comprising the
New York Property which is owned by such Contributor, other than any Parcel of
such Contributors constituting part of the 263 Old Country Road Property and
the 31 Commercial Street Property, to the center line thereof;
(iii) All right, title and interest of the
Contributors, if any, in any easements, covenants, rights of way, privileges,
hereditaments and other rights appurtenant to any of the New York Property
which is owned by such Contributors, other than the 263 Old Country Road
Property and the 31 Commercial Street Property.
(b) On the Initial Closing Date, and subject to the
terms and conditions set forth in this Agreement, each Participant partner or
member of the Contributor which owns New Jersey Property (other than the 101
Paragon Drive Property) shall sell or contribute, assign,
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transfer and convey to the Partnership (or its designee) and the Partnership
shall purchase or accept, as the case may be, from each Participant partner or
member of the Contributor which owns New Jersey Property (other than the 101
Paragon Drive Property) such Participant's Entity Interest in and to the
Contributor so that one hundred percent (100%) of the Entity Interests in and
to such Contributor shall be contributed, assigned, transferred and conveyed
to the Partnership. In each case, such Entity Interests shall be contributed,
assigned, transferred and conveyed to the Partnership free and clear of any
claim, lien, pledge, security interest or encumbrances (collectively, "EI
Encumbrances").
(c) On the Old Country Road Closing Date, and
subject to the terms and conditions set forth in this Agreement, the
applicable Contributor shall sell or contribute, assign, transfer and convey
to the Partnership (or its designee) and the Partnership shall purchase or
accept, as the case may be, from the applicable Contributor the following:
(i) All right, title and interest of the
applicable Contributor in and to that certain ground lease which is to be
entered into (prior to the Old Country Road Closing but after the Effective
Date) between the Suffolk County Industrial Development Agency (which shall be
subject to the reasonable approval of the Partnership) and such Contributor
with respect to the 263 Old Country Road Property;
(d) On the 31 Commercial Street Closing Date, and
subject to the terms and conditions set forth in this Agreement, the
applicable Contributor shall sell or contribute, assign, transfer and convey
to the Partnership (or its designee) and the Partnership shall purchase or
accept, as the case may be, from the respective applicable Contributor the
following:
(i) All right, title and interest of the
applicable Contributor in and to the Property of such Contributor in the 31
Commercial Street Property;
(ii) All right, title and interest of the
Contributor, if any, in any land lying in the bed of any street, road, avenue
or alley, open or closed, in front of or adjoining any Parcel of such
Contributor constituting part of the 31 Commercial Street Property, to the
center line thereof;
(iii) All right, title and interest of the
Contributor, if any, in any easements, covenants, rights of way, privileges,
hereditaments and other rights appurtenant to any of the Real Property of such
Contributor constituting part of the 31 Commercial Street Property
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3. Consideration and Time of Payment.
(a) On the Effective Date, the Partnership shall
deposit in immediately available funds the amount of Two Million Dollars
($2,000,000) to the Escrow Agent, which funds shall be held and disbursed
pursuant to the Escrow Terms. The Deposit shall be allocated to and among the
Contributors and Participants, pro rata, in accordance with the relative
Purchase Price payable by the Partnership to the respective Contributors and
Participants for each of the Properties and Entity Interests as set forth on
Schedule "2" annexed hereto. At the applicable Closing, the Escrow Agent shall
release to each Contributor and Participant the portion of the Deposit
allocable to such Contributor and Participant at each Closing in partial
satisfaction of the cash Consideration such Contributor and Participants are
to receive at such Closing pursuant to subparagraph (c) below; provided that
if a Contributor or Participant is not to receive any cash Consideration at
such Closing, such portion of the Deposit shall be released to the Partnership
following receipt by each Contributor and Participant of Units pursuant to
subparagraph (c) below.
(b) On the Closing Date, the Partnership shall pay,
as consideration (the "Consideration") for the Property and Entity Interests,
as the case may be, relating to each Parcel contributed on such date, the
amount set forth under the heading "Purchase Price" on Schedule 2 hereto
opposite the address of such Parcel less the sum of (i) the aggregate
principal amount of the Assumed Mortgage Loans as of the applicable Closing
Date, if any, in respect of such Parcel, plus accrued interest thereon through
the applicable Closing Date, (ii) the Assumed Debt Differential, if any, in
respect of such Assumed Mortgage Loan, and (iii) the aggregate principal
amount of the Subject-to Mortgage Loans (as hereinafter defined) as of the
applicable Closing Date, plus accrued interest thereon through the applicable
Closing Date. The amount of the Consideration payable for each Property and
Entity Interests shall be subject to adjustment as provided in Paragraph 7.
The Consideration shall be paid to each Contributor and Participant in the
form of cash via wire transfer of immediately available funds and/or Units as
provided herein, subject to the provisions of this Agreement. Each Unit so
issued shall be deemed to have a value equal to $24.00.
(c) The percentage of the Consideration payable in
cash and Units to Axinn in respect of a Property and Entity Interest is
specified opposite Axinn's name on Schedule 4. Each of the Contributors agrees
that a Contributor and Participant may only receive Units as all or a portion
of the Consideration if such Contributor and all Participants of such
Contributor that are to receive a distribution of such Units are Accredited
Investors and such Contributor and all Participants of such Contributor are
able to make (and make) the representations and warranties set forth either in
Section 10(b) hereof or in the Consent and Acknowledgment of Participant
substantially in the form annexed hereto as "Exhibit AA" and made a part
hereof. The parties agree that in all cases in which the Contributor and
Participants are required or elect to receive cash and not Units in respect of
a New York Property, such Contributor and Participants shall contribute,
assign, transfer and convey to the Partnership (or its designee) and the
Partnership shall accept from each Participant partner or member of the
Contributor which owns such New York Property or, all of such Participant's
Entity Interest in and to such Contributor (i.e., the transaction shall be a
transfer of Entity Interests).
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(d) The contribution, purchase and sale of all of
the Property and, as applicable, Entity Interests hereunder is conditioned
upon the contribution, purchase and sale of all Property listed on the
critical property list annexed hereto as Schedule "7" and made a part hereof
(collectively, the "Critical Property") and (as applicable) all Entity
Interests in the Contributors which own the Critical Property, so that no
Critical Property and Entity Interests in the Contributors which own the
Critical Property may be excluded from the transaction contemplated hereunder
without all of the Property and Entity Interests being so excluded, unless
expressly agreed to in writing by the Partnership, the Applicable Contributor
and the Participants, as the case may be. In the event that the parties
determine to exclude any Property (including any of the Critical Property) or
Entity Interests (including any Entity Interests in the Contributors which own
the Critical Property), the Escrow Agent shall release to the Partnership at
the Initial Closing the portion of the Deposit allocable to the Contributor of
such Property (including any of the Critical Property) and to such
Participants.
(e) Schedule 5 attached hereto lists (i) all of the
mortgage debt (collectively, the "Mortgage Loans") secured by the respective
Properties, (ii) the principal balance of the Mortgage Loans as of June 30,
1998, (iii) the interest rate borne by the Mortgage Loans, (iv) the maturity
date of the Mortgage Loans, (v) the earliest date that each such Mortgage Loan
may be prepaid without premium or penalty, (vi) any lender participations
applicable to such Mortgage Loans, (vii) the Property securing the Mortgage
Loans and (viii) the name of the lenders of such Mortgage Loans. All of the
Assumed Mortgage Loans will be assumed by the Partnership at the Closing of
the applicable Property, as indicated on Schedule 5. The Partnership agrees to
use commercially reasonable efforts to release at the applicable Closing each
Contributor and Participant that has personal liability on any Assumed
Mortgage Loan from continuing personal liability on such Assumed Mortgage
Loan; provided that the use of commercially reasonable efforts shall not
require expenditure of funds by the Partnership. Schedule 5 identifies in
respect of each Assumed Mortgage Loan the Contributor and Participants, if
any, who have personal liability on such Assumed Mortgage Loan. The
Partnership will provide each Contributor with reasonable assistance in its
lender negotiations. Each Contributor will be responsible for any prepayment
costs associated with the Mortgage Loan payoffs and debt transfer costs for
each Assumed Mortgage Loan. At the applicable Closing, the applicable
Contributor shall receive a credit for any amounts held in deposit or in
escrow accounts by each of the lenders of the Assumed Mortgage Loans if and to
the extent such amounts held in deposit or in escrow accounts will thereafter
be held for the benefit of the Partnership, free of any claims of the
Contributor. As to any Mortgage Loan that is not as Assumed Mortgage Loan, but
which is to be repaid by the Partnership at the applicable Closing, as set
forth on Schedule 5-1 (each a "Subject-to Mortgage Loan"), the Partnership (or
its designee) shall take title to the mortgaged Parcel subject to the mortgage
securing such Subject-to Mortgage Loan and shall discharge a stated amount of
principal and accrued interest on the Subject-to Mortgage Loan at the Closing
(based on a pay-off letter from the applicable lender), so long as the amount
required to discharge such Subject-to Mortgage Loans affecting such mortgaged
Parcel, together with all other credits against the Consideration applicable
to such mortgaged Parcel hereunder, does not exceed the cash portion of the
consideration applicable to such mortgaged Parcel; and provided further that
the Partnership shall not be required to assume,
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and shall not be deemed to have assumed, any debt, obligation or liability
under or in connection with any Subject-to Mortgage Loan other than the
liability to pay the above-referenced stated amount of principal and accrued
interest. At the applicable Closing, the Partnership and the applicable
Contributor shall enter into an agreement, in form and substance reasonably
acceptable to both the Partnership and the Applicable Contributor, with
respect to each Subject-to Mortgage Loan (the "Subject-to Mortgage Loan
Agreement").
(f) If the aggregate Consideration that has been paid in
the form of Units (with each Unit valued at $24.00) to the Axinn Participants
exceeds 75% of the dollar amount of the Total Axinn Equity, then each
Contributor and Participant which has agreed to receive Units as Consideration
hereunder shall receive, as additional Consideration, a number of additional
Units equal to the product of the number of Units such Contributor and
Participant agreed to receive multiplied by 0.035. The Partnership shall have
no obligation to issue fractional Units under this Agreement and, in lieu of
issuing fractional Units, shall round the fraction up or down to the next
closest whole number in accordance with customary rounding conventions.
(g) Notwithstanding anything contained in this Agreement
to the contrary, the parties hereto agree that the Purchase Price for the 31
Commercial Street Property shall be $778,845.00 if the 31 Commercial Street
Closing occurs on or before April 1, 1999 and shall be $811,170.00 if the 31
Commercial Street Closing occurs subsequent to April 1, 1999.
4. Closings.
(a) Subject to satisfaction of the conditions set forth
in this Agreement, the initial closing of the transactions contemplated by
this Agreement (the "Initial Closing"), other than those transactions
specified in subparagraphs (b), (c) and (d) below, shall be held on or before
the date that is twenty (20) calendar days following the Due Diligence
Termination Date, on a mutually agreed date determined by the Contributors and
the Partnership, at the offices of Pepper Hamilton LLP, 3000 Two Logan Square,
Philadelphia, Pennsylvania, commencing at 10:00 a.m., time being of the
essence.
(b) Subject to satisfaction of the conditions set forth
in this Agreement and the consummation of the Initial Closing, the closing of
the transactions contemplated by this Agreement with respect to the 263 Old
Country Road Property (the "Old Country Road Closing") shall be held on the
Rent Commencement Date, at the offices of the Partnership, 16 Campus
Boulevard, Newtown Square, Pennsylvania, commencing at 10:00 a.m., time being
of the essence. The applicable Contributor shall provide the Partnership with
no less than ten (10) days prior written notice of the date for the Old
Country Road Closing.
(c) Subject to satisfaction of the conditions set forth
in this Agreement and the consummation of the Initial Closing, the closing of
the transactions contemplated by this Agreement with respect to the 31
Commercial Street Property (the "31 Commercial Street Closing") shall be held
on a date specified by the Partnership at the offices of the Partnership, 16
Campus Boulevard, Newtown Square, Pennsylvania, commencing at 10:00 a.m., time
being of the essence; provided, that the obligation of the Partnership to
consummate the 31 Commercial Street Closing is further conditioned upon the
satisfaction of the 31 Commercial
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Environmental Condition (as set forth in Paragraph 14(d) below). The
Partnership shall provide the Applicable Contributor with no less than ten
(10) days prior written notice of the date for the 31 Commercial Street
Closing.
5. Title and Conveyance of the Property.
(a) At each Closing, title to each Parcel of Real
Property to be conveyed to the Partnership in accordance with Paragraph 2
hereof and title to each Parcel comprising New Jersey Property (each, a
"Subject Property" for purposes of this Paragraph) shall be insurable at
regular rates by Commonwealth Land Title Insurance Company (the "Title
Insurer"), free and clear of all liens, encumbrances and restrictions other
than the Permitted Exceptions; provided, however, that if title to any Subject
Property is not insurable as aforesaid, the Partnership's sole right and
remedy shall be as set forth in Paragraph 5(b) below.
(b) (i) The Partnership has applied for a title insurance
commitment with respect to each Subject Property (1992 ALTA Form with
Creditor's Rights Exclusion Deleted) to be issued by the Title Insurer (each,
a "Commitment"), providing for the issue to the Partnership, upon recording of
the Deeds (as hereinafter defined) for each Subject Property and upon transfer
of the Entity Interests, an owner's policy of title insurance as above
specified ("Title Policy"). Said Commitments shall provide a commitment to
insure the proposed title of the Partnership to each Subject 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 discloses 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 Axinn and the Contributor of such Subject Property (for purposes of
this Paragraph, the "Applicable Contributor") of such Title Defects with
sufficient specificity to enable Axinn and the Applicable Contributor to
respond. All notices to be given by the Partnership to the Applicable
Contributor under the terms of this Paragraph 5 shall be addressed to Axinn,
at Donald E. Axinn Companies, 131 Jericho Turnpike, Jericho, New York 11753,
with copies given to the additional parties as required under Paragraph 22
hereof. The Partnership's notice of any Title Defects shall be given in
writing to Axinn and the Applicable Contributor no later than the date which
is five (5) business days prior to the Due Diligence Termination Date,
together with the Commitments and copies of all matters of record raised
therein as exceptions thereto, after which the Partnership shall be deemed to
have waived any and all Title Defects not so raised, except for Title Defects
which are disclosed to the Partnership in continuations of title issued
subsequent to the issuance of the Commitments, unless the Partnership fails to
object to same in writing (or fails to deliver such continuations of title
together with copies of all matters raised therein as exceptions thereto)
within five (5) 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. Axinn
and the Applicable Contributor shall have the right, but not the obligation
(except as otherwise specifically provided), to cure such Title Defects and,
if Axinn and the Applicable Contributor elect to attempt to cure the Title
Defects but have not cured the same on
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or before the Closing Date for the Subject Property (for purposes of this
Paragraph, the "Applicable Closing Date"), then the Applicable Closing Date
may be extended by Axinn and the Applicable Contributor, for a period not to
exceed forty-five (45) days, to enable Axinn and the Applicable Contributor to
effect such cure. Notwithstanding anything contained in this Paragraph 5 to
the contrary, the Partnership shall not be obligated to close the transfer of
title to any Property, unless and until all Title Defects relating to the
Critical Property are cured by either Axinn or the Applicable Contributor or
waived in writing by the Partnership.
(ii) In the event that either (a) the
Applicable Contributor is unable to convey title in accordance with the terms
of this Agreement free of Title Defects, (b) Axinn and the Applicable
Contributor elect not to cure or cause the removal of any exception to title,
except as required in subparagraph (iii) below, or (c) if Axinn and the
Applicable Contributor 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 Axinn
and the Applicable Contributor shall be to cause the Escrow Agent to return
the applicable portion of the Deposit to the Partnership, and to pay the
Partnership the amounts, if any, required pursuant to Paragraph 17(b) hereof
and upon such payments being made, this Agreement shall be deemed canceled
with respect to the Subject Property (and if the Subject Property is a
Critical Property, then this Agreement shall be deemed canceled with respect
to all Property and Entity Interests) 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 Axinn and the Applicable Contributor in
law or in equity, for damages, except for the purpose of enforcing Axinn's and
the Applicable Contributor's contractual obligations under subparagraph (iii)
below for specific performance. Notwithstanding the foregoing, the Partnership
shall have the right, upon written notice to Axinn and the Applicable
Contributor, to waive any conditions to the Partnership's obligations
hereunder, in which event Axinn and the Applicable Contributor shall make the
deliveries provided for herein to the Partnership to the extent that Axinn and
the Applicable Contributor 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 Subject Property at
the Applicable Closing is other than that which the Partnership is required or
agrees to accept hereunder solely by reason of any mortgages (other than
Assumed Mortgage Loans) or other monetary liens (hereinafter referred to as
"Liens") which can be satisfied or remedied by the payment of a liquidated
amount of money not to exceed 10% of the Consideration to be received for the
Subject Property, Axinn and the Applicable Contributor shall not have the
right to cancel this Agreement and Axinn and the Applicable Contributor shall
either (aa) discharge, satisfy, or bond the same or (bb) deliver the
applicable portion of the Consideration to be held in escrow as and to the
extent required by the Title Company, in either event so that the Title
Company shall affirmatively insure the full and complete discharge of the
foregoing and shall agree to omit the same as an exception to its title
insurance policy.
(iv) Notwithstanding anything to the
contrary contained in this Agreement, no Contributor (including Axinn) shall
have any duty nor be required to take any
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action, to institute any proceedings or to incur any expense (other than as
may be 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. Nothing contained in this Agreement shall be
construed as a representation of the state of title to any of the Real
Property. Any attempt by Axinn or an Applicable Contributor to cure Title
Defects shall not be construed as an admission by either Axinn or such
Applicable Contributor that such Title Defects are valid title objections
under this Agreement.
(c) Any failure by the Partnership to notify Axinn and a
Contributor of Real Property in writing of any Title Defects relating to such
Real Property on or before the Due Diligence Termination Date shall for all
purposes be deemed to be an acceptance by the Partnership of such Title
Defects as if they were one or more of the Permitted Exceptions, except with
respect to continuations of title as specifically provided in Paragraph
5(b)(i).
(d) At each Closing for the New York Property (as
provided in Section 3(c)), either (i) each Contributor of Real Property will
convey fee simple title to such Real Property by a Bargain and Sale Deed with
Covenant Against Grantor's Acts (collectively, the "Deeds") to the Partnership
(or its designee), subject in all cases to the Permitted Exceptions and free
of all Title Defects other than Title Defects expressly waived or deemed to
have been waived under clause (b)(i), in the forms attached hereto and made a
part hereof as "Exhibit"F" or (ii) each Participant partner or member shall
assign to the Partnership (and/or its designee) all of its Entity Interests in
such Contributor by an Assignment of Entity Interest (the "Entity
Assignments") in the forms attached hereto and made a part hereof as "Exhibit
F-1" so that one hundred percent (100%) of the Entity Interests in and to such
Contributor shall be contributed, assigned, transferred and conveyed to the
Partnership. In each case, such Entity Interests shall be contributed,
assigned, transferred and conveyed to the Partnership free and clear of EI
Encumbrances. The title to the New York Property shall be subject in all cases
to the Permitted Exceptions and free of all Title Defects other than Title
Defects expressly waived under clause (b)(i).
(e) At each Closing for the New Jersey Property, each
Participant partner or member shall assign to the Partnership (and/or its
designee) all of its Entity Interests in such Contributor by an Entity
Assignment so that one hundred percent (100%) of the Entity Interests in and
to such Contributor shall be contributed, assigned, transferred and conveyed
to the Partnership (and/or its designee). In each case, such Entity Interests
shall be contributed, assigned, transferred and conveyed to the Partnership
free and clear of EI Encumbrances. The title to the New Jersey Property shall
be subject in all cases to the Permitted Exceptions and free of all Title
Defects other than Title Defects expressly waived under clause (b)(i).
(f) At each Closing, each Contributor of Personal
Property will transfer all of its right, title and interest in and to its
Personal Property to the Partnership by executing a Bill of Sale (the "Bills
of Sale") in the form attached hereto and made a part hereof as "Exhibit G".
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(g) At each Closing, each Contributor will assign to the
Partnership all of such Contributor's right, title, and interest in, to and
under the Leases, Licenses and the Contracts relating to such Property, and
the Partnership shall assume all obligations accruing from and after the
Closing Date under such Leases, Licenses and Contracts, by executing an
Assignment and Assumption Agreement in the form attached hereto and made a
part hereof as "Exhibit H" (the "Assignments").
(h) At the Old Country Road Closing, as a condition to
the Partnership's obligation to close in respect of the 263 Old Country Road
Property, the Contributor of such Property shall deliver to the Partnership
(i) "as built" plans sealed by the architect or contractor relating to the
construction of the approximately 62,500 square foot office building currently
under construction thereon, (ii) a temporary certificate of occupancy relating
to such building and (iii) an estoppel certificate from ADI certifying that it
has taken possession of space at such property and has accepted such space
under its lease, subject to the terms thereof with respect to any punchlist
items. The Contributor and Axinn shall also provide the Partnership, at the
Old Country Road Closing, with an agreement pursuant to which they shall each
be jointly and severally obligated to obtain, at the Contributor's and Axinn's
sole cost (without regard to any limitations set forth in Paragraph 11
hereto), a permanent certificate of occupancy and to complete the punchlist
items in accordance with the provisions of the ADI Lease. Notwithstanding the
foregoing, at the Old Country Road Closing, the Partnership shall assume all
of the obligations of AML, including, without limitation, AML's obligations
under Article 7(c)(iii) of the ADI Lease, and AML shall assign to the
Partnership all of its right, title and interest in and to all warranties and
guaranties relating to such construction at the 263 Old Country Road Property.
AML shall also certify to the Partnership that, to AML's knowledge, as of the
Closing Date for the Old Country Road Closing, there are no defaults by AML,
as landlord, under the terms of the ADI Lease.
(i) At the Initial Closing, Axinn shall execute and
deliver to the Partnership an income guaranty pursuant to which Axinn shall
guaranty the net operating income (which net operating income shall be
determined using the same calculations used to determine the Purchase Price
for the Chestnut Property (as hereinafter defined)) at the 102 Chestnut Ridge
Road Montvale, New Jersey Property (the "Chestnut Property"), subject to the
terms and conditions set forth herein and subject to such other terms as the
parties shall mutually agree upon prior to the Initial Closing (the "Chestnut
Guaranty"). The Chestnut Guaranty shall provide that Axinn shall only be
liable thereunder in the event Geotek Communications, Inc. ("Geotek"), the
tenant at the Chestnut Property, rejects its lease with Axinn for the Chestnut
Property (the "Geotek Lease") in connection with its current Chapter 11
bankruptcy proceeding within two (2) years after the Initial Closing and such
rejection occurs prior to the assumption of the lease by Geotek. In the event
of such a rejection, Axinn shall only be liable for actual damages incurred by
the Partnership up to $500,000. Axinn shall be fully released from his
obligations thereunder (and the Chestnut Guaranty shall be promptly returned
to Axinn) in the event Geotek assumes the Geotek Lease in connection with its
current Chapter 11 bankruptcy proceeding. For purposes of computing the
Partnership's actual damages, the parties shall take into account any monies
which the Partnership will receive as a result of (a) the Partnership
exercising its rights with respect to the $817,000 letter of credit security
held pursuant to the
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terms of the Geotek Lease, which letter of credit will be assigned by Axinn to
the Partnership at the Initial Closing, (b) the Partnership retaining all or a
portion of the Grubb & Ellis Commission (as hereinafter defined) as a result
of the termination of the Geotek Lease, whether in connection with Geotek's
rejection of the same in the Chapter 11 bankruptcy proceeding or otherwise,
and (c) the Partnership recovering any net damages, after costs including
reasonable attorneys fees, awarded to it by the bankruptcy court from Geotek.
At the Initial Closing, the Partnership shall receive a credit in the amount
of $250,000, representing the remaining amount of the brokerage commission due
Grubb & Ellis (the "Grubb & Ellis Commission") under its brokerage agreement
for the Geotek Lease (the "Grubb & Ellis Agreement") and, in consideration
thereof, the Partnership shall assume all of the obligations of Axinn under
the Grubb & Ellis Agreement.
6. Closing Documents.
(a) At each Closing, as a condition of the Partnership's
obligation to close hereunder, the Contributor of the Property to be conveyed
at such Closing or the Participants of such Contributor shall deliver or cause
to be delivered the following:
(i) The Deeds, executed by each
Contributor of the New York Property, covering such New York Property or the
Entity Assignments, executed by each Participant covering all Entity Interests
in the Contributors which own such New York Property, except in the case of
the 263 Old Country Road Property (and separate quitclaim deeds to such Real
Property utilizing new ALTA survey descriptions, if requested), and, in the
case of the 263 Old Country Road Property, the 263 Assignment and Assumption
(as hereinafter defined), executed by the Contributor of the 263 Old Country
Road Property;
(ii) The Entity Assignments, executed by
each Participant covering all Entity Interests in the Contributors which own
New Jersey Property. With respect to the 3 Paragon Drive Property and the 25
Phillips Parkway, Montvale, New Jersey Property (the "25 Phillips Property")
the Contributor which owns the 3 Paragon Property shall also deliver or cause
to be delivered, a correcting deed from Axinn to 80-20 Associates for the 3
Paragon Drive Property (the "3 Paragon Correcting Deed") and the Contributor
which owns the 25 Phillips Property shall also deliver or cause to be
delivered a correcting deed from Axinn to Montvale IV for the 25 Phillips
Parkway Property (the "25 Phillips Correcting Deed");
(iii) The Bills of Sale executed by each
Contributor of Personal Property, covering such Personal Property. The
applicable Contributor shall also deliver to the Partnership the original
title certificates for the three (3) automobiles listed on Exhibit "E",
together with any and all documentation which is necessary to effectuate the
transfer of ownership of the same to the Partnership;
(iv) The Assignments, executed by each
Contributor of Property;
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(v) The originals (or copies where the
originals are not available) of the Contracts, Leases, Licenses, and other
items covered by the Assignments as are in the possession or control of any
Contributor or Participant;
(vi) 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 any Contributor or Participant;
(vii) 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 any Contributor or Participant;
(viii) All Tenant security deposits in
possession of such Contributor or such Contributor's managing agent;
(ix) Written notice from each Contributor
of Real Property or such Contributor's managing agent to each Tenant in form
annexed hereto as "Exhibit BB" stating that such Real Property has been sold
to the Partnership and that Tenant security deposits (if any) in such
Contributor's (or such managing agent'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 ( the "Tenant
Notice Letter");
(x) Non-foreign person certifications
executed by each Contributor in the form attached hereto as "Exhibit I";
(xi) All building records and Tenant lease
files in with respect to all Real Property to be conveyed at such Closing that
are in the possession of any Contributor or Participant;
(xii) All bills for current real estate
taxes, sewer charges and assessments, water charges and other utilities with
respect to all Real Property to be conveyed at such Closing , and to the
extent in any Contributor's or Participant's possession or control, bills for
each of the same for the last two (2) years, together with proof of payment
thereof (to the extent same have been paid);
(xiii) All plans, specifications, as-built
drawings, surveys, site plans, and final, written reports of architects,
engineers and surveyors, and any other Personal Property constituting part of
the Property or any portion thereof, but only to the extent that the same
exist and are in the possession of any Contributor or Participant or any
property manager controlled by any Contributor or Participant;
(xiv) An affidavit or affidavits of title
in favor of the Title Insurer on the form customarily used by such Title
Insurer in the state in which the Subject Property is located, and in form
reasonably acceptable to each Contributor of Real Property, to enable the
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Title Insurer to issue the Commitments described in Paragraph 5(b)(i). The
Partnership shall require affirmative endorsements against mechanic's liens,
consistent with each such Contributor's obligations under Paragraph 5(b)(iii),
above;
(xv) A letter, from the New Jersey
Department of Environmental Protection or its successor ("NJDEP") stating that
the provisions of the Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et seq.,
the regulations promulgated thereunder and any successor legislation and
regulations are inapplicable to Real Property located in New Jersey to be
conveyed at the Closing (the "Non-Applicability Letter");
(xvi) Subject to the provisions of
Paragraph 13(c), below, Estoppel Certificates, if any, received from Tenants
of the Real Property to be conveyed at the Closing;
(xvii) Updated rent rolls for the Real
Property to be conveyed at the Closing, which shall be certified as correct
and complete as of the Closing Date by such Contributors;
(xviii) Proof as to the due authorization
and execution by any Contributor and Participant of the documents executed and
delivered by such Contributor or Participant;
(xix) At the Initial Closing, a
certificate of continued occupancy for the 1255 Broad Street, Bloomfield, New
Jersey Property;
(xx) A counterpart to the Partnership
Agreement and Power of Attorney in the form contained therein executed by each
Contributor receiving Units as Consideration in accordance with Paragraph 3
and executed by each Participant of any Contributor that will be receiving, at
the Closing, a distribution of any such Units from the Contributor;
(xxi) A Consent and Acknowledgment of
Participant executed by each Participant;
(xxii) INTENTIONALLY DELETED.
(xxiii) INTENTIONALLY DELETED
(xxiv) An Assumption, Modification and
Release Agreement in substantially the same form as annexed hereto as "Exhibit
CC" and made a part hereof (the "Loan Assumption Agreement") executed by the
lender of each Assumed Mortgage Loan that is secured by Property that will be
transferred at such Closing;
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(xxv) A New York State Combined Real
Estate Transfer Tax Return and Credit Line Mortgage Certificate (form TP 584)
for each Parcel of Real Property located in New York (the "TP 584");
(xxvi) A Real Property Transfer Tax
Report, State of New York State Board of Real Property Services for each
Parcel of Real Property located in New York (the "Transfer Report");
(xxvii) A certificate from the Applicable
Contributors to the Partnership and the Trust certifying (i) that the
representations and warranties of the Contributors contained in this Agreement
are true and correct in all material respects as of the Applicable Closing
Date as if made on the Applicable Closing Date, except to the extent that they
expressly relate to an earlier date, (ii) that each of the Applicable
Contributors has performed or complied in all material respects with all of
its agreements herein contained and required to be performed or complied with
by it hereunder, and (iii) that none of the Participants have revoked their
consent to the transaction contemplated hereby as set forth in the Consent and
Acknowledgment of Participants and, to the knowledge of the Applicable
Contributor and Axinn, none of the Participants have threatened to revoke such
consent as of the Applicable Closing Date;
(xxviii) A certificate of each Contributor
the Entity Interests in which will be assigned to the Partnership duly
executed by an authorized officer of each such Contributors in such capacity,
certifying that annexed thereto (i) is a true and correct copy of (x) the
Contributor's partnership or operating agreement, as the case may be, and any
and all amendments thereto, and (y) the certificate of limited partnership or
articles of organization for the Contributor and all amendments thereto, if
any, as filed in the state of formation for the Contributor; and the same have
not been otherwise modified or amended, and are in full force and effect; (ii)
are duly adopted resolutions authorizing the consummation of the transactions
contemplated by this Agreement; and (iii) are good standing certificates dated
as of the most recent practicable date for each of the Contributors in their
respective state of formation;
(xxix) Incumbency certificates of each
Contributor the Entity Interests in which will be assigned to the Partnership
certifying the authority of the officers of such entity Contributor to execute
and deliver this Agreement and all applicable transaction documents;
(xxx) Resignations from all directors and
officers of the Contributors the Entity Interests in which will be assigned to
the Partnership pursuant to the terms hereof;
(xxxi) An opinion letter from the law firm
of Dollinger & Dollinger regarding the transfer of Entity Interests in the
form annexed hereto as "Exhibit EE" (the "Dollinger Opinion Letter");
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(xxxii) The Subject-to Mortgage Loan
Agreement executed by the Applicable Contributor and a payoff letter from each
lender stating the amount of principal and accrued interest that must be paid
in order for the lender to release its mortgage.
