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EXHIBIT 10.4
OPTION AGREEMENT
(Lot 8, Block 1104, Mt. Laurel, NJ)
THIS OPTION AGREEMENT (the "Agreement") is made as of this
31st day of January, 1997, by and between MLCP ASSOCIATES LIMITED PARTNERSHIP,
a Delaware limited partnership, having an address at 4 Eves Drive, Marlton, New
Jersey 08053 (hereinafter, "Optionor"), and BRANDYWINE OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership, having an address c/o Brandywine Realty
Trust, 16 Campus Boulevard, Suite 150, Newtown Square, Pennsylvania 19073
(hereinafter, "Optionee").
Background
A. Optionor is the owner of that certain tract of ground,
comprising approximately 8 acres, located in the Mt. Laurel Corporate Park, Mt.
Laurel, New Jersey, and being identified as Lot 8 of Block 1104, all as more
fully described on Exhibit "A" (the "Property").
B. Optionor desires to grant to Optionee and Optionee desires to
acquire from Optionor an option to purchase the Property upon the terms and
conditions contained herein.
Agreement
The parties hereto, in consideration of the sum of Ten Dollars
($10.00) and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and the mutual covenants and agreements
contained herein, and intending to be legally bound hereby, covenant and agree
as follows:
1. Grant of Option. Optionor does hereby grant to
Optionee the right and option (the "Option") to acquire the Property for the
Purchase Price (as defined below) and otherwise upon the terms and conditions
set forth herein. The Optionee may exercise the Option by delivering written
notice to the Optionor in accordance with Section 16 of this Agreement at any
time during the Option Period (as defined below) or during any extension
thereof.
2. Term of Option. The Option may be exercised by
Optionee at any time during the term commencing on the date hereof, and
continuing thereafter until June 30, 1998 (the "Option Period"). Time is of
the essence. Optionor and Optionee understand and agree that the price of the
Option is Ten Dollars ($10.00), which sum, together with the execution of that
certain Agreement of Sale by and among Optionor, certain affiliates of Optionor
and Optionee dated January 21, 1997 (the "Agreement of Sale") and all related
documentation, constitute full and adequate consideration for the Option.
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3. Extension of Option Period. Optionee may extend the
Option Period from the expiration thereof through June 30, 2000, by delivering
to Optionor written notice of such extension not later than thirty (30)
business days prior to the expiration of the Option Period, and delivering an
option extension fee of $100,000 (the "Extension Fee") to Optionor, which
Extension Fee shall be the consideration for the extension of the Option and
shall be non- refundable to Optionee except as expressly provided in Section 15
below, but shall nevertheless be applied in reduction of the Purchase Price.
4. Purchase Price. The Purchase Price for the Property
shall be One Million ($1,000,000) Dollars ("Purchase Price"), payable by wire
transfer of immediately available funds at the time of Closing. Optionee shall
be credited at Closing with the Extension Fee if theretofore paid, and the
Purchase Price shall be subject to proration for real estate taxes and water
and sewer rents in the same manner that the purchase price under the Agreement
of Sale was subject to adjustment thereunder.
5. Exclusive Option. At no time during the term of the
Option shall Optionor convey, transfer, sell, lease, option or otherwise
dispose of the Property or any part thereof. No such sale, transfer or other
disposition shall be effective unless this Option shall have first expired or
been terminated.
6. Title. Optionor shall convey title to the Property
to Optionee at Closing by Bargain and Sale Deed with Covenants against
Grantor's Acts (the "Deed"), free and clear of all liens, restrictions,
easements and other encumbrances, except for those set forth on the attached
Exhibit "B" (the "Permitted Encumbrances"). At Closing (as defined below), the
title conveyed by Optionor shall be good and marketable and insurable as such
by any reputable title insurance company licensed to do business in New Jersey
and selected by the Optionor, at such company's regular rates, pursuant to a
standard ALTA owner's form of policy, free of all exceptions, other than the
Permitted Encumbrances.
7. Closing. The closing of the transaction contemplated
herein ("Closing") shall take place at 10:00 a.m. on the fifteenth (15th) day
following the date Optionee gives notice of its exercise of the Option, or
sooner by mutual agreement of the parties hereto (the "Closing Date"). Time is
of the essence. If said fifteenth (15th) day shall not be a business day, then
the Closing shall occur on the first business day thereafter. For purposes
hereof, a "business day" shall mean any day other than a day on which
commercial banks in the State of New Jersey are required or permitted by law to
close. The Closing shall occur at the offices of Pepper, Hamilton & Scheetz,
Suite 500, LibertyView Building, 457 Haddonfield Road, Cherry Hill, New Jersey
08002, or at such other location as the parties may mutually agree.