(xxxiii) Each Contributor and Axinn shall
deliver such other certificates, documents, instruments and agreements as the
Trust and the Partnership shall deem necessary in their reasonable discretion
in order to effectuate the transactions contemplated herein in form and
substance reasonably satisfactory to the Trust and the Partnership. For the
purposes of this Paragraph 6(a), except for the actual documents which each
Contributor is required to execute and deliver at each Closing as set forth
above, each Contributor shall be deemed to have fully satisfied its
obligations to deliver or cause to be delivered such Closing Documents at each
Closing, if: (a) each such Contributor actually delivers the same at each
Closing; or (b) such documentation continues to be located at the offices of
Donald E. Axinn Companies ("DEAC"), 131 Jericho Turnpike, Jericho, New York at
the time of each Closing.
(b) (i) At the Initial Closing, as a condition of each
Contributor's and each Participant's obligations hereunder, Donald E. Axinn
shall be elected as a member of the Board of Trustees of the Trust (and the
Partnership shall provide evidence of the same to Donald E. Axinn in the form
of a Board Resolution of Trust's Board of Trustees certified by the Secretary
or Assistant Secretary of the Trust) and Axinn shall file a Form 3 with the
SEC, and the Partnership shall deliver or cause to be delivered the following
documents:
(1) Option Agreements, in substantially the forms
attached hereto as "Exhibit N" and "Exhibit O", respectively, executed by the
Trust, providing for the grant to each of Donald E. Axinn and Mark Hamer of
options to purchase 100,000 Common Shares.
(2) An Employment Agreement with Mark Hamer, in
substantially the form attached hereto as "Exhibit P", executed by the Trust.
(ii) At each Closing (including, without limitation,
the Initial Closing) as a condition of each Contributor's and each
Participant's obligations hereunder, the Partnership shall deliver or cause to
be delivered the following:
(1) The Consideration (in immediately available
funds or Units in accordance with Paragraph 3) for the Property and Entity
Interests conveyed to the Partnership at such Closing;
(2) The applicable Assignments, executed by the
Partnership;
(3) The applicable Entity Assignments, executed
by the Partnership;
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(4) INTENTIONALLY DELETED
(5) At the Initial Closing, a Registration Rights
Agreement in substantially the form attached hereto as "Exhibit J", executed
by the Trust. Because this Agreement contemplates the issuance of Units after
the Initial Closing (the "Additional Units"), the Trust will execute, in
connection with closings held more than 175 days after the Initial Closing and
at which Additional Units are issued, an additional Registration Rights
Agreement in substantially the form attached hereto as Exhibit J covering the
resale of Common Shares issuable upon redemption of such Additional Units. The
timing of the Trust's obligations under such additional Registration Rights
Agreement will be established in a manner intended to provide the holder(s) of
such Additional Units with the ability to resell the Common Shares issuable
upon redemption of such Units under a Form S-3 Registration Statement within
six months following the date of issuance of such Additional Units.
(6) The applicable Tenant Notice Letters,
executed by the Partnership.
(7) The applicable Loan Assumption Agreement,
executed by the Partnership.
(8) The applicable TP 584, executed by the
Partnership.
(9) The applicable Transfer Report, executed by
the Partnership.
(10) Certificates duly executed and issued in the
names of the respective Participants evidencing the issuance of the Units,
together with the duly adopted amendment to the Partnership Agreement
described in subparagraph (11) below.
(11) A certificate of the Trust duly executed by
an authorized officer of the Trust in such capacity, on the Trust's behalf and
in its capacity as general partner of the Partnership, as the case may be,
certifying that annexed thereto (i) is a true and correct copy of (x) the
Amendment to the Amended and Restated Agreement of Limited Partnership of the
Partnership dated as of November 18, 1997, a copy of which is annexed hereto
as Exhibit II (the "Amendment"), and any and all amendments thereto, and (y)
the certificate of limited partnership of the Partnership and all amendments
thereto, if any, as filed in the State of Delaware; and the same have not been
otherwise modified or amended, and are in full force and effect; (ii) are duly
adopted resolutions authorizing the consummation of the transactions
contemplated by this Agreement; (iii) is a true and correct copy of the
Trust's declaration of trust and by-laws and all amendments thereto and that
the same have not been otherwise modified or amended, and are in full force
and effect; and (iv) good standing certificates dated as of a date within
fifteen (15) days of the applicable Closing for each of the Trust and the
Partnership for Maryland and Delaware, respectively.
(12) INTENTIONALLY DELETED
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(13) A certificate from the Trust and the
Partnership to the Contributors and the Participants certifying (i) that the
representations and warranties of the Trust and the Partnership contained in
this Agreement are true and correct in all material respects as of the
Applicable Closing Date as if made on the Applicable Closing Date, except to
the extent that they expressly relate to an earlier date, and (ii) that each
of the Trust and the Partnership has performed or complied in all material
respects with all of its agreements herein contained and required to be
performed or complied with by it hereunder.
(14) A certificate of the Partnership, certifying
that each Participant to be admitted at such Closing has been admitted as a
limited partner of the Partnership in respect to the applicable Units,
effective on the Applicable Closing Date, and that the Partnership's books and
records will, as of the Applicable Closing Date, indicate that each
Participant is the holder of the number of Units which is called for pursuant
to Paragraph 3.
(15) An incumbency certificate of the Trust
certifying the authority of the officers of the Trust, on its own behalf and
as general partner of the Partnership, to execute and deliver this Agreement
and all applicable transaction documents.
(16) The Subject-to Mortgage Loan Agreement,
executed by the Partnership.
(17) The Trust and the Partnership shall deliver
such other certificates, documents, instruments and agreements as the
Contributors and Participants shall deem necessary in their reasonable
discretion in order to effectuate the transactions contemplated herein in form
and substance reasonably satisfactory to the Contributors and the
Participants.
7. Prorations and Closing Costs. All matters involving
prorations or adjustments to be made to the Consideration for the Property
relating to each Parcel (each, a "Subject Property") 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 for each Subject Property as of
the Closing Date for such Subject Property (for purposes of this Paragraph,
the "Applicable Closing Date"), with the Partnership to be treated as the
owner of the Subject Property, for purposes of prorations of income and
expenses, on and after the Applicable Closing Date.
(a) Real estate taxes and all other ad valorem taxes, if
any, with respect to the Real Property constituting part of the Subject
Property (the "Subject Real Property") for the applicable fiscal or calendar
year in which the Applicable Closing Date with respect to the Subject Real
Property occurs shall be prorated in accordance with the provisions of this
Paragraph 7. If the amount of such taxes is not known on the Applicable
Closing Date for the Subject Real Property, taxes will be prorated on the
basis of the most recently ascertainable tax bill and such proration shall be
adjusted by the Applicable Contributor and the Partnership upon written
evidence that the actual taxes for the year in which the Applicable Closing
Date occurs differ from the amounts used for adjustments at the applicable
Closing in accordance with Paragraph 7(i) below. There shall be no proration
of insurance premiums or assignment of
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insurance policies relating to the Applicable Real Property and the
Contributor of the Subject Real Property (for purposes of this Paragraph, the
"Applicable Contributor") shall be entitled to cancel all of its existing
policies relating to the Applicable Real Property as of such Closing Date. The
Partnership shall be obligated (at its own election) to obtain any replacement
policies. The amounts of all telephone, electric, sewer, water and other
utility bills, trash removal bills, janitorial and maintenance service bills
relating to the Subject Real Property and allocable to the period prior to the
Applicable Closing Date shall be determined and paid by the Applicable
Contributor before the Applicable Closing Date, if possible, or shall be paid
promptly thereafter by the Applicable Contributor, or shall be adjusted
between the Partnership and the Applicable Contributor at the applicable
Closing based upon the last meter readings, or adjusted between the
Partnership and the Applicable Contributor immediately after the same have
been determined. The Partnership and the Applicable Contributor shall, to the
extent necessary, enter into an agreement to such effect as of the Applicable
Closing Date. The Applicable Contributor shall attempt to have all utility
meters read as of the Applicable Closing Date. The Applicable Contributor
shall further attempt to obtain from the provider of same all other service
statements and bills of account adjusted as of the Applicable Closing Date.
The Applicable Contributor shall be entitled to refunds of all deposits, if
any, paid by the Applicable Contributor or the Applicable Contributor's
predecessor-in-interest prior to the Applicable Closing Date and held by
entities providing such service, or, at the Applicable Contributor's option,
the Applicable Contributor shall transfer all of its right, title and interest
in and to such deposits to the Partnership on the Applicable Closing Date and
shall receive a credit for the amount of such deposits. All Contracts and
other obligations in connection with the Subject Property, to the extent the
same are intended to be assumed hereunder, shall be prorated as of the
Applicable Closing Date.
(b) Special assessments which have been filed as a lien
against the Subject Real Property on or before the Effective Date and are not
payable in installments shall be paid by the Applicable Contributor. Special
assessments which have been filed as a lien against the Subject Real Property,
but which are payable in installments shall be adjusted based upon the
installment payment for the fiscal or calendar year in which Applicable
Closing Date 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 Subject Real Property as of the Applicable
Closing Date, and special assessments which are filed as a lien after the
Applicable Closing Date, shall be assumed and paid by the Partnership.
(c) The Partnership and each Applicable Contributor shall
each pay one half of any state or county documentary stamps or transfer taxes
imposed in connection with the transfer of each Subject Real Property. The
Partnership and each Applicable Contributor shall also each pay one-half of
the costs charged by the Title Insurer in connection with its issuance of
non-imputation endorsements to the Title Policy and one-half of costs charged
by Dollinger & Dollinger in connection with its issuance of the Dollinger
Opinion Letter. The Partnership shall pay the expense of recording the Deeds
for the Subject Real Property, the title searches, title premiums and any
other title insurance costs on the owner's title insurance policies and the
cost of obtaining any surveys, if desired by the Partnership. The Partnership
agrees to pay the expense of the legal fees of its own counsel, and the
Contributors and Participants shall
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pay the expense of the legal fees of their 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 (including,
without limitation, estimated pass through payments, payments for common area
maintenance and all additional charges payable by tenants) under the Leases
(in each case, collectively, the "Rents") relating to the Subject Real
Property (the "Subject Leases") which are in arrears as of the Applicable
Closing Date shall not be apportioned at the applicable Closing, but instead
the right to collect the same shall be assigned to the Partnership. All such
Rents received by the Partnership or the Applicable Contributor within the
first ninety (90) days after the Applicable Closing Date (other than "true up"
payments received from Tenants attributable to a year-end reconciliation of
actual and budgeted pass-through payments which shall be apportioned between
the Partnership and the Applicable Contributor pro rata in accordance with
their respective period of ownership as provided in Paragraph 7(i) below)
shall be applied in the following order of priority: (a) to the Partnership,
so long as such Tenant is in arrears for current or prior rent arising after
the Applicable Closing Date, then (b) to the Applicable Contributor for all
rent in arrears prior to the Applicable Closing Date; and then (c) to the
Partnership with no further claim by the Applicable Contributor thereto. The
Applicable Contributor shall have no claim to Rents collected ninety (90) days
after the Applicable Closing Date. Any Rents which are delinquent or otherwise
not paid on the Applicable Closing Date, and collected by the Partnership or
the Applicable Contributor after the Applicable Closing Date shall be
apportioned as aforesaid and the portion to which the Applicable Contributor
is entitled shall be promptly remitted by the Partnership to the Applicable
Contributor and the portion to which the Partnership is entitled shall be
promptly remitted by the Applicable Contributor to the Partnership. The
Applicable Contributor retains the right to pursue its remedies against
Tenants after the Applicable Closing Date for any delinquent Rents or other
amounts owed to the Applicable Contributor (other than proceedings to evict
Tenant or terminate the Subject Lease). The Partnership shall not enter into
any agreement pursuant to which any sums owed to the Applicable Contributor in
respect of the Subject Lease for periods prior to the Applicable Closing Date
are reduced, modified or waived. The Partnership's obligations to collect rent
arrearages shall be limited to commercially reasonable efforts and the
Partnership shall not be obligated to spend any money without adequate
assurance of reimbursement from the Applicable Contributor, and the
Partnership shall under no circumstance be required to commence litigation
against any Tenant to collect the same. Any cash security deposits held by the
Applicable Contributor for any Subject Lease, together with the interest due
thereon, if any and if required under the terms of the Subject Lease or as
required by applicable law, shall either be credited or transferred to the
Partnership on the Applicable Closing Date at the Applicable Contributor's
option. If any security deposits are in the form of a letter of credit, the
Applicable Contributor shall assign its interest in the letter of credit to
the Partnership (to the extent assignable) and deliver the original letter of
credit to the Partnership at the applicable Closing.
(e) All leasing and brokerage commissions for the Subject
Lease(s) set forth on "Exhibit V" annexed hereto and made a part hereof (and
designated thereon as the responsibility of the Applicable Contributor) shall
be paid by the Applicable Contributor without contribution by, or
reimbursement from, the Partnership. The Partnership shall expressly assume
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and be solely obligated for the leasing and brokerage commissions for which
the Partnership is the responsible party as set forth on "Exhibit V", for all
the leasing and brokerage commissions arising in connection with expansions
and extensions exercised by a tenant after the Effective Date and all the
leasing and brokerage commissions which are not set forth on said "Exhibit V"
(provided any such commissions that are the Partnership's responsibility as
provided herein are in connection with expansions and renewals exercised by
tenants listed on the rent roll annexed hereto as "Exhibit C" after the
Effective Date and are at rates which brokers are customarily receiving in the
area in which the Subject Property is located), subject only to the
Partnership's right to approve any new Subject Lease or amendments,
discretionary renewals or modifications of any Subject Lease which are not
otherwise permitted pursuant to Paragraph 18(e), below. Any other leasing or
brokerage commissions which are not set forth on Exhibit "V" or are the
responsibility of the Partnership as set forth in the preceding sentence shall
remain the responsibility of the Applicable Contributor. The Applicable
Contributor shall be responsible for the costs of, and shall pay or perform
prior to the Applicable Closing Date, the capital improvements, tenant
improvements and allowances for work performed or required to be performed (or
paid, as applicable) prior to March 23, 1998 by or on behalf of the Applicable
Contributor for all Subject Leases as set forth in "Exhibit V" annexed hereto
and made a part hereof (collectively, the "Contributors Tenant Work"). The
Partnership shall assume, pay or reimburse (as applicable) the Applicable
Contributor on the Applicable Closing Date for the costs of all other capital
improvements, tenant improvements and allowances for work (other than
Contributors Tenant Work) pursuant to the Subject Leases (including all
amendments, renewals and modifications thereof) incurred by or on behalf of
the Applicable Contributor in connection with any Subject Lease (including all
amendments, renewals and modifications thereof) entered into after March 23,
1998 with respect to any of the Subject Real Property, provided that such
costs are explicitly noted on "Exhibit C" hereto or are approved by the
Partnership after the date hereof in accordance with Paragraph 18(e) below.
(f) Amounts paid or payable as fees or expenses under any
of the Licenses relating to the Subject Property (the "Subject Licenses")
assigned on the Applicable Closing Date shall be prorated as of the Applicable
Closing Date but all amounts refundable under unassigned and unassignable
Subject Licenses shall belong to the Contributor of each such Subject License.
(g) The Applicable Contributor shall be solely
responsible for the payment of any "roll back taxes" assessed or imposed upon
any of the Subject Real Property under the "Farmland Assessment Act of 1964,"
Chapter 58, Laws of 1964, N.J.S.A. 54:4 23-1 et seq., as amended, or
otherwise, which relate to any period prior to the Applicable Closing Date,
and the Applicable Contributor agrees to indemnify, defend and save the
Partnership harmless (including attorneys' fees) from and against any claim
for such taxes without regard to the limits set forth in Paragraph 11.
(h) Miscellaneous income relating to the Subject Leases,
including, without limitation, telephone and vending machine income, if any,
shall be prorated as of the Applicable Closing Date, to the extent that such
income has been actually received by the Applicable Contributor.
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(i) At the Initial Closing, the Partnership shall receive
a credit against the Purchase Price in the amount of $400,000 in full
satisfaction of the obligations of each Contributor and Participants with
respect to the physical condition of the Properties (the "IC Credit"). Prior
to the Initial Closing, Axinn shall advise the Partnership, in writing, as to
how the IC Credit shall be allocated to and among the Contributors and
Participants. The Applicable Contributor shall remain responsible for all
payments due under repair contracts for those repair items which are such
Applicable Contributor's responsibility as specifically set forth on Schedule
V. The Partnership shall be responsible for all payments due under all other
repair contracts, provided the Applicable Contributor obtains the prior
written approval of the Partnership for such repair contracts. The Partnership
shall respond to the Applicable Contributor's request for a consent in all
cases under this subparagraph (i) within three (3) business days of receiving
such request. Failure by the Partnership to respond within such three (3)
business day period, shall be deemed the consent of the Partnership to such
repair contract. Except as specifically set forth herein, the Contributors and
Participants shall have no other obligations to the Partnership or to the
Trust with respect to the physical condition of the Properties.
(j) At the Initial Closing, the Contributors and the
Participants set forth on Schedule 13 shall deposit up to $34,000.00 in the
aggregate in escrow so that funds will be available to the Partnership to
complete the environmental condition items at the Properties set forth on
Schedule 13 annexed hereto. The Contributors and the Partnership shall agree
upon the actual amount to be held in escrow prior to the Initial Closing. Such
Contributors, Participants and the Partnership shall, at the Initial Closing,
enter into an agreement, in form and substance reasonably acceptable to all
parties, to reflect such an escrow arrangement. Except as specifically set
forth herein and except for the obligations of the Contributor of the 31
Commercial Street Property set forth in Paragraphs 11(b) and 14(d) below, the
Contributors and the Participants shall have no other obligations to the
Partnership or to the Trust with respect to the environmental condition of the
Properties.
(k) At the Initial Closing, the Contributor of the 80
Skyline-Express Plainview, New York Property shall receive a credit in the
amount of $12,400.00 with respect to such Contributor's funding of the cost of
"tenant extras" pursuant to the terms of such Contributor's lease with Olsten
Health Services.
(l) All prorations shall be made on the basis of the
actual number of days of the month which shall have elapsed as of the day of
the applicable Closing and based upon the actual number of days in the month
and a three hundred and sixty five (365) day year. The amount of such
prorations shall be initially performed at the applicable Closing but shall be
subject to adjustment after the applicable Closing as and when complete and
accurate information becomes available, if such information is not available
as of the Applicable Closing Date. The Partnership and each Applicable
Contributor agree to cooperate and use their best efforts to make such
adjustment no later than one hundred and twenty (120) days after the
applicable Closing (or as soon thereafter as may be practicable, with respect
to common area maintenance and other additional rent charges including
pass-throughs for real estate taxes and special assessments, if any, payable
by tenants under the Subject Leases). Except as set forth in
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this Paragraph 7, all items of income and expense which accrue for the period
prior to each applicable Closing will be for the account of each Applicable
Contributor and all items of income and expense which accrue for the period
after the applicable Closing will be for the account of the Partnership. The
provisions of this subparagraph 7(i) shall specifically survive each
applicable Closing.
(m) All of the provisions of this Paragraph 7 and each
Contributor's and the Partnership's respective rights and obligations
hereunder shall survive the Closings contemplated by this Agreement and Axinn
shall be obligated to cause each Contributor to comply with all of such
Contributor's obligations hereunder.
8. Possession of Property.
(a) Each Contributor or Participant shall deliver
possession to the Real Property conveyed by it to the Partnership either
directly or through the conveyance of Entity Interests on each Closing Date
and shall also deliver possession to the Real Property owned by Contributors
whose Participants have conveyed Entity Interests to the Partnership on each
Closing Date, subject only to the Permitted Exceptions.
(b) The Partnership shall assume, by execution of the
Assignments on each Closing Date, all of each Contributor's obligations in, to
and under the Licenses and Leases assigned on such Closing Date if such
obligations are set forth in writing in such Licenses and Leases and such
Licenses and Leases are listed on Exhibits annexed hereto. The Applicable
Contributor and Axinn shall remain responsible for all other obligations in,
to and under the Licenses and the Leases which the Partnership does not assume
pursuant to the terms hereof. Notwithstanding the foregoing, the Partnership
shall not assume management agreements, leasing or brokerage agreements;
provided, however, that the Partnership shall remain liable for all leasing
and brokerage commissions as and to the extent set forth in Paragraph 7(e)
above.
(c) All of the provisions of this Paragraph 8 and each
Contributor's and the Partnership's respective rights and obligations
hereunder shall survive each Closing contemplated hereunder.
9. Employees. The Property of each Contributor does not
include any employees of such Contributor. The Partnership, through an
affiliate or related person, intends, however, to offer to hire or retain (but
shall not be obligated to offer to hire or retain) those individuals currently
employed by DEAC and identified on "Exhibit Q" (the "Transferred Employees")
at salary levels and with benefits consistent with those currently paid by
DEAC, which salary levels and benefits are also set forth on "Exhibit Q". It
is anticipated that the responsibilities currently borne by the Transferred
Employees will be subject to modification to insure consistency with the
Partnership's existing Asset Management/Tenant Services Program. The
Partnership and its affiliates and related persons shall have no obligation or
liability whatsoever with respect to employees of DEAC, or of any Contributor,
Participant or their respective affiliates, it being such Contributor's,
Participant's or affiliate's sole responsibility and obligation to provide
severance arrangements, if any, for all such employees and to pay all
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liabilities to such employees that accrued or relate to periods of time prior
to the Closing. Closing of the transactions under this Agreement shall not be
conditioned upon any or all of the Transferred Employees accepting employment
with the Partnership or any affiliate or related person of the Partnership.
10. Representations and Warranties.
(a) Each Contributor (excluding Axinn), severally and not
jointly, hereby represents and warrants, solely as to himself, itself and each
Property owned by it or him, as the case may be, and Axinn, severally and
jointly, hereby represents and warrants as to himself and each Property owned
by each Contributor and as to each Contributor, as follows, all of which shall
be true and correct on, and as of the Effective Date and each applicable
Closing Date:
(1) Unless the Contributor is an
individual, the Contributor is duly organized or formed and validly existing
under the laws of its state of organization or formation, and is in good
standing in such state. With respect to Contributors who are not individuals,
the Contributor is not in default under, or in violation of, any provision of
its organizational documents.
(2) The Contributor 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, as necessary on or prior to
each Closing Date. A list of such required consents or authorizations is
contained on "Exhibit R" attached hereto. A list of such required notices is
contained on "Exhibit R-1". This Agreement constitutes, and the other
documents and instruments to be delivered by the Contributor pursuant hereto
when delivered will constitute, valid and binding obligations of the
Contributor, enforceable against the Contributor in accordance with their
respective terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar rights of creditors
generally and by general principals of equity.
(3) Except as set forth in "Exhibit S"
attached hereto and made a part hereof, there is no litigation, proceeding,
action or investigation pending or, to the best of the Contributor's
knowledge, threatened against or relating to the Contributor or its Property,
nor is there any judgment, decree, injunction, or order of any court,
governmental department, commission, agency, instrumentality or arbitrator,
which could reasonably be expected to materially and adversely affect the
Contributor or its Property or which would invalidate this Agreement or any
action taken or to be taken by the Contributor pursuant hereto.
(4) Except as set forth in "Exhibit R" and
in "Exhibit "R-1", neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will (i) constitute a
violation or be in conflict with or constitute a default under any term or
provision of the Contributor's constituting or organizational documents; (ii)
result in a violation or breach of, or constitute (with or without due notice
or lapse of time or
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both) a default (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any
indenture, license, contract, agreement or other instrument or obligation to
which a Contributor is a party or by which its respective properties or assets
may be bound; or (iii) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Contributor, or any of its properties or
assets.
(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 Contributor's possession or
control, have been made available as of April 22, 1998, to the Partnership:
(i) Leases and rent rolls; (ii) Contracts; (iii) leases of equipment, vehicles
and other tangible personal property used by Contributor in connection with
the ownership and operation of the Property listed on "Exhibit C-2" (the
"Personal Property Leases"); (iv) Licenses; (v) surveys; (vi) title reports;
(vii) engineering reports; and (viii) environmental reports.
(6) (i) all of the Leases, Contracts,
Personal Property Leases and Licenses are in full force and effect, (ii) to
the best of its knowledge, there has been no action or failure to act by the
Contributor or any other party to any Lease, Contract, Personal Property Lease
or License which, with the giving of notice or the passage of time or both,
would constitute a default in any material respect of such document or
otherwise entitle any other party thereto to damages or a right to terminate;
and (iii) the Contributor has not received from any other party written notice
with respect to a material deficiency in the condition of the Property or the
use or repair of the same or of any alleged default by Contributor under any
such Lease, Contract, Personal Property Lease or License which is reasonably
likely to cost more than $5,000 to cure or remediate individually (or more
than $25,000 in the aggregate for each property), as the case may be. Except
as set forth on "Exhibit T", 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 the
Contributor. Except as set forth on "Exhibit T", to the best of its knowledge,
the Contributor is not a party to any existing management agreement or
brokerage or leasing arrangement.
(7) There is set forth or identified in
"Exhibit U" all of the plans, funds, policies, programs, arrangements or
understandings sponsored or maintained by the Contributor, or DEAC or any DEAC
affiliates (collectively, the "Axinn Affiliates"), and administered by the
Contributor or any of the Axinn Affiliates, which provide any current employee
of the Contributor or any of the Axinn Affiliates (an "Employee") (or any
dependent or beneficiary of any such Employee) with (a) retirement benefits;
(b) severance or separation from service benefits; (c) incentive, performance,
stock, share appreciation or bonus awards; (d) health care benefits; (e)
disability income or wage continuation benefits; (f) supplemental unemployment
benefits; (g) life insurance, death or survivor's benefits; (h) accrued sick
pay or vacation pay; or (i) any other type of material benefit offered under
any arrangement subject to characterization as an "employee benefit plan"
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") and not excepted by Section 4 of ERISA are
collectively called "Employee Benefit Plans". Except as set forth on
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"Exhibit U", none of such Employee Benefit Plans is an "employee benefit
pension plan" or a "pension plan" as defined in Section 3(2) of ERISA which is
subject to Title IV of ERISA. As to any Employee Benefit Plan identified in
"Exhibit U", each of the following is true: (i) all amounts due from the
Contributor or other person responsible for sponsoring, maintaining or
administering such Employee Benefit Plan (the "Responsible Person") as
contributions to the date hereof have been paid or accrued on their books;
(ii) the Responsible Person and any Affiliated Company (as hereinafter
defined) have performed or satisfied all material obligations required to be
performed or satisfied by them under, and are not in default under or in
violation of, any Employee Benefit Plan and no other party is in default
thereunder or in violation thereof; (iii) the Responsible Person and any
Affiliated Company are in compliance in all material respects with the
requirements (including reporting and disclosure requirements applicable to
them) prescribed by all statutes, orders or governmental rules or regulations
applicable to the Employee Benefit Plans, including, but not limited to, ERISA
and the Internal Revenue Code of 1986, as amended (the "Code"); (iv) neither
the Responsible Person nor any Affiliated Company or any other "disqualified
person" or "party in interest" (as defined in Section 4975 of the Code and
Section 3(14) of ERISA, respectively) has engaged in any "prohibited
transaction," as such term is defined in Section 4975 of the Code or Section
406 of ERISA, which could subject any Employee Benefit Plan (or its related
trust), the Contributor, the Responsible Person or any Affiliated Company, the
Partnership, the Trust, any shareholder, officer, director, trustee, partner
or employee of the Contributor, any Affiliated Company, the Partnership or the
Trust or any trustee, administrator or other fiduciary of any Employee Benefit
Plan to the tax or penalty imposed under Section 4975 of the Code or Section
502(i) of ERISA; and (v) there are no material actions, suits or claims
pending (other than routine claims for benefits) or threatened, against any
Employee Benefit Plan or against the assets of any Employee Benefit Plan. For
purposes of this subparagraph 10(a)(7), "Affiliated Company" shall mean any
member (whether or not incorporated) of a group which is part of a controlled
group of corporations or under common control (within the meaning of the
regulations promulgated under Section 414 of the Code) and of which the
Contributor, the Axinn Affiliates or the Responsible Person is a member.
Neither the Seller nor the Responsible Person maintains or participates in,
and has never maintained or participated in, any "multiemployer plans" as
defined in Section 3(37) of ERISA. There are no liens against the Real
Property arising under ERISA, nor any other compensation or employment related
lien or liability that could become the responsibility of the Partnership.
There are no existing collective bargaining or other employment agreements in
effect with respect to the Real Property or the employees of the Contributor
or the Axinn Affiliates. The Contributors and the Axinn Affiliates shall offer
health care continuation coverage pursuant to the Consolidated Omnibus
Reconciliation Act ("COBRA"), if any, for persons employed by the Contributor
or Axinn Affiliates and have complied and shall otherwise comply in all
material respects with all applicable laws (including laws prohibiting
employment discrimination) relating to persons employed by such Contributors
and the Axinn Affiliates.
(8) Except for public improvements which
are to be made in connection with the construction of the 263 Old Country Road
Property, to the Contributor'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
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heretofore been assessed and, to the Contributor's 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 in "Exhibit S-1",
the Contributor has not been served with written notice that it has been named
as a party in any litigation, administrative proceeding or investigation
naming Contributor as a responsible party or potentially responsible party for
any liability for clean-up costs, natural resource damages or other damages or
liability for prior disposal or release of Hazardous Substances, Hazardous
Wastes or other environmental pollutants or contaminants. For purposes of this
Agreement, "Hazardous Substances" means those elements and compounds which are
designated as such in Section 101(14) of the Comprehensive Response,
Compensation and Liability Act (CERCLA), 42 U.S.C. Section 9601 (14), as
amended, all petroleum products and by-products, and any other hazardous
substances as that term may be further defined in any and all such federal,
state and local laws (including, in New Jersey, the New Jersey Industrial Site
Recovery Act (ISRA) and "Hazardous Wastes" means any hazardous waste,
residential or household waste, solid waste, or other waste as defined in such
federal, state and local laws. Except as set forth in "Exhibit S-1", the
Contributor 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 the
Contributor's part which either (a) resulted in the releasing, spilling,
leaking, pumping, pouring, emitting, emptying or dumping of Hazardous
Substances or Hazardous Wastes, or (b) related in any way to the generation,
storage, transport, treatment or disposal of Hazardous Substances or Hazardous
Wastes.