8. Deliveries at Closing. At Closing, Optionor and
Optionee shall execute and deliver the documents and agreements enumerated on
Exhibit "C" hereto.
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9. Transfer Taxes. Seller shall pay for all applicable
realty transfer taxes related to the execution, delivery and recording of the
Deed and other closing documents, and all related recording charges.
10. Representations and Warranties of Optionor. In order
to induce Optionee to enter into this Agreement, Optionor hereby represents and
warrants to Optionee that the following representations and warranties are true
now, and to the extent specifically set forth herein, will be true at Closing
(except that immaterial changes which occur in the ordinary course of Seller's
business which do not materially affect Optionee's valuation of the Property
or, provided Optionee closes, any matter or occurrence within Optionee's actual
knowledge prior to Closing, shall not be considered to render such
representation untrue at and as of Closing):
10.1 Authorization. Optionor is a duly authorized
and validly existing partnership formed under the laws of the State of Delaware
and is duly qualified to do business in the State of New Jersey, (ii) Optionor
has full power, right and authority to own its properties, to carry on its
business as now conducted, and to enter into and fulfill its obligations under
this Agreement, (iii) each of the persons executing this Agreement on behalf of
Optionor is authorized to do so, (iv) this Agreement is the valid and legally
binding obligation of Optionor, enforceable against Optionor in accordance with
its terms, (v) the execution and delivery of this Agreement and compliance with
its terms will not conflict with or result in the breach of any law, judgement,
order, writ, injunction, decree, rule or regulation, or conflict with or result
in the breach of any other agreement, document or instrument to which Optionor
is a party or by which it or the Property is bound or affected. The
representation and warranty contained herein shall be true and correct at and
as of Closing.
10.2 Employment. There are no employees of
Optionor, and Optionee assumes no obligations or responsibilities whatsoever
for any employees. The representation and warranty contained herein shall be
true and correct at and as of Closing.
10.3 Contracts. Except as disclosed in the
Agreement of Sale, there are no service, equipment, supply or maintenance
contracts with or affecting the Property. The representation and warranty
contained herein shall be true and correct at and as of Closing.
10.4 No Lawsuits. Except as disclosed in the
Agreement of Sale, Optionor has received no written notice of any claims,
lawsuits or proceedings pending, and to the best of Optionor's knowledge, there
are no claims, lawsuits or proceedings threatened against or relating to
Optionor or the Property, or which could affect them, or either of them, in any
court or before any governmental agency.
10.5 Leases. There are no oral or written leases,
licenses or rights of occupancy or, to the best of Optionor's knowledge, any
grants or claims of right, title or interest in any portion of the Property.
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10.6 Good Title to Property. To the best of
Optionor's knowledge, Optionor holds good and marketable, indefeasible fee
simple title to the Property, free and clear of liens and encumbrances, other
than the Permitted Exceptions.
10.7 FIRPTA. Optionor is not a "foreign person"
as such term is defined in Section 1445(f)(3) of the Internal Revenue Code of
1954, as amended (the "Code").
10.8 Rights to Purchase. There are no outstanding
agreements, options, rights of first refusal, conditional sales agreements or
other agreements or arrangements, whether oral or written, regarding the
purchase and sale of the Property.
When used in this Section 10, the phrase "knowledge" and "to
the best knowledge", shall be deemed to mean the actual knowledge of Joseph D.
Gonnelli and R. Brian Jackson.
11. Representations of Optionee. Optionee represents and
warrants as of the date of this Agreement as follows:
(a) Optionee has full power and authority to
enter into this Agreement and to perform all obligations hereunder.
(b) The performance by Optionee of Optionee's
obligations under this Agreement will not violate any law, result in any
breach, constitute a default under, or require any consent pursuant to any
contract or other agreement, lease, license or permit to which optionee is a
party, or require Optionee to obtain the consent of any person, entity or
governmental authority.
12. Representations Limited. All representations and
warranties made by the parties in this Agreement shall survive the execution of
this Agreement and the consummation of the transactions contemplated hereunder
for a period of six (6) months from the Closing Date, and claims made prior to
the expiration of such six (6) month period shall survive if not resolved
within such six (6) month period.
13. Condition of Premises. Except as expressly set forth
herein, Optionor makes no representations with respect to the condition or
character of the Property or the use or uses to which the foregoing may be put.