(10) To the Contributor's knowledge,
except (a) in amounts customarily found in office uses and in other uses for
which the Property is suited and used and (b) in compliance with applicable
law, no Hazardous Substances and no Hazardous Wastes are present on the
Property including, without limitation, asbestos, flammable substances,
explosives, radioactive materials, hazardous wastes, toxic substances,
pollutants, pollution, contaminant, polychlorinated biphenyls ("PCBs"), urea
formaldehyde foam insulation, radon, corrosive, irritant, biologically
infectious materials, petroleum product, garbage, refuse, sludge, hazardous or
waste materials, except as has been disclosed in the environmental site
assessment reports prepared for the Partnership for each Property by Dames &
Moore, and there has been no use of the Property that shall, under any
federal, state or local environmental statute, ordinance or regulation,
require, at any time, any closure or cessation of the use or occupancy of the
Property and/or impose, at any time, upon the owner of the Property any
clean-up or other monetary obligation. To the Contributor's knowledge, none of
the Properties 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. Notwithstanding the representations and warranties set forth in
this subparagraph and subparagraph (9) above, the acts, if any, of any
Applicable Contributor's past or current tenants shall not be imputed to such
Applicable Contributor unless such Applicable Contributor shall have actual
knowledge thereof.
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(11) True and correct copies of the income
and expense statements for each Property owned by the Contributor for the
calendar year 1997 certified by the Contributor, have been delivered to the
Partnership upon execution of this Agreement.
(12) The Contributor has received no
written notice of any material 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 Contributor and related to the ownership or operation of each Property
owned by the Contributor (collectively, the "Permits"), and there is no
pending or, to the knowledge of the Contributor, threatened proceeding which
could result in the revocation or cancellation of, or inability of the
Contributor to renew, any Permit.
(13) Except as set forth in "Exhibit V"
attached hereto and except for the obligations which the Partnership has
specifically agreed to assume pursuant to the provisions of Paragraph 7(e)
above, to the best of the Contributor's knowledge, all management fees,
leasing commissions and tenant improvement allowances relating to the Property
are fully paid, there are no brokerage commissions owing by the Contributor
with respect to any of the Leases or otherwise related to the Properties owned
by the Contributor which have not been paid, and there are no ongoing
commission or leasing fee obligations.
(14) The Contributor has received no
written notice from any insurance company which has issued a policy with
respect to any of the Property or by any board of fire underwriters (or other
body exercising similar functions) claiming any material defects or
deficiencies or requesting the performance of any material repairs,
alterations or other work, and the Contributor will promptly notify the
Partnership of any such notice or requirement if such notice is received prior
to any Closing.
(15) The Contributor is not a "foreign
person" within the meaning of the Internal Revenue Code of 1986, as amended.
(16) The Contributor has not received
written notice in the last two (2) years from any governmental agency or
authority of outstanding material violations issued by governmental
authorities having jurisdiction over the Property owned by it.
(17) Except as set forth in "Exhibit R-1",
there are no options, rights of first refusal, rights of first offer or
conditional sales agreements regarding the purchase and sale of the Property.
(18) 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 and the Licenses. No Tenant has
advised the Contributor in the last two (2) years, that the Contributor is in
default under any of the Leases, or asserted, in the last two (2) years, any
claim or basis for any claim for free or reduced rent or right of set off
against the landlord or the rent under the Leases, and the Contributor has no
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
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an event of default. The Contributor 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 the Contributor except as
additional collateral for any existing mortgage upon the Real Property to
which any such Lease relates, which shall be satisfied or assumed at or before
Closing at which such Real Property shall be conveyed by the Contributor. 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 currently being collected by the Contributor under the Leases.
Except as set forth on "Exhibit V", all material obligations of the
Contributor that it is required to complete pursuant to any Lease as of the
date hereof has been completed as of this date or shall be completed as of the
Closing at which the Real Property as to which any such Lease relates shall be
conveyed, and all costs therefore have been or shall be paid by the
Contributor, and all of the Contributor's work has or shall have been accepted
by the Tenant without exception on or before such Closing, other than routine
punch list items, which items shall remain the responsibility of the
Contributor following such Closing (without regard to the limitations set
forth in Paragraph11), and which obligation shall expressly survive Closing.
The amount of each security deposit contains, where required by law or
otherwise, such interest which has accrued in accordance with law. No Tenant
of the Property under any of the Leases has, and shall not at Closing at which
such Property shall be conveyed have, prepaid any rent under any of the Leases
for more than one (1) month. Except as explicitly noted in "Exhibit C", no
security deposits by Tenants have heretofore been returned or applied to
charges against the Tenants.
(19) Schedule 5 is a true and correct list
of matters regarding the Mortgage Loans covered by Paragraph 3(e) above. No
holder of an Assumed Mortgage Loan is entitled to receipt of a participation
interest (whether of profits, sale or refinancing proceeds) in any of the
Consideration to be received by the Applicable Contributor hereunder, nor is
the holder of an Assumed Mortgage Loan entitled to receipt of a participation
interest under any other circumstances.
(20) To the Contributor's knowledge, all
adequate utilities, useable public sanitary and storm sewers, public water
facilities, electric facilities and gas facilities (collectively, the
"Utilities"), are installed in, and are duly connected to, the Property; the
sanitary sewer system has been dedicated to and accepted by the Municipal
Utilities Authority and can be used without charge, except for normal and
usual metered utility charges and water and sewer charges. All utilities
required for the operation of the Property, either enter the Property through
adjoining public streets or, if they pass through adjoining public land, do so
in accordance with valid public easements or private easements which will
inure to the benefit of the Partnership at no cost to the Partnership. All of
said Utilities are installed and operating and all installation, connection
and "tap-in" charges have been paid in full.
(21) No work has been performed or is in
progress at, and no materials have been furnished to the Contributor with
respect 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
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complete releases have been obtained and except for the work currently being
performed in connection with the 263 Old Country Road Property. If any lien
for any such work is filed before or after Closing with respect to the
Property (including the 263 Old Country Road Property), the applicable
Contributor covenants that it shall promptly discharge the same.
(22) To the Contributor'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) All charges, fees and assessments
(including condominium fees) and any and all other sums due under
declarations, cross-easements and like agreements to which the Property or any
portion thereof may be subject, have been paid, and no special assessments
thereunder are pending, there is no constituted board of directors or board of
trustees for the Property (or the development in which the Property is
situated) 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 Contributor's knowledge, all
debts, liabilities, and obligations of the Contributor arising out of the
construction, ownership, and operation of the Property owned by it, including,
but not limited to, construction costs, salaries, taxes, accounts payable and
the like, have been paid consistent with the Contributor's prior practices and
shall continue to be so paid from the date hereof until the Closing Date with
respect to the Property.
(25) Except as set forth on "Exhibit DD",
there are no existing tax reduction proceedings in effect with respect to the
Property.
(26) Schedule 1 attached hereto correctly
reflects all existing Participants of the Contributor as shown on the books of
the Contributor, the percentage ownership interest of each Participant of the
Contributor, the percentage ownership of the Axinn Participants of the
Contributor, and either the state of residence for each individual Participant
and Contributor or the state of formation for each such entity Participant and
Contributor.
(27) Each of the Contributors has
conducted its business only in the ordinary course of such business and there
has not been any change, circumstance or event since January 1, 1998 that has
resulted in a material adverse effect on the business, properties, results of
operations or financial condition of each of the Contributors, taken as a
whole.
(28) Axinn and the Contributors have not
provided management, maintenance or other services other than in a de minimis
manner to persons or entities who are not then tenants or customers of the
Property owned by them. The employees listed on "Exhibit Q" only provide
services to Property owned by Axinn or DEAC in whole or in part.
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(29) None of the Contributors have made a
general assignment for the benefit of creditors, filed any voluntary petition
in bankruptcy or suffered the filing of any involuntary petition by the
creditors of any such entity, suffered the appointment of a receiver to take
possession of all, or substantially all, of the assets of such Contributor, or
any of their respective direct or indirect subsidiaries, suffered the
attachment or other judicial seizure of all, or substantially all, of the
assets of any such entity, admitted in writing its inability to pay its debts
as they come due or made an offer of settlement, extension or composition to
its creditors generally.
(b) Each Contributor hereby represents and warrants
as follows, all of which shall be true and correct on and as of the Effective
Date and each Closing Date:
(1) That it has received a copy of the
Trust's Annual Report on Form 10-K for the fiscal year ended December 31,
1997, and all Current Reports on Form 8-K filed by the Trust between January
1, 1998 and the date hereof, the Trust's proxy statement for its annual
meeting of shareholders to be held on May 15, 1998, the Trust's Prospectus
dated November 13, 1997 (relating to Preferred Shares, Common Shares,
Depositary Shares and Warrants), the Trust's Form 10-Q for the quarter ended
March 31, 1998 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
and not with 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 is an Accredited Investor;
(4) That it is not relying on, and did not
become aware of, the offering of the Securities through or as a result of any
form of general solicitation or general advertising including, without
limitation, any article, notice, advertisement or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio, in connection with the offering and sale of the
Securities;
(5) 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 and are subject to
substantial restrictions on transfer;
(6) 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 such
state securities laws and the transferability thereof is subject to compliance
with the Securities Act and such state securities laws;
(7) 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
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Act and any applicable state securities laws, or unless the Securities may be
sold in reliance on an exemption from such registration requirements;
(8) That it understands that, except as
and to the extent set forth in the Registration Rights Agreement, 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 it
therefore may be precluded from selling or otherwise transferring or disposing
of any Securities or any portion thereof for an indefinite period of time or
at any particular time;
(9) 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;
(10) That it has been apprised by Axinn of
the terms of the options to be issued to Axinn and Mark Hamer and the
employment agreement to be entered into by Mark Hamer. That it has reviewed
with Axinn the financial condition of the Contributor in which it has an
economic interest and has reviewed with Axinn the reasons for the transactions
contemplated by this Agreement and alternatives to the transactions
contemplated hereby;
(11) That it acknowledges that, except for
the information contained in the public filings made by the Trust with the
Securities and Exchange Commission and specifically identified herein, the
undersigned has not relied upon any information furnished by the Trust or the
Partnership in determining to consent to the transactions contemplated by this
Agreement.
(12) THAT IT UNDERSTANDS THAT THE
ACQUISITION OF THE SECURITIES INVOLVES CERTAIN RISKS, including those risks
identified in the Trust's Prospectus dated November 13, 1997 referred to
above, and that it can bear the economic risk of the acquisition of the
Securities, including the total loss of its investment;
(13) 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, and (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;
(14) 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
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the Securities hereunder, or made any finding or determination as to the
fairness of the Securities for investment;
(15) 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 exemptions and the suitability of the Contributors and Participants to
acquire the Securities. In this regard, it understands that Common Shares will
only be issued upon the redemption of the Units if an exemption from the
registration requirements of the Securities Act is then available for such
issuance; and
(16) That it does not beneficially own
five (5%) percent or more of the outstanding Common Shares.
(c) The Trust and the Partnership, jointly and
severally, hereby represent and warrant to each of the Contributors as
follows, all of which shall be true and correct on and as of the Effective
Date and each Closing Date:
(1) The Partnership is a limited
partnership duly formed and validly existing under the laws of the State of
Delaware, and is in good standing with the State of Delaware. The Trust is a
real estate investment trust duly formed and validly existing under and by
virtue of the laws of the State of Maryland, and is in good standing with the
State Department of Assessments and Taxation of Maryland. Each of the Trust
and the Partnership has the trust and limited partnership power and authority,
as the case may be, to own its properties and is duly registered, qualified,
authorized and licensed to do business and is in good standing in each
jurisdiction in which the conduct of its business or the nature of its
properties requires such registration, qualification, authorization or
license, except where the failure to be so registered, qualified, authorized
or licensed would not have a material adverse effect on the Trust and its
subsidiaries taken as a whole.
(2) Subject to subparagraph (c)(5), below,
each of the Trust and the Partnership has all necessary trust and limited
partnership power and authority, as the case may be, to enter into this
Agreement, to execute and deliver this Agreement and 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, in each case,
prior to each Closing. This Agreement has been duly and validly executed and
delivered by each of the Trust and the Partnership and constitutes, and the
other documents and instruments to be delivered by the Partnership and the
Trust pursuant hereto when delivered will constitute, the legal, valid and
binding obligations of the Partnership and the Trust, as applicable,
enforceable against the Partnership and the Trust, as applicable, in
accordance with their respective terms.
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(3) Neither the execution and delivery of
this Agreement by the Trust or the Partnership nor the consummation by any of
them of the transactions contemplated hereby nor compliance by each of them
with any of the provisions hereof will (i) conflict with or result in any
breach of any provision of the organizational documents of the Trust or the
Partnership; (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any indenture, license, contract, agreement or
other instrument or obligation to which the Trust or the Partnership is a
party or by which any of them or any of their respective properties or assets
may be bound; or (iii) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Trust or the Partnership, or any of their
properties or assets.
(4) There is no litigation, proceeding or
action pending, or, to 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 would invalidate this Agreement or
any action taken or to be taken by the Partnership or the Trust pursuant
hereto.
(5) Except in connection with the filing
by the Trust of a supplemental listing application with the NYSE to list the
Common Shares issuable upon redemption of the Units issuable hereunder and the
registration of the Underlying Shares pursuant to the Registration Rights
Agreement and as required by any federal and state securities or "blue sky"
laws, no permit, 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.
(6) The Units to be issued hereunder are
duly authorized and, when issued by the Partnership, will be fully paid and
non-assessable, free and clear of any mortgage, pledge, lien, encumbrance,
security interest, claim or rights of interest of any third party. The Common
Shares that may be issued upon redemption of the Units are duly authorized,
and, upon such issuance, will be fully paid and non-assessable, free and clear
of any mortgage, pledge, lien, encumbrance, security interest, claim or rights
of interest of any third party. As of the date hereof, if the Unitholders were
to redeem a Unit pursuant to the Partnership Agreement and the Trust were to
satisfy such redemption with Common Shares, such Unitholder, as applicable,
would receive one Common Share in exchange therefor. As of the date on which
the last dividend on the Common Shares was paid, the amount of the dividend
payable with respect to one Common Share into which a Unit may be redeemed was
equivalent to the distribution payable on one Unit that had been outstanding
for the last full quarter.
(7) Since January 1, 1998, the Trust has
filed all reports, schedules, forms, statements and other documents
(collectively, the "SEC Documents") required to be filed by it with the
Securities and Exchange Commission ("SEC"). The Trust furthermore has caused
to be delivered to the Contributors copies of the SEC Documents (without
exhibits) and will cause to be delivered to the Contributors copies of such
additional
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documents as may be filed by the Trust pursuant to the 1933 Act or the 1934
Act on or prior to the Closing Date if the Trust believes such documents
contain such information that would be material to a Participant or
Contributor. The SEC Documents were, and those additional documents filed
between the date hereof and the Closing will be, prepared and filed in
material compliance with the 1933 Act and the 1934 Act and the rules and
regulations promulgated by the SEC, and do not and will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein in order to make the statements contained therein, in light of
the circumstances under which they were made or will be made, not misleading.
The consolidated financial statements included in the SEC Documents (i)
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, (ii) have been prepared in accordance with GAAP and applied on a
consistent basis during the period involved (except as may be indicated in the
notes thereto or, in the case of the unaudited statements, as permitted by
Form 10-Q) and (iii) present fairly (subject, in the case of the unaudited
statements, to normal, recurring year-end audit adjustments) the consolidated
financial position of the Trust and its subsidiaries at the dates thereof and
the consolidated results of operations and cash flows for the periods then
ended.
(8) Except as disclosed in the SEC
Documents filed with the SEC prior to the date hereof , since March 31, 1998,
each of the Trust and the Partnership and each of their subsidiaries has
conducted its business only in the ordinary course of such business and there
has not been any change, circumstance or event that has resulted in a material
adverse effect on the business, properties, results of operations or financial
condition of the Trust, the Partnership and their respective subsidiaries,
taken as a whole.
(9) Neither the Trust nor the Partnership,
nor any of their respective direct or indirect subsidiaries is at the date of
this Agreement, or will be at the Closing, required to be registered with the
SEC as an investment company under the Investment Company Act of 1940, as
amended.
(10) Neither the Trust nor the Partnership
is in default under, or in violation of, any provision of its organizational
documents.
(11) Neither the Trust nor the
Partnership, nor any of their respective direct or indirect subsidiaries has
made a general assignment for the benefit of creditors, filed any voluntary
petition in bankruptcy or suffered the filing of any involuntary petition by
the creditors of any such entity, suffered the appointment of a receiver to
take possession of all, or substantially all, of the assets of the Trust, the
Partnership, or any of their respective direct or indirect subsidiaries,
suffered the attachment or other judicial seizure of all, or substantially
all, of the assets of any such entity, admitted in writing its inability to
pay its debts as they come due or made an offer of settlement, extension or
composition to its creditors generally.
(12) To the knowledge of the Trust and the
Partnership, except as disclosed in the SEC Documents, none of the Trust, the
Partnership, or any of their respective direct or indirect subsidiaries has
violated or failed to comply with any statute, law,
39
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ordinance, regulation, rule, judgment, decree or order of any governmental
authority applicable to its business, properties, or operations, except for
any violations and failures to comply that would not, in the aggregate,
reasonably be expected to have a material adverse effect on the Trust, the
Partnership and their respective subsidiaries, taken as a whole.
(13) The Trust, beginning with its taxable
year ended December 31, 1986 and through December 31, 1997 (i) has been
subject to taxation as a Real Estate Investment Trust (a "REIT Entity") within
the meaning of the Code and has complied with all requirements contained in
the Code to qualify as a REIT Entity for such years, (ii) has operated, and
currently intends to continue to operate, in such a manner as to qualify as a
REIT Entity for the tax year ending December 31, 1998 and thereafter and (iii)
has not taken or omitted to take any action which could reasonably be expected
to result in a successful challenge to its status as a REIT Entity, and no
such challenge is pending or, to the knowledge of the Trust, threatened.
Neither the Trust nor any of its Subsidiaries holds any asset that is subject
to a consent filed pursuant to Section 341(f) of the Code and the regulations
thereunder.
(14) The Trust and the majority-owned
subsidiaries of the Trust (the "Subsidiaries") have (A) timely filed with the
appropriate taxing authority all Tax Returns required to be filed by them
(after giving effect to any filing extension granted by the appropriate taxing
authority) and such Tax Returns were true, complete and accurate in all
respects and (B) have paid all Taxes shown as owed by any of them on any Tax
Return. Neither the Trust nor any of the Subsidiaries has executed or filed
with the Internal Revenue Service or any other taxing authority any agreement
now in effect extending the period for assessment or collection of any Tax. To
the Trust's knowledge, neither the Trust nor any of the Subsidiaries is a
party to any material pending action or proceedings by any taxing authority
for assessment or collection of any Tax, and no material claim for assessment
or collection of any Tax has been asserted against any of them. No claim has
been made by an authority in a jurisdiction where the Trust or any of the
Subsidiaries, as applicable, does not file Tax Returns that such entity is or
may be subject to taxation by the jurisdiction. There is no material dispute
or claim concerning any Tax liability of the Trust or any of the Subsidiaries
claimed or raised by any taxing authority and neither the Trust nor any of the
Subsidiaries has entered into or intends to enter into any agreements with any
taxing authority, including but not limited to closing agreements. True,
complete and accurate copies of all income or franchise tax returns that have
been filed by the Trust or any of the Subsidiaries for 1993, 1994, 1995 and
1996 and all written communications with a taxing authority relating thereto
which could affect the tax status of the Trust have been delivered to the
Contributors.
(15) Neither the Trust nor any of the
Subsidiaries has incurred (i) any material liability for Taxes under Sections
856(b), 860(c) or 4981 of the Code, or (ii) a liability for Taxes other than
Taxes incurred in connection with the ordinary course of business. Except for
the risks identified in the Trust's Prospectus dated November 13, 1997
referenced in Section 10(b)(i) above, no event has occurred, and to the
Trust's knowledge, no condition or circumstances exists, which presents a
material risk that any material Tax described in the preceding sentence will
be imposed upon the Trust or any of the Subsidiaries.
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(16) The Partnership was not and is not a
publicly traded partnership within the meaning of Section 7704 of the Code and
the regulations promulgated thereunder. In addition, no Subsidiaries have
taken the position, for federal income tax purposes, that it is a publicly
traded partnership within the meaning of Section 7704 of the Code and the
regulations promulgated thereunder and (ii) (A) the Subsidiaries organized as
a partnership or a limited liability company including, without limitation,
the Partnership (and any other Subsidiaries that file tax returns as
partnership for income tax purposes) were and continue to be classified as
partnerships for income tax purposes (other than wholly owned, "100% pass
through" subsidiary partnerships and limited liability companies which are not
classified as a partnerships for income tax purposes); and (B) each
corporation or other entity which is taxable as a corporation for income tax
purposes and in which the Trust has a direct or indirect interest is either
(x) a "qualified REIT Entity subsidiary", within the meaning of Section 856(i)
of the Code, or (y) an entity of which less than ten (10%) percent of the
voting securities is owned directly or indirectly by the Trust and of which
the total value of the securities of such entity owned directly or indirectly
by the Trust represent less than five (5%) percent of the value of the assets
of the Trust within the meaning of Section 856(c)(5) of the Code.
(17) The Trust is a "domestically-
controlled" REIT Entity within the meaning of Section 897(h)(4)(B).
(18) To the Trust's knowledge, no person
or entity owns or would be considered to own (taking into account the
ownership attribution rules under Section 544 of the Code, as modified by
Section 856(h) of the Code) in excess of 9.8% of the value of the outstanding
equity interests in the Trust, except as set forth in public filings on either
Schedule 13D or 13G filed with the Securities and Exchange Commission.
(19) Neither the Trust nor the Partnership
is an entity whose assets are deemed to be "plan assets" within the meaning of
the Department of Labor Regulation Section 2510.3-101.
(d) As to any representation or warranty made in
this Agreement which is qualified as being to the "knowledge" of any party,
the following shall apply: a Contributor will be deemed to have knowledge of a
particular matter if the facts and circumstances thereof are actually known,
without any implied, imputed or constructive knowledge, without any
independent investigation having been made or any implied duty to investigate
by Donald Axinn and Mark Hamer, and with respect to the Property located at 55
Ames Court, Plainview, New York, if the facts and circumstances thereof are
actually known, without any implied, imputed or constructive knowledge,
without any independent investigation having been made or any implied duty to
investigate by Morris Greene only. The Partnership will be deemed to have
knowledge of a particular matter if the facts and circumstances thereof are
actually known, without implied, imputed or constructive knowledge, without
independent investigation having been made or any implied duty to investigate
by Gerard H. Sweeney, Brad A. Molotsky, Esq. and Andrew Hicks.
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(e) All of the representations and warranties set forth
in this Paragraph 10 shall be deemed renewed by Axinn, each Contributor, the
Trust and the Partnership on each Closing Date and shall, as a conditions to
each party's obligation to close hereunder, be recertified by each party as
being true and correct in all material respects as of such Closing Date as if
made at such time (it being understood that specific, numbered representations
and warranties that speak as of a specified date shall only continue to speak
as of the date so specified).
(f) If, to the Trust's or the Partnership's knowledge,
as evidenced by written information furnished to them, any of the
Contributor's or Axinn's representations or warranties in this Agreement are
not true as of the Closing and the Trust and the Partnership elect nonetheless
to close, the Trust and the Partnership shall be deemed to have waived any
claim for breach of such representation or warranty. This limitation shall be
in addition to, and not in substitution for, any other limitations of the
Trust's and the Partnership's remedies or damages set forth in this Agreement.
(g) If, to Axinn's or the Contributors' knowledge, as
evidenced by written information furnished to them, any of the Trust's or the
Partnership's representations or warranties in this Agreement are not true as
of the Closing and the Contributors elect nonetheless to close, the
Contributors shall be deemed to have waived any claim for breach of such
representation or warranty. This limitation shall be in addition to, and not
in substitution for, any other limitations of the Contributors' or Axinn's
remedies or damages set forth in this Agreement.
(h) Any event, fact or circumstance described in any
section of the Disclosure Schedules shall be deemed a disclosure for all
purposes of all other portions of the Disclosure Schedules, provided the
relevance of the disclosure to such other portions can be reasonably discerned
from the applicable section of the Disclosure Schedules.
11. Survival; Indemnification.
(a) The Partnership hereby acknowledges and agrees that
the representations and warranties contained in Paragraphs 10 (a) (3), (7)
(with respect to representations and warranties made by Axinn and each
Contributor regarding compliance with ERISA only), (17) and 10(b) shall
survive for a period of three (3) years from the Applicable Closing Date for
such Subject Property. With respect to all other representations and
warranties set forth in Paragraph 10, the representations and warranties made
with respect to a Subject Property in Paragraph 10 shall survive for a period
of nine (9) months from the Applicable Closing Date for such Subject Property.
The representations and warranties of the Trust and the Partnership shall
survive for nine (9) months from the Applicable Closing Date. In addition, in
the event that an Applicable Contributor delivers to the Partnership a tenant
estoppel certificate for a tenant (whether prior to, at or subsequent to any
Applicable Closing), then the Applicable Contributor shall thereafter be
released from all liability relating to such tenant's Lease which the
Applicable Contributor may have as a result of its representations, warranties
and certificates under Paragraphs 10(a)(6), 10(a)(18) and Paragraph 20(i)
below to the extent such representations and warranties relate to matters
covered by the tenant estoppel certificate
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(provided such tenant estoppel contains no information which is materially and
adversely contradictory or inconsistent with the information previously
provided by the Applicable Contributor to the Partnership with respect to such
tenant). Any claim that the Trust or the Partnership may have at any time
against Axinn or any other Contributor or that any Contributor or Participant
may have against the Trust or the Partnership for a breach of any such
representation or warranty, whether known or unknown, which is not asserted by
written notice from the Partnership and the Trust to Axinn or the Applicable
Contributor or by the Contributor and Participants against the Trust and the
Partnership within such three (3) year period or nine (9) month period, as the
case may be, will not be valid or effective, and Axinn and such Applicable
Contributor, the Trust and the Partnership will have no liability with respect
thereto. Nor shall the Contributors and Axinn have an aggregate liability to
the Partnership or the Trust for a breach of any representation or warranty
exceeding $7,500,000.00 (the "R&W Cap"). If the Partnership or the Trust is
successful in an action regarding a breach of a representation or warranty,
the Applicable Contributor and Axinn shall have the right, at the option of
such Applicable Contributor and Axinn, to redeem Units (at the market price
for one Common Share for each Unit at the time such action is completed) or
pay such amounts in cash.
(b) Without limitation of any other indemnity
obligations of the Contributors or Axinn set forth herein, from and after the
Initial Closing Date, each Contributor and Axinn shall be obligated to
indemnify, defend and save and hold harmless the Partnership and the Trust,
and their respective partners, trustees, officers and employees, of, from and
against any and all loss, cost, expense, damage, claim, and liability,
including reasonable attorney's fees and court costs, including, without
limitation, attorney's fees and costs associated with the enforcement of such
Contributor's or Participant's indemnification obligations (hereinafter
collectively, the "P&T Losses") which the Partnership or the Trust may suffer
or incur, resulting from, relating to, or arising in whole or in part, from or
out of (i) any misrepresentation or a breach of a representation or warranty
by such Contributor or Participant contained in this Agreement, subject,
however, to the time limitations set forth in Paragraph 11(a) above; (ii) all
litigation identified on "Exhibit S" to which such Contributor or Participant
has ever been a party; (iii) all "non-Property claims and liabilities" (as
hereinafter defined) arising out of the Contributor, the Entity Interests in
which will be assigned to the Partnership; (iv) a claim, demand, cost or
judgment in favor of a third party, including, without limitation, any
governmental authority, arising from the deposit, storage, disposal, burial,
dumping, injecting, spilling, leaking, or other placement or release of
Hazardous Substances or Hazardous Wastes in or on any Property conveyed by
such Contributor to the Partnership during Contributor's period of ownership,
but only if such Contributor had actual knowledge of the such Hazardous Wastes
or Hazardous Substances condition and failed to disclose same to the
Partnership (except in the case of those environmental remediation conditions
which are specifically the subject of the environmental escrow arrangement
described in Paragraph 7(j) above, in which case such Contributor shall be
obligated to indemnify and hold the Partnership and the Trust harmless from
and against the matters set forth in this subparagraph (iv) with respect to
those environmental remediation conditions which are the subject of the
environmental escrow arrangement and any additional environmental remediation
which may arise as a result thereof, regardless of whether such Contributor
had actual knowledge of the same); (v) any and all actions, suits,
investigations, proceedings, demands, assessments, audits, judgments; and/or
claims arising out
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of or relating to any of the foregoing. This obligation shall survive all
Closings contemplated hereby. For purposes of this Agreement, the term
"non-Property claims and liabilities" means claims and liabilities which would
not have been incurred by the Trust or Partnership had the Trust or
Partnership acquired the applicable Property owned by the Applicable
Contributor, rather than the Entity Interests, on the terms and conditions,
and subject to the representations and warranties, contained herein applicable
to Property being acquired in fee.
(c) Without limitation of any other indemnity
obligations of the Trusts or Partnership set forth herein, from and after the
Initial Closing Date, each of the Trust and the Partnership shall be obligated
to indemnify, defend and save and hold harmless the Contributors and the
Participants, and their respective partners, officers and employees, of, from
and against any and all loss, cost, expense, damage, claim, and liability,
including reasonable attorney's fees and court costs, including, without
limitation, attorney's fees and costs associated with the enforcement of such
Trust's or Partnership's indemnification obligations (hereinafter
collectively, the "C&P Losses") which each Contributor and Participant may
suffer or incur, resulting from, relating to, or arising in whole or in part,
from or out of (i) any misrepresentation or a breach of a representation or
warranty by the Trust or the Partnership contained in this Agreement; and (ii)
any and all actions, suits, investigations, proceedings, demands, assessments,
audits, judgments; and/or claims arising out of or relating to any of the
foregoing. This obligation shall survive all Closings contemplated hereby.
(d) Promptly after receipt by the Partnership or the
Trust of written notice of the commencement of any suit, audit, demand,
judgment, action, investigation or proceeding (a "P&T Third Party Action") or
promptly after the Partnership or the Trust incurs any P&T Losses or has
knowledge of the existence of any P&T Losses, the Partnership or the Trust, as
the case may be, will, if a claim with respect thereto is to be made against
any Contributor or Axinn (the "P&T Indemnitor") due to such P&T Indemnitor's
obligation to provide indemnification hereunder, give such P&T Indemnitor
written notice within forty-five (45) days of such P&T Losses or within
forty-five (45) days of the Partnership's or the Trust's receipt of notice of
the commencement of any P&T Third Party Action. Promptly after receiving such
notice, the P&T Indemnitor will, upon notice to the Partnership or the Trust,
as the case may be, have the right to assume and control the defense and
settlement of any such P&T 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 P&T Indemnitor that the P&T Indemnitor shall agree in
writing that the P&T Losses, or the P&T Third Party Action, as the case may
be, is properly within the scope of the indemnification obligation and that as
between the parties, the P&T Indemnitor shall be responsible to satisfy and
discharge such P&T Third Party Action. No P&T Indemnitor shall enter into any
resolution or other compromise of a P&T Third Party Action without obtaining
the complete release of the Partnership or the Trust, as appropriate, for any
liability to all claimants under or pursuant to such P&T Third Party Action.
The Partnership or the Trust, as the case may be, shall have the right to
participate in any such defense, contest or other protective action at its own
cost and expense.
(e) Notwithstanding the foregoing, the Partnership or
the Trust, as the case may be, shall have the right to assume and control the
defense and settlement of a P&T
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Third Party Action if (a) such action includes claims for equitable relief
which, if determined adversely to the Partnership or the Trust, as the case
may be, could reasonably be expected to interfere with its intended business
operations or damage its business reputation or (b) the P&T Indemnitor fails
to do so in a timely manner. In any circumstances in which the Partnership or
the Trust, as the case may be, undertakes to control the P&T 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 P&T Indemnitor provided that such written
consent may not be withheld if it would materially interfere with the
Partnership's or the Trust's, as the case may be, business operation and (ii)
keep the P&T Indemnitor informed on an ongoing basis of the status of such P&T
Third Party Action and shall deliver to the P&T Indemnitor copies of all
documents related to the P&T Third Party Action reasonably requested by the
P&T Indemnitor. The Partnership or the Trust, as the case may be, shall act to
assure that all attorneys' fees and expenses incurred in connection therewith
are reasonable.
(f) Promptly after receipt by a Contributor, Axinn or a
Participant of written notice of the commencement of any suit, audit, demand,
judgment, action, investigation or proceeding (a "C&P Third Party Action") or
promptly after such Contributor, Axinn or a Participant incurs any Losses or
has knowledge of the existence of any C&P Losses, such Contributor, Axinn or a
Participant will, if a claim with respect thereto is to be made against the
Trust or the Partnership (the "C&P Indemnitor") due to such C&P Indemnitor's
obligation to provide indemnification hereunder, give such C&P Indemnitor
written notice within forty-five (45) days of such C&P Losses or within
forty-five (45) days of such C&P's receipt of notice of the commencement of
any C&P Third Party Action. Promptly after receiving such notice, the C&P
Indemnitor will, upon notice to the Contributor and the Participant have the
right to assume and control the defense and settlement of any such C&P 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 C&P Indemnitor that
the C&P Indemnitor shall agree in writing that the C&P Losses, or the C&P
Third Party Action, as the case may be, is properly within the scope of the
indemnification obligation and that as between the parties, the C&P Indemnitor
shall be responsible to satisfy and discharge such C&P Third Party Action. No
C&P Indemnitor shall enter into any resolution or other compromise of a C&P
Third Party Action without obtaining the complete release of the Contributor,
Axinn or the Participant, as appropriate, for any liability to all claimants
under or pursuant to such C&P Third Party Action. The Contributor, Axinn and
the Participant shall have the right to participate in any such defense,
contest or other protective action at its own cost and expense.
(g) Notwithstanding the foregoing, the Contributor,
Axinn and the Participant shall have the right to assume and control the
defense and settlement of a C&P Third Party Action if (a) such action includes
claims for equitable relief which, if determined adversely to the Contributor,
Axinn and the Participant could reasonably be expected to interfere with its
intended business operations or damage its business reputation or (b) the C&P
Indemnitor fails to do so in a timely manner. In any circumstances in which
the Contributor, Axinn and the Participant undertakes to control the C&P 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 C&P Indemnitor provided that such written
consent
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may not be withheld if it would materially interfere with the Contributor's,
Axinn's and the Participant's business operation and (ii) keep the C&P
Indemnitor informed on an ongoing basis of the status of such C&P Third Party
Action and shall deliver to the C&P Indemnitor copies of all documents related
to the C&P Third Party Action reasonably requested by the C&P Indemnitor. The
Contributor. Axinn and the Participant shall act to assure that all attorneys'
fees and expenses incurred in connection therewith are reasonable.
(h) Except as specifically set forth in this
subparagraph (h), from and after the Initial Closing Date, the Trust and the
Partnership on the one hand and the Contributors and Axinn on the other hand
shall indemnify, defend, save and hold harmless the other group and their
respective partners, trustees, officers and employees of, from and against
one-half of any and all loss, cost, expense, damage and liability, including
reasonable attorneys' fees, arising with respect to any state or county
documentary or transfer taxes (including any interest and late charges with
respect thereto) imposed subsequent to each Closing in connection with the New
Jersey Property. Notwithstanding the foregoing, Axinn and the Contributor of
the 3 Paragon Drive Property shall indemnify, jointly and severally, save and
hold harmless the Trust and the Partnership and their respective partners,
trustees, officers and employees of, from and against any and all loss, cost,
expense, damage and liability, including reasonable attorneys' fees, arising
with respect to any state or county documentary or transfer taxes (including
any interest and late charges with respect thereto) imposed subsequent to the
Initial Closing in connection with such Contributor's recordation of the 3
Paragon Correcting Deed and Axinn and the Contributor of the 25 Phillips
Property shall indemnify, jointly and severally, save and hold harmless the
Trust and the Partnership and their respective partners, trustees, officers
and employees of, from and against any and all loss, cost, expense, damage and
liability, including reasonable attorneys' fees, arising with respect to any
state or county documentary or transfer taxes (including any interest and late
charges with respect thereto) imposed subsequent to the Initial Closing in
connection with such Contributor's recordation of the 25 Phillips Correcting
Deed, in each case without regard to the limitations in Paragraph 11.
(i) The indemnifying party and the indemnified party
under subparagraphs (d) through (h) above shall cooperate fully in all aspects
of any investigation, defense, pretrial activities, trial, compromise,
settlement or discharge of any claim in respect of which indemnity is sought
pursuant to this Paragraph 11, including, but not limited to, by providing the
other party with reasonable access to employees and officers (including as
witnesses) and other information.
(j) IN NO EVENT SHALL ANY PARTY HERETO, OR ANY DIRECT OR
INDIRECT PARTNER, MEMBER, SHAREHOLDER, BENEFICIARY, OWNER OR AFFILIATE
THEREOF, OR ANY OFFICER, DIRECTOR, EMPLOYEE, TRUSTEE, OR AGENT OF ANY OF THE
FOREGOING OR ANY AFFILIATE OR CONTROLLING PERSON THEREOF, BE LIABLE TO ANY
INDEMNIFIED PARTY IN CONTRACT, TORT OR OTHERWISE WITH RESPECT TO ANY INDIRECT,
CONSEQUENTIAL, OR EXEMPLARY DAMAGES ARISING FROM OR RELATING TO THIS AGREEMENT
OR ANY CLOSING DOCUMENT OR TRANSACTION DOCUMENT.
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(k) IN NO EVENT SHALL THE CONTRIBUTORS OR AXINN BE
LIABLE TO THE TRUST OR THE PARTNERSHIP HEREUNDER UNLESS AND UNTIL THE
AGGREGATE AMOUNT OF DAMAGES FOR WHICH THE CONTRIBUTORS OR AXINN ARE OBLIGATED
TO INDEMNIFY THE TRUST AND THE PARTNERSHIP EXCEEDS $150,000, AFTER WHICH THE
TRUST AND THE PARTNERSHIP MAY BRING ONE OR MORE CLAIMS AGAINST THE
CONTRIBUTORS OR AXINN FOR THE ENTIRE AMOUNT OF THEIR AGGREGATE DAMAGES,
SUBJECT TO THE FURTHER LIMITATIONS SET FORTH IN THIS PARAGRAPH 11.
(l) IN NO EVENT SHALL THE TRUST OR THE PARTNERSHIP BE
LIABLE TO THE CONTRIBUTORS, AXINN OR THE PARTICIPANTS HEREUNDER UNLESS AND
UNTIL THE AGGREGATE AMOUNT OF DAMAGES FOR WHICH THE TRUST OR THE PARTNERSHIP
ARE OBLIGATED TO INDEMNIFY THE CONTRIBUTORS, AXINN OR THE PARTICIPANTS EXCEEDS
$150,000, AFTER WHICH THE CONTRIBUTORS, AXINN AND THE PARTICIPANTS MAY BRING
ONE OR MORE CLAIMS AGAINST THE TRUST OR THE PARTNERSHIP FOR THE ENTIRE AMOUNT
OF THEIR AGGREGATE DAMAGES SUBJECT TO THE FURTHER LIMITATIONS SET FORTH IN
THIS PARAGRAPH 11.
(m) IF THE CLOSING OCCURS, THE TRUST AND THE PARTNERSHIP
ON THE ONE HAND, AND THE CONTRIBUTORS, AXINN AND PARTICIPANTS, ON THE OTHER
HAND, SHALL NOT HAVE THE RIGHT TO BRING A CLAIM AGAINST ANY MEMBER OF THE
OTHER GROUP BY VIRTUE OF ANY OF THE REPRESENTATIONS OR WARRANTIES CONTAINED
HEREIN OR IN ANY TRANSACTION DOCUMENT BEING FALSE OR MISLEADING UNLESS (I)
SUCH CLAIM IS BROUGHT ON OR PRIOR TO THE DATE ON WHICH A CLAIM BASED ON SUCH
REPRESENTATION OR WARRANTY MAY NO LONGER BE BROUGHT AND (II) NOTICE OF THE
FALSE OR MISLEADING REPRESENTATION OR WARRANTY HAS BEEN GIVEN TO THE MEMBERS
OF THE APPLICABLE GROUP AND THE MEMBERS OF SUCH GROUP HAVE HAD THIRTY (30)
DAYS TO CURE SAME, PROVIDED SAME IS SUSCEPTIBLE TO CURE WITHIN SAID THIRTY
(30) DAY PERIOD.
(n) Notwithstanding anything contained in this Paragraph
11 to the contrary, the R&W Cap and the provisions of subparagraphs 11(k) and
11(l) hereof shall not apply with respect to the indemnifications by the
Contributors and Axinn set forth in subparagraph 11(b)(ii) through (b)(v)
hereof and with respect to the indemnifications of all parties set forth in
subparagraph 11(h) hereof.
(o) As collateral security for Axinn's indemnification
obligations under this Paragraph 11, at the Initial Closing, Axinn shall enter
into a pledge agreement, in the form annexed hereto as "Exhibit FF" (the
"Axinn Pledge Agreement"), pursuant to which Axinn shall pledge and grant to
the Partnership a security interest in the 312,500 Units which Axinn is to
receive at the Initial Closing.
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(p) With respect to the indemnity obligations of Morris
Greene under this Paragraph 11, it is understood and agreed by the Partnership
and the Trust that such indemnity obligations shall only relate to the 55 Ames
Court, Plainview, New York Property.
12. Access to the Property.
(a) The Partnership and its agents, employees and
representatives, during normal business hours and after reasonable advance
notice to any Contributor, may enter upon any of the Real Property of such
Contributor from time to time prior to the Closing Date with respect to such
Real Property, accompanied by an agent of the Contributor, for purposes of
conducting such inspections, investigations and/or studies as the Partnership
deems necessary, including, without limitation, financial reviews, physical
inspections, lease reviews and environmental reviews and testing, which
activities may include test borings and soil samplings (the "Partnership
Inspections"). 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 the Contributor and only after
three (3) business days' prior notice to the Contributor. The Partnership may
contact any governmental or quasi-governmental authorities concerning the
Property without the prior written approval of the Contributor. The
Partnership shall give the Contributor at least five (5) days notice prior to
the Partnership contacting any such governmental or quasi-governmental
authorities. The Contributor shall have the opportunity to observe any and all
action taken by the Partnership or its representatives, consultants, agents,
etc. pursuant to this Paragraph 12. All information set forth in any document
which the Contributor has granted to the Partnership the express right to
review, if any, shall be held in confidence until the Closing Date hereunder
to which such information relates. The Partnership shall promptly repair any
damage to the Real Property resulting from the Partnership Inspections and
replace, refill and regrade any holes made in, or excavations of, any portion
of the Real Property used for such Partnership Inspections so that the Real
Property shall be in the same condition that it existed prior to such
Partnership Investigations. In conducting any inspections, investigations or
tests of the Real Property, the Trust and the Partnership and their agents and
representatives shall: (i) not disturb or interfere in any material respect
with the Tenants' use of the Real Property pursuant to their respective
Leases; (ii) not interfere in any material respect with the operation and
maintenance of the Real Property; (iii) not damage in any material respect any
part of the Real Property or any personal property owned or held by Tenant or
any other Person; (iv) not injure or otherwise cause bodily harm to any
Contributor, or its agents, guests, invitees, contractors and employees or any
Tenant or any other Person; (v) promptly pay when due the costs of all tests,
investigations, and examinations performed by or on behalf of the Trust or the
Partnership with regard to the Real Property; and (vi) comply with all
statutes, laws, ordinances, rules and regulations applicable to any such
inspections, investigations or tests. The Partnership hereby agrees to
indemnify, defend and hold harmless Contributor from and against all (a)
physical damage to any of the Real Property and Personal Property, personal
injury and/or any other claims or liability which may
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occur as a result of the Partnership's (or the Partnership's agents,
employees, or representatives) entry or activities upon any of the Real
Property, as specified in this Paragraph and (b) any liens or encumbrances
filed or recorded against any of the Real Property as a consequence of the
Partnership or the Partnership's representatives entry thereon. The provisions
of this Paragraph 12(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 each Contributor as additional
named insured with respect to any liability occurring on the Real Property of
such Contributor), 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 Contributor prior to the Partnership's or any of the
Partnership's consultants' entry on to any of the Real Property.
Notwithstanding anything to the contrary in Paragraph 12(a), the Partnership
shall have no obligation to indemnify any contributor to the extent that any
liability is covered by the insurance obtained by the Partnership pursuant to
this Paragraph 12(b).
(c) In the event Closing does not occur with respect to
one or more Parcels of Real Property, the Partnership shall promptly return to
Contributor any documents obtained from Contributor or Contributor's agents
and deliver to Contributor, without charge, copies of all written test
results, studies, reports and similar materials obtained by or on behalf of
the Partnership relating to such Real Property.
13. 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 review all plans and specifications, conditions of title,
agreements relating to and the availability of utilities, environmental
conditions, the physical condition of the existing improvements, compliance by
the Properties with zoning, licensing and all other governmental requirements,
Leases for any of the Real Property, operating statements pertaining to the
Properties and all other aspects and conditions of the Properties which the
Partnership may decide to review (collectively with the Partnership's
Inspections, "the Partnership's Due Diligence Activities"), all as the
Partnership shall deem appropriate. In connection with the Partnership's Due
Diligence Activities, each Contributor has delivered or will deliver to the
Partnership various documents, reports and materials (collectively, the
"Contributor Due Diligence Materials"). The Partnership understands and hereby
acknowledges and agrees that the Contributor Due Diligence Materials are being
delivered to the Partnership without any representation or warranty whatsoever
by any Contributor or by the preparer of such Contributor 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. The Partnership and the Trust hereby acknowledge and agree
that the Due Diligence Termination Date has, as of the date hereof, expired
and the right of the Partnership and the Trust to conduct the Partnership's
Due Diligence Activities and to terminate this Agreement as a result thereof
has also expired.
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(b) INTENTIONALLY DELETED.
(c) Each Contributor shall prepare certificates (the
"Estoppel Certificates") for execution by the Tenants of such Contributor's
Real Property, which shall either (i) be in such form or contain such
information as the Tenant from whom request is made is obligated under its
Lease to execute and deliver for execution by the Tenants (the "Required
Form"), or (ii) be in the form annexed hereto as "Exhibit W". Each Contributor
agrees to deliver the Estoppel Certificates to the Tenants of its Real
Property promptly after the Due Diligence Termination Date and to use all
reasonable and diligent efforts to obtain executed copies of same from such
Tenants prior to the Closing with respect to such Real Property.
(d) Axinn shall recommend to all of the Participants
that they each consent to the transactions contemplated by this Agreement and
shall use good faith efforts to obtain the consents of each of the
Participants, if the organizational documents of each Contributor require that
such consents be obtained in order to effectuate the same. In soliciting the
consents of the Participants, Axinn shall also provide each Participant with
information regarding the transactions contemplated hereby which is sufficient
to comply with the partnership or limited liability company law of the
applicable state.
14. Additional Provision Relating to the 3 Paragon Drive
Property, the 101 Paragon Drive Property and the 263 Old Country Road
Property.
(a) The 3 Paragon Drive Property. (i) Axinn holds fee title
to the 3 Paragon Drive Property as nominee for a New York general partnership
known as 80-20 Associates (the "3 Paragon Drive Partnership"). Axinn and
Lennard Axinn are the sole partners in the 3 Paragon Drive Partnership.
(ii) Axinn is the borrower under a loan (the "NY Life
Loan") with New York Life Insurance Company ("NY Life"). Axinn has entered
into a Forbearance Agreement dated June 10, 1998 (the "Forbearance Agreement")
with NY Life.
(iii) The costs incurred and anticipated to be incurred
by the 3 Paragon Drive Partnership in connection with the 3 Paragon Drive
Partnership's operation of the 3 Paragon Drive Property from March 24, 1998
through the remainder of 1998 are set forth on Schedule 12 annexed hereto (the
"3 Paragon Operating Costs").
(iv) At the Initial Closing, the Partnership agrees to
pay the 3 Paragon Drive Partnership the sum of (1) $500,000 plus (ii) an
amount equal to the 3 Paragon Operating Costs actually incurred through the
Initial Closing. In exchange for the payments made by the Partnership pursuant
to the preceding sentence, the 3 Paragon Drive Partnership grants the
Partnership an option (the "Option") to make a loan (the "Loan") in the amount
of $10,000,000 to 3 Paragon Drive Partnership on the terms set forth below.
Upon exercise by the Partnership of the Option, Axinn shall cause the proceeds
of the Loan, together with the other funds, to be used to repay in full the
Discounted Amount (as defined in the Forbearance
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Agreement) and shall cause all of the partnership interests in the 3 Paragon
Drive Partnership to be contributed to the Partnership or, as directed by the
Partnership, one or more subsidiaries of the Partnership. Upon such
contribution, neither Axinn nor Lennard Axinn shall have any liability to
repay any portion of the Loan, which shall thereupon be treated as a capital
contribution by the Partnership to the 3 Paragon Drive Partnership.
(v) The Partnership agrees to pay to the 3 Paragon Drive
Partnership $500,000, of which $100,000 shall be paid at the Initial Closing
and $100,000 shall be paid on each of the following dates: November 1, 1998,
February 1, 1999, May 1, 1999 and August 1, 1999; provided that any such
payments made by the Partnership after the date the Partnership makes the Loan
shall be paid directly to Axinn.
(vi) On or before 5:00 p.m. on December 28, 1998, the
Partnership may exercise the Option by loaning $10,000,000 to the 3 Paragon
Drive Partnership, which shall thereupon be required to use such funds to
enable Axinn to satisfy in full his obligations to NY Life under Section 4 of
the Forbearance Agreement. In the event that the Partnership has not exercised
the Option by 12:00 p.m. on December 28, 1998, it shall exercise such Option
by 4:00 p.m. on December 29, 1998, subject only to the condition that Axinn
has not then defaulted in his obligations under the Forbearance Agreement and
hence that NY Life will accept the Discounted Amount (as defined in the
Forbearance Agreement) and take the actions specified in the third and fourth
sentences of Section 4 of the Forbearance Agreement.
(vii) Upon exercise by the Partnership of the Option and
payment by Axinn of the Discounted Amount to NY Life in accordance with the
Forbearance Agreement, Axinn will file a corrective deed for the 3 Paragon
Drive Property (the "3 Paragon Corrective Deed") reflecting record ownership
of the 3 Paragon Drive Property by the 3 Paragon Drive Partnership (which will
then be owned by the Partnership and one or more subsidiaries of the
Partnership), free and clear of all liens and encumbrances other than any
Permitted Exceptions.
(viii) Axinn represents and warrants that upon exercise
by the Partnership of the Option, all sums owning by the 3 Paragon Drive
Partnership to any and all third parties, including NY Life, will have bee
paid in full (except to the extent of 3 Paragon Drive Operating Expenses
incurred subsequent to the Initial Closing).
(ix) In the event that 3 Paragon Drive is leased prior
to exercise by the Partnership of the Option and revenues are received from
the tenant under a lease, such revenues shall be applied as an offset against
the 3 Paragon Operating Expenses that the Partnership will otherwise be
required to fund.
(x) The Partnership acknowledges that the transactions
contemplated by the New York Life Forbearance Agreement are intended to be
consummated in a manner which will allow Axinn and Lennard Axinn to defer the
recognition of certain gain for federal and state income tax purposes.
Consequently, to the extent that the NY Life Loan is satisfied at less than
its face amount, the cancellation of indebtedness income realized by the 3
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Paragon Drive Partnership will be allocated to Axinn and Lennard Axinn, as the
current partners in the 3 Paragon Drive Partnership, and not to the
Partnership. In addition, if any of the cancellation of indebtedness income is
determined to be "qualified real property business indebtedness" under Section
108(a)(3) of the Code and applicable regulations thereunder, and Axinn and
Lennard Axinn elect to exclude the cancellation of indebtedness income under
Section 108(a)(1)(D) of the Code, it is anticipated that the 3 Paragon Drive
Partnership will reduce its tax basis under Section 1017 of the Code in the 3
Paragon Drive Property in the amount of the excluded cancellation of
indebtedness income to the extent of the 3 Paragon Drive Partnership's tax
basis in the 3 Paragon Drive Property, and to the extent of any cancellation
of indebtedness income that exceeds the 3 Paragon Drive Partnership's tax
basis in the 3 Paragon Drive Property, the Partnership will agree to permit
Axinn and Lennard Axinn to elect to reduce their basis in any Units that they
own. The proportionate share of the basis of the 3 Paragon Drive Property and
the Units of Axinn and Lennard Axinn is equal to the sum of: (1) the partners'
basis adjustment under section 743(b) of the Code to items of Partnership
depreciable real property for the 3 Paragon Drive Property and the Units and
(2) the common basis depreciation deductions that, under the terms of the 3
Paragon Drive Partnership Agreement and the Partnership Agreement of the
Partnership, are reasonably expected to be allocated to Axinn and Lennard
Axinn over the remaining useful life of the 3 Paragon Drive Property. The
amount of the reduction to the basis of the 3 Paragon Drive Property and the
property underlying the Units constitutes an adjustment to the basis of
Partnership property with respect to Axinn and Lennard Axinn and not to the
Partnership, and such adjustment will be recovered in the manner described in
Treas. Reg. Section 1.743-1. Consequently, no adjustment will be made to the
common basis of Partnership property. For purposes of income, deduction, gain
and loss, Axinn and Lennard Axinn will have a special basis for the
Partnership properties whose basis are adjusted under Section 1017 of the
Code.
(b) The 101 Paragon Drive Property.
(i) Axinn represents and warrants to the Trust and
the Partnership that:
(A) He has furnished the Trust and the Partnership with true
and correct copies of the documents listed on Schedule 14 (the "Documents").
(B) The Documents provide that Axinn, as nominee for Axinn
Montvale II Associates("AMA"), a New Jersey general partnership having the
partners identified on Schedule I attached hereto, owns 101 Paragon Drive,
free of all liens and encumbrances other than (i) the First Mortgage (the
"First Mortgage") from Axinn, as nominee for AMA, as mortgagor, and NJRE
Corp., as mortgagee, that secures a loan in the original principal amount of
$12,992,607 (the "First Mortgage Loan"); (ii) the Second Mortgage (the "Second
Mortgage" from Axinn, as nominee for AMA, as mortgagor, and NJRE Corp., as
mortgagee, that secures a loan in the original principal amount of $6,197,393
(the "Second Mortgage Loan" and, together with the First Mortgage Loan, the
"NJRE Loans"), (iii) the Purchase Option (as defined below) and (iv) Permitted
Exceptions.
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(C) Axinn, on behalf of AMA, has the right to purchase, and
thereupon discharge in their entirety, the NJRE Loans (including all accrued
interest thereon) for $11,000,000.00 on September 15, 2005 (the "Loan Purchase
Date"). Assuming that the purchase option (the "Purchase Option") held by
Medco Containment Services, Inc., Paid Prescriptions, Inc. ("Medco") is not
exercised by Medco prior to the Loan Purchase Date then, upon purchase by
Axinn of the NJRE Loans, Axinn, as nominee for AMA, will own 101 Paragon
Drive, free of all liens and encumbrances other than Permitted Exceptions. The
Purchase Option may only be exercised by Medco on or before _____________ and,
if not exercised by Medco on or before such date, expires. The minimum price
that Medco must pay to acquire 101 Paragon upon exercise of the Purchase
Option is $11,000,000.00.
(D) Under a lease (the "Lease") between Axinn, as landlord,
and Medco, as tenant, Axinn is presently entitled to receive annual lease
payments that aggregate not less than $50,000 per year (the "Annual Excess
Amount") in excess of Axinn's payment obligations under the NJRE Loans.
(ii) At the Initial Closing, and in reliance on the foregoing
representations and warranties, the Partnership (or, at the option of the
Partnership, one or more subsidiaries of the Partnership) shall pay to AMA
$500,000 in cash or in the form of Units, with each Units valued at $24.
(iii) In consideration of the payment by the Partnership or one or
more subsidiaries of the Partnership of $500,000 to AMA pursuant to paragraph
(ii) above, Axinn, on behalf of himself and AMA, agrees to the following:
(A) to pay the Partnership, in cash and to the extent
collected by Axinn or AMA (which Axinn shall use best efforts to collect), an
amount equal to the Annual Excess Amount on each of the following: September
1, 1999; September 1, 2000; September 1, 2001; September 1, 2002; September 1,
2003; September 1, 2004; and September 1, 2005; provided that such payment
obligation shall cease upon the earlier to occur of (i) the exercise by Medco
of the Purchase Option; and (ii) the purchase by Axinn, AMA or the Partnership
of the NJRE Loans.
(B) unless and until the Purchase Option has previously been
exercised by Medco, to give all notices and take all actions so as to purchase
the NJRE Loans for $11,000,000.00 on the Loan Purchase Date, subject to
receipt by Axinn or AMA of $11,000,000.00 on the Loan Purchase Date from the
Partnership or its subsidiaries;
(C) in the event the Purchase Option is exercised and the
purchase price exceeds $11,000,000.00, to pay over, or cause to be paid over,
the amount in excess of $11,000,000.00 to the Partnership;
(D) unless the deed to 101 Paragon Drive has previously been
transferred to AMA, to transfer the deed to 101 Paragon Drive to AMA
concurrently with the purchase and discharge of the NJRE Loans, free of liens
and encumbrances except Permitted Exceptions.
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(E) to cause the partnership agreement of AMA (the "AMA
Partnership Agreement") to be amended and restated to include the following
provisions and to have such provisions remain in the AMA Partnership Agreement
unless the Partnership consents to the amendment of any such provisions:
(1) AMA will elect to close its books pursuant to
Section 706(d) of the Code immediately prior to the admission of the
Partnership as a partner of AMA.
(2) In the event that the Partnership is admitted as
a partner of AMA, if the NJRE Loans are satisfied at less than their face
amounts, the cancellation of indebtedness income realized by AMA shall be
allocated as follows: (i) if the NJRE Loans are satisfied for less than
$11,000,000, the income up to $8,000,000 will be allocated to Axinn and other
partners of AMA, not including the Partnership, and the balance will be
allocated to the Partnership, and (ii) if the NJRE Loans are satisfied for
$11,000,000 or more, the income will be allocated among Axinn and the other
partners of AMA in accordance with their percentage interests in AMA, not
including the Partnership.
(F) to permit the Partnership to review the federal income
tax return of AMA in the year that any cancellation of indebtedness income is
reported as a result of the payment of the NJRE Loans.
(iv) The Partnership agrees to loan AMA up to $11,000,000.00 (the
"Partnership Loan") on the Loan Purchase Date in order to provide AMA (or
Axinn acting on behalf of AMA) with funds necessary to purchase and thereupon
discharge the NJRE Loans such that, upon such purchase and discharge, AMA will
hold fee title to 101 Paragon Drive free of liens and encumbrances other than
Permitted Exceptions; provided that the Partnership's agreement to make the
Partnership Loan shall terminate if (A) the Purchase Option has then been
exercised; (B) the NJRE Loans have previously been purchased (a possibility
contemplated by subparagraph (vi) below); (C) any of Axinn's representations
and warranties in subparagraph (i) above are incorrect in any material
respect; or (D) Medco has actually terminated or threatened to terminate the
Lease; provided that this clause (D) shall only be a condition to the
Partnership's obligation to make the Partnership Loan in the event that AMA or
the Partnership suffers or can reasonably be expected to suffer economic loss
as a result of any actual Lease termination; or (E) the partners of AMA do not
unconditionally agree to transfer to the Partnership or, as directed by the
Partnership, one or more subsidiaries of the Partnership, all of their right,
title and interest in AMA, free and clear of liens, encumbrances and
liabilities (other than the Partnership Loan), immediately following the
making of the Partnership Loan.
(v) Axinn, on behalf of himself and the other partners of AMA, agrees
that immediately following the making of the Partnership Loan and the
concurrent purchase and discharge by AMA of the NJRE Loans, Axinn and such
other partners will contribute all of their right, title and interest in AMA
to the Partnership or, as directed by the Partnership, to subsidiaries of the
Partnership, free and clear of liens, encumbrances and liabilities (other than
the Partnership Loan), in exchange for an aggregate of 12 Class A Units (to be
allocated among themselves as they may agree).
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(vi) Without limiting the provisions to be included in the AMA
Partnership Agreement in accordance with paragraph (iii)(E) above, Axinn, on
behalf of himself and the partners of AMA, and the Partnership agree that in
the event that the NJRE Loans are purchased prior to the Loan Purchase Date,
any cancellation of indebtedness income arising from the purchase shall be
allocated under Section 704b) of the Code and the applicable regulations
thereunder to Axinn and the other partners in AMA, not including the
Partnership. In addition, if any of the cancellation of indebtedness income is
determined to be "qualified real property business indebtedness" under Section
108(a)(3) of the Code and applicable regulations thereunder, and Axinn and the
other partners of AMA elect to exclude the cancellation of indebtedness income
under Section 108(a)(1)(D) of the Code, it is anticipated that AMA will reduce
its tax basis under Section 1017 of the Code in 101 Paragon Drive in the
amount of the excluded cancellation of indebtedness income to the extent of
AMA's tax basis in 101 Paragon Drive, and to the extent of any cancellation of
indebtedness income that exceeds AMA's tax basis in 101 Paragon Drive, the
Partnership will agree to permit Axinn and the other Partners of AMA to elect
to reduce their basis in any Units that they own. The proportionate share of
the basis of 101 Paragon and the Units of Axinn and the other partners of AMA
is equal to the sum of: (1) the partners' basis adjustment under section
743(b) of the Code to items of partnership depreciable real property for 101
Paragon Drive and the Units and (2) the common basis depreciation deductions
that, under the terms of the AMA Partnership Agreement and the Partnership
Agreement of the Partnership, are reasonably expected to be allocated to Axinn
and the other partners of AMA over the remaining useful life of the property.
The amount of the reduction to the basis of 101 Paragon Drive and the property
underlying the Units constitutes an adjustment to the basis of partnership
property with respect to Axinn and the other partners of AMA and not to the
Partnership, and such adjustment will be recovered in the manner described in
Treas. Reg. Section 1.743-1. Consequently, no adjustment will be made to the
common basis of Partnership property. For purposes of income, deduction, gain
and loss, Axinn and the AMA Partners will have a special basis for the
partnership properties whose bases are adjusted under Section 1017 of the Code.
(vii) In the event that the Loan Purchase Date is accelerated by NJRE
Corp. to a date earlier than September 15, 2005, then the Partnership shall
have the option to (A) terminate the arrangements provided for this Section
and receive from Axinn or AMA payment of $500,000 minus the aggregate of the
sums previously paid to it under paragraph iii(A) above or (B) lieu of making
the Partnership Loan, to loan AMA the funds necessary to enable AMA to
purchase and thereupon discharge the NJRE Loans and concurrently obtain fee
title to 101 Paragon Drive free of liens and encumbrances other than Permitted
Exceptions (in which case Axinn and the other partners of AMA will thereupon
contribute their partnership interests in AMA to the Partnership in the manner
and for the consideration contemplated by paragraph (v) above).
(viii) Axinn agrees to defend the Trust and the Partnership, and to
hold the Trust and the Partnership harmless from and against, any lawsuits or
actions instituted by Medco, NJRE Corp. or their affiliates that name the
Trust or the Partnership alleging that the arrangements set forth herein
breach any of Axinn's agreements with Medco and NJRE Corp. This indemnity
shall not be subject to the limitations contained in Paragraph 11 of this
Agreement. Neither Axinn nor the Trust or Partnership, by including this
provision, shall be deemed to have
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acknowledged that the arrangements provided for herein breach any obligation
Axinn or his affiliates have with Medco, NJRE Corp. or their affiliates, and
it is not the intention of the parties to breach any such obligations.
(ix) In recognition of the intent of this paragraph to vest in the
Partnership the ultimate right to acquire ownership of 101 Paragon Drive
(through the Partnership's acquisition, directly or through subsidiaries, of
AMA) concurrently with the purchase of the NJRE Loans and the discharge of the
related First Mortgage and Second Mortgage, free of all liens and encumbrances
other than Permitted Exceptions, and to afford the Partnership any benefits
that might arise from subsequent negotiations with Medco relating to a
modification of the contractual arrangements in effect between Medco, NJRE
Corp., Axinn and their respective affiliates, Axinn agrees: (i) not to modify
any contracts he or any affiliate has with Medco or NJRE Corp. without the
Partnership's written consent; (ii) to seek to modify any such contracts as
and to the extent requested by the Partnership; and (iii) to allow the
Partnership to realize the economic benefits of any such contractual
modifications. For example, if Medco is willing to sell the NJRE Loans prior
to the Loan Purchase Date at less than $11,000,000.00 and the Partnership
wishes to have the NJRE Loans acquired on such earlier date for such lower
amount, then Axinn will cooperate in effecting such earlier purchase, with
funds provided by the Partnership, thereby allowing AMA to acquire fee title
to 101 Paragon Drive for less than $11,000,000.00 followed immediately by a
contribution of the partnership interests in AMA to the Partnership in
exchange for the Units specified in Paragraph (v) above; provided, however,
that in such event, any cancellation of indebtedness income attributable to
the purchase and discharge of the NJRE Loans for less than $11,000,000 shall
be allocated to the Partnership and, in order to effect such allocation, the
$500,000 payment made by the Partnership pursuant to Section (ii) above shall
be treated as a capital contribution to AMA as of the time immediately prior
to the purchase of the NJRE Loans for less than $11,000,000.
(x) In the event of an inconsistency between this Section and the AMA
Partnership Agreement, this Section shall prevail.
(c) The 263 Old Country Road Property. The
Partnership and the Contributor of the 263 Old Country Road shall, at the 263
Old Country Road Closing, enter into an assignment and assumption agreement
(the "263 Assignment and Assumption") pursuant to which such Contributor shall
represent and warrant that it has not defaulted under, and shall assign all of
its right, title and interest in and to the ground lease with the Suffolk
County Industrial Development Agency for the 263 Old Country Road Property
(the "IDA Ground Lease") and the Partnership shall assume all of the
obligations of such Contributor under the IDA Ground Lease. The Partnership
and the Trust hereby also acknowledge that they have been advised by the
Contributor of the 263 Old Country Road Property that : (i) the Contributor
and/or its affiliate intends on entering into an agreement with ADI with
respect to an affiliate of the Contributor performing certain interior tenant
improvement work for ADI at the 263 Old Country Road Property (the "ADI
Agreement"), and (ii) in connection therewith, ADI shall execute and deliver
to the Contributor, and/or its affiliate, a promissory note in the amount of
the cost of such work to ensure the repayment of the same by ADI to the
Contributor and/or its affiliate. The Partnership and the Trust hereby consent
to all of the foregoing transactions between ADI and the
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Contributor and/or its affiliate; provided the promissory note does not give
ADI or any affiliate of ADI a right to set-off rents under the ADI Lease.
(d) The 31 Commercial Street Property. The
Partnership and the Trust hereby acknowledge that the 31 Commercial Street
Property is the subject of a consent order dated April, 1995 (the "Commercial
Street Consent Order") between the Contributor of the 31 Commercial Street
Property and the New York State Department of Environmental Conservation (the
"DEC"). The parties agree that the Partnership shall purchase the 31
Commercial Street Property upon, and subject to, the satisfaction of the 31
Commercial Environmental Condition. For purposes hereof, the 31 Commercial
Environmental Condition shall mean that the 31 Commercial Street Property has
been delisted by the DEC as a hazardous waste disposal site under the DEC's
Registry of Inactive Hazardous Waste Disposal Sites (which delisting shall
include a determination by the DEC that no further ground water monitoring or
other action under the Commercial Street Consent Order is required). Upon the
Contributor's satisfaction of the 31 Commercial Environmental Condition and
the transfer of title to the 31 Commercial Street Property from the
Contributor to the Partnership, all of the Contributor's obligations to the
Partnership with respect to environmental matters at the 31 Commercial Street
Property including, without limitation, any environmental indemnity
obligations set forth in Paragraph 11 hereof, shall be deemed fully and
completely satisfied. In the event that remediation activities are required at
the 31 Commercial Property in connection with the delisting activities, the
costs of such remediation shall remain the responsibility of Axinn, who shall
hold the Trust and Partnership harmless from any such costs, regardless of the
limitations in Section 11. Notwithstanding anything contained in this
Agreement to the contrary, in the event the 31 Commercial Environment
Condition is not satisfied by two (2) years from the Initial Closing, either
the Contributor of the 31 Commercial Street Property or the Partnership shall
have the right to terminate this Agreement by providing the other party with
written notice thereof, whereupon this Agreement shall terminate with respect
to the 31 Commercial Street Property.
(e) 885 Waverly Avenue, Holtsville, New York. The
Partnership hereby agrees that, in the event United States Profile Wrapping
Co., Inc. ("USPW") does not close its purchase of the 885 Waverly Avenue,
Holtsville, New York Property (the "Waverly Property") pursuant to the terms
of USPW's purchase option set forth in Article 63 of its lease with the
Contributor of the Waverly Property (the "USPW Lease"), the Partnership shall
purchase the Waverly Property in accordance with the terms hereof. The
applicable Contributor shall provide the Partnership with written notice that
USPW has either failed to close its purchase of the Waverly Property in
accordance with the terms of Article 63 of the USPW Lease or has waived its
option under the same (the "Waverly Closing Condition"). The applicable
Contributor shall also provide the Partnership with no less than ten (10) day
prior written notice of the date of the Closing for the Waverly Property.
Notwithstanding the foregoing, in the event the Waverly Closing Condition is
not satisfied by six (6) months from the Initial Closing, either the
Contributor of the Waverly Property or the Partnership shall have the right to
terminate this Agreement by providing the other party with written notice
thereof, whereupon this Agreement shall terminate with respect to the Waverly
Property.
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15. Condemnation. Each Contributor represents and warrants that such
Contributor has not received any written notice of any condemnation proceeding
or other proceeding in the nature of eminent domain in connection with any
Real Property of such Contributor, and has no actual knowledge of any
threatened condemnation. As used herein, a "material taking" shall mean a
taking of either an entire Parcel of Real Property (for purposes of this
Paragraph, the "Subject Property"), more than twenty percent (20%) of the
Improvements constituting a part of the Subject Property or more than 10% of
the parking area of the Subject Property. If, prior to the Closing with
respect to the Subject Property (for purposes of this Paragraph, the
"Applicable Closing"), any such proceeding affecting a material portion of any
of the Subject Property is commenced, the Contributor of the Subject Property
(for purposes of this Paragraph, the "Applicable Contributor") agrees promptly
to notify the Partnership thereof. In the event of a material taking or
commencement of proceedings in connection with such a material 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 with the Applicable Closing as provided in this Paragraph 15 without
an abatement of the Consideration for the Subject Property and, at the
Applicable Closing, the Applicable Contributor of the Subject Property 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 Subject Property as to which a material taking has occurred, whereupon
this Agreement shall terminate with respect to the Subject Property but shall
continue in full force and effect with respect to all of the remaining
Properties and, at the Applicable Closing, the Partnership shall pay to each
Contributor the aggregate of the Consideration for the remaining Properties.
Provided the Partnership shall have waived its right to terminate this
Agreement with respect to the Subject Property so taken, as provided above,
the Applicable Contributor 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. The parties hereby waive the provisions of Section 5-1311
of the General Obligation Law of the State of New York, and agree that the
provisions of this Paragraph shall serve in lieu thereof.
16. Damage by Fire or Other Casualty.
(a) Each Contributor shall promptly notify the Partnership of
damage to the Improvements constituting part of the Real Property of such
Contributor (for purposes of this Paragraph, the "Applicable Contributor")
occurring by reason of casualty during the period between the Effective Date
and the Closing Date with respect to such Real Property (for purposes of this
Paragraph 16, the "Applicable Closing Date"). The Applicable Contributor 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 (for purposes of this Paragraph, the "Subject Property"), as
provided below, Contributor shall not, from and after the Due Diligence
Termination Date, settle or adjust any claims relating to a casualty without
the Partnership's prior approval, which shall not be unreasonably withheld or
delayed.
(b) If (i) any portion of the Improvements is damaged by fire or
casualty after the Effective Date and the Improvements so damaged are not
repaired or restored
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on or before the Applicable Closing Date to substantially the condition
existing prior to the damage, and (ii) on the Applicable Closing Date, the
estimated cost of repairs by reason of such fire or casualty to the
Improvements, as determined by an independent adjuster is an amount equal to
or less than ten percent (10%) of the Consideration for the Subject Property,
there shall be no abatement or adjustment in the Consideration and, provided
the loss or damage is a covered loss under the Applicable Contributor's
insurance policy, the Partnership shall be required to purchase the Subject
Property in accordance with the terms of this Agreement and, on the Applicable
Closing Date, the Contributor shall assign to the Partnership, without
recourse, all insurance claims and proceeds with respect thereto (less sums
theretofore expended, if any, by the Applicable Contributor for emergency
repairs or barricades) and the Applicable Contributor shall credit the
Partnership on the Applicable Closing Date with the amount of any such
deductible. The Applicable Contributor shall have no liability or obligation
with respect to the condition of any of the Subject Property as a result of
any such fire or casualty. If the repair to, or the restoration of, the
Improvements so damaged has not been completed as aforesaid and, at the time
of the Applicable Closing Date, the estimated cost of such repair or
restoration, as determined by such independent adjuster, is an amount which is
greater than ten percent (10%) of the Consideration for the Subject Property,
the Partnership may, at its sole option, (x) proceed to Closing with respect
to the Subject Property as provided in this Paragraph 16(b) without an
abatement of the Consideration and, on the Applicable Closing Date, the
Applicable Contributor shall assign to the Partnership, without recourse, all
insurance claims and proceeds with respect thereto (less sums theretofore
expended, if any, by the Applicable Contributor for emergency repairs or
barricades) and the Applicable Contributor shall credit the Partnership on the
Applicable Closing Date with the amount of any such deductible; or (y)
terminate this Agreement with respect to the Subject Property which has
suffered damage to the Improvements by fire or other casualty in an amount
which exceeds ten percent (10%) of its Consideration, whereupon this Agreement
shall terminate with respect to the Subject Property but shall continue in
full force and effect with respect to all of the remaining Property and, at
each Closing, the Partnership shall pay to the Contributor's thereof the
aggregate of the Consideration for the remaining Property. The Partnership
shall assign all of its right, title and interest in and to any and all
insurance policies and insurance proceeds relating to the Subject Property for
which this Agreement has been terminated.
(c) The parties hereby waive the provisions of Section
5-1311 of the General Obligation Law of the State of New York, and agree that
the provisions of this Paragraph shall serve in lieu thereof.
17. Default.
(a) If the Partnership shall default in its obligations
to pay the Consideration and complete the Initial Closing in accordance with
the terms of this Agreement, then, as each Contributor's and Participant's
sole and exclusive remedy therefor, such Contributor and Participant shall be
entitled to retain its allocable portion of the Deposit as liquidated and
agreed upon damages for the losses and injuries which such Contributor and
Participant 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
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as expressly provided in this Agreement. It is agreed that the provisions of
this Paragraph 17(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 Property from sale to the general public at a
time when other parties would be interested in purchasing such Property, that
each Contributor and Participant 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, at any Closing (each, an "Applicable Closing"
for purposes of this Paragraph), any Contributor shall default in its
obligation to deliver any of the Deeds or other items described in Paragraph 6
hereof or any Participant shall default in its obligation to deliver any of
the Entity Assignments or other items described in Paragraph 6 above, upon the
Partnership's (i) tender of the full aggregate Consideration for the Property
to be conveyed or the Entity Interests to be transferred at the Applicable
Closing and (ii) compliance with all of the terms and conditions of this
Agreement relative to the Applicable Closing, the Partnership shall have the
sole option of terminating this Agreement and receiving the return of the
Deposit (less any amount of such Deposit applied in satisfaction of the
Purchase Price at any prior or concurrent Closing), together with payment by
the Contributors of the Partnership's actual, documented out-of-pocket costs
and expenses incurred in connection with the Partnership's Due Diligence
Activities, not to exceed $12,500 with respect to any one Property or (Y) to
seek specific performance of the applicable Contributor's and Participant's
obligation to convey the Property to be conveyed or the Entity Interest to be
transferred, as the case may be, at the Applicable Closing in accordance with
this Agreement. If the Partnership elects to terminate this Agreement, upon
payment of the sums described above, the applicable Contributor and
Participant shall be released and relieved of any further liability. Except as
expressly set forth above, the Partnership hereby waives any right which the
Partnership may have to any lis pendens or other lien or encumbrance against
any of the Property or Entity Interests, equitable relief, consequential or
punitive damages, loss of profits, costs related to in-house or other overhead
allocations, and damages. The remedies set forth herein shall be the
Partnership's sole remedies pursuant to this Agreement, or otherwise at law or
in equity, with respect to each Closing and such remedies shall become null
and void with respect to each Closing as each Closing occurs (except as to
obligations hereunder which by their terms expressly survive such Closings),
and shall not apply to a defect in title, the remedies for which are set forth
in Paragraph 5(b) hereof, or to any inability on the part of any Contributor
or Participant to perform its obligations under this Agreement.
18. Operations Prior To Closing.
(a) Each Contributor agrees to operate its Property
between the Effective Date and the Closing Date with respect to such Property
in the same general manner as such Contributor 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 the Closing with respect
to such Property, and maintaining all insurance coverage currently in force.
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(b) Each Contributor shall comply with all of the
obligations of landlord under its Leases and all other agreements and
contractual arrangements affecting its Real Property by which such Contributor
is bound or to which such Contributor's Real Property, is subject, and which
will be binding upon the Partnership or a lien upon such Real Property, after
the Closing with respect to such Real Property.
(c) Each Contributor shall notify the Partnership
promptly of such Contributor's receipt of any written notice from any party
alleging that such Contributor is in default of its obligations under any of
the Leases or any Permit or agreement affecting its Real Property, or any
portion or portions thereof.
(d) No contract for or on behalf of or affecting the
Real Property of any Contributor shall be negotiated or entered into which
cannot be terminated by such Contributor upon the Closing with respect to such
Real Property without the payment of a specific charge, cost, penalty or
premium for such termination. On or before ten (10) days prior to each
Applicable Closing Date, the Partnership shall send written notice to the
Applicable Contributor informing the Applicable Contributor of which of the
Contracts listed on "Exhibit T" attached hereto the Partnership is willing to
accept assignment (the "Accepted Contracts"). At the Closing, the Partnership
shall be obligated to accept assignment of, and assume the Applicable
Contributor's obligations (arising on or after the date of Closing) under, the
Accepted Contracts. The Applicable Contributor and Axinn shall remain
responsible for all other obligations in, to and under the Contracts (other
than the Accepted Contracts) which the Partnership does not accept and assume
pursuant to the terms hereof. Anything herein to the contrary notwithstanding,
neither the Trust nor the Partnership is assuming the Contracts (or any other
obligation arising under the Contracts) identified on Exhibit B with American
Transfer Company, Inc. and Unique Sanitation Co., Inc. Axinn, on behalf of
himself and the Axinn affiliate that has entered into these agreements, shall
remain responsible for performance under these agreements. However, in
recognition of the benefits to be realized by the Partnership from the waste
removal services that will be provided under such agreements, from and after
the date the Partnership acquired title to the Properties that are subject to
these two agreements, the Partnership agrees to make payments on behalf of
Axinn when such payments are due under these agreements in accordance with the
terms thereof as currently in effect. Axinn agrees not to renew or modify
either of these agreements without the prior written consent of the
Partnership.
(e) Except with the prior written consent of the
Partnership, which the Partnership agrees it shall not unreasonably withhold,
condition or delay, no Contributor shall enter into any new leases for any
portion of its Real Property after the Effective Date. Any new lease entered
into after the Effective Date 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, no Contributor shall, after the Effective Date, 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 its Leases (except as may be required under such
Lease), nor accept any rental more than one (1) month in advance
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(exclusive of any security deposit). The Partnership shall respond to the
Contributor's written request for a consent in all cases under this
subparagraph (e) within three (3) business days of receiving such request.
Failure by the Partnership to respond within such three (3) business day
period, shall be deemed the consent of the Partnership to the proposed leasing
transaction.
(f) No Contributor shall make or permit to be made any
capital improvements or additions to its Real Property, or any portion
thereof, without the prior written consent of the Partnership, except those
made by a Contributor pursuant to the express requirements of this Agreement,
those capital improvements or additions described on "Exhibit V", those made
by Tenants pursuant to the right to do so under their Leases, or by a
Contributor if required by such law or ordinance, or as required under any
Lease.
(g) Each Contributor shall timely bill all Tenants for
all rent billable under its Leases, and use commercially reasonable efforts to
collect any rent in arrears.
(h) Each Contributor shall notify the Partnership of any
tax assessment disputes (pending or threatened) prior to any Closing with
respect to the Property at issue, and, from and after the Due Diligence
Termination Date, no Contributor shall agree to any changes in the real estate
tax assessment, nor settle, withdraw or otherwise compromise any pending
claims with respect to tax assessments relating to the current or any
subsequent year, without the Partnership's prior written consent, which shall
not be unreasonably withheld, delayed or conditioned. If any proceedings shall
result in any reduction of assessment and/or tax for the tax year in which the
Closing with respect to such Contributor's Property 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 such Contributor and the Partnership as of the date real
estate taxes are apportioned under this Agreement. All refunds relating to any
tax year prior to the Closing with respect to its Property shall be the sole
property of Contributor, and all refunds relating to any year subsequent to
the year in which such Closing occurs shall be the sole property of the
Partnership. Each Contributor and the Partnership agrees to promptly remit to
the other any refund received by it which is the property of the other.
(i) Each Contributor 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 its Real Property, or any portion thereof;
(ii) Receipt of any notice of any default from any
Tenant or from the holder of any lien or security interest in or encumbering
its Real Property, or any portion thereof;
(iii) Notice of any actual or threatened litigation
against such Contributor or affecting or relating to its Real Property, or any
portion thereof which may
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materially and adversely affect such Real Property or such Contributor'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.
(j) Subject to the terms of this Agreement, Axinn
and each Contributor shall use all commercially reasonable efforts to take and
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations, to cause
the condition to the Partnership's and the Trust's obligation to close
specified in Paragraph 20 below to be satisfied and otherwise to consummate
and make effective the transactions contemplated by this Agreement.
19. PROPERTY CONVEYED "AS-IS, WHERE IS". IT IS UNDERSTOOD
AND AGREED THAT, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT,
NO CONTRIBUTOR IS MAKING AND EACH CONTRIBUTOR SPECIFICALLY DISCLAIMS, ANY
WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE ECONOMICAL, FUNCTIONAL, ENVIRONMENTAL OR PHYSICAL
CONDITION OF ALL OF THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OR
REPRESENTATIONS AS TO MATTERS OF TITLE, ZONING, TAX CONSEQUENCES, PHYSICAL OR
ENVIRONMENTAL CONDITIONS, AVAILABILITY OF ACCESS, INGRESS OR EGRESS, OPERATING
HISTORY OR PROJECTIONS, VALUATION, GOVERNMENTAL APPROVALS, GOVERNMENTAL
REGULATIONS OR ANY OTHER MATTER OR THING RELATING TO OR AFFECTING THE
ECONOMICAL, FUNCTIONAL, ENVIRONMENTAL OR PHYSICAL CONDITION OF THE PROPERTY OF
SUCH CONTRIBUTOR, INCLUDING, WITHOUT LIMITATION: (I) THE VALUE, CONDITION,
MERCHANTABILITY, MARKETABILITY, PROFITABILITY, SUITABILITY OR FITNESS FOR A
PARTICULAR USE OR PURPOSE OF ANY OF SUCH PROPERTY, (II) THE MANNER OR QUALITY
OF THE CONSTRUCTION OR MATERIALS INCORPORATED INTO ANY OF SUCH PROPERTY AND
(III) THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF ANY OF SUCH
PROPERTY. THE PARTNERSHIP AGREES THAT WITH RESPECT TO THE PROPERTY IN THE
AGGREGATE, THE PARTNERSHIP HAS NOT RELIED UPON AND WILL NOT RELY UPON, EITHER
DIRECTLY OR INDIRECTLY, ANY REPRESENTATION OR WARRANTY OF CONTRIBUTOR OR ANY
AGENT OF CONTRIBUTOR NOT EXPRESSLY SET FORTH IN THIS AGREEMENT. THE
PARTNERSHIP REPRESENTS THAT IT IS KNOWLEDGEABLE OF REAL ESTATE AND THAT IT IS
RELYING SOLELY ON ITS OWN EXPERTISE, THAT OF THE PARTNERSHIP'S CONSULTANTS,
AND THE REPRESENTATIONS AND WARRANTIES OF EACH CONTRIBUTOR CONTAINED IN THIS
AGREEMENT, SUBJECT, HOWEVER, TO THE LIMITATIONS CONTAINED HEREIN UPON SUCH
REPRESENTATIONS AND WARRANTIES, AND THAT EACH CONTRIBUTOR HAS OR SHALL HAVE
AFFORDED THE PARTNERSHIP WITH A FULL AND COMPLETE OPPORTUNITY TO MAKE ITS OWN
INDEPENDENT INVESTIGATION OF THE PROPERTY AND ALL MATTERS PERTAINING THERETO
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DURING THE DUE DILIGENCE PERIOD 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, EACH CONTRIBUTOR SHALL SELL AND CONVEY TO THE PARTNERSHIP AND
THE PARTNERSHIP SHALL ACCEPT THE PROPERTY "AS IS, WHERE IS," WITH ALL FAULTS,
AND THERE ARE NO ORAL AGREEMENTS, WARRANTIES OR REPRESENTATIONS (EXCEPT AS
HEREIN SPECIFICALLY PROVIDED), COLLATERAL TO OR AFFECTING ANY OF THE PROPERTY
BY ANY CONTRIBUTOR, ANY AGENT OF ANY CONTRIBUTOR OR ANY THIRD PARTY. THE
PARTNERSHIP EXPRESSLY AGREES THAT THE TERMS AND CONDITIONS OF THIS PARAGRAPH
19 SHALL EXPRESSLY SURVIVE THE CLOSING AND NOT MERGE THEREIN AND EACH
CONTRIBUTOR IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN
STATEMENTS, REPRESENTATIONS, OR INFORMATION PERTAINING TO ANY OF THE PROPERTY
FURNISHED BY ANY REAL ESTATE BROKER, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON,
UNLESS THE SAME ARE SPECIFICALLY SET FORTH OR REFERRED TO IN THIS AGREEMENT.
20. Conditions Precedent to Obligations of the Partnership
and the Contributors.
(a) The obligations of the Partnership hereunder are
subject to the fulfillment of the following conditions prior to or on each
Closing Date (for purposes of this Paragraph, the "Applicable Closing Date"),
any one of which may be waived in whole or in part by the Partnership on or
prior to such Applicable Closing Date, and in the event any of the conditions
are not complied with, the Partnership may terminate this Agreement with
respect to a Closing that has not then been consummated by notifying the
Contributor and Escrow Agent and thereupon the remaining balance of the
Deposit shall be returned to the Partnership and thereafter this Agreement
shall be null and void, except for provisions which expressly survive each
applicable Closing:
(i) Correctness of Representations and Warranties
and Consent of Participants. The representations and warranties made by Axinn
and each Contributor in this Agreement and each Participant made in the
Consent and Acknowledge of each Participant shall be true and correct in all
material respects on the Closing Date as though such representations and
warranties were made on the Applicable Closing Date, except to the extent that
they expressly relate to an earlier date. For purposes of this subsection, the
truth and correctness of any representation or warranty shall be determined on
an absolute basis, meaning apart from any qualification of "knowledge" set
forth in said representation or warranty. No Participant shall have revoked
its consent to the Applicable Closing.
(ii) Compliance with Terms and Conditions. Each
Contributor and each Participant shall have performed and complied with all of
the material terms and
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conditions required by this Agreement, including, without limitation, the
delivery of all required documents pursuant to Paragraph 6(a), to be performed
and complied with by it prior to or on the Applicable Closing Date.
(iii) The Partnership's Satisfaction with
Inspection. INTENTIONALLY DELETED.
(iv) Exchange Approval. On or prior to Applicable
Closing Date, the Underlying Shares and shares issuable upon exercise of the
options granted to Axinn and Mark Hamer shall have been approved for listing
with the NYSE, upon official notice of issuance.
(v) Issuance of Units. The issuance of Units shall
be (i) exempt from registration requirements of the Securities Act and (ii)
either exempt from, registered pursuant to, or qualified under any applicable
securities or "blue sky" requirements.
(vi) Termination of Agreements. The existing
management agreements and brokerage or leasing agreements identified on
"Exhibit T" shall be terminated as of the Closing with respect to the Property
to which they relate unless the Partnership shall specify otherwise or assume
the obligations of the Applicable Contributor under the terms thereof as
provided herein.
(vii) Estoppel Certificates. Estoppel Certificates
shall have been obtained from at least 75% of the Tenants at each Parcel of
Real Property and from all Tenants identified on "Exhibit X" annexed hereto
and made a part hereof (the "Identified Tenants"), but only if the initial
request made of such Tenant was for an Estoppel Certificate in the Required
Form; provided, however, if an Estoppel Certificate in the Required Form is
not obtained from an Identified Tenant, each Contributor may, in lieu thereof,
deliver its certificate containing the information set forth on the Required
Form, which certificate shall serve as Contributor's representation as to the
facts stated therein, which representation shall survive for a period of nine
(9) months following the Closing, except as set forth in Paragraph 11(a)
above.
(viii) No Injunction or Restraints. No statute,
rule, regulation, temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other legal restraint or prohibition preventing the consummation of the
transactions contemplated by this Agreement shall be in effect, provided,
however, that Axinn and the Applicable Contributor shall use commercially
reasonable efforts to have any such temporary restraining order, injunction,
order, restraint or prohibition vacated.
(ix) HSR Act. Any waiting period applicable to the
consummation of the transactions contemplated hereby under the HSR Act shall
have expired or been terminated, and no action shall have been instituted by
the United States Department of Justice or the United States Federal Trade
Commission challenging or seeking to enjoin the consummation of the
transactions contemplated hereby, which action shall not have been withdrawn
or terminated, or the Trust and the Partnership and the Contributors and the
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<PAGE>
Participants shall have reasonably mutually concluded that no filing under the
HSR Act is required with respect to the transactions contemplated hereby.
(x) Each Participant that is to contribute an Entity
Interest expressly agrees that the applicable Contributor the Entity Interest
in which is being contributed shall not be dissolved or terminated by virtue
of such contribution but shall continue.
(b) Conditions to the Contributors', Axinn's and Participant's
Obligations to Close. The obligation of the Contributors, Axinn and
Participants to consummate the transactions contemplated hereby at the Closing
is further subject to satisfaction or waiver by the Contributors, Axinn and
the Participants of the following conditions on or before the Applicable
Closing Date:
(i) Representations and Warranties. The
representations and warranties of the Trust and the Partnership contained
herein shall be true and correct in all material respects as of the Closing
Date as if remade on the Closing Date, except to the extent that they
expressly relate to an earlier date. For purposes of this subsection, the
truth and correctness of any representation or warranty shall be determined on
an absolute basis, meaning apart from any qualification of "knowledge" set
forth in said representation or warranty.
(ii) Full Performance. Each of the Trust and the
Partnership shall have performed and complied in all material respects with
all agreements, covenants, obligations and conditions required by this
Agreement to be performed or complied with by it on or prior to the Closing.
(iii) Closing Documents. The Trust and the
Partnership, as applicable, shall have executed and delivered to the
Contributors and the Participants all Closing documents required to be
delivered by the members of them hereunder.
(iv) Employment Agreement. The Employment Agreement
shall have been executed and delivered as of the Closing.
(v) Option Agreements. The Option Agreements shall
have been executed and delivered as of the Closing.
(vi) Issuance of Units. The Partnership shall have
issued the Units to the Participants.
(vii) REIT Election. The Trust shall not have
revoked its prior election pursuant to Section 856(c)(1) of the Code to be
taxed as a REIT, and shall be in compliance with all applicable federal income
tax laws, rules and regulations, including the Code, necessary to permit it to
be taxed as a REIT. The Trust shall not have taken any action or have failed
to take any action which would reasonably be expected to, alone or in
conjunction with any other factors, result in the loss of its status as a REIT
for federal income tax purposes.
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<PAGE>
(viii) Amendment to Partnership Agreement. The
Partnership Agreement shall have been amended by an instrument in
substantially the form of the Amendment, a copy of which shall be delivered at
Closing, to reflect the admission of the Participants as limited partners
therein.
(ix) Absence of Litigation. No action, suit, or
legal, administrative or arbitral proceedings shall have been instituted
before or by any court or governmental authority or arbitration panel seeking
to enjoin or challenging the transactions contemplated by this Agreement.
(x) Approval of Transaction. The consummation of the
transactions contemplated hereby and the delivery of the consideration to the
Contributors and Participants shall have been duly and validly authorized and
approved by the board of the Trust, on its own behalf and in its capacity as
the general partner of the Partnership.
(xi) No Injunction or Restraints. No statute, rule,
regulation, temporary restraining order, preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the transactions
contemplated by this Agreement shall be in effect, provided, however, that the
Trust and the Partnership shall use commercially reasonable efforts to have
any such temporary restraining order, injunction, order, restraint or
prohibition vacated.
(xii) HSR Act. Any waiting period applicable to the
consummation of the transactions contemplated hereby under the HSR Act shall
have expired or been terminated, and no action shall have been instituted by
the United States Department of Justice or the United States Federal Trade
Commission challenging or seeking to enjoin the consummation of the
transactions contemplated hereby, which action shall not have been withdrawn
or terminated, or the Trust and the Partnership and the Contributors and the
Participants shall have reasonably mutually concluded that no filing under the
HSR Act is required with respect to the transactions contemplated hereby.
(xiii) Mortgage Loan Assumption. At each Closing,
the Partnership shall have assumed the Assumed Mortgage Loan for the Subject
Property in accordance with the terms of this Agreement and shall have entered
into an agreement with respect to the Subject-to Mortgage Loans to pay off the
dollar amount specified in the applicable debt pay off letters.
(c) In the event the Contributors, the Participants and Axinn have
failed to comply with or are unable to fulfill the conditions to Closing
relative to such parties set forth in Paragraph 20(a) by November 10, 1998,
the Partnership and the Trust may terminate this Agreement by notifying the
Contributors, the Participants, Axinn and the Escrow Agent in writing, proceed
under Section 17(b) hereof and thereafter this Agreement shall be null and
void, except as to obligations hereunder which by their terms expressly
survive such termination. In the event the Partnership and the Trust have
failed to comply with or are unable to fulfill the conditions to Closing
relative to such parties set forth in Paragraph 20(b) by November 10, 1998,
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<PAGE>
the Contributors, the Participants and Axinn may terminate this Agreement by
notifying the Partnership, the Trust and the Escrow Agent in writing,
whereupon the Deposit shall be returned to the Partnership and this Agreement
shall be null and void, except as to obligations hereunder which by their
terms expressly survive such termination.
21. Brokers.
(a) Each Contributor and Axinn jointly and severally
represents to the Partnership that neither Axinn nor any Contributor has dealt
with any real estate broker, dealer or salesman in connection with the
transactions contemplated hereby other than Realty Capital International,
Inc., all of the fees, expenses and commissions of which shall be paid by the
Contributors and Axinn.
(b) The Partnership and the Trust jointly and
severally represent to each Contributor and Participant that neither the
Partnership nor the Trust has dealt with any real estate broker, dealer or
salesman in connection with the transactions contemplated hereby other than
Legg Mason Wood Walker, Incorporated, all of the fees, expenses and
commissions of which shall be paid by the Partnership and the Trust.
(c) Each of the Contributors and Axinn, on the one
hand, and the Partnership and the Trust, on the other, hereby agree to
indemnify, defend, and hold harmless the other from and against any loss,
damage or claim resulting from a breach of the representations set forth in
subparagraphs (a) and (b) above. The provisions of this Paragraph shall
survive Closing hereunder and any termination of this Agreement and shall not
be subject to the limitations set forth in Paragraph 11.
22. 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 Contributor or the Partnership shall have given notice as
herein provided):
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<PAGE>
If to the Partnership, addressed to:
------------------------------------
Brandywine Operating Partnership, L.P.
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
Attn: Gerard H. Sweeney,
President and Chief Executive Officer
with a copy in each instance to:
--------------------------------
Brad A. Molotsky, General Counsel
Brandywine Operating Partnership, L.P.
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
If to any Contributor (including Axinn) or Participant, to
it at the address set forth opposite such party's name on the signature pages
hereto.:
with a copy in each instance to:
--------------------------------
Mark Hamer
President and Chief Operating Officer
Donald E. Axinn Companies
131 Jericho Turnpike
Jericho, New York 11753
with a copy in each instance to:
--------------------------------
Steven B. Aptheker, Esquire
Lazer, Aptheker, Feldman, Rosella
& Yedid, LLP
Melville Law Center
225 Old Country Road
Melville, NY 11747-2712
Luke P. Iovine, III, Esq.
Battle Fowler LLP
Park Avenue Tower
75 East 55th Street
New York, NY 10022
69
<PAGE>
If to Escrow Agent, addressed to:
---------------------------------
M. Gordon Daniels, Esquire
Commonwealth Land Title Insurance Company
1700 Market Street
Philadelphia, Pennsylvania 19103
or to such other address or addresses and to the attention of such other
person or persons as any of the parties may notify the other in accordance
with the provisions of this Agreement. All such notices, requests and other
communications shall be deemed to have been sufficiently given for all
purposes hereof only if given pursuant to the foregoing requirements as to
both manner and address, and only upon receipt (or refusal to accept delivery)
by the party to whom such notice is sent. Notices by the parties may be given
on their behalf by their respective attorneys.
23. Successors and Assigns. The Trust and the Partnership
may not assign this Agreement or any rights herein or any portion hereof
without the prior written consent of each Contributor, which may be withheld
for any reason or for no reason; provided that neither the foregoing nor any
other provision in this Agreement will restrict the ability of the Trust or
Partnership to merge with another entity or sell all or substantially all of
its assets or otherwise engage in a business combination so long as any
successor to the Trust or the Partnership by merger, asset acquisition, or
other business combination succeeds to and assumes the rights and obligations
of the Trust and the Partnership hereunder. 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.
24. 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.
25. 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.
26. 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.
27. Captions and Recitals. The captions contained herein are
not a part of this Agreement and are included solely for the convenience of
the parties.
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28. Entire Agreement. This Agreement and the Exhibits and
Schedules attached hereto contains the entire agreement between the parties
relating to the acquisition of the Properties in the aggregate, 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. Any consents or approvals with respect to the subject matter
of this Agreement shall be in writing.
29. Governing Law; Venue.
(a) This Agreement and the rights and duties of the
parties hereto and the validity, construction, enforcement and interpretation
of this Agreement shall be governed by the laws of the State of New York with
respect to the New York Property and the laws of the State of New Jersey with
respect to the New Jersey Property.
(b) Any dispute, controversy or claim arising out of or
concerning this Agreement shall be determined, settled and resolved by
arbitration (and not by litigation) administered by the American Arbitration
Association (or any successor thereto) under its Commercial Arbitration Rules
and judgment on the award rendered by the arbitrator may be entered in any
court having jurisdiction thereto. Such arbitration shall be conducted in the
State of New Jersey. The fees and expenses of the arbitrator and all other
expenses of the arbitration (other than the fees and disbursements of
attorneys or witnesses for each party) shall be borne by the parties equally.
30. Confidentiality. Subject to the provisions of Paragraphs
31 and 36 below, the Partnership agrees that, unless and until the Applicable
Closing occurs, all information and materials obtained by the Partnership in
connection with the Subject Property that are not otherwise known by or
readily available to the public will not be disclosed by the Partnership to
any third persons (other than to its Authorized Representatives) without the
prior written consent of the Applicable Contributor. If the transaction
contemplated by this Agreement does not occur for any reason whatsoever, the
Partnership shall promptly return to each Applicable Contributor, and shall
instruct its Authorized Representatives to return to each Applicable
Contributor all copies and originals of all documents and information provided
to the Partnership. The provisions of this Paragraph 30 shall survive any
termination of this Agreement.
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<PAGE>
31. Public Announcement. The parties agree that upon the
prior written consent of Axinn, the Trust may issue a press release in in form
and substance reasonably acceptable to both Axinn and the Trust and that the
Trust may, upon execution and delivery of this Agreement, make such public
filings as the Trust reasonably believes to be required to enable it to comply
with applicable securities laws.
32. INTENTIONALLY DELETED
33. Limitation of Liability. The obligations of each
Applicable Contributor are binding only on such Applicable Contributor and
Axinn and such Applicable Contributor's and Axinn's assets and shall not be
personally binding upon, nor shall any resort be had to, the private
properties of any of the partners, officers, directors, shareholders or other
beneficiaries of each Applicable Contributor (other than Axinn) or of any of
each Applicable Contributor's employees or agents (other than Axinn). In
addition, the obligations of Morris Greene are binding only on Morris Greene
and Morris Greene's assets and shall not be personally binding upon, nor shall
any resort be had to, the private properties of Axinn with respect thereto. 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 of the Partnership or the Trust, whether by virtue of any
statute or rule of law or by the enforcement of any assessment or penalty or
otherwise, all such liability being expressly waived and released by all of
the Contributors, all of the Participants and any other party claiming by,
through or under any Contributor or Participant.
34. SEC Reporting Requirements. For the period of time
commencing on the date hereof and continuing through the first anniversary of
the final Closing Date hereunder, each Contributor 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 such Contributor's possession pertaining to the period of such
Contributor's ownership and operation of its 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"); (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.
Each Contributor shall deliver to the Trust's accountants a representation
letter (the "Letter"), in the form annexed hereto as "Exhibit Z".
35. 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.
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<PAGE>
36. Reporting. The Trust may file this Agreement and any of
the Exhibits and Schedules to this Agreement as an exhibit to a filing it may
make with the Commission (such as a Current Report on Form 8-K) pursuant the
Securities Exchange Act of 1934.
37. Tender. Formal tender of an executed deed, an entity
assignment and assumptions and purchase money is hereby waived by the
Partnership.
38. Further Assurances. After the Closing with respect to a
Parcel of Property or with respect to an Entity Transfer, each Contributor
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 (or its designee) and perfect
the Partnership's (or such designee's) right, title and interest in and to
such Property.
39. Jury Trial Waiver. THE PARTNERSHIP, THE TRUST AND EACH
CONTRIBUTOR AND PARTICIPANT 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.
40. 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.
41. Additional Trust and Partnership Covenants
(a) Reasonable Efforts. Subject to the terms and
conditions of this Agreement, the Trust and the Partnership shall use all
commercially reasonable efforts to take, and cause to be taken, all actions,
and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations, to cause the conditions to the
Contributors' and Participants' obligation to close specified in Paragraph 20
to be satisfied and otherwise to consummate and make effective the
transactions contemplated by this Agreement.
(b) NYSE Requirements. The Trust shall file a
supplemental listing application with the NYSE to list the Common Shares
issuable upon redemption of the Units issuable hereunder and shall comply with
its obligations under the Registration Rights Agreement.
(c) Tax Deferral and Gain Recognition. The parties
acknowledge that the Contributors and the Participants have entered into this
Agreement and the transactions contemplated by this Agreement with an
intention to defer recognition of gain for federal income tax purposes at
Closing and to maintain such deferral thereafter to the extent provided herein
based upon the agreement of the Trust and the Partnership to abide by certain
covenants set forth
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<PAGE>
in this Agreement. Based upon the foregoing, the Trust and the Partnership
hereby covenant as follows:
(i) Debt Maintenance and Guaranty Requirements.
(A) Guaranty or Indemnity. In order to allow the
Contributors and the Participants to defer the recognition of gain for federal
and state income tax purposes resulting from the contribution of the
Properties and Entity Interests to the Partnership, the Trust and the
Partnership will, during the Restricted Period (as defined below) permit the
Contributors and the Participants to guarantee, or indemnify the Trust and the
Partnership for the indebtedness of the Partnership (excluding, however, any
indebtedness (not in excess of $25,000,000) that is, as of the date of
Closing, the subject of any such guaranty, indemnity or similar arrangement).
Subject to this Paragraph 41, the Trust and the Partnership agree to maintain,
or caused to be maintained, at all times during the Restricted Period an
amount of indebtedness not to exceed $46,500,000.00 (the "Debt Amount") solely
for the Contributors and the Participants (as allocated by the Contributors
and the Participants among themselves) either to guarantee (or to indemnify
the Trust and the Partnership against liability for such indebtedness);
provided, however, that if during the Restricted Period, the Trust and the
Partnership do not maintain such indebtedness, they shall not be liable under
this Agreement to a Contributor or Participant to the extent that the Trust or
Partnership can prove that such failure did not cause the Contributor or
Participant to recognize taxable income. In addition, after the Restricted
Period, the Trust and the Partnership agree to allow the Contributors and the
Participants to guarantee (or indemnify the Trust and the Partnership) any
debt of the Trust and Partnership to the extent that the Trust or the
Partnership has such debt outstanding and such debt is not guaranteed (or
indemnified) by any other partners of the Partnership up to the Debt Amount.
The Trust and the Partnership agree to execute and deliver the Indemnity
Agreement in the form attached hereto as "Exhibit HH" at each Closing. The
Trust and the Partnership agree to take commercially reasonable action
necessary so that the execution of each guarantee or indemnity by the
Contributor and the Participants results in tax basis for the Contributor and
the Participants for federal income tax purposes. Each Contributor
acknowledges that neither the Trust nor the Partnership has made or makes any
representations or warranties regarding the effectiveness of the Indemnity
Agreement (or any guaranty or indemnity agreement entered into by a
Contributor or Participant in replacement thereof) in deferring the
recognition of gain for federal or state income tax purposes and neither the
Trust nor the Partnership shall have any liability to the Contributors and
Participants on account of such ineffectiveness.
(B) In the event that any Contributor or Participant
(I) obtains a tax-free step-up in the basis of its Units for federal income
tax purposes (e.g., upon the death of a member); (ii) sells, transfers or
otherwise disposes of all or a portion of its Units in a taxable transaction;
(iii) receives the Tax Payment from the Trust and the Partnership in
reimbursement of Taxes imposed upon such Contributor or Participant as the
result of the sale, transfer or other disposition of Property contributed by
the Contributor or Participant to the Partnership or its designee; or (iv)
receives an allocation under Treasury Reg. Section 1.704-3(b) using the
traditional method without curative allocations that reduces the amount of
Built-in-Gain (as defined below) then, in each case, the Debt Amount shall be
reduced by the amount by
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<PAGE>
which the Built-in-Gain is reduced on account of the any of the events set
forth in this Subsection. For purposes of this Agreement, Built-in-Gain shall
mean with respect to each Property (including Properties that will be
contributed to the Partnership or its designee through a contribution of
Entity Interests), the amount of gain that would be allocated to the
applicable Contributor or Participant under Section 704(c) of the Code if the
Property or Entity Interest were disposed of in a fully taxable transaction.
(ii) No Property Disposition. Subject to the
following provisions of this Section, the Trust and the Partnership covenant
for the benefit of the Contributors and Participants, not to sell, transfer or
otherwise dispose of (including, without limitation, by way of foreclosure)
the Properties (or property for which any such Properties are exchanged), or
make distributions which are treated as taxable dispositions for federal
income tax purposes, prior to expiration of the applicable Restricted Period
for each Property, as set forth on Schedule 1 annexed hereto (in each case,
the "Restricted Period") other than an exchange or other disposition which
does not cause the applicable Contributor and Participant to recognize
Built-in Gain for federal income tax purposes. During the Restricted Period
the Trust and the Partnership shall have the right to dispose of or distribute
the Properties (including Properties that will be contributed to the
Partnership or its designee through a contribution of Entity Interests),
provided the Trust and the Partnership pay to the applicable Contributor or
Participant the Tax Payment within thirty (30) days after such disposition or
distribution.
(iii) Expiration of Restrictions. Upon a
Contributor's or Participant's conversion into Common Shares or disposition of
more than eighty (80%) percent of the Units issued to such Contributor or
Participant pursuant to this Agreement the Trust and the Partnership shall no
longer (I) be required to provide such Contributor or Participant with any
guarantee or indemnity as described in Section 41(c)(I)(A) above and (ii) be
liable to such Contributor or Participant for a Tax Payment as described in
Section 41(c)(ii) above.
(iv) Allocation Method. The Trust and the
Partnership covenant that the "traditional method" (without curative
allocations), as defined in Treas. Reg. 1.704-3(b), of allocating income,
gain, loss and deduction to account for the variation between the fair market
value and adjusted basis of the Property and Entity Interests for federal
income tax purposes, shall be used (I) with respect to the contribution of the
Property and Entity Interests, and (ii) with respect to any revaluation of the
Property and Entity Interests, pursuant to Treas. Reg. ss.ss.1.704-
1(b)(2)(iv)(f), 1.704-1(b)(2)(iv)(g) and 1.704-3(a)(6).
(v) Defined Terms
"Tax Payment" means, with respect to each Contributor and Participant, an
amount equal to the sum of (I) the product of (A) the Built-in-Gain allocable
to such Participant or Contributor and (B) the maximum combined (federal,
state and local) income Tax rate imposed on such Contributor or Participant on
income of such character and (ii) an additional payment in the amount equal to
the amount such that, after payment by such Contributor or Participant of all
Taxes (including interest and penalties) on amounts received under clause (I)
and this clause (ii), the Contributor or Participant retain an amount equal to
the amount described in clause (I).
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"Tax or Taxes" means any and all federal and state income taxes.
"Tax Return" means returns, reports and forms required to be filed with any
governmental authority.
(vi) The Partnership and the Trust hereby agree that
the terms and the provisions of this Paragraph 41 are for the benefit of the
parties hereto and the Participants set forth in Schedule 1 of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, intending to be legally bound hereby,
the parties have duly executed this Agreement as of the day and year first
above stated.
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
/s/ Donald E. Axinn
-------------------------------------
DONALD E. AXINN
CONTRIBUTORS: ADDRESSES:
131 Jericho Turnpike
/s/ Donald Everett Axinn Jericho, New York 11743
- -------------------------
DONALD EVERETT AXINN
/s/ Morris L. Green -----------------------------
- ------------------------- -----------------------------
MORRIS L. GREEN
AXINN AVENUE ASSOCIATES c/o 131 Jericho Turnpike
Jericho, New York 11743
BY:/s/ Donald E. Axinn
- -------------------------
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AXINN ELLIPSE ASSOCIATES c/o 131 Jericho Turnpike
Jericho, New York 11743
BY:/s/ Donald E. Axinn
---------------------------
AXINN-MELVILLE, LLP c/o 131 Jericho Turnpike
Jericho, New York 11743
BY:/s/ Donald E. Axinn
---------------------------
AXINN EDISON ASSOCIATES c/o 131 Jericho Turnpike
Jericho, New York 11743
BY:/s/ Donald E. Axinn
---------------------------
AXINN-NEW DURHAM ASSOCIATES c/o 131 Jericho Turnpike
Jericho, New York 11743
BY:/s/ Donald E. Axinn
---------------------------
DONALD E. AXINN, L.L.C. c/o 131 Jericho Turnpike
Jericho, New York 11743
BY:/s/ Donald E. Axinn
---------------------------
AXINN-BERNHARD ASSOCIATES c/o 131 Jericho Turnpike
Jericho, New York 11743
BY:/s/ Donald E. Axinn
---------------------------
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The Undersigned Hereby Acknowledges
Receipt Of The Deposit And Agrees To
Hold And Apply The Same In Accordance
With The Provisions Of The Escrow Terms
Commonwealth Land Title Insurance Company:
By: _________________________
M. Gordon Daniels
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<PAGE>
BRANDYWINE/AXINN
SCHEDULE 1
<TABLE>
<CAPTION>
Axinn State
Participant Participant of Restricted
Property Contributor (Record Owner) Participants % % Residence Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
LONG ISLAND
INDUSTRIAL
- ------------------------------------------------------------------------------------------------------------------------------------
111 Ames Court Donald Everett Axinn n/a n/a 100% New York 10 Years
Plainview, NY
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Axinn State
Participant Participant of Restricted
Property Contributor (Record Owner) Participants % % Residence Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 Ames Court Donald Everett Axinn Donald E. Axinn 50% New York 10 Years
Plainview, NY and Morris L. Green,(1)
as tenants in common Morris Green 30.5% New York
Arthur and Marion 4.56%
Eberstein New York
Coney Gottlieb .912%
New York
Barry Gruber 6.39%
Wash.
Daryl Kulok 1.82% (State)
Conn.
Naomi Suberi 3.65%
New York
Theodore Fain .912%
Florida
Ronald D. 1.25%
Adelstein New York
- ------------------------------------------------------------------------------------------------------------------------------------
10 Skyline Drive Donald E. Axinn Donald E. Axinn 80 % New York 10 Years
Plainview, NY
Lennard Axinn 20% New York
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------
(1) There is no written agreement regarding Morris Green's distribution of his
fifty (50%) percent interest in the property.
2
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Axinn State
Participant Participant of Restricted
Property Contributor (Record Owner) Participants % % Residence Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
31 Commercial Street Donald Everett Axinn n/a n/a 100% New York 10 Years
Plainview, NY
11 Commercial Street Donald Everett Axinn n/a n/a 100% New York 10 Years
Plainview, NY
80 Skyline - Express Donald Everett Axinn n/a n/a 100% New York 10 Years
Plainview, NY
120 Express Street Donald Everett Axinn n/a n/a 100% New York 10 Years
Plainview, NY
163-167 S. Service Road Donald Everett Axinn Donald E. Axinn 50% New York 10 Years
Plainview, NY
Radam Corp. 50% New York
and
Ontario,
Canada
- ------------------------------------------------------------------------------------------------------------------------------------
336 S. Service Road Donald Everett Axinn n/a n/a 100% New York 10 Years
Melville, NY
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Axinn State
Participant Participant of Restricted
Property Contributor (Record Owner) Participants % % Residence Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
180 Central Ave. Donald E. Axinn Donald E. Axinn 75% New York 10 Years
2 Engineers Lane
Farmingdale, NY Helen Geffner 6.25% New York
Howard Kantor 6.25% New York
Estate of Irving 6.25%
Hirschman Florida
Judith Ann 2.97% Arizona
Sussman
3.02% New York
Thea Feldman
0.26% Mass.
Ruth Siskind
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Axinn State
Participant Participant of Restricted
Property Contributor (Record Owner) Participants % % Residence Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
8 Engineers Lane Donald Everett Axinn Donald E. Axinn 75% New York 10 Years
Farmingdale, NY
Helen Geffner 6.25% New York
Howard Kantor 6.25% New York
Estate of Irving 6.25%
Hirschman Florida
Judith Ann 2.97% Arizona
Sussman
3.02% New York
Thea Feldman
0.26% Mass.
Ruth Siskind
- ------------------------------------------------------------------------------------------------------------------------------------
19 Engineers Lane Donald Everett Axinn Donald E. Axinn 50% New York 10 Years
Farmingdale, NY
Leo Guthart 25% New York
Howard Kantor 12.5% New York
Gloria Kantor 12.5% New York
- ------------------------------------------------------------------------------------------------------------------------------------
91 N. Industry Court Donald E. Axinn n/a n/a 100% New York 10 Years
Deer Park, NY
- ------------------------------------------------------------------------------------------------------------------------------------
100 Voice Road Donald Everett Axinn n/a n/a 100% New York 10 Years
Carle Place, NY
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Axinn State
Participant Participant of Restricted
Property Contributor (Record Owner) Participants % % Residence Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
110 Voice Road Donald Everett Axinn n/a n/a 100% New York 10 Years
Carle Place, NY
- ------------------------------------------------------------------------------------------------------------------------------------
1000 Axinn Avenue Axinn Avenue Associates, Donald E. Axinn 91.04% New York 10 Years
Garden City, NY a New York general
partnership Frank Zarb 8.96% Virginia
- ------------------------------------------------------------------------------------------------------------------------------------
645 Stewart Avenue Donald Everett Axinn n/a n/a 100% New York 10 Years
Garden City, NY
- ------------------------------------------------------------------------------------------------------------------------------------
885 Waverly Avenue Donald E. Axinn n/a n/a 100% New York 10 Years
Holtsville, NY
- ------------------------------------------------------------------------------------------------------------------------------------
LONG ISLAND
OFFICE
- ------------------------------------------------------------------------------------------------------------------------------------
125 Jericho Turnpike Donald E. Axinn n/a n/a 100% New York 10 Years
Jericho, NY
- ------------------------------------------------------------------------------------------------------------------------------------
131 Jericho Turnpike Donald E. Axinn n/a n/a 100% New York 10 Years
Jericho, NY
- ------------------------------------------------------------------------------------------------------------------------------------
245 Old Country Road Axinn Ellipse Associates, Donald E. Axinn 80% New York 10 Years
Melville, NY a New York general
partnership Lennard Axinn 20% New York
- ------------------------------------------------------------------------------------------------------------------------------------
263 Old Country Road Axinn-Melville, LLC, a Donald E. Axinn 100% New York 5 Years
Melville, NY New York limited liability
company
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Axinn State
Participant Participant of Restricted
Property Contributor (Record Owner) Participants % % Residence Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NEW JERSEY
INDUSTRIAL
- ------------------------------------------------------------------------------------------------------------------------------------
44 National Road Axinn Edison Associates, Donald E. Axinn 75% New York 10 Years
Edison, NJ a New York general
partnership Howard Kantor 12.5% New York
Gloria Kantor 12.5% New York
- ------------------------------------------------------------------------------------------------------------------------------------
835/837 Durham Road Axinn-New Durham Donald E. Axinn 78.2% New York 10 Years
Edison, NJ Associates, a New Jersey
limited partnership Howard Kantor 8.29% New York
Gloria Kantor 8.29% New York
Stanley Spielman 5.4% New York
- ------------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY
OFFICE
- ------------------------------------------------------------------------------------------------------------------------------------
102 Chestnut Ridge Donald E. Axinn, L.L.C. Donald E. Axinn 99% New York 10 Years
Road No. 1, a New Jersey limited
Montvale, NJ liability company Donald E. Axinn, 1%
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Axinn State
Participant Participant of Restricted
Property Contributor (Record Owner) Participants % % Residence Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
25 Phillips Parkway Donald E. Axinn(2) Donald E. Axinn 76% New York 10 Years
Montvale, NJ
James Beattie 5% New
Jersey
Howard Kantor 4% New York
Ralph Padovano 5% New
Jersey
Thomas W. Dunn 5% New
Jersey
Martin W. Kafafian 5% New
Jersey
- ------------------------------------------------------------------------------------------------------------------------------------
101 Paragon Drive Donald E. Axinn(3) Donald E. Axinn 87.5% New York 10 Years
Montvale, NJ
Lennard Axinn 10% New York
Trust UTW of 2.5% New York
Theodore Geffner
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------
(2) At closing, the current record owner will be Montvale IV, a New Jersey
joint venture.
(3) At closing, the current record owner will be Axinn Montvale II Associates,
a New York general partnership.
8
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Axinn State
Participant Participant of Restricted
Property Contributor (Record Owner) Participants % % Residence Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
3 Paragon Drive Donald E. Axinn4 Donald E. Axinn 80% New York 5 Years
Montvale, NJ
Lennard Axinn 20% New York
- ------------------------------------------------------------------------------------------------------------------------------------
1255 Broad Street Axinn-Bernhard Donald E. Axinn 33.33% New York 10 Years
Bloomfield, NJ Associates, a New York
general partnership Richard Bernhard 33.33% New York
Calvin Axinn 33.33% New York
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------
(4) At closing, the current record owner will be 80-20 Associates, a New York
general partnership.
9
<PAGE>
BRANDYWINE/AXINN
SCHEDULE 2
<TABLE>
<CAPTION>
Property Purchase Price Mortgage Debt Equity Unit Equivalents
-------- -------------- ------------- ------ ----------------
<S> <C> <C> <C> <C>
LONG ISLAND INDUSTRIAL
- -----------------------------------------------------------------------------------------------------------------------------------
111 Ames Court $ 862,493 $ 862,493
Plainview, NY
- -----------------------------------------------------------------------------------------------------------------------------------
55 Ames Court 3,918,112 3,918,112
Plainview, NY
- -----------------------------------------------------------------------------------------------------------------------------------
10 Skyline Drive 1,168,093 1,168,096
Plainview, NY
- -----------------------------------------------------------------------------------------------------------------------------------
31 Commercial Street 778,845 778,845
Plainview, NY
- -----------------------------------------------------------------------------------------------------------------------------------
11 Commercial Street 1,156,540 1,156,540
Plainview, NY
- -----------------------------------------------------------------------------------------------------------------------------------
80 Skyline - Express 2,363,755 2,363,755
Plainview, NY
- -----------------------------------------------------------------------------------------------------------------------------------
120 Express Street 1,973,836 1,973,836
Plainview, NY
- -----------------------------------------------------------------------------------------------------------------------------------
163-167 S. Service Road 2,774,167 $ 1,843,985 930,182 38,757.58
Plainview, NY
- -----------------------------------------------------------------------------------------------------------------------------------
336 S. Service Road 3,453,486 2,110,735 1,342,753 55,948.04
Melville, NY
- -----------------------------------------------------------------------------------------------------------------------------------
180 Central Ave. $1,082,691 $1,082,691
2 Engineers Lane
Farmingdale, NY
- -----------------------------------------------------------------------------------------------------------------------------------
8 Engineers Lane 949,736 949,736
Farmingdale, NY
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1-
<PAGE>
<TABLE>
<CAPTION>
Property Purchase Price Mortgage Debt Equity Unit Equivalents
-------- -------------- ------------- ------ ----------------
<S> <C> <C> <C> <C>
19 Engineers Lane 555,752 555,752
Farmingdale, NY
- -----------------------------------------------------------------------------------------------------------------------------------
91 N. Industry Court 2,690,045 2,690,045
Deer Park, NY
- -----------------------------------------------------------------------------------------------------------------------------------
100 Voice Road 1,957,029 1,957,029
Carla Place, NY
- -----------------------------------------------------------------------------------------------------------------------------------
110 Voice Road 1,249,964 1,249,964
Carla Place, NY
- -----------------------------------------------------------------------------------------------------------------------------------
1000 Axinn Avenue 2,667,340 2,667,340
Garden City, NY
- -----------------------------------------------------------------------------------------------------------------------------------
645 Stewart Avenue 2,023,833 2,023,833
Garden City, NY
- -----------------------------------------------------------------------------------------------------------------------------------
LONG ISLAND OFFICE
- -----------------------------------------------------------------------------------------------------------------------------------
125 Jericho Turnpike $4,961,782 $4,961,782
Jericho, NY
- -----------------------------------------------------------------------------------------------------------------------------------
131 Jericho Turnpike 1,609,767 1,609,767
Jericho, NY
- -----------------------------------------------------------------------------------------------------------------------------------
245 Old Country Road 6,021,484 $5,790,678 230,806 9,616.92
Melville, NY
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2-
<PAGE>
<TABLE>
<CAPTION>
Property Purchase Price Mortgage Debt Equity Unit Equivalents
-------- -------------- ------------- ------ ----------------
<S> <C> <C> <C> <C>
263 Old Country Road 7,800,000 7,800,000
Melville, NY
- -----------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY INDUSTRIAL
- -----------------------------------------------------------------------------------------------------------------------------------
44 National Road 1,587,714 1,587,714
Edison, NJ
- -----------------------------------------------------------------------------------------------------------------------------------
835/837 Durham Road 4,914,676 1,044,131 3,870,545 161,272.71
Edison, NJ
- -----------------------------------------------------------------------------------------------------------------------------------
NEW JERSEY OFFICE
- -----------------------------------------------------------------------------------------------------------------------------------
102 Chestnut Ridge Road 7,936,863 3,948,796 3,988,067 166,169.46
Montvale, NJ
- -----------------------------------------------------------------------------------------------------------------------------------
25 Phillips Parkway 9,616,189 4,793,826 4,822,363 199,742.75
Montvale, NJ
- -----------------------------------------------------------------------------------------------------------------------------------
101 Paragon Drive 500,000 11,000,000 1,646,179 68,590.79
Montvale, NJ
- -----------------------------------------------------------------------------------------------------------------------------------
3 Paragon Drive $500,000 $12,214,174 $ 100,000 4,166.67
Montvale, NJ
- -----------------------------------------------------------------------------------------------------------------------------------
1255 Broad Street 4,866,400 4,866,400
Bloomfield, NJ
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3-
<PAGE>
SCHEDULE 5
ASSUMED MORTGAGE LOANS
<TABLE>
<CAPTION>
Earliest
Pre-payment Assumed
Date Debt(1) Assumed
Property as of Principal Int. Maturity Without Differential Personal Other Debt
6/30/98 Balance Rate Date Lender Penalty Date Liability Participants Differential
------- ------- ---- ---- ------ ------- ---- --------- ------------ ------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
336 S. Service Rd. $2,090,350 9.875% June 1, Guardian June 1, June 1, 2001 No None $167,262
Melville, NY 2001 Life 2001
- -----------------------------------------------------------------------------------------------------------------------------------
102 Chestnut $3,931,545 9.640% May 1, Lasalle May 1, May 1, 2007 No None $783,950
Ridge Rd. 2007 National 2007
Montvale, NJ Bank
- -----------------------------------------------------------------------------------------------------------------------------------
101 Paragon Dr.(3) $19,190,000 6.0% September NJRE N/A N/A DEA- None $0
Montvale, NJ 15, 2005 Corp. Limited
$11,000,000
- -----------------------------------------------------------------------------------------------------------------------------------
163 S. Service Rd. $1,825,428 8.375% October Roslyn October 1, September 1, DEA- None $60,966
Plainview, NY 1, 2007 Savings 2006 1998 Specific
Bank Performance(2)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------
(1) Please see annexed documentation which sets forth how the assumed debt
differential amounts were calculated.
(2) DEA personal guaranty is limited to delivering the Premises occupied and
paying rent. DEA has complied with this provision.
1-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
835/837 New $1,016,849 9.375% August 1, Woodmen August 1, August 1, No None $50,218
Durham Rd. 2008 Insurance 2008 1998
Edison, NJ
- -----------------------------------------------------------------------------------------------------------------------------------
3 Paragon Dr. $10,500,000(4) 10.08% August 10, New N/A N/A DEA- None $0
Montvale, NJ(3) 1998 York Specific
Life Performance(5)
- -----------------------------------------------------------------------------------------------------------------------------------
25 Phillips Pkwy. $4,713,145 9.875% January 10, Lasalle January 1, January 1, No None $434,269
Montvale, NJ 2002 National 2002 2002
Bank
- -----------------------------------------------------------------------------------------------------------------------------------
245 Old Country $5,761,959 8.0% October 1, Roslyn October 1, October 1, DEA- None $137,229
Rd. Melville, NY 2007 Savings 2006 2000 Limited
Bank guaranty
$1,000,000
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------
(3) Please see Section 14 of the Contribution Agreement.
(4) It is anticipated that pursuant to a settlement agreement between New York
Life and Donald E. Axinn that the existing principal balance totaling
$12,207,367will be reduced to $10,500,000.
(5) DEA personal guaranty is limited to "Good Guy" guaranty pursuant to
settlement agreement with New York Life.
2-
<PAGE>
Void after 5:00 p.m. New York Time, on _________, 2008.
BRANDYWINE REALTY TRUST
OPTION AGREEMENT
OPTION AGREEMENT, dated as of __________, 1998, between
Brandywine Realty Trust (the "Company") and Donald E. Axinn (the "Optionee").
1. Grant of Option. The Company hereby grants to the
Optionee an option (the "Option") to purchase a total of 100,000 common shares
of beneficial interest, par value $.01 per share (the "Shares"), of the
Company ("Common Shares"), subject to adjustment as and to the extent provided
herein.
2. Date of Grant; Term of Option. This Option is granted
this __ day of __________, 1998, and it may not be exercised later than 5:00
p.m. on _______, 2008 (the "Expiration Time"). All rights evidenced hereby shall
terminate, and this Option shall be void, immediately following the Expiration
Time.
3. Option Exercise Price. The Option exercise price
("Exercise Price") is twenty-four dollars ($24.00) per Share as to 50,000
Shares and twenty-six dollars and forty cents ($26.40) per Share as to 50,000
Shares, subject to adjustment as and to the extent provided herein.
4. Exercise of Option. This Option shall be exercisable
during its term only in accordance with the following:
(a) Right to Exercise. This Option is fully vested and
exercisable as of the date hereof.
(b) Method of Exercise. This Option shall be exercisable,
in whole or in part (but not for fractional shares), during its term by written
notice delivered to the Company at the address specified in Section 11 hereof,
which notice shall state the Optionee's election to exercise this Option and
the number of full Shares in respect to which this Option is being exercised.
The written exercise notice shall be accompanied by payment of the Exercise
Price multiplied by the number of Shares for which this Option is being
exercised. Payment of the Exercise Price shall be in lawful money of the
United States of America, in the form of a check, subject to collection, or
such consideration and method of payment as may be authorized by the Board of
Trustees of the Company. If this Option should be exercised in part only, the
lower priced Shares shall be deemed to have been purchased first and the
Company shall, upon surrender of this Option, execute and deliver a new Option
evidencing the rights of the Optionee thereof to purchase the balance of the
Shares purchasable hereunder. Upon receipt by the Company of this Option,
together with proper payment of the purchase price, the Optionee shall be
deemed to be the holder of record of the Shares, notwithstanding that the
-1-
<PAGE>
share transfer books of the Company shall then be closed or that certificates
representing such Shares shall not then be actually delivered to the Optionee.
The Company shall pay any and all documentary stamp or similar issue or
transfer taxes payable in respect of the issue or delivery of the Shares. The
certificate or certificates for the Shares as to which this Option shall be
exercised shall be registered in the name of the Optionee and shall be
legended as the Company may reasonably require to comply with applicable
federal and state securities laws.
(c) Restrictions on Exercise. This Option may not be
exercised if the issuance of the Shares upon such exercise would constitute a
violation of any applicable federal or state securities laws or other laws or
regulations. As a condition to the exercise of this Option, the Company may
require the Optionee to make such representations and warranties to the
Company as may be required to determine whether such exercise would constitute
a violation of any applicable law or regulation. If it is determined pursuant
to this Section 4(c) that an Option may not be exercised, then the Company
must return to the Optionee, within one business day, any payment made by the
Optionee to the Company with respect to such Option. The Company represents
and warrants that as of the date of this Option, the Company has registered on
a Form S-8 filed pursuant to the Securities Act of 1933 the Common Shares
issuable upon exercise of this Option.
5. Reservation of Shares. The Company shall reserve at all
times for issuance and delivery upon exercise of this Option the number of
Common Shares from time to time issuable upon exercise of this Option. All
such Shares shall be duly authorized and, when issued upon the exercise of
this Option in accordance with the terms hereof, shall be validly issued,
fully paid and nonassessable, free and clear of all taxes, liens, security
interests, charges and other encumbrances or restrictions (other than
restrictions pursuant to applicable federal and state securities laws) and
free and clear of all preemptive rights.
6. Investment Representations. The Optionee represents and
warrants as follows:
(a) The Optionee is acquiring this Option, and upon
exercise of this Option, he will be acquiring the Shares for investment for
his own account, not as a nominee or agent, and not with a view to, or for
resale in connection with, any distribution thereof.
(b) The Optionee has a preexisting business relationship
with the Company and, by reason of his business and financial experience, has
the capacity to protect his interests in connection with the acquisition of
this Option and the Shares.
7. Non-transferability of Option. This Option may not be
sold, pledged, assigned, hypothecated, gifted, transferred or disposed of in
any manner either voluntarily or involuntarily by operation of law, other than
by will or by the laws of descent or distribution, and may be exercised during
the lifetime of the Optionee only by such Optionee. Subject to the
-2-
<PAGE>
foregoing, the terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
8. Rights of the Optionee. The Optionee shall not, by virtue
of his ownership of this Option alone, be entitled to any rights of a holder
of Common Shares of the Company, either at law or equity, and the rights of
the Optionee are limited to those expressly set forth in this Agreement.
9. Adjustment of Purchase Price and Number of Shares. The
number and kind of securities purchasable upon the exercise of this Option and
the Exercise Price shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows:
(a) Adjustment for Certain Changes. If at any time after
the date hereof, the Company:
(i) pays a dividend or makes a distribution on its
Common Shares in additional Common Shares;
(ii) subdivides its outstanding Common Shares into a
greater number of Common Shares;
(iii) combines its outstanding Common Shares into a
smaller number of Common Shares; or
(iv) makes a distribution on its Common Shares in
shares of beneficial interest of the Company other
than Common Shares;
then the Exercise Price in effect (and the number of Shares and other
securities, if any, issuable upon exercise of this Option) immediately prior
to such action shall be adjusted so that the Optionee may receive upon
exercise of the Option, and payment of the same aggregate consideration, the
number of shares of beneficial interest of the Company which the Optionee
would have owned immediately following such action if the Optionee had
exercised this Option immediately prior to such action.
The adjustment shall become effective immediately after the
record date in the case of a dividend or distribution, and immediately after
the effective date in the case of a subdivision, combination or
reclassification.
(b) Officers' Certificate. Whenever the Exercise Price
shall be adjusted as required by the provisions of this Section 9, the Company
shall forthwith file in the custody of its Secretary or an Assistant Secretary
at its principal office an officers' certificate showing the adjusted Exercise
Price determined as herein provided, setting forth in reasonable detail the
facts requiring such adjustment and the manner of computing such adjustment.
-3-
<PAGE>
Each such officers' certificate shall be signed by the Chairman of the Board,
President and Chief Executive Officer or the Chief Financial Officer of the
Company and by the Secretary or any Assistant Secretary of the Company. A copy
of each such officers' certificate shall be promptly mailed, by certified
mail, to the Optionee.
10. Reclassification, Reorganization, Consolidation or
Merger. In the event of any reclassification, capital reorganization or other
change of the outstanding Common Shares of the Company (other than a
subdivision or combination of the outstanding Common Shares and other than a
change in the par value of the Common Shares) or in the event of any
consolidation or merger of the Company with or into another person or entity
(other than a merger in which the Company is the continuing person or entity
and that does not result in any reclassification, capital reorganization or
other change of outstanding Common Shares) or in the event of any sale or
conveyance to another person or entity of the property and assets of the
Company as an entirety or substantially as an entirety, the Company shall, as
a condition precedent to such transaction, cause effective provisions to be
made so that the Optionee shall have the right thereafter, by exercising this
Option, to purchase the kind and amount of shares of beneficial interest and
other securities and property (including cash) receivable upon such
reclassification, capital reorganization and other change, consolidation,
merger, sale or conveyance by a holder of the number of Common Shares that
might have been received if this Option had been exercised immediately prior
to such reclassification, capital reorganization, change, consolidation,
merger, sale or conveyance. Any such provision shall include provisions for
adjustments in respect of such shares of beneficial interest and other
securities and property that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Option. The foregoing
provisions of this Section 10 shall similarly apply to successive
reclassifications, capital reorganizations and changes of Common Shares and to
successive consolidations, mergers, sales or conveyances.
11. Notices. Any notice required or permitted to be
delivered hereunder to the Company or the Optionee shall be delivered or sent
by certified mail or by overnight courier. If the notice is to the Company, it
shall be sent to: 16 Campus Boulevard, Newtown Square, PA 19073, attention,
Secretary. If the notice is sent to the Optionee, it shall be sent to: 131
Jericho Turnpike, Jericho, New York 11753. Any party may change the address to
which notices are to be sent by delivery of written notice to the other party
in the manner specified in the preceding sentence.
12. Entire Agreement. This Option has been granted pursuant
to the Company's 1997 Long-Term Incentive Plan, as amended (the "Plan"). This
Agreement, and the provisions of the Plan, represent the entire agreement
between the parties with respect to the subject matter hereof. Termination of
the Plan shall not impair the rights of the Optionee under this Option.
13. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Maryland.
-4-
<PAGE>
14. Modification and Waiver. Neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated other than by an
instrument in writing signed by the Company and the Optionee.
15. Non-Recourse. No recourse shall be had for any
obligation of the Company hereunder, or for any claim based thereon or
otherwise in respect thereof, against any past, present or future trustee,
shareholder, officer or employee of the Company, whether by virtue of any
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such liability being expressly waived and released by the
Optionee.
16. Status of Option. The Option is intended to be a
non-qualified stock option. Accordingly, it is intended that the transfer of
property pursuant to the exercise of the Option shall be subject to federal
income tax in accordance with section 83 of the Internal Revenue Code of 1986
(the "Code"). The Option is not intended to qualify as an incentive stock
option within the meaning of section 422 of the Code.
17. Withholding of Taxes. Whenever the Company proposes or
is required to deliver or transfer Common Shares in connection with the
exercise of the Option, the Company shall have the right to (a) require the
Optionee to remit to the Company an amount sufficient to satisfy any federal,
state and/or local withholding tax requirements prior to the delivery or
transfer of any certificate or certificates for such Common Shares or (b) take
whatever action it deems necessary to protect its interests with respect to
tax liabilities, and in connection with the foregoing, the Company agrees, to
the extent consistent with the Plan and applicable law, and upon request of
the Optionee, to withhold Common Shares otherwise issuable upon exercise of
the Option to satisfy such tax liabilities.
IN WITNESS WHEREOF, the Company has caused its duly
authorized officer to execute this instrument this _____ day of __________,
1998.
By: _______________________________
Name: Gerard H. Sweeney
Title: President and Chief
Executive Officer
Acknowledged and Agreed:
- ----------------
Donald E. Axinn
-5-
<PAGE>
Void after 5:00 p.m. New York Time, on , 2008.
BRANDYWINE REALTY TRUST
OPTION AGREEMENT
OPTION AGREEMENT, dated as of ______, 1998, between Brandywine
Realty Trust (the "Company") and Mark Hamer (the "Optionee").
1. Grant of Option. The Company hereby grants to the
Optionee an option (the "Option") to purchase a total of 100,000 common shares
of beneficial interest, par value $.01 per share (the "Shares"), of the
Company ("Common Shares"), subject to adjustment as and to the extent provided
herein.
2. Date of Grant; Term of Option. This Option is granted
this day of , 1998, and it may not be exercised later than 5:00 p.m. on
____________, 2008 (the "Expiration Time"). All rights evidenced hereby shall
terminate, and this Option shall be void, immediately following the Expiration
Time.
3. Option Exercise Price. The Option exercise price
("Exercise Price") is twenty-four dollars ($24.00) per Share as to 50,000
Shares and twenty-six dollars and forty cents ($26.40) per Share as to 50,000
Shares, subject to adjustment as and to the extent provided herein.
4. Exercise of Option. This Option shall be exercisable
during its term only in accordance with the following:
(a) Right to Exercise. Prior to the first
anniversary of the date of this Option, this Option shall not be exercisable.
If a Forfeiture Event (as defined below) has not occurred prior to the first
anniversary of the date of this Option, then on such first anniversary and at
any time thereafter until the earlier of the Expiration Time and a Forfeiture
Event, this Option shall be exercisable for fifty percent (50%) of the Shares
purchasable hereunder having an Exercise Price of $24.00 per Share and shall
be exercisable for fifty percent (50%) of the Shares purchasable hereunder
having an exercise price of $26.40 per Share. If a Forfeiture Event has not
occurred prior to the second anniversary of the date of this Option, then on
such second anniversary and at any time thereafter until the earlier of the
Expiration Time and a Forfeiture Event, this Option shall be exercisable for
the remaining fifty percent (50%) of the Shares purchasable hereunder.
Notwithstanding the foregoing, in the event that a Change in Control of the
Company (as defined in the Company's 1997 Long-Term Incentive Plan, as amended
(the "Plan")) occurs prior to the earlier of the Expiration Time and a
Forfeiture Event, this Option
<PAGE>
shall become fully exercisable. The term "Forfeiture Event" means either (i)
the termination of the employment of the Optionee pursuant to Section 12 of
the Employment Agreement dated _________, 1998 (the "Employment Agreement")
between the Company and the Optionee (i.e., a "for Cause" termination) and
(ii) the voluntary resignation by the Optionee as an employee of the Company
prior to the second anniversary of the date of this Option that is not in
response to a breach by the Company of its obligations under the Employment
Agreement. Optionee shall not be deemed to have voluntarily resigned as an
employee of the Company if his employment terminates on account of his death
or disability (as defined in the Plan).
(b) Method of Exercise. This Option shall be
exercisable, in whole or in part (but not for fractional shares), during its
term by written notice delivered to the Company at the address specified in
Section 11 hereof, which notice shall state the Optionee's election to
exercise this Option and the number of full Shares in respect to which this
Option is being exercised. The written exercise notice shall be accompanied by
payment of the Exercise Price multiplied by the number of Shares for which
this Option is being exercised. Payment of the Exercise Price shall be in
lawful money of the United States of America, in the form of a check, subject
to collection, or such consideration and method of payment as may be
authorized by the Board of Trustees of the Company. If this Option should be
exercised in part only, the lower priced Shares shall be deemed to have been
purchased first and the Company shall, upon surrender of this Option, execute
and deliver a new Option evidencing the rights of the Optionee thereof to
purchase the balance of the Shares purchasable hereunder. Upon receipt by the
Company of this Option, together with proper payment of the purchase price,
the Optionee shall be deemed to be the holder of record of the Shares,
notwithstanding that the share transfer books of the Company shall then be
closed or that certificates representing such Shares shall not then be
actually delivered to the Optionee. The Company shall pay any and all
documentary stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of the Shares. The certificate or certificates for the
Shares as to which this Option shall be exercised shall be registered in the
name of the Optionee and shall be legended as the Company may reasonably
require to comply with applicable federal and state securities laws.
(c) Restrictions on Exercise. This Option may not
be exercised if the issuance of the Shares upon such exercise would constitute
a violation of any applicable federal or state securities laws or other laws
or regulations. As a condition to the exercise of this Option, the Company may
require the Optionee to make such representations and warranties to the
Company as may be required to determine whether such exercise would constitute
a violation of any applicable law or regulation. If it is determined pursuant
to this Section 4(c) that an Option may not be exercised, then the Company
must return to the Optionee, within one business day, any payment made by the
Optionee to the Company with respect to such Option. The Company represents
and warrants that as of the date of this Option, the Company has registered on
a Form
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<PAGE>
S-8 filed pursuant to the Securities Act of 1933 the Common Shares issuable
upon exercise of this Option.
5. Reservation of Shares. The Company shall reserve at all
times for issuance and delivery upon exercise of this Option the number of
Common Shares from time to time issuable upon exercise of this Option. All
such Shares shall be duly authorized and, when issued upon the exercise of
this Option in accordance with the terms hereof, shall be validly issued,
fully paid and nonassessable, free and clear of all taxes, liens, security
interests, charges and other encumbrances or restrictions (other than
restrictions pursuant to applicable federal and state securities laws) and
free and clear of all preemptive rights.
6. Investment Representations. The Optionee represents and
warrants as follows:
(a) The Optionee is acquiring this Option, and upon
exercise of this Option, he will be acquiring the Shares for investment for
his own account, not as a nominee or agent, and not with a view to, or for
resale in connection with, any distribution thereof.
(b) The Optionee has a preexisting business
relationship with the Company and, by reason of his business and financial
experience, has the capacity to protect his interests in connection with the
acquisition of this Option and the Shares.
7. Non-transferability of Option. This Option may not be
sold, pledged, assigned, hypothecated, gifted, transferred or disposed of in
any manner either voluntarily or involuntarily by operation of law, other than
by will or by the laws of descent or distribution, and may be exercised during
the lifetime of the Optionee only by such Optionee. Subject to the foregoing,
the terms of this Option shall be binding upon the executors, administrators,
heirs, successors and assigns of the Optionee.
8. Rights of the Optionee. The Optionee shall not, by virtue
of his ownership of this Option alone, be entitled to any rights of a holder
of Common Shares of the Company, either at law or equity, and the rights of
the Optionee are limited to those expressly set forth in this Agreement.
9. Adjustment of Purchase Price and Number of Shares. The
number and kind of securities purchasable upon the exercise of this Option and
the Exercise Price shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows:
(a) Adjustment for Certain Changes. If at any time
after the date hereof, the Company:
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<PAGE>
(i) pays a dividend or makes a distribution on its Common
Shares in additional Common Shares;
(ii) subdivides its outstanding Common Shares into a
greater number of Common Shares;
(iii) combines its outstanding Common Shares into a
smaller number of Common Shares; or
(iv) makes a distribution on its Common Shares in shares
of beneficial interest of the Company other than
Common Shares;
then the Exercise Price in effect (and the number of Shares and other
securities, if any, issuable upon exercise of this Option) immediately prior
to such action shall be adjusted so that the Optionee may receive upon
exercise of the Option, and payment of the same aggregate consideration, the
number of shares of beneficial interest of the Company which the Optionee
would have owned immediately following such action if the Optionee had
exercised this Option immediately prior to such action.
The adjustment shall become effective immediately after the
record date in the case of a dividend or distribution, and immediately after
the effective date in the case of a subdivision, combination or
reclassification.
(b) Officers' Certificate. Whenever the Exercise
Price shall be adjusted as required by the provisions of this Section 9, the
Company shall forthwith file in the custody of its Secretary or an Assistant
Secretary at its principal office an officers' certificate showing the
adjusted Exercise Price determined as herein provided, setting forth in
reasonable detail the facts requiring such adjustment and the manner of
computing such adjustment. Each such officers' certificate shall be signed by
the Chairman of the Board, President and Chief Executive Officer or the Chief
Financial Officer of the Company and by the Secretary or any Assistant
Secretary of the Company. A copy of each such officers' certificate shall be
promptly mailed, by certified mail, to the Optionee.
10. Reclassification, Reorganization, Consolidation or
Merger. In the event of any reclassification, capital reorganization or other
change of the outstanding Common Shares of the Company (other than a
subdivision or combination of the outstanding Common Shares and other than a
change in the par value of the Common Shares) or in the event of any
consolidation or merger of the Company with or into another person or entity
(other than a merger in which the Company is the continuing person or entity
and that does not result in any
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<PAGE>
reclassification, capital reorganization or other change of outstanding Common
Shares) or in the event of any sale or conveyance to another person or entity
of the property and assets of the Company as an entirety or substantially as
an entirety, the Company shall, as a condition precedent to such transaction,
cause effective provisions to be made so that the Optionee shall have the
right thereafter, by exercising this Option, to purchase the kind and amount
of shares of beneficial interest and other securities and property (including
cash) receivable upon such reclassification, capital reorganization and other
change, consolidation, merger, sale or conveyance by a holder of the number of
Common Shares that might have been received if this Option had been exercised
immediately prior to such reclassification, capital reorganization, change,
consolidation, merger, sale or conveyance. Any such provision shall include
provisions for adjustments in respect of such shares of beneficial interest
and other securities and property that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Option. The foregoing
provisions of this Section 10 shall similarly apply to successive
reclassifications, capital reorganizations and changes of Common Shares and to
successive consolidations, mergers, sales or conveyances.
11. Notices. Any notice required or permitted to be
delivered hereunder to the Company or the Optionee shall be delivered or sent
by certified mail or by overnight courier. If the notice is to the Company, it
shall be sent to: 16 Campus Boulevard, Newtown Square, PA 19073, attention,
Secretary. If the notice is sent to the Optionee, it shall be sent to: Mark
Hamer, 12 Blair Drive, Huntington, NY 11743. Any party may change the address
to which notices are to be sent by delivery of written notice to the other
party in the manner specified in the preceding sentence.
12. Entire Agreement. This Option has been granted pursuant
to the Plan. This Agreement, and the provisions of the Plan, represent the
entire agreement between the parties with respect to the subject matter
hereof. Termination of the Plan shall not impair the rights of the Optionee
under this Option.
13. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Maryland.
14. Modification and Waiver. Neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated other than by an
instrument in writing signed by the Company and the Optionee.
15. Non-Recourse. No recourse shall be had for any
obligation of the Company hereunder, or for any claim based thereon or
otherwise in respect thereof, against any past, present or future trustee,
shareholder, officer or employee of the Company, whether by
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<PAGE>
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 Optionee.
16. Status of Option. The Option is intended to be a
non-qualified stock option. Accordingly, it is intended that the transfer of
property pursuant to the exercise of the Option shall be subject to federal
income tax in accordance with section 83 of the Internal Revenue Code of 1986
(the "Code"). The Option is not intended to qualify as an incentive stock
option within the meaning of section 422 of the Code.
17. Withholding of Taxes. Whenever the Company proposes or
is required to deliver or transfer Common Shares in connection with the
exercise of the Option, the Company shall have the right to (a) require the
Optionee to remit to the Company an amount sufficient to satisfy any federal,
state and/or local withholding tax requirements prior to the delivery or
transfer of any certificate or certificates for such Common Shares or (b) take
whatever action it deems necessary to protect its interests with respect to
tax liabilities, and in connection with the foregoing, the Company agrees, to
the extent consistent with the Plan and applicable law, and upon request of
the Optionee, to withhold Common Shares otherwise issuable upon exercise of
the Option to satisfy such tax liabilities.
IN WITNESS WHEREOF, the Company has caused its duly
authorized officer to execute this instrument this _____ day of __________,
1998.
By: _________________________
Name: _________________________
Title: _________________________
Acknowledged and Agreed:
- --------------------------
Mark Hamer
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<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of __________,
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 the holders of Units
(as defined below) listed on Schedule 1A hereto and signatory hereto
(individually, an "Investor" and collectively, the "Investors").
RECITALS
WHEREAS, the Investors are receiving on the date hereof
Class A units of limited partnership interests ("Units") in the Partnership
pursuant to that certain Contribution Agreement, dated as of _______, 1998, by
and among the Partnership and the persons and entities set forth on the
signature page thereof (the "Contribution Agreement"); and
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; and
WHEREAS, in order to induce the Investors to consummate the
closings of the transactions contemplated by the Contribution Agreement and
related transaction documents, the Trust has agreed to grant to each Investor
the registration rights provided for herein.
NOW, THEREFORE, in consideration of these 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.
<PAGE>
"Commission" means the United States Securities and
Exchange Commission.
"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 Common Shares issued
or issuable upon redemption of Units issued on the date hereof pursuant to the
Contribution Agreement and any other Common Shares issued in respect of such
shares (because of share splits, share dividends, reclassifications,
recapitalizations or similar events); provided that such Common Shares shall
cease to constitute Registrable Securities once: (i) a registration statement
covering such Common Shares has been declared effective by the Commission and
such Common Shares have been sold or transferred pursuant to such effective
registration statement, (ii) such Common Shares may be sold pursuant to Rule
144(k) under the Securities Act or (iii) such Common Shares have been
otherwise transferred in a transaction that would constitute a sale thereof
under the Securities Act, the Trust has delivered a new certificate or other
evidence of ownership for such Common Shares not bearing the Securities Act
restricted stock legend and such Common Shares may be resold without
subsequent registration under the Securities Act. In the event that the
Partnership issues additional Units pursuant to the Contribution Agreement on
or prior to the date that is 175 days after the date hereof, the Common Shares
issued or issuable upon redemption of such Units shall also constitute
Registrable Securities, and the holders of such Units shall execute a joinder
to this Agreement (agreeing to be bound by the provisions hereof as if they
were listed on Schedule 1A hereto and a signatory hereto) and thereupon shall
be entitled to the benefits of this Agreement and be treated as Investors
hereunder.
"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.
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<PAGE>
2. Registration Rights.
2.1 Registration on Demand.
2.1.1 Registration of Registrable
Securities. Subject to Sections 2.1.3 and 2.1.6, within 200 days after the
date hereof, the Trust shall prepare and file with the Commission a "shelf"
registration statement under the Securities Act covering the offer and sale of
all 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, and the
Trust shall use its commercially reasonable efforts to cause that registration
statement to become effective within 230 days after the date hereof.
Thereafter, the Trust shall use commercially reasonable efforts to take all
such action (including timely filing of all reports required to be filed
pursuant to the Exchange Act) as may be necessary to cause that registration
to remain in effect until all of the Registrable Securities have been sold by
the Investors (or such earlier date as all Common Shares issued or issuable
upon redemption of any Units have ceased to constitute Registrable
Securities).
2.1.2 Registration of Other Securities.
Whenever the Trust shall effect a registration pursuant to this Section 2.1,
other holders of securities of the Trust who have registration rights may
include all or a portion of such securities in such registration, offering or
sale.
2.1.3 Registration Statement Form S-3.
Registrations under this Section 2.1 shall only be required to be made on Form
S-3, or any successor form. In the event the Trust is not eligible to use Form
S-3 to register the Registrable Securities, 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 warrants to the
Investors that, as of the date hereof, the Trust is eligible to register the
Registrable Securities on Form S-3, and the Trust shall use its best efforts
to remain eligible to register the Registrable Securities on Form S-3.
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 the Investors, the
Trust shall pay the Registration Expenses in connection therewith. If the
registration is withdrawn solely at the request of the Investors and if the
Investors elect not to have such registration count as their single
registration under this Section 2.1, the Investors shall pay all the
Registration Expenses of such registration.
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.
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<PAGE>
2.1.6 Limitations on Registration on
Demand.
(i) In no event shall the Trust be
required to effect more than one registration pursuant to this Section 2.1.
(ii) Notwithstanding anything
herein, if the Trust reasonably believes that the filing of a registration
statement with the Commission would materially and 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 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;
provided, however, that the Trust may not delay the filing of such
registration statement for such reason more often than once during any period
of three consecutive months.
2.2 Registration Procedures.
2.2.1 In connection with the registration
of any Registrable Securities under the Securities Act as provided in Section
2.1, the Trust shall as promptly as practicable:
(i) prepare and file with the
Commission the requisite registration statement to effect such registration
and thereafter use commercially reasonable efforts to cause such registration
statement to become and remain effective;
(ii) prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with provisions of the
Securities Act with respect to the disposition of all Registrable Securities
covered by such registration statement until all of such Registrable
Securities have been sold thereunder;
(iii) furnish to the Investors,
without charge, 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
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<PAGE>
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 an Investor 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 an Investor to
consummate the disposition in such jurisdictions of the Registrable Securities
to be sold by such Investor, 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 statements therein not misleading, in the light of the
circumstances under which they were made, and, use its commercially reasonable
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 the class of Registrable Securities of the Trust (i.e., Common
Shares) covered by such registration statement are then listed;
(vii) notify the Investors promptly
(x) when the registration statement has become effective and when any
post-effective amendments and supplements thereto become effective, (y) of the
issuance of the Commission of any stop order suspending the effectiveness of
the registration statement or the initiation of any proceeding for that
purpose, and (z) if the Trust receives any notification with respect to the
suspension of the qualification of the Registrable Securities for sale in any
jurisdiction or of the initiation of any proceeding for such purpose;
(viii) make every reasonable effort
to obtain the withdrawal of any order suspending the effectiveness of the
registration statement at the earliest possible moment.
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<PAGE>
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)
or 2.2.1 (vii)(y) or (z), 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) or until any such suspension is lifted, respectively.
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 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 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; provided, however, that the Trust may not so direct the Investors
to so suspend the sales of Registrable Securities more often than once during
any period of three consecutive months.
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 20 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 an Investor is a selling shareholder, the Trust shall, and hereby
does, indemnify and hold harmless such Investor, each
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<PAGE>
Person, if any, who controls the Investor (within the meaning of Section 15 of
the Securities Act) and the officers, directors, shareholders, partners and
employees of the Investor and each such controlling Person (collectively, the
"Investor Indemnified Parties") from and against any losses, claims, damages
or liabilities incurred by any of such Investor Indemnified Parties, insofar
as losses, claims, damages, or liabilities (or actions, proceedings or
investigations, 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 such Investor Indemnified Parties
for any legal or any other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, liability, action,
proceeding or investigation 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 written information furnished to the Trust by such Investor specifically
for inclusion in such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of such Investor and shall survive the transfer of such securities by
such Investor.
2.5.2 Indemnification by the Investors If
any Registrable Securities are included in any registration statement, the
Investors shall, jointly and severally, 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, shareholder 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 written
information furnished to the Trust by the Investors specifically for inclusion
in such registration statement, preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement.
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
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<PAGE>
obligations under the preceding paragraphs of this Section 2.5, except to the
extent that the indemnifying party is materially prejudiced by such failure.
In case any such action is brought against an indemnified party, unless in
such indemnified party's reasonable judgment a conflict of interest between
such indemnified and indemnifying parties may exist in respect of such claim,
the indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly notified
to the extent that the indemnifying parties may agree, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable out of pocket costs
related to the indemnified party's cooperation with the indemnifying party,
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties arises in respect of such
claim after the assumption of the defense thereof. No indemnifying party shall
be liable for any settlement of any action or proceeding effected without its
written consent, which consent shall not be unreasonably withheld, delayed or
conditioned. Consent of the indemnified party shall be required for the entry
of any judgment or to enter into a settlement only when such judgment or
settlement does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all
liability in respect such claim or litigation.
2.5.4 Contribution. If the indemnification
provided for in this Section 2.5 shall for any reason be held by a court to be
unavailable to an indemnified party under Section 2.5.1 or 2.5.2 hereof in
respect of any loss, claim, damage or liability, or any action in respect
thereof, then, in lieu of the amount paid or payable under Sections 2.5.1 or
2.5.2 hereof, the indemnified party and the indemnifying party under Sections
2.5.1 or 2.5.2 hereof shall contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses reasonably incurred
in connection with investigating the same), in such proportion as shall be
appropriate to reflect the relative fault of and benefits to the Trust on the
one hand and the Investor on the other, in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, or
other relevant equitable considerations. The relative benefits to the
indemnifying party and indemnified party shall be determined by reference to,
among other things, the total proceeds received by the indemnifying party and
indemnified party in connection with the offering to which such losses,
claims, damages or liabilities relate. The relative fault of the indemnifying
party and indemnified party shall be determined by reference to, among other
things, whether the action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact, has been made by, or relates to information supplied by the
indemnifying party or the indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The parties hereto agree that it would not be just or equitable if
contribution pursuant to this Section 2.5.4 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in this paragraph. Notwithstanding
any of the provisions of this Section 2.5.4, an Investor shall not be required
to contribute any amount in excess of the amount of the total proceeds to the
Investor from sales of the Registrable Securities of such Investor under the
registration statement. No
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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. Rule 144 Compliance. The Trust covenants that it will use
commercially reasonable efforts to timely file the reports required to be
filed by the Trust under the Securities Act and the Exchange Act so as to
enable each Investor to sell Registrable Securities pursuant to Rule 144. In
connection with any proposed sale by any Investor of any Registrable
Securities pursuant to Rule 144, upon receipt by the Trust of an opinion of
the Investor's counsel that the disposition by the Investor falls within the
safe harbor provisions of Rule 144, the Trust shall cooperate with the
Investor to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any Securities
Act legend, and shall use commercially reasonable efforts to enable
certificates for such Registrable Securities to be for such number of shares
and registered in such names as the Investor may reasonably request prior to
any sale of Registrable Securities under Rule 144.
4. Decisions; Modification; Waivers. This Agreement may be
modified or amended only with the written consent the Trust, the Partnership
and the Investors to whom the modification or amendment relates. No party
shall be released from its obligations hereunder without the written consent
of the other party. The observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) by the party entitled to enforce such term, but any such waiver
shall be effective only if in a writing signed by the party against which such
waiver is to be asserted. Except as otherwise specifically provided herein, no
delay on the part of any party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party hereto of any right, power or privilege hereunder
operate as a waiver of any other right, power or privilege hereunder nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any right,
power or privilege hereunder.
5. Entire Agreement. This Agreement represents the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and supersedes all other prior and contemporaneous
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof.
6. 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.
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<PAGE>
7. 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:
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 any Investor, addressed to:
its respective address set forth on Schedule 1A hereto
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with a copy in each instance to:
Ralph A. Rosella, Esquire
Lazer, Aptheker, Feldman, Rosella & Yedid LLP
Melville Law Center
225 Old Country Road
Melville, NY 11747-2712
Fax: (516) 761-0015
and
Luke P. Iovine, III, Esquire
Battle Fowler LLP
Park Avenue Tower
75 East 55th Street
New York, NY 10022
Fax: (212) 856-7821
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.
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 State of Delaware
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 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.
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12. Specific Performance. The parties hereto acknowledge
that there would be no adequate remedy at law if any party fails to perform
any of its obligations hereunder, and accordingly agree that each party, in
addition to any other remedy to which it may be entitled at law or in equity,
shall be entitled to compel specific performance of the obligations of any
other party under this Agreement in accordance with the terms and conditions
of this Agreement in any court of the United States or any State thereof
having jurisdiction.
13. Successors, Assigns and Transferees. This Agreement
shall inure to the benefit of and be binding upon the successors, assigns and
transferees of each of the parties. If any successor, assignee or transferee
of an Investor shall acquire Registrable Securities, in any manner, whether by
operation of law or otherwise, such Registrable Securities shall be held
subject to all of the terms of this Agreement, and by taking and holding such
Registrable Securities such Person shall be entitled to receive the benefits
hereof and shall be conclusively deemed to have agreed to be bound by all of
the terms and provisions hereof.
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IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed and delivered on the date first above written.
BRANDYWINE REALTY TRUST
By: ______________________________
Name: Gerard H. Sweeney
Title: President & CEO
BRANDYWINE OPERATING
PARTNERSHIP, L.P.
By: BRANDYWINE REALTY
TRUST, its sole general partner
By: ______________________________
Name: Gerard H. Sweeney
Title: President & CEO
__________________________________
Donald E. Axinn
__________________________________
[ ]
__________________________________
[ ]
__________________________________
[ ]
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<PAGE>
PLEDGE AGREEMENT
PLEDGE AGREEMENT (the "Agreement") made as of this ___ day
of _______, 1998 by and between Donald E. Axinn ("Pledgor") and Brandywine
Operating Partnership, L.P., a Delaware limited partnership ("Pledgee"). Terms
used herein as defined terms but not defined herein have the meanings assigned
to them in that certain Contribution Agreement dated as of __________, 1998 by
and between Pledgee and certain other persons signatory thereto, including
Pledgor (the "Contribution Agreement").
WITNESSETH:
WHEREAS, on the date hereof, Pledgor is depositing with
Pledgee, in pledge pursuant to this Agreement, 312,500 Class A Units of
limited partner interest of Pledgee ("Pledged Class A Units").
NOW, THEREFORE, intending to be legally bound hereby, the
parties hereto agree as follows:
1. Defined Terms. For purposes of this Agreement, the
following terms shall have the meanings specified below.
"Average Closing Price" means, with respect to a
particular date, the average of the closing prices per share of common shares
of beneficial interest ("Common Shares") of Brandywine Realty Trust, as
reported by the New York Stock Exchange (as published in The Wall Street
Journal or, if not reported thereby, by another authoritative source), for the
fifteen (15) consecutive trading days ending on the date immediately preceding
such particular date.
"Collateral" means the Pledged Class A Units and any
Common Shares for which they may have been redeemed. Pledged Class A Units and
any Common Shares and any dividends or proceeds deriving therefrom shall cease
to constitute Collateral at such time as any such Class A Units or Common
Shares are released to Pledgee under Section 6 or to Pledgor under Section 7.
"Collateral Value" shall mean, as of any particular date,
(i) in respect of Collateral consisting of Pledged Class A Units and Common
Shares, the Average Closing Price as of such particular date multiplied by the
number of Pledged Class A Units and Common Shares; (ii) in respect of cash,
the amount of such cash; and (iii) in respect of Collateral consisting of
property other than Pledged Class A Units, Common Shares or cash, if any, the
fair market value thereof as determined in good faith by the Board of Trustees
of Brandywine Realty Trust.
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"First Release Date" means the __ day of ____, 1999.
"Second Release Date" means the __ day of ____, 2000.
"Reserve" shall mean, as of any given date, the aggregate
amount of bona fide claims for indemnity that have been asserted by Pledgee
under the Contribution Agreement as of such date but that have not then been
resolved.
2. Pledge; Grant of Security Interest. The Pledgor hereby
grants and confirms to Pledgee a first pledge and security interest in the
Collateral, as collateral security for any and all liability of Pledgor and
the other Contributors to or in favor of Pledgee in respect of Liquidated
Claims arising out of the indemnification provisions of the Contribution
Agreement.
3. Transfer Powers. Pledgor hereby delivers to Pledgee, and
Pledgee acknowledges receipt of, a certificate representing the Pledged Class
A Units, with an undated unit transfer power covering such certificate, duly
executed in blank by Pledgor. Such certificates and unit transfer power shall
be held and released by Pledgee pursuant to the terms hereof.
4. Representations and Warranties. Pledgor represents and
warrants that: (a) Pledgor has the power and authority and the legal right to
grant the lien on the Collateral pursuant to this Agreement; (b) Pledgor is
the record owner of, and has good and marketable title to, the Pledged Class A
Units, free of any and all liens or options in favor of any other person,
except the lien granted by this Agreement; (c) the lien granted and confirmed
pursuant to this Agreement constitutes a valid, first priority lien on the
Collateral, enforceable as such against all creditors of Pledgor and any
persons purporting to purchase any Collateral from Pledgor; and (d) this
Agreement constitutes the valid and binding obligations of Pledgor,
enforceable against Pledgor in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar rights of creditors generally and by
general principles of equity, and the execution, delivery and performance of
this Agreement does not violate any agreement or understanding to which
Pledgor is a party or by which Pledgor is bound, or any applicable law, rule
or regulation.
5. Covenants. Pledgor and Pledgee covenant and agree that
from the date of this Agreement until such time as Pledgee no longer holds any
remaining Collateral:
(a) If Pledgor shall, as a result of its ownership of the
Pledged Class A Units or any proceeds thereof, become entitled to receive or
shall receive any additional units of limited partner interest in Pledgee or
Common Shares or any other property, as a result of any Unit or Common Share
dividend, distribution or split, Pledgor shall immediately deliver the same to
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Pledgee in the exact form received, duly endorsed by Pledgor to Pledgee, if
required, together with a valid transfer power covering any certificates
received, duly executed in blank by Pledgor to be held as part of the
Collateral pursuant to this Agreement.
(b) Pledgor will not create, incur or permit to exist any
lien or option in favor of, or any claim of any person with respect to, the
Collateral, or any interest therein, except for the lien provided for by this
Agreement. Pledgor will, at its expense, defend the right, title and interest
of Pledgee in and to the Collateral against the claims and demands of all
person.
(c) Pledgor agrees to pay, and to save Pledgee harmless
from, any and all liability with respect to or resulting from any delay in
paying any and all stamp, excise, sales or other taxes which may be payable or
determined to be payable as a result of transactions contemplated by this
Agreement.
(d) As to Collateral consisting of Pledged Class A Units
and Common Shares, Pledgor shall be permitted to direct the voting with
respect to any such Collateral, and, except as provided in subparagraph (a),
to receive all distributions, dividends or other similar payments payable on
any such Collateral for all periods prior to such time as Pledgee is entitled
to such Collateral as provided herein in satisfaction of a payment obligation
owing to it under the Contribution Agreement.
6. Procedures and Remedies.
(a) In the event Pledgee asserts that it is entitled to
payment from Pledgor under the Contribution Agreement, concurrent with such
assertion Pledgee shall deliver a written notice (the "Indemnification
Notice") to Pledgor describing in reasonable detail the facts and
circumstances giving rise to such indemnification obligation and the amount of
the indemnification obligation. Any assertion by Pledgee of its entitlement to
payment under the Contribution Agreement shall be subject to any applicable
time limitations set forth in the Contribution Agreement. In the event that
Pledgor does not dispute the validity or accuracy of Pledgee's assertion set
forth in the Indemnification Notice by delivering to Pledgee a written notice
(a "Dispute Notice") within twenty (20) days of its receipt of the
Indemnification Notice, such claim shall be deemed a Liquidated Claim and
Pledgee shall be deemed to be entitled to the payment described in the
Indemnification Notice and to take the actions provided in Section 6. In the
event that Pledgor delivers a Dispute Notice to Pledgee within twenty (20)
days of its receipt of the Indemnification Notice, then the matter shall be
resolved through arbitration in the manner provided in Section 29(b) of the
Contribution Agreement unless Pledgor and Pledgee otherwise agree to a
contrary approach to resolving the dispute.
(b) In the event that (i) Pledgor receives an
Indemnification Notice and fails to timely deliver a Dispute Notice to the
Pledgee and fails to make payment to the Pledgee in respect of the claimed
indemnification obligation within thirty (30) days after receipt by it of an
Indemnification Notice or (ii) it has been determined pursuant to the
arbitration procedures set forth in Section 29(b) of the Contribution
Agreement that the Pledgor has an indemnification obligation to the Pledgee
under the Contribution Agreement, and if the Pledgor does not satisfy
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<PAGE>
such obligation within ten (10) days after the decision rendered pursuant to
such arbitration procedures, then, in either event, the Pledgee's claim shall
be deemed a "Liquidated Claim" and the Pledgee shall be deemed, without the
payment of any further consideration or the taking of any further action by
the Pledgor, to have acquired from the Pledgor such portion of the Collateral
as shall be equal in value (based on the Collateral Value, as of the date of
such deemed acquisition) to the amount set forth in the Indemnification Notice
or, in the case of clause (ii), the amount determined as a result of the
arbitration procedures set forth in Section 29(b) of the Contribution
Agreement. In the event the Pledgee shall have acquired from the Pledgor any
collateral pursuant to this Section 6, the Pledgee shall deliver written
notice to the Pledgor within five (5) Business Days thereafter identifying the
specific collateral acquired.
(c) The Pledgor shall have the right, in its sole
discretion at any time and from time to time, to substitute cash (to be held
in an escrow account and on such terms as the Pledgor and the Pledgee, acting
in good faith, shall agree at the time of the first such substitution) for all
or any portion of the Collateral and, in connection therewith, to have
Collateral consisting of securities released from the pledge established
hereby, so long as the total value of the Collateral released (based on the
Collateral Value as of the date of the release) equals the amount of
substituted cash.
7. Disposition of Collateral.
(a) Promptly, but in no event later than five (5) days,
after the First Release Date, the Second Release Date, and any Interim Release
Date (as defined below), Pledgee shall distribute to Pledgor that portion of
the Collateral, if any, determined as respectively set forth in clauses (i),
(ii) and (iii) below; provided that if the Collateral is comprised of
different types of property, Pledgee shall release whatever mix of property
comprising the Collateral that it elects.
(i) The value of Collateral, if any, to be released
on the First Release Date shall be equal to "x" where "x" is calculated as
follows:
x = [(0.5)(Collateral Value at the First Release Date)]
- (Reserve at the First Release Date)
(ii) The value of Collateral to be released on the
Second Release Date, if any, shall be equal to "y" where "y" is calculated as
follows:
y = [(1.0)(Collateral Value at the Second Release Date)]
- (Reserve at the Second Release Date)
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(iii) On any date (an "Interim Release Date") after
the First Release Date on which Pledgee determines that the Reserve has
decreased since Pledgee's most recent release of Collateral, or, if no such
release has occurred, since the First Release Date, Pledgee shall release
Collateral with a value equal to "z" where "z" is calculated as follows:
z = (Reserve at the time of the most recent - (Reserve at such Interim
release, or, if no such release has Release Date)
occurred, at the First Release Date)
provided; however, that "z" will be capped such that, prior to the Second
Release Date, Pledgee shall always be entitled to hold Collateral with a value
equal to [(0.5)(Collateral Value at the First Release Date)] + (Reserve at
such Interim Release Date), and on or after the Second Release Date, Pledgee
shall be entitled to hold Collateral with a value equal to the Reserve at such
Interim Release Date until such claim becomes a Liquidated Claim.
(b) This Agreement shall terminate on the later of
the Second Release Date or the first day after the Second Release Date when
all releases of Collateral to which Pledgor has become entitled pursuant to
Section 7(a) have been made and either (i) the Reserve on such day is equal to
zero, or (ii) the Collateral Value on such day is equal to zero (the
"Termination Date"). Any remaining Collateral at the Termination Date shall be
promptly released to Pledgor (the "Termination Date Release").
8. Further Assurances. Pledgor agrees to cooperate with
Pledgee and to execute and deliver, or cause to be executed and delivered, all
such other instruments and to take all such actions as Pledgee may reasonably
request from time to time which shall be appropriate or necessary in Pledgee's
judgment in order to carry out the provisions and purposes of this Agreement.
9. Miscellaneous.
(a) Indulgences, Etc. Neither the failure nor any
delay on the part of Pledgee to exercise any right, remedy, power or privilege
under this Agreement shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, remedy, power or privilege preclude any
other or further exercise of the same or of any other right, remedy, power or
privilege, nor shall any waiver of any right, remedy, power or privilege with
respect to any occurrence be construed as a waiver of such right, remedy,
power or privilege with respect to any other occurrence. No waiver shall be
effective unless it is in writing and signed by the party asserted to have
granted such waiver.
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(b) Controlling Law. This Agreement and all questions
relating to its validity, interpretation, performance and enforcement
(including, without limitation, provisions concerning limitations of actions),
shall be governed by and construed in accordance with the laws of the State of
Delaware, notwithstanding any conflict-of-laws doctrines of such state or
other jurisdiction to the contrary, and without the aid of any canon, custom
or rule of law requiring construction against the draftsman.
(c) Notices. All notices required or permitted
hereunder shall be deemed given when delivered (personally or by recognized
courier service such as Federal Express), or upon receipt by the party
entitled to receive the notice two days after being sent by registered or
certified mail, postage prepaid, addressed as follows or to such other address
or addresses as may hereafter be furnished in writing by notice similarly
given by one party to the other:
(i) If to Pledgor:
131 Jericho Turnpike
Jericho, New York 11753
Attention: Donald E. Axinn
With a copy to:
Lazer, Aptheker, Feldman,
Rosella & Yedid, LLP
Melville Law Center
225 Old Country Road
Melville, NY 11747-2712
Attention: Steven B. Aptheker, Esquire
(ii) If to Pledgee:
Brandywine Operating Partnership, L.P.
16 Campus Boulevard, Suite 150
Newtown Square, PA 19073
Attention: Gerard H. Sweeney, President
and Chief Executive Officer
With a copy to:
Brandywine Realty Trust
16 Campus Boulevard, Suite 150
Newtown Square, PA 19073
Attention: Brad A. Molotsky, Esquire
General Counsel
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(d) Binding Nature of Agreement; No Assignment. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
(e) Settlement of Disputes. Any and all controversies
of every kind and nature between the parties hereto shall be resolved in
accordance with the provisions set forth in Section 29(b) of the Contribution
Agreement.
(f) No Limitation. This Agreement and the security
arrangements established hereby shall not limit any recourse Pledgee may have
under any agreements entered into with Pledgor or Pledgor's affiliates or any
other party to the Contribution Agreement.
(g) Provisions Separable. The provisions of this
Agreement are independent of and separable from each other, and no provision
shall be affected or rendered invalid or unenforceable by virtue of the fact
that for any reason any other or others of them may be invalid or
unenforceable in whole or in part.
(h) Entire Agreement. This Agreement, together with
the Contribution Agreement, contains the entire understanding among the
parties hereto with respect to the subject matter hereof, and supersedes all
prior and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written, except as herein contained.
The express terms hereof control and supersede any course or performance
and/or usage of the trade inconsistent with any of the terms hereof. This
Agreement may not be modified or amended other than by agreement in writing.
(i) Section Headings. The section headings in this
Agreement are for convenience only; they form no part of this Agreement and
shall not affect its interpretation.
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(j) Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original as against any party whose signature appears thereon, and all of such
shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of all of the parties reflected hereon as
the signatories. Execution of this Agreement may be delivered by fax
transmission.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this
Agreement to be duly executed and delivered as of the date first above
written.
PLEDGEE
BRANDYWINE OPERATING PARTNERSHIP, L.P.
By: BRANDYWINE REALTY TRUST, its
sole general partner
By:_________________________________
Name:
Title:
PLEDGOR
---------------------------------
Donald E. Axinn
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FOURTH AMENDMENT TO AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
BRANDYWINE OPERATING PARTNERSHIP, L.P.
THIS FOURTH AMENDMENT, dated as of ________, 1998 (the
"Amendment"), further amends the Amended and Restated Agreement of Limited
Partnership Agreement (as amended to date, 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 interests in real estate and real estate related assets that
are being made to the Partnership on the date hereof pursuant to a
"contribution" agreement (relating to properties owned by persons and entities
that include Donald E. Axinn and affiliates) among the Partnership and the
other signatories thereto.
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 to them on the date hereof on account of
the fiscal quarter in which they are admitted to the Partnership shall be
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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. Notwithstanding anything contained
in the Partnership Agreement or this Amendment, if the holder of Class A Units
exercises its Redemption Right and the General Partner or the holder
reasonably believes that the issuance of Common Shares in satisfaction of the
Redemption Right would require a notification and filing under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the obligation of the Partnership and the General Partner to satisfy
the Redemption Right may be suspended until applicable filings with the
Federal Trade Commission and the Antitrust Division of the Department of
Justice have been made and the applicable waiting periods have expired. The
General Partner agrees to use commercially reasonable efforts to make any
requisite filings under the HSR Act in order to promptly obtain expiration of
the applicable waiting periods, and the Partnership and the applicable holder
of Class A Units shall split equally any filing fees that may be payable under
the HSR Act.
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:
-2-
<PAGE>
(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 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, 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: ________________________
Its: President and Chief Executive Officer
ADMITTED PARTNERS:
----------------------------------------
Donald E. Axinn
----------------------------------------
[ ]
----------------------------------------
[ ]
----------------------------------------
[ ]
-4-
<PAGE>
SCHEDULE "A"
NUMBER OF
ADMITTED PARTNERSHIP
PARTNERS INTERESTS
-------- -----------
<PAGE>
SCHEDULE "B"
BRANDYWINE OPERATING PARTNERSHIP, L.P.
OUTSTANDING PARTNERSHIP INTERESTS
AS OF ________, 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
Werner A. Fricker 6,830
R. Randle Scarborough 59,578
M. Sean Scarborough 60,576
Steven L. Shapiro 1,902
Robert K. Scarborough 215,384
Raymond J. Perkins 2,536
Brandywine Holdings I, Inc. 5
Brandywine Realty Trust 467,220
NUMBER OF
PARTNERSHIP
INTERESTS
GENERAL PARTNER (ALL GP UNITS)
- --------------- --------------
Brandywine Realty Trust [37,636,457]
<PAGE>
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 the terms of this Agreement; (iii) all conveyances and other
instruments or documents that the General Partner deems appropriate or
necessary to reflect the dissolution and liquidation of the Partnership
pursuant to the terms of this Agreement, including, without limitation, a
certificate of cancellation; and (iv) all instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant to the
provisions of this Agreement, or the Capital Contribution of any Partner. The
foregoing power of attorney is irrevocable and a power coupled with an
interest, in recognition of the fact that each of the Partners will be relying
upon the power of the General Partner to act as contemplated by this Agreement
in any filing or other action by it on behalf of the Partnership, and it shall
survive the death, incapacity or incompetency of a Limited Partner to the
effect and extent permitted by law and the Transfer of all or any portion of
such Limited Partner's Partnership Units and shall extend to such Limited
Partner's heirs, distributees, successors, assigns and personal
representatives.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Proxy on this ____ day of _________________, 1998.
-------------------------
Donald E. Axinn
<PAGE>
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 the terms of this Agreement; (iii) all conveyances and other
instruments or documents that the General Partner deems appropriate or
necessary to reflect the dissolution and liquidation of the Partnership
pursuant to the terms of this Agreement, including, without limitation, a
certificate of cancellation; and (iv) all instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant to the
provisions of this Agreement, or the Capital Contribution of any Partner. The
foregoing power of attorney is irrevocable and a power coupled with an
interest, in recognition of the fact that each of the Partners will be relying
upon the power of the General Partner to act as contemplated by this Agreement
in any filing or other action by it on behalf of the Partnership, and it shall
survive the death, incapacity or incompetency of a Limited Partner to the
effect and extent permitted by law and the Transfer of all or any portion of
such Limited Partner's Partnership Units and shall extend to such Limited
Partner's heirs, distributees, successors, assigns and personal
representatives.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Proxy on this ____ day of _________________, 1998.
--------------------------------------
[ ]
<PAGE>
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 the terms of this Agreement; (iii) all conveyances and other
instruments or documents that the General Partner deems appropriate or
necessary to reflect the dissolution and liquidation of the Partnership
pursuant to the terms of this Agreement, including, without limitation, a
certificate of cancellation; and (iv) all instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant to the
provisions of this Agreement, or the Capital Contribution of any Partner. The
foregoing power of attorney is irrevocable and a power coupled with an
interest, in recognition of the fact that each of the Partners will be relying
upon the power of the General Partner to act as contemplated by this Agreement
in any filing or other action by it on behalf of the Partnership, and it shall
survive the death, incapacity or incompetency of a Limited Partner to the
effect and extent permitted by law and the Transfer of all or any portion of
such Limited Partner's Partnership Units and shall extend to such Limited
Partner's heirs, distributees, successors, assigns and personal
representatives.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Proxy on this ____ day of _________________, 1998.
---------------------------------------
[ ]
<PAGE>
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 the terms of this Agreement; (iii) all conveyances and other
instruments or documents that the General Partner deems appropriate or
necessary to reflect the dissolution and liquidation of the Partnership
pursuant to the terms of this Agreement, including, without limitation, a
certificate of cancellation; and (iv) all instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant to the
provisions of this Agreement, or the Capital Contribution of any Partner. The
foregoing power of attorney is irrevocable and a power coupled with an
interest, in recognition of the fact that each of the Partners will be relying
upon the power of the General Partner to act as contemplated by this Agreement
in any filing or other action by it on behalf of the Partnership, and it shall
survive the death, incapacity or incompetency of a Limited Partner to the
effect and extent permitted by law and the Transfer of all or any portion of
such Limited Partner's Partnership Units and shall extend to such Limited
Partner's heirs, distributees, successors, assigns and personal
representatives.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Proxy on this ____ day of _________________, 1998.
---------------------------------------
[ ]
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated May 15, 1998, on the combined financial statement of revenue and
certain expenses of The Axinn Properties for the year ended December 31, 1997,
included in this Form 8-K, into the Company's previously filed Registration
Statements on Form S-3 (File No. 333-20991, File No. 333-20999, File No. 333-
46647, File No. 333-53359 and File No. 333-56237) and Form S-8 (File No.
333-14243, File No. 333-28427 and File No. 333-52957)
/s/ ARTHUR ANDERSEN LLP
- -------------------------
Arthur Andersen LLP
Philadelphia, PA.,
July 21, 1998