Optionee shall be afforded the opportunity to examine, inspect and test the
Property and Optionee, if it exercises the Option, shall automatically and
without further action, and except as herein otherwise provided, be deemed to
have released Optionor from all responsibility and liability regarding the
condition or utility of the Property. Except for Optionor's representations,
warranties, covenants and agreements as are herein expressly provided, OPTIONEE
SHALL PURCHASE THE PROPERTY IN "AS IS - WHERE IS" CONDITION AT CLOSING. If
Optionee intends to exercise its rights to inspect and examine the physical
condition of the Property, it shall (i) provide Optionor with prior verbal
notice of Optionee's entry, (ii) keep the Property free of any liens or
third-party claims resulting therefrom except as may be required by applicable
law; (iii) maintain adequate liability insurance in an
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amount of not less than $1,000,000.00 for a single occurrence and $50,000 for
property damage, which insurance shall name Optionor as an additional insured;
(iv) indemnify Optionor against any liability or expense for injuries to or
death of persons or damage to property arising from the exercise of the rights
hereunder that are not the result of any act or omission of the Optionee or its
agents, employees or contractors and (v) if Closing does not occur for any
reason other than Optionor's breach or default, restore as nearly as
practicable the Property substantially to its condition immediately before such
exercise. The indemnification and restoration provisions of this subsection
shall survive the termination of this Agreement.
14. Brokers. Optionor and Optionee each represent and
affirm to the other that neither has made any agreement or taken any action
which may cause any broker or finder to become entitled to a commission as a
result of the transaction contemplated by this Agreement. Each of the parties
hereto agrees to indemnify, defend and hold the other harmless against any
claims, demands, suits, judgments or liabilities which arise by reason of a
breach of the foregoing representation. The provisions of this Section shall
survive the Closing or other termination of this Agreement.
15. DEFAULT; REMEDIES
15.1 Prior to title passing and the completion of
Closing, in the event of Optionor's default hereunder, Optionee's sole remedies
shall be that of (i) specific performance, with abatement of the Purchase Price
to the extent of liens of a fixed or ascertainable amount, or (ii) termination
of this Agreement and return of the Extension Fee, if theretofore paid; in no
event shall Optionee be entitled to damages of any kind or nature;
15.2 Prior to title passing and completion of
Closing, with respect to any representations or warranties of Optionor
contained in this Agreement, Optionee's obligations hereunder are contingent
upon such representations and/or warranties contained in this Agreement being
true and correct as of the date hereof and, where the context specifically
provides, as of the date of Closing, but recision of this Agreement and return
of the Extension Fee, if theretofore paid, shall be Optionee's exclusive remedy
for any breach of any representation and/or warranty by Optionor.
15.3 Notwithstanding the foregoing, in the event of
a willful or intentional breach of a covenant, obligation or warranty by
Optionor under this Agreement, or if Optionor makes a willful or intentional
material misrepresentation in this Agreement, Optionee shall be entitled to
terminate this Agreement and to the return of the Extension Fee, if theretofore
paid, and Optionee's reasonably documented Transaction Costs (as hereinafter
defined) sustained by Optionee in connection with this Agreement; and the
foregoing shall be Optionee's sole remedies under this subparagraph.
15.4 Subsequent to title passing and completion of
Closing, Optionee shall have recourse against Optionor for its reasonably
documented actual damages, sustained solely
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for Optionor's breach of representations and warranties which survive Closing,
which breach is discovered by Optionee after Closing; the right to pursue said
recourse shall expire and terminate, as to any right on which action has not
then been initiated, at the expiration of the survival periods set forth
herein.
15.5 Optionee recognizes that the Property will be
removed by Optionor from the market during the existence of this Agreement and
that if after the Initial Option Term, the term hereof shall have been extended
by Optionee as hereinabove provided, and thereafter, the option hereby granted
shall not be exercised by Optionee, or the option shall be exercised but
Closing is not consummated because of Optionee's default, then, in either such
event, Optionor shall be entitled to retain the Extension Fee as its sole and
liquidated damages. The parties agree that the sum stated above as liquidated
damages shall be in lieu of any other relief to which Optionor might otherwise
be entitled, Optionor hereby specifically waiving any and all rights which it
may have to damages or specific performance as a result of Optionee's default
under this Agreement.
15.6 Optionee's Out-of-Pocket Costs. In the event
of Optionor's breach or default in accordance with Section 15.3 then, in any
such event, upon termination by Optionee hereunder, in addition to receiving
the immediate return of the Extension Fee, anything in the Agreement contained
to the contrary notwithstanding, Optionee shall also receive from Optionor,
upon demand, Optionee's actual, documented out-of-pocket costs and expenses
associated with this Agreement and Optionee's anticipated acquisition of the
Property including, without limitation, Optionee's reasonable counsel fees and
costs, title expenses, survey costs, financial and accounting due diligence,
Optionee's environmental assessment of the Property, and other costs and
expenses associated with Optionee's due diligence (collectively, "Transaction
Costs"). The foregoing list is not intended to be exclusive, but
representative of the costs and expenses that the parties anticipate that
Optionee will incur in anticipation of this transaction. Optionor's maximum
reimbursement liability under this Section 15 shall not exceed $10,000 in the
aggregate.
16. Notices. All notices, requests and other
communications under this Agreement, to be effective, shall be in writing and
shall be sent by certified mail, return receipt requested, or by overnight
delivery by recognized courier, addressed as follows:
If to Optionor:
MLCP Associates Limited Partnership
4 Eves Drive
Marlton, New Jersey 08053
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With a copy to:
Robert E. Schwartz, Esquire
Sherman, Silverstein, Kohl,
Rose & Podolsky
4300 Haddonfield Road
Suite 311
Pennsauken, New Jersey 08109
If to Optionee:
Brandywine Operating Partnership, L.P.
c/o Brandywine Realty Trust
16 Campus Boulevard
Suite 150
Newtown Square, Pennsylvania 19073
Attn: Gerard H. Sweeney, President
and Chief Executive Officer
With a copy to:
Eric L. Stern, Esquire and
Brad A. Molotsky, Esquire
Pepper, Hamilton & Scheetz
3000 Two Logan Square
18th & Arch Streets
Philadelphia, PA 19103-2799
17. Recording. At the request of either party, this
Agreement or a memorandum thereof may be recorded in the Office of the Clerk in
and for Burlington County, New Jersey. In such instance, a termination of
Memorandum of Option Agreement (the "Termination") shall be delivered by
Optionee to Optionor's legal counsel Sherman, Silverstein, Kohl, Rose &
Podolsky, ATTN: Robert E. Schwartz, Esquire, as Escrow Agent, to be held in
escrow. Upon the expiration or sooner termination of the term of this
Agreement (including any extension(s) thereto), Escrow Agent is hereby
authorized to release the Termination for recording in the said Clerk's Office,
but only after Escrow Agent shall have first delivered to Optionee notice of
its intention to do so, and the failure of Optionee, or its agent, to object to
such recording within ten (10) days next following the receipt of such notice
by Optionee, by return notice in writing to Optionor and Escrow Agent, in the
manner specified in this Agreement.
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18. Miscellaneous.
(a) Entire Agreement; Merger. This Agreement
together with the Exhibits attached hereto embodies and constitutes the entire
understanding between the parties with respect to the transactions contemplated
herein, and all prior or contemporaneous agreements, understandings,
representations and statements, oral or written, are merged into this
Agreement. Neither this Agreement nor any provision hereof may be waived,
modified, amended, discharged or terminated except by an instrument in writing
signed by the party against which the enforcement of such waiver, modification,
amendment, discharge or termination is sought, and then only to the extent set
forth in such instrument.
(b) Time of the Essence. Time is of the essence
as to the performance of all terms and conditions of this Agreement.
(c) Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of New
Jersey.
(d) Successors and Assigns. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, legal representatives, successors
and assigns.
(e) Headings. All headings are for convenience
only, and shall not be used in construing any of the provisions of this
Agreement.
(f) Counterparts. This Agreement may be executed
in multiple counterparts, each of which shall be deemed an original.
(g) Non-Recourse. No recourse shall be had for
any obligation of Brandywine Realty Trust ("BRT") hereunder or under any
document executed in connection herewith or pursuant hereto, or for any claim
based thereon or otherwise in respect thereof, against any past, present or
future trustee, shareholder, officer or employee of BRT, whether by virtue of
any statute or rule of law, or by the enforcement of any assessment or penalty
or otherwise, all such liability being expressly waived and released by
Optionor and all parties claiming by, through or under Optionor.
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IN WITNESS WHEREOF, the parties hereto have executed, sealed
and delivered this Agreement the day and year first above written.
OPTIONOR:
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MLCP ASSOCIATES LIMITED PARTNERSHIP,
a Delaware limited partnership
By: MLCP General Corporation,
its authorized general partner
By: /s/ Joseph D. Gonnelli
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Name: Joseph D. Gonnelli
Title: President
[Corporate Seal]
OPTIONEE:
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BRANDYWINE OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership
By: BRANDYWINE REALTY TRUST, a Maryland
Real Estate Investment Trust, its general partner
By: /s/ Gerard H. Sweeney
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Gerard H. Sweeney,
President and Chief
Executive Officer
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The address of the above named Optionee is:
c/o Brandywine Realty Trust
16 Campus Boulevard
Suite 150
Newtown Square, Pennsylvania 19073
By: /s/ Gerard H. Sweeney
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On behalf of the Optionee
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EXHIBIT "A"
Legal Description
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EXHIBIT "B"
Permitted Exceptions
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EXHIBIT "C"
Documents
I. Documents. At Closing, the parties indicated shall
simultaneously execute and deliver the following:
A. Optionor's Documents and Other Items. Optionor shall
execute and deliver or cause to be executed and delivered to Optionee, in
proper form for recording:
(i) Deed. A Bargain and Sale Deed with Covenants
Against Grantor's Acts prepared by Optionee's counsel in form acceptable to
Optionor (the "Deed"), conveying the Property, duly executed by Optionor for
recording. The Deed description shall be based upon the metes and bounds
description attached as Exhibit "A". In addition, if Optionee requests that
Optionor convey the Premises by the metes and bounds description shown on the
new survey, if any, obtained by Optionee, Optionor covenants to execute a Quit
Claim Deed for such new description.
(ii) Original Licenses, Contract Documents and Other
Personal Property. All original Licenses, Contract Documents, and other
Personal Property (of the type described in Section 1.2, of the Agreement of
Sale) if any, and to the extent in Optionor's possession and as applicable to
the Property, and any assignment thereof, without representation or warranty.
(iii) FIRPTA Certificates. All certificate(s)
required under Section 1445 of the Code.
(iv) Title Insurance Certificates. Such
affidavits of title or other certifications as shall be required by the Title
Company to insure Optionee's title to the Property as set forth in Section 6 of
the within Agreement, and to provide affirmative endorsements against
construction liens.
(v) Optionor Certificate. A written certification
confirming that as of Closing that the representations and warranties which are
required to be true at and as of Closing, are true at and as of Closing.
(vi) Organization Certifications. Confirmation of
the good standing and existence of Optionor and its general partner and the due
authority of those executing for them, including, without limitation, the
following documents issued no earlier than 30 days prior to Closing: (a) good
standing certificate in state of organization and in the State in which the
Property are located, (b) partnership agreement, (c) a certificate from the
secretary of the corporation or managing general partner of the partnership
confirming the incumbency of the signatories and the current force and effect
of the resolution authorizing their execution of the documents required under
this Agreement.
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B. Optionee's Documents. Optionee shall deliver or
cause to be delivered to Optionor:
(i) The amounts required to be paid to Optionor
pursuant to this Agreement;
(ii) Confirmation of the existence and
subsistence of Optionee, and the authority of those executing for Optionee,
including, without limitation, the following documents issued no earlier than
thirty (30) days prior to Closing: (a) good standing certificate in State of
Maryland, (b) Optionee's Amendment and Restatement of Declaration of Trust
filed on August 27, 1996, as amended, (c) a certificate from any officer of
Optionee confirming the incumbency of the signatories and the current force and
effect of the resolution authorizing their execution of the documents required
under this Agreement.
C. Necessary Documents. Optionee and Optionor shall
execute and deliver such other documents and instruments as may be reasonably
necessary to complete the transaction contemplated by this Agreement.
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[OPTIONOR'S ACKNOWLEDGMENT]
STATE OF :
: SS.
COUNTY OF :
On this, the _____ day of __________, 1997, before me, a
Notary Public in and for the State and County aforesaid, the undersigned
officer, personally appeared __________________, who acknowledged himself to be
the __________________ of MLCP General Corporation, the authorized General
Partner of MLCP Associates Limited Partnership, a Delaware limited partnership,
and that he as such ___________________, of the authorized General Partner,
being authorized to do so, executed the foregoing instrument on behalf of the
said limited partnership for the purposes therein contained.
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NOTARY PUBLIC
My Commission Expires:
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[OPTIONEE'S ACKNOWLEDGMENT]
STATE OF :
: SS.
COUNTY OF :
On the _______ day of _____________, 1997, before me a Notary
Public in and for the State and County aforesaid, the undersigned officer,
personally appeared Gerard H. Sweeney, who acknowledged himself to be the
President of Brandywine Realty Trust, the authorized managing general partner
of Brandywine Operating Partnership, L.P., a Delaware limited partnership, and
that he, as President of the authorized General Partner, being authorized as to
do, executed the foregoing instrument on behalf of the said limited partnership
for the purposes therein contained.
IN WITNESS WHEREOF, I have hereunto set my hand and official
seal.
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NOTARY PUBLIC
My Commission Expires: