FIRST COMMERCIAL DEVELOPMENT COMPANY
COMMERCE PARK
CORPORATE CENTER 81
CAMP HILL CORPORATE CENTER
CONTRIBUTION AGREEMENT
AMONG
THE MEMBERS OF FIRST COMMERCIAL DEVELOPMENT
COMPANY LISTED ON SCHEDULE 1 TO THIS AGREEMENT
AND
BRANDYWINE OPERATING PARTNERSHIP, L.P.
Dated as of April 7 , 1998
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT is made and entered into as of the 7th day of
April, 1998 by and among THE MEMBERS OF FIRST COMMERCIAL DEVELOPMENT COMPANY
LISTED ON SCHEDULE " 1 " HERETO (together, the "Members") having the addresses
set forth on Schedule "1" hereto and BRANDYWINE OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership or its nominee, having an address at Newtown
Square Corporate Campus, 16 Campus Boulevard, Suite 150, Newtown Square,
Pennsylvania 19073 (the "Partnership").
RECITALS
A. First Commercial Development Company ("First Commercial") is a
Pennsylvania limited partnership whose general partner and limited partners
are listed on Schedule "1" attached hereto (the general partner and the
limited partners are collectively the "Members").
B. First Commercial is the owner of a certain tract of land, together
with the buildings and improvements thereon, including four (4) office
buildings containing approximately 71,728 net rentable square feet in Commerce
Park, commonly known as 2401, 2404, 2405 and 2407 Park Drive, Harrisburg,
Susquehanna Township, Pennsylvania as more fully described on Exhibit "A"
attached hereto; and
C. First Commercial is the owner of a certain tract of land, together
with the buildings and improvements thereon, including four (4) office
buildings containing approximately 61,821 net rentable square feet in
Corporate Center 81, commonly known as 600 and 800 Corporate Circle and 200
and 500 Nationwide Drive, Harrisburg, Susquehanna Township, Pennsylvania as
more fully described on Exhibit "A" attached hereto.
D. First Commercial is the owner of a certain tract of land, together
with the buildings and improvements thereon, including three (3) office
buildings containing approximately 277,092 net rentable square feet in Camp
Hill Corporate Center, commonly known as 150, 200 and 300 Corporate Center
Drive, East Pennsboro Township, Pennsylvania as more fully described on
Exhibit "A" attached hereto.
E. The Members desire and hereby agree to contribute, and the Partnership
desires and hereby agrees to acquire or accept, all of the Members' right,
title and interest as partners in and to First Commercial (the "First
Commercial Partnership Interests"), subject to and on the terms and conditions
hereinafter set forth.
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NOW THEREFORE, in consideration of the mutual promises and agreements
hereinafter set forth and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Definitions Of Certain Terms. For all purposes of this Agreement, the
following terms shall have the respective meanings set forth below:
"Agreement" shall mean this document entitled "Contribution
Agreement", all exhibits and schedules attached hereto or made a part hereof
and all amendments to this Agreement which are agreed to in writing and signed
by all of the parties hereto.
"Closing" shall have the meaning ascribed to that term in
Paragraph 4 hereof. The date upon which the Closing actually occurs shall be
the "Closing Date."
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder or with respect
thereto.
"Common Shares" shall mean the common shares of beneficial
interest, par value $.01 per share, of the Trust.
"Contracts" shall mean all contracts and agreements with
respect to the management (excluding property management agreements),
operation, supply, maintenance, repair or construction affecting any of the
Property, all as described in Exhibit "B" attached hereto.
"Deposit" shall mean the two payments in the amount of Two
Hundred Thousand Dollars ($200,000), each, delivered by the Partnership to
Escrow Agent pursuant to Paragraph 3(a) hereof, together with all interest
earned thereon, if any.
"Due Diligence Termination Date" shall mean 5:00 p.m. E.S.T. on
the date which is twenty five (25) days from the Effective Date.
"Effective Date" shall mean the date on which this Agreement
has been fully executed and delivered by all parties hereto to each other.
"Escrow Agent" shall mean Commonwealth Land Title Insurance
Company, 1700 Market Street, Philadelphia, Pennsylvania 19103.
"Escrow Terms" shall mean the escrow agreement to be entered of
even date herewith between the Escrow Agent, the Members and the Partnership.
"Excluded Assets" shall mean the assets of First Commercial
which are described in Paragraph 2(b).
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"First Commercial" shall mean First Commercial Development
Company, a Pennsylvania limited partnership and its predecessor entity, First
Commercial Development Company, a Pennsylvania general partnership.
"First Commercial Partnership Interests" shall mean all of the
general partner and limited partner partnership interests of First Commercial,
collectively.
"Improvements" shall mean those certain buildings and other
improvements constructed and located on the Land as described on Exhibit "A"
attached hereto.
"Initial Members" shall mean John S. Trogner, Sr., John S.
Trogner, Jr. and Blair S. Trogner, Sr.
"Land" shall mean collectively the certain parcels of real
property which are owned by First Commercial and located in Harrisburg,
Pennsylvania and in Camp Hill, Pennsylvania, as described on Exhibit "A"
attached hereto.
"Leases" shall mean those certain leases (and guarantees
thereof, if any) listed on Exhibit "C" attached hereto, or hereafter entered
into by First Commercial, as landlord, in accordance with the terms of this
Agreement, for any space within any of the Improvements located on any of the
Land.
"Licenses" shall mean the licenses, permits, approvals and
agreements affecting any of the Real Property.
"Other Assets" shall mean the Excluded Assets and the Other
Properties, collectively.
"Other Properties" shall mean all of the real property which
First Commercial owned, transferred and conveyed to third parties prior to the
Effective Date, which are listed on Exhibit "F-2" attached hereto.
"Partnership Agreement of the Partnership" and "Partnership
Agreement" shall mean the Amended and Restated Agreement of Limited
Partnership of the Partnership, as amended.
"Permitted Exceptions" shall mean with respect to any of the
Real Property (i) the lien of real estate taxes, water rent and sewer charges
that are not due and payable on the Closing Date, (ii) the printed exclusions,
conditions and stipulations contained in the Commitment (as hereinafter
defined), (iii) additional exceptions to title set forth in Exhibit "D"
attached hereto, (iv) special assessments which become a lien on any of the
Real Property on or after the Closing Date, and (v) such other title matters
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existing on the Closing Date which are accepted or deemed accepted by the
Partnership pursuant to Paragraph 5 hereof; and (vii) the rights of Tenants of
any of the Real Property pursuant to the Leases for all or any portion of any
of the Real Property.
"Personal Property" shall (except as specifically excluded on
Exhibit "E" attached hereto) mean all of First Commercial's right, title and
interest in and to the tangible personal property including, without
limitation, furniture, furnishings, equipment, machinery and fixed and movable
fixtures, together with all component and replacement parts, owned by First
Commercial, situated on any of the Real Property on the Closing Date, and all
artwork, renderings, flags, awnings and trade dress; all architects',
engineers', surveyors' and other real estate professionals' plans,
specifications, certifications, reports, data or other technical descriptions
(including, without limitation, all environmental, structural and mechanical
inspection reports) to the extent the same are in First Commercial's
possession, are not proprietary in nature, and related directly to the Real
Property and all building names and First Commercial's rights, if any, in and
to the names "Commerce Park, Corporate Center 81, and Camp Hill Corporate
Center."
"Property" shall mean the Real Property and such of the
Contracts, Leases, Licenses, Personal Property and other rights, titles,
interests and obligations which pertain to the Real Property and are intended
to be contributed, conveyed, sold or otherwise transferred to the Partnership
by First Commercial pursuant to this Agreement.
"Real Property" shall mean the Land and the Improvements.
"Tenants" shall mean the tenants under the Leases.
"Trust" shall mean Brandywine Realty Trust, a Maryland real
estate investment trust, the sole general partner of the Partnership.
"Underlying Shares" shall mean the Common Shares issuable upon
the redemption of the Units issuable hereunder.
"Units" shall mean Class A Units of Limited Partnership
Interests in the Partnership.
2. The Transaction
(a) Contribution of Partnership Interests in First Commercial.
On the Closing Date, subject to the terms and conditions set forth in this
Agreement, the Members shall contribute, assign, transfer and convey to the
Partnership and the Partnership shall accept from the Members the following:
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(i) On the Closing Date, the Members shall contribute (the
"Initial Contribution") to the Partnership, and the Partnership shall acquire
from the Members, all of the general partner interests and certain limited
partner interests in First Commercial, comprising in the aggregate a 99%
profits interest and a 89% capital interest in First Commercial. In return for
the Initial Contribution, the Partnership shall, on the Closing Date, pay to
the Members the initial consideration (the "Initial Consideration") consisting
of a payment of cash and/or the issuance to the Members of the number of
Units, having an aggregate value equal to 93% of the Net Consideration, such
value to be determined under Paragraph 3 of this Agreement. The Initial
Contribution shall be made by the Members and the Initial Consideration shall
be allocated to the Members as set forth on Schedule "2" attached hereto.
(ii) One Thousand One Hundred and Twenty Six Days after the
Closing Date, the Members shall contribute (the "Subsequent Contribution") to
the Partnership and the Partnership shall acquire from the Initial Members all
of the remaining limited partner interests in First Commercial, comprising in
the aggregate a 1% profits interest and a 11% capital interest in First
Commercial. In return for the Subsequent Contribution, the Partnership shall
on the closing date for the Subsequent Consideration, pay to the Initial
Members the subsequent consideration (the "Subsequent Consideration")
consisting of a payment of cash and/or the issuance to the Initial Members of
the number of Units having the aggregate value equal to 7% of the Net
Consideration, such value to be determined under Paragraph 3 of this
Agreement. In addition as part of the Subsequent Consideration, the
Partnership shall pay to the Initial Members the amount, if any, that is equal
to the aggregate amount that would have been distributed on or before the date
of the Subsequent Contribution in respect of such Units had they been issued
to the Initial Members on the Closing Date, less any amounts distributed to
the Initial Members after the Closing Date and prior to the date of the
Subsequent Contribution in respect of the First Commercial Partnership
Interests of the Initial Members retained by the Initial Members after the
Initial Contribution.
(b) Excluded Assets. Prior to Closing, First Commercial shall assign,
transfer and convey to the Members or an entity designated by the Members, (i)
the real property which is described on Exhibit "F-1" attached hereto, and
(ii) all cash and cash equivalents of First Commercial except for any such
items which are to be transferred or credited to the Partnership under the
terms of this Agreement. The Members and First Commercial are hereby
authorized to transfer and withdraw from First Commercial the Excluded Assets,
prior to or simultaneously with the Closing of the Initial Contribution. The
costs of the transfer, including without limitation transfer taxes, shall be
borne by the Members and the obligation of the Members to pay all transfer
taxes in connection with such transfers shall survive the Closing, without
limitation.
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(c) Liabilities.
(i) The Members shall pay, perform and discharge all
obligations and liabilities of First Commercial which relate to the periods
prior to the Closing or which by their terms are to be paid, performed or
discharged on or before the Closing Date for the Initial Contribution (whether
or not such liabilities or obligations have been disclosed to the
Partnership). Such payments shall occur prior to Closing or with respect to
invoices received after Closing promptly upon receipt of such invoices.
(ii) Except as expressly set forth in Paragraph 7 of this
Agreement, all liabilities or obligations of First Commercial accrued as of
the Closing or relating to periods prior to the Closing, whether or not
relating to the Property, which are not paid, performed or discharged by First
Commercial prior to the Closing, shall be transferred and assigned by First
Commercial to the Members or their designee and the said transferee shall be
responsible for and shall perform such excluded liabilities and obligations.
The liabilities and obligations which are to be transferred and assigned under
this Paragraph 2(c)(ii) are the "Excluded Liabilities."
(d) Right of First Refusal Properties.
(i) The Real Property is subject to the following rights of
first refusal to purchase: a right of first refusal for the benefit of IBM
with respect to the property known as 300 Corporate Center Drive, Camp Hill,
Pennsylvania, as set forth in Article 23 of the lease with IBM for such
property; and a right of first refusal for the benefit of Tracking Systems
Corporation ("Tracking") with respect to the property known as 2404 Park
Drive, Harrisburg, Pennsylvania, as set forth in Paragraph 7 of the lease with
Tracking for such property. First Commercial has received a letter from IBM
which waives the right of first refusal under Article 23 of the IBM Lease.
First Commercial has sent to Tracking a letter (the "Tracking RFR Letter")
which requests the waiver of Tracking of its right of first refusal. The IBM
waiver letter and the request letter to Tracking are set forth as Exhibit "AA"
hereto.
(ii) Should Tracking not waive its right of first refusal but
instead offer and agree to purchase its first refusal property (the "Tracking
Refusal Purchase Property"), the transactions under this Agreement shall
proceed with the following changes to the terms and provisions of this
Agreement:
(1) the Real Property shall consist of all of the Real Property
listed on Exhibit "A" hereto except for the Tracking Refusal Purchase Property.
(2) the Aggregate Consideration shall be reduced by an amount
equal to the base consideration payable under the Tracking RFR Letter for the
Tracking Refusal Purchase Property which is $825,000; and
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(3) each Member shall notify the Partnership of the applicable
cash/Units allocation of the Aggregate Consideration for such Member in the
aggregate and with respect to the Initial Contribution and the Subsequent
Contribution; and
(e) The Partnership agrees to change the name of First
Commercial and stop using the name "First Commercial" within three months
after the Closing. Within three months after the Closing, the Partnership
shall assign and transfer to the Members or an entity designated by the
Members on an "as is" basis the rights of the Partnership to the name "First
Commercial Development Company" and "First Commercial" and all derivatives
thereof. The name change and the transfer of the name by the Partnership to
the Members or such entity and the subsequent use of the name by the Members
and such entity shall be done in a manner which minimizes any confusion of
third parties and the public with respect to the entity known as First
Commercial immediately after the Closing.
3. Consideration And Time Of Payment. The total value of the
consideration (the "Aggregate Consideration") to be received by the Members
from the Partnership, in exchange for the First Commercial Partnership
Interests, shall be Forty Eight Million Five Hundred Thousand Dollars
($48,500,000), as adjusted pursuant to Paragraph 7 of this Agreement. The
amount of the Aggregate Consideration which is payable to the Members shall be
reduced by the amount of principal and accrued interest secured by the
Mortgage Debt on the Real Property as of the Closing Date which is paid off
under Paragraph 3(b) below or which is assumed by the Partnership. Such
reduced Consideration shall be called the "Net Consideration." The Aggregate
Consideration shall be paid to the Members in the following manner:
(a) On the Effective Date, the Partnership shall deliver a
check, subject to collection, in the amount of Two Hundred Thousand Dollars
($200,000) to the Escrow Agent, which check shall be payable to the order of
the Escrow Agent and shall be held and disbursed pursuant to the Escrow Terms.
Thereafter, within two (2) business days following the Due Diligence
Expiration Date, the Partnership shall deliver a check, subject to collection,
in the amount of Two Hundred Thousand Dollars ($200,000) to the Escrow Agent,
which check shall be payable to the order of the Escrow Agent and shall be
held and disbursed pursuant to the Escrow Terms. In the event that the Members
elect, pursuant to subparagraph (d) below, to receive all of the Consideration
in Units in exchange for the contribution of the Partnership Interests, the
Escrow Agent shall release the Deposit to the Partnership at the Closing.
(b) At the Closing, the Partnership shall deliver in cash
sufficient funds to payoff all of the debt on the Real Property which is
listed on Exhibit "G" attached hereto (the "Mortgage Debt") provided, however,
that amount of such funds shall not exceed an amount equal to 93% of the
Aggregate Consideration.
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(c) (i) The balance of the Initial Consideration shall be paid to the
Members at the Closing and the making of the Initial Contribution by wire
transfer of immediately available funds to an account designated by the
Members.
(ii) The Subsequent Consideration shall be paid to the Initial
Members upon the making of the Subsequent Contribution, by wire transfer of
immediately available funds to an account designated by the Initial Members.
(d) In lieu of receiving the cash Consideration pursuant to subparagraphs
(a) and (c)(i) and (ii) above, the Members may elect, at their option, to
receive all or a portion of the cash Consideration in the form of Class A
Units of Limited Partnership Interest ("Units") in the Partnership in exchange
for the contribution to the Partnership of all or a portion, as the case may
be, of the First Commercial Partnership Interests. The Members may make such
election by providing the Partnership written notice not later than twenty
(20) days prior to the applicable Closing Date. Such election notice shall
state the dollar amount of the Consideration to be received in Units. The
number of Units issuable in satisfaction of the applicable portion of the
Consideration that the Members elect to be so received shall be computed by
dividing the aggregate dollar amount of such applicable portion of the
Consideration by the Computed Market Price. The term "Computed Market Price"
shall mean the average closing price for the Common Shares as reported by the
New York Stock Exchange (the "NYSE") for the ten (10) trading day period
immediately preceding the Due Diligence Termination Date. The distributions
declared by the Partnership in respect of the Class A Units issuable pursuant
to this Agreement during the initial calendar quarter in which the Closing
occurs shall be pro-rated by the Partnership based on the number of days the
Class A Units are outstanding during such quarter. For example, if the Class A
Units issuable pursuant to this Agreement are issued on May 1, 1998, each of
such Class A Units shall be entitled to receive an amount equal to two-thirds
of the amount of the distributions payable to a Class A Unit that was
outstanding during the full quarter.
(e) (i) It is the intent of the parties to this Agreement that the
transaction qualify as a tax-deferred contribution by the Members to the
Partnership of the First Commercial Partnership Interests under Section 721 of
the Code with respect to the receipt of Units by the Members.
(ii) At the request of the Members, the Partnership shall
provide the Members with an allocation of additional debt (through guarantees
in the form attached hereto as Exhibit "H" or otherwise) to provide the
Members with sufficient tax basis to defer at Closing income tax recognition
in connection with the Section 721 contribution to the Partnership.
(iii) The Partnership makes no representations and warranties
regarding the tax consequences to the Members of the transactions under this
Agreement.
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(f) The Members will be responsible for any prepayment costs
associated with the Mortgage Debt payoffs.
(g) The Units to be issued to the Members will be restricted
from sale for two years as provided in the Partnership Agreement of the
Partnership.
4. Closing. The closing of the Initial Contribution and the transactions
contemplated by this Agreement (the "Closing") shall be held on or before May
5, 1998, at the offices of counsel to the Members, Buchanan, Ingersoll,
Professional Corporation, Eighth Floor, 30 North Third Street, Harrisburg, PA,
commencing at 10:00 a.m., time being of the essence.
5. Title And IDA Conveyances.
(a) At Closing, legal and equitable title to the Real Property
shall be in the name of First Commercial and insurable at regular rates by
Commonwealth Land Title Insurance Company (the "Title Insurer"), free and
clear of all liens, encumbrances and restrictions other than the Permitted
Exceptions; provided, however, that if title to any of the Real Property is
not insurable as aforesaid, the Partnership's sole right and remedy shall be
as set forth in Paragraph 5(b) below. Title to the properties known as 600 and
800 Corporate Circle and 200 and 500 Nationwide Drive, is currently in the
name of the Dauphin County Industrial Development Authority and title to the
properties known as 2401 and 2404 Park Drive, Harrisburg, Susquehanna
Township, Pennsylvania is currently in the name of the Susquehanna Township
Industrial Development Authority (collectively the "Authority"). Prior to
Closing, the Members shall take all necessary action to cause title to such
properties to be transferred to First Commercial free and clear of all liens
and encumbrances in favor of the Authority and terminate any and all
agreements involving the Authority with respect to such properties. All such
action and transfers shall be taken at no cost and expense to the Partnership,
including without limitation, transfer taxes and the obligation of the Members
to pay all transfer taxes in connection with such transfers shall survive the
Closing, without limitation.
(b) (i) The Partnership has applied for a title insurance
commitment (1992 ALTA Form with Creditor's Rights Exclusion Deleted) to be
issued by the Title Insurer ("Commitment"), agreeing to issue to the
Partnership, upon the Closing, an owner's policy of title insurance as above
specified ("Title Policy"). Said Commitments shall agree to insure the
proposed title of the Partnership to each of the Real Property subject only to
the Permitted Exceptions and such other title exceptions as the Partnership
has agreed to accept or is deemed to have accepted pursuant to this Paragraph.
If any of the Commitments disclose any title exceptions in addition to the
Permitted Exceptions and the Partnership objects to such additional title
exceptions (the "Title Defects"), the Partnership shall notify the Members of
such Title Defects with sufficient specificity to enable the Members to
respond. The Partnership's notice of any Title Defects shall be given in
writing to the Members no later than the date which is five (5) business days
prior to the Due Diligence Termination Date, together with the Commitments and
copies of all matters of record raised therein as exceptions thereto, after
which
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the Partnership shall be deemed to have waived any and all Title Defects not
so raised, except for Title Defects which are first disclosed to the
Partnership in continuations of title issued subsequent to the issuance of the
Commitments, unless the Partnership fails to object to same in writing within
three (3) business days after the Partnership's receipt of the continuation of
title in which the same is disclosed, in which case the Partnership will be
deemed to have waived such additional Title Defects. The Members shall have
the right, but not the obligation (except as otherwise specifically provided),
to cure such Title Defects and, if the Members elect to attempt to cure the
Title Defects but have not cured same on or before the Closing Date, then the
Closing Date may be extended by the Members at their sole option for up to
thirty (30) days to enable the Members to effect such cure.
(ii) In the event that either (a) title is not in accordance
with the terms of this Agreement, (b) the Members elect not to cure or cause
the removal of any exception to title, except as required in subparagraph
(iii) below, or (c) if the Members are unable to satisfy any other conditions
to the Partnership's obligations under this Agreement, then (except as
otherwise specifically provided in subparagraph (iii) below) the sole
liability of the Members shall be to (A) direct the Escrow Agent to return the
Deposit to the Partnership and (B) reimburse the Partnership for the
reasonable charges imposed by the Title Company for preparation of the
Commitments (without the issuance of a policy) and for the reasonable fees
paid by the Partnership to update the existing surveys and in respect of the
Partnership's actual, documented out-of-pocket costs of due diligence, the sum
of which shall in no event exceed in the aggregate $45,000 (collectively the
"Partnership's Reasonable Costs"), and upon such payments being made, this
Agreement shall be deemed canceled and the parties hereto shall be released of
all obligations and liabilities hereunder, except as to any provisions which
expressly survive a termination of this Agreement; and the Partnership shall
have no rights of action against the Members in law or in equity, for damages
or, except for the purpose of enforcing the Members's contractual obligations
under subparagraph (iii) below, for specific performance. Notwithstanding the
foregoing, the Partnership shall have the right to waive any conditions to the
Partnership's obligations hereunder, in which event the Members shall make the
deliveries provided for herein to the Partnership to the extent that the
Members are able so to do, and there shall be no reduction in the
Consideration in such event.
(iii) Notwithstanding the provisions of the foregoing
paragraph, if the condition of title to the Real Property at the Closing is
other than that which the Partnership is required or agrees to accept
hereunder solely by reason of any mortgages or other monetary liens
(hereinafter referred to as "Liens") which can be satisfied or remedied by the
payment of a liquidated amount of money, the Members shall not have the right
to cancel this Agreement and the Members shall either (aa) discharge, satisfy,
or bond the same or (bb) deliver such funds to be held in escrow required by
the Title Company, in either event so that the Title Company shall
affirmatively insure the full and complete discharge of the foregoing and
shall agree to omit the same as an exception to its title insurance policy.
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(iv) Notwithstanding anything to the contrary contained in this
Agreement, the Members shall have no duty nor be required to take any action,
to institute any proceedings or to incur any expense (other than as may be
expressly required in subparagraph (iii) above) in order to remedy or remove
any objections to title or otherwise to render title in accordance with the
terms called for in this Agreement.
6. Closing Documents - Closing and Subsequent Contribution.
(a) At the Closing, as a condition of the Partnership's obligations
to close hereunder, the Members shall deliver or cause to be delivered the
following:
(i) An Assignment of Partnership Interests of First Commercial
comprising the Initial Contribution;
(ii) An executed counterpart of an Amended and Restated Limited
Partnership Agreement of First Commercial in the form of Exhibit "I" hereto,
which substitutes the Partnership for the Members as the partners in First
Commercial with respect to the First Commercial Partnership Interests which
are the subject of the Closing and the Initial Contribution;
(iii) Proof as to the due authorization and execution by the
Members of the documents executed and delivered by the Members;
(iv) The signed originals (or true and correct copies of same)
of the Contracts, Leases, Licenses, as are in the possession or control of
First Commercial;
(v) All machinery and/or equipment operating manuals, technical
data and other documentation relating to the building systems and equipment,
and all machinery, equipment and other building warranties and guarantees, if
any, but only to the extent that any of the same are in the possession or
control of First Commercial;
(vi) All master and duplicate keys, combinations and codes to
all locks and security devices for the Improvements which are in the
possession or control of First Commercial;
(vii) Written notice from First Commercial or First
Commercial's managing agent to each Tenant in form reasonably satisfactory to
the Partnership stating that the Real Property has been acquired by the
Partnership and that tenant security deposits (if any) in First Commercial's
possession have been transferred to the Partnership and directing the Tenants
to make future rental payments to the Partnership at the address designated by
the Partnership;
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(viii) Non-foreign person certification in the form of Exhibit
"J" attached hereto;
(ix) All building records and Tenant lease files with respect
to the Real Property which are in the possession of First Commercial;
(x) Each bill of current real estate taxes, sewer charges and
assessments, water charges and other utilities and to the extent in First
Commercial's possession or control, bills for each of the same for the three
(3) preceding years, together with proof of payment thereof (to the extent
same have been paid);
(xi) All plans, specifications, as-built drawings, surveys,
site plans, and final, written reports of architects, engineers and surveyors,
and any other Personal Property forming part of the Property or any portion
thereof, but only to the extent that the same exist and are in the possession
of First Commercial or any property manager controlled by First Commercial;
(xii) Subject to the provisions of Paragraph 11(d), below,
Estoppel Letters, if any, received from Tenants;
(xiii) Updated rent rolls, which shall be certified by First
Commercial to be correct and complete as of Closing Date;
(xiv) Proof as to the due authorization and execution by First
Commercial of the documents executed and delivered by First Commercial;
(xv) An affidavit or affidavits of title in favor of the Title
Insurer on the form used by such Title Insurer, in form reasonably acceptable
to the Members to enable the Title Insurer to issue the Commitments described
in Paragraph 5(b)(i) and as shall be required by the Title Company to insure
the Partnership's title to the Property as set forth in Section 5. The
Partnership shall require affirmative endorsements consistent with the
Members' obligations under Paragraph 5(b)(iii), above and affirmative
endorsements (a) against mechanic's liens, (b) insuring against any violation
of existing covenants, conditions or restrictions, and insuring that future
violation will not result in forfeiture of title,(c) with respect to
non-attribution to the Partnership and First Commercial after Closing of any
knowledge or activities of First Commercial and the Members on or before the
Closing;
(xvi) A Registration Rights Agreement (the "Registration Rights
Agreement") in the form of Exhibit "K" attached hereto, executed by the
Members;
(xvii) Proof satisfactory to the Partnership, in its sole
discretion, as to the transfer to the Members or an entity designated by the
Members of the Excluded Assets and the Excluded Liabilities; and
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(xviii) The closing certificate required pursuant to Paragraph
9.
(b) At the Closing, as a condition of the obligations of the Members to
close hereunder, the Partnership shall deliver or cause to be delivered the
following:
(i) The balance of the Initial Consideration (in immediately
available funds or Units in accordance with Paragraph 3);
(ii) A Registration Rights Agreement executed by the Trust; and
(iii) Proof as to the due authorization and execution by the
Partnership of the documents executed and delivered by the Partnership;
(iv) An executed counterpart of an Amendment to the Amended and
Restated Limited Partnership Agreement of the Partnership evidencing the
issuance of Units to the Members as specified above;
(v) An executed counterpart of an Amended and Restated Limited
Partnership Agreement of First Commercial;
(vi) The Tax Indemnification Agreement in the form of Exhibit
"L" hereto.
(vi) The closing certificate required pursuant to Paragraph 9.
(c) At the making of the Subsequent Contribution, as a condition of the
obligations to pay the Subsequent Consideration, the Members shall deliver or
cause to be delivered the following:
(i) An Assignment of Partnership Interests of First Commercial
comprising the Subsequent Contribution;
(ii) An executed counterpart of an Amended and Restated Limited
Partnership Agreement of First Commercial which substitutes the Partnership
for the Members as the partners in First Commercial with respect to the First
Commercial Partnership Interests which are the subject of the Subsequent
Contribution;
(iii) Proof as to the due authorization and execution by the
Members of the documents executed and delivered by the members;
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(iv) An affidavit or affidavits of title in favor of the Title
Insurer on the form used by such Title Insurer, in form reasonably acceptable
to First Commercial to enable the Title Insurer to issue the Commitments
described in Paragraph 5(b)(i). The Partnership shall require affirmative
endorsements with respect to non-attribution to the Partnership and First
Commercial after the Subsequent Contribution of any knowledge or activities of
the Members on or before the Subsequent Contribution; and
(v) An update of the certificate set forth in Paragraph 9, but
only with respect to the matters set forth in Paragraphs 9(b) and 9(c)(1) and
(2) and then only insofar as such Paragraphs relate to the Members making the
Subsequent Contribution.
(d) At the making of the Subsequent Contribution, as a
condition of the obligation of the Members to make the Subsequent
Contribution, the Partnership shall deliver or cause to be delivered the
following:
(i) The Subsequent Consideration (in immediately available
funds or Units in accordance with Paragraph 3); and
(ii) An update of the certificate set forth in Paragraph 9.
7. Prorations And Closing Costs. All matters involving prorations or
adjustments to be made to the Consideration in connection with the Closing and
not specifically provided for in any other provision of this Agreement shall
be adjusted as provided below. Except as otherwise set forth herein, all items
to be prorated pursuant to this Paragraph shall be prorated as of the Closing
Date, in connection with the Initial Contribution, for purposes of prorations
of income and expenses, on the Closing Date.
(a) Real estate taxes and all other ad valorem taxes, if any,
with respect to the Real Property for the applicable fiscal or calendar year
in which the Closing occurs shall be prorated on a per diem basis. If the
amount of such taxes is not known on the Closing Date, taxes will be prorated
on the basis of the most recently ascertainable tax bill. There shall be no
proration of First Commercial's insurance premiums or assignment of First
Commercial's insurance policies and First Commercial shall be entitled to
cancel all of its existing policies as of the Closing Date with any unexpired
premiums, which are refunded by the insurers, being repaid to the Members. The
Partnership shall be obligated (at its own election) to obtain any replacement
policies. The amounts of all telephone, electric, sewer, water and other
utility bills, trash removal bills, janitorial and maintenance service bills
relating to the Property and allocable to the period prior to the Closing Date
shall be determined and paid by First Commercial before Closing, if possible,
or shall be paid promptly thereafter by the Members or adjusted between the
Partnership and the Members immediately after the same have been determined.
First Commercial shall attempt to have all utility meters read as of the
Closing Date. First Commercial shall further attempt to obtain from the
provider of same, all other service statements and bills of account adjusted
as of the Closing Date. The Members shall be entitled to
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refunds of all deposits, if any, paid by First Commercial or First
Commercial's predecessor-in-interest prior to Closing and held by entities
providing such service, or, at the option of the Members, the Members shall
agree that, First Commercial may retain such deposits after Closing in which
case the Members shall receive a full credit for the amount of such deposits.
All Contracts and other obligations in connection with the Property, to the
extent the same are intended to be assumed hereunder, shall be prorated as of
the Closing Date.
(b) Special assessments which have been filed as a lien against any of
the Real Property on or before the Closing Date and are not payable in
installments shall be paid by First Commercial on or before the Closing.
Special assessments which have been filed as a lien against any of the Real
Property, but which are payable in installments shall be adjusted based upon
the installment payment for the fiscal or calendar year in which Closing takes
place and the remaining unpaid assessments shall be assumed by the
Partnership. Special assessments which are or may be pending, but which have
not become a lien on the Real Property as of the Closing Date, and special
assessments which are filed as a lien after the Closing Date, shall be assumed
and paid by the Partnership.
(c) The parties intend that the transactions under this Agreement not be
subject to the real estate transfer tax or stamps of the Commonwealth of
Pennsylvania and East Pennsboro Township and Susquehanna Township. To the
extent that state and local transfer taxes or stamps are imposed in connection
with the transactions under this Agreement for any reason whatsoever, the cost
of such taxes or stamps shall be borne one-half by the Partnership and
one-half by the Members. The Partnership shall pay the expense of the title
searches, title premiums and any other title insurance costs on the owner's
title insurance policies and the cost of obtaining any surveys, if desired by
the Partnership. Each party agrees to pay the expense of the legal fees of its
own counsel. The cost of all of the Partnership's Due Diligence Activities (as
defined below) shall be borne solely by the Partnership.
(d) Any base, minimum or similar rents under the Leases collected by
First Commercial on or before the Closing for a rental period or portion
thereof from or after the Closing Date shall be credited to the Partnership at
Closing on a per diem basis. In addition, any security deposits held by First
Commercial for any Lease, together with the interest due thereon, if any and
if required under the terms of the Lease or as required by applicable law,
shall be credited to or transferred to the Partnership at Closing. If any
tenant is in arrears in the payment of rent or additional rent on the Closing
Date, rents received from such tenant within ninety (90) days after the
Closing Date shall be applied in the following order of priority: (a) to the
Partnership, for current unpaid rents and for so long as current rent is due
and payable and such tenant is in arrears for current or prior rent arising
after Closing, then (b) to the Members for all rent in arrears prior to the
Closing Date; and then (c) to the Partnership with no further claim by the
Members thereto.
(i) Except as herein provided, after Closing, First Commercial
and the Partnership are not under any obligation to collect rents in arrears
for the benefit of the
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Members. Any rents which are delinquent or otherwise not paid at the time of
Closing, and collected by the Partnership or First Commercial or the Members
within ninety (90) days after Closing shall be apportioned as aforesaid and
the portion to which the Members are entitled shall be promptly remitted by
the Partnership to the Members. Except as provided in Paragraph 7(d)(ii)
below, the Members shall have no claim to rents collected ninety (90) days
after the Closing Date. The Members retain the right to pursue their remedies
against Tenants after Closing for any delinquent rents or other amounts owed
to First Commercial which relate to the period prior to the Closing Date
(other than proceedings to evict a Tenant or terminate its lease). The
Partnership shall not enter into any agreement pursuant to which any sums owed
to the Members in respect of any Lease for periods prior to the Closing are
reduced, modified or waived. The obligations of the Partnership and First
Commercial to collect arrearages shall be limited to commercially reasonable
efforts, and First Commercial and the Partnership shall under no circumstance
be required to commence litigation against any Tenant to collect the same.
(ii) Notwithstanding the foregoing provisions of Paragraph
7(d): at least five (5) days prior to Closing, the Members shall deliver to
the Partnership a reasonably detailed statement setting forth, as of the date
of Closing (1) the sums collected from Tenants under Leases on account of or
in reimbursement of landlord's operating expenses and/or any other payments
made by Tenants to landlord on account of sums which are attributable to
expenses paid or incurred by the landlord ("Escalation Payments") for the
current fiscal year under each such Lease (whether a lease year or calendar or
other year); and (2) the amounts paid or incurred by First Commercial during
the appropriate fiscal year as aforesaid which First Commercial expects will
be paid or reimbursed by Escalation Payments made by Tenants. If First
Commercial shall have collected Escalation Payments for periods prior to
Closing, whether pursuant to estimates which were in excess of the amounts
actually required to be paid, or otherwise, there shall be an adjustment and
credit to the Partnership at Closing for such excess. If the charges were not
billed or have not been collected as of the date of Closing, then, when the
amount of such Escalation Payments is determined and collected by First
Commercial from Tenants after Closing, First Commercial will, upon collection,
remit to the Members the portion thereof to which the Members are entitled to
the date of Closing. After Closing, First Commercial shall have the right, in
good faith, to settle or adjust any amount of such Escalation Payments due
from any Tenant without the Members' prior consent, provided that such
settlement or adjustment applies ratably to all amounts of Escalation Payments
due from such Tenant.
(e) All leasing commissions due or to become due prior to the Closing
Date for any Leases entered into before the date hereof and all amendments,
renewals and modifications thereof entered into before the date hereof, shall
be paid by First Commercial prior to Closing without contribution by, or
reimbursement from, the Partnership. At Closing, the Partnership shall pay or
reimburse the Members for any leasing commissions due or to become due prior
to Closing for any Leases and for any amendments, modifications or renewals of
any Leases entered into after the date hereof which are entered into in
accordance with the provisions of Paragraph 15(e) hereof. Except with respect
to the commissions for the prospective Lease
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renewals set forth on Exhibit "M" , the Members shall be solely obligated to
pay all leasing commissions payable under all Leases entered into prior to the
date hereof (including all amendments, renewals and modifications thereof)
which are first due or payable on or after the Closing Date, regardless of the
date on which such Leases (including all amendments, renewals and
modifications thereof) were executed or any of the leasing commissions
therefor earned, subject only to the right of the Partnership to approve any
new Leases or amendments, discretionary renewals or modifications of any
Leases which are not otherwise permitted pursuant to Paragraph 15(e), below.
First Commercial shall be responsible for the costs of, and shall pay or
perform prior to Closing any tenant improvements and allowances for work
performed or required to be performed (or paid, as applicable) prior to the
Closing Date by or on behalf of First Commercial for all Leases (including all
amendments, renewals and modifications thereof) entered into on or before the
date of this Agreement for any of the Real Property. The Partnership shall
assume, pay or reimburse (as applicable) the Members on the Closing Date for
the costs of any tenant improvements and allowances for work to first be
performed after the Closing Date pursuant to Leases (including all amendments,
renewals and modifications thereof) entered into prior to the date of this
Agreement and all costs of tenant improvements and allowances incurred by or
on behalf of First Commercial in connection with any Leases (including all
amendments, renewals and modifications thereof) entered into after the date of
this Agreement for any of the Real Property, provided (i) the same were
approved by the Partnership or (ii) are permitted under Paragraph 15(e) hereof
or (iii) such costs are set forth on Exhibit "C" hereto.
(f) Amounts paid or payable as fees or expenses under any of the Licenses
shall be prorated as of the Closing Date but all amounts refundable under
Licenses shall belong to the Members.
(g) The Initial Members shall be solely responsible for the payment of
any "roll back taxes" assessed or imposed upon any of the Real Property under
the Pennsylvania Farmland and Forest Land Assessment Act of 1974, or Act 515,
as amended, or otherwise, which relate to any period prior to the Closing
Date, and the Initial Members agree to indemnify, defend and save First
Commercial and the Partnership harmless (including attorneys' fees) from and
against any claim for such taxes.
(h) Miscellaneous income including, without limitation, telephone and
vending machine income, if any, shall be prorated as of the Closing Date.
(i) All of the provisions of this Paragraph 7 and First Commercial's, the
Members' and the Partnership's respective rights and obligations hereunder
shall survive the Closing.
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8. Possession Of Property.
(a) Possession to the Real Property shall be delivered on the Closing
Date, subject only to the Permitted Exceptions.
(b) All of the provisions of this Paragraph 8 and First Commercial's,
the Member's and the Partnership's respective rights and obligations hereunder
shall survive the Closing.
(c) The Property is being acquired without any employees of First
Commercial. An affiliate of the Partnership, however, intends to hire or
retain (but is not obligated to hire or retain) for First Commercial three
individuals currently employed by First Commercial (and its affiliates) at
salary levels consistent with those currently provided by First Commercial,
with benefits consistent with that provided by such affiliate to other
employees at a location in the Harrisburg area. The salary levels of such
employees are as follows: Bookkeeper/Secretary - $640.85/week;
Receptionist/Secretary - $556.14/week; and Property Supervisor - $717.79/week.
It is anticipated that the responsibilities currently borne by the employees
will be subject to modification to insure consistency with the Partnership's
existing Asset Management/Tenant Services Program. Closing of the transactions
under this Agreement is not conditioned upon any or all of such First
Commercial employees accepting employment with an affiliate of the Partnership
or continuing with First Commercial after Closing.
(d) The Partnership shall cooperate with the Members and First
Commercial to insure good tenant retention at the Property and to utilize the
expertise of the Members in establishing a market presence and deal flow.
However, no restrictions whatsoever will be placed upon the Members after
Closing; rather, it is acknowledged that the Members will continue to develop
and lease real estate in the Central Pennsylvania market after the Closing,
even though such activities may directly or indirectly compete with the
Partnership or First Commercial. In no event, however, for a period of three
(3) years after Closing will the Members or any affiliate, employee,
representative, or agent of any of them, directly or indirectly approach,
canvas or solicit any existing tenant of the Property, without specific
written authorization from the Partnership (specifically excluding the ability
of the Members to respond to tenant initiated request for proposals). First
Commercial is currently responding to a request for proposal of Conrad M.
Siegel, Inc. for new office space in a building to be constructed by the
Members or certain of them. The Members, or certain of them, would be entitled
to brokerage commissions in amounts determined in accordance with local
practice for all leasing transactions secured by the Members or their
affiliates for the benefit of the Partnership after Closing, including current
renewals being negotiated by First Commercial or its affiliates (as detailed
in Exhibit "N" to this Agreement).
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9. Representations Of The Initial Members and The Partnership.
(a) The Initial Members hereby represent and warrant, as follows, all
of which shall be true and correct at, and as of, the Effective Date:
(1) First Commercial is a limited partnership duly organized
and validly existing under the laws of the Commonwealth of Pennsylvania, and
is in good standing in such state.
(2) First Commercial has all necessary power and authority to
enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby, without the consent or
authorization of, or notice to, any third party, except those third parties to
whom such consents or authorizations have been or will be obtained, or to whom
notices have been or will be given, prior to the Closing.
(3) Except as set forth in Exhibit "O" attached hereto and made
a part hereof, there is no litigation, proceeding or action pending or, to the
best of First Commercial's knowledge, threatened against or relating to First
Commercial or the Property which might materially and adversely affect First
Commercial or the Property or which questions the validity of this Agreement
or any action taken or to be taken by First Commercial pursuant hereto.
(4) Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will constitute a
violation or be in conflict with or constitute a default under any term or
provision of First Commercial's limited partnership agreement or any other
material agreement, instrument or lease to which First Commercial is a party,
subject to any required consents or authorizations of, or notices to, third
parties from whom such consents or authorizations will be obtained or to whom
notices will be given prior to Closing.
(5) True, correct and complete copies of all of the following,
together with any modifications or amendments thereof, but only if and to the
extent the same are in First Commercial's possession or control, have been or
will be delivered, or made available, to the Partnership within five (5) days
following the execution of this Agreement: (i) Leases and rent rolls; (ii)
Contracts; (iii) leases of equipment, vehicles and other tangible personal
property used by First Commercial in connection with the ownership and
operation of the Property (the "Personal Property Leases"); (iv) Licenses; (v)
surveys; (vi) title reports; (vii) engineering reports; and (viii)
environmental reports.
(6) To the best of First Commercial's knowledge, (i) all of the
Leases, Contracts and Personal Property Leases and Licenses, are in full force
and effect, (ii) there has been no action or failure to act by First
Commercial or any other party to any Lease, Contract or Personal Property
Lease or License which, with the giving of notice or the passage of
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time or both, would constitute a default in any material respect or a right to
terminate; and (iii) First Commercial has not received from any other party
written notice with respect to the condition of the Property or the use or
repair of the same or of any alleged default by First Commercial under any
such Lease, or Personal Property Lease or License. Except as set forth on
Exhibit "P", each of the Contracts is terminable at will without penalty or
cancellation fee upon no more than thirty (30) days prior written notice but,
except as hereinafter expressly provided, unless otherwise directed by the
Partnership, the Contracts shall not be terminated by First Commercial as of
Closing. Anything in this Agreement to the contrary notwithstanding, any and
all existing management agreements and brokerage or leasing agreements shall
be terminated as of Closing. First Commercial shall retain or the Partnership
shall assume all Contracts which are not terminated at Closing.
(7) As of the Closing, there are and shall be no liens against
the Real Property arising under the Employee Retirement Income Security Act of
1974, as amended, nor any other compensation or employment related lien or
liability or obligation that could become the responsibility of the
Partnership or continue to be the responsibility of First Commercial on or
after the Closing. The Partnership shall be under no obligation to assume any
of First Commercial's employees, it being the sole responsibility and
obligation of the Members to provide severance arrangements, if any, for all
such employees so that at Closing, there are no employees of First Commercial.
(8) To the best of First Commercial's knowledge, there are no
public improvements in the nature of off-site improvements or otherwise, which
have been ordered to be made and/or which have not heretofore been assessed
and, to First Commercial's actual knowledge, there are no special or general
assessments currently affecting or pending against the Real Property or any
portion thereof.
(9) Except as set forth on Exhibit "Q", First Commercial has
not been served with written notice that it has been named as a party in any
litigation, administrative proceeding or investigation naming First Commercial
as a responsible party or potentially responsible party for any liability for
clean-up costs, natural resource damages or other damages or liability for
prior disposal or release of Hazardous Substances, Hazardous Wastes or other
environmental pollutants or contaminants affecting the Real Property. For
purposes of this Agreement, "Hazardous Substances" means those elements and
compounds which are designated as such in Section 101(14) of the Comprehensive
Response, Compensation and Liability Act (CERCLA), 42 U.S.C. Section 9601
(14), as amended, all petroleum products and by-products, and any other
hazardous substances as that term may be further defined in any and all
applicable federal, state and local laws; and "Hazardous Wastes" means any
hazardous waste, residential or household waste, solid waste, or other waste
as defined in applicable federal, state and local laws. First Commercial has
not received any summons, citation, directive, letter or other written
communication, from any governmental or quasi-governmental authority
concerning any intentional or unintentional action or omission on First
Commercial's part which either (a) resulted in the releasing, spilling,
leaking, pumping, pouring, emitting, emptying or
-20-
dumping of Hazardous Substances or Hazardous Wastes at the Real Property, or
(b) related in any way to the generation, storage, transport, treatment or
disposal of Hazardous Substances or Hazardous Wastes at the Real Property.
(10) The income and expense statements for the Property and the
current rent roll which have been delivered by the Members to the Partnership
are true, correct and complete in all material respects.
(11) First Commercial has received no written notice of any
violation of any of the licenses, permits, consents, authorizations,
approvals, and certificates of any regulatory, administrative or other
governmental agency or body, if any, issued to or held by the First Commercial
and related to the ownership or operation of the Property (collectively, the
"Permits"), and there is no pending or, to the best of First Commercial's
knowledge, threatened proceeding which could result in the revocation or
cancellation of, or inability of First Commercial to renew, any Permit.
(12) To the best of First Commercial's knowledge, except as set
forth in Exhibit "R" attached hereto and made a part hereof: (a) all
management fees, leasing commissions and tenant improvement allowances are
fully paid, (b) there are no brokerage commissions owing by First Commercial
with respect to any of the Leases or otherwise related to the Property which
have not been paid, and (c) there are no ongoing or prospective commission or
leasing fee obligations.
(13) First Commercial has received no written notice from any
insurance company which has issued a policy with respect to the Property or by
any board of fire underwriters (or other body exercising similar functions)
claiming any defects or deficiencies or requesting the performance of any
repairs, alterations or other work, and First Commercial will promptly notify
the Partnership of any such notice or requirement if such notice is received
prior to the Closing.
(14) First Commercial is not a "foreign person" and will
deliver to the Partnership, at the Closing, a statement certifying that it is
not a "foreign person" within the meaning of the Internal Revenue Code of
1986, as amended.
(15) First Commercial has not received written notice from any
governmental agency or authority of outstanding material violations issued by
governmental authorities having jurisdiction over the Real Property.
(16) Except as may be set forth in a Lease as specifically
noted on Exhibit "C", there are no options, rights of first refusal or
conditional sales agreements regarding the purchase and sale of the Real
Property.
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(17) There are no oral or written leases or rights of
occupancy or grants or claims of right, title or interest in any portion of
the Property other than the leases (the "Leases") listed on the rent roll
attached hereto as Exhibit "C". No tenant has advised First Commercial that
First Commercial is in default under any of the Leases, or asserted any claim
or basis for any claim for free or reduced rent or right of setoff against the
landlord or the rent under the Leases, and First Commercial has no actual
knowledge of any default or any event which has taken place which, with the
passage of time, or the delivery of notice, or both, could become an event of
default. First Commercial has the sole right to collect rents under the
Leases, and neither such right nor any of the Leases has been assigned,
pledged, hypothecated or otherwise encumbered by First Commercial except as
additional collateral for the Mortgage Debt. No holder of any such collateral
assignment has asserted or exercised any of its right to collect such rents.
Each of the Leases is valid and subsisting and in full force and effect, the
tenant is in actual possession in the normal course, and the rents set forth
in Exhibit "C" are the actual rents, income and charges being collected by
First Commercial under the Leases. Any tenant improvements which First
Commercial is obligated to complete pursuant to any Lease (or any unsigned
lease proposal or lease amendment) have been completed as of this date or
shall be completed as of Closing, and all costs therefore have been or shall
be paid by First Commercial, prior to Closing and all of First Commercial's
work has or shall have been accepted by the Tenant without exception on or
before Closing, other than routine punch list items, which items shall remain
the responsibility of First Commercial following Closing, and which obligation
shall expressly survive Closing. The amount of each security deposit contains,
where required by law or otherwise applicable, interest which has accrued in
accordance with law. No tenant of the Property under any of the Leases has,
and shall not at Closing have, prepaid any rent under any of the Leases for
more than one (1) month. Except as otherwise set forth on Exhibit "C", no
security deposits by tenants have heretofore been returned or applied to
charges against the tenants.
(18) To the best of First Commercial's knowledge: (i) the
Property and the continued operation and use thereof comply with all
applicable requirements of federal, state and local law, and all applicable
requirements of governmental bodies or agencies having jurisdiction thereof,
and (ii) except as disclosed on Exhibit "S", no portion of the Property lies
within a flood hazard area, flood plain or wetland.
(19) Except as specifically set forth on the environmental
reports attached hereto as Exhibit "T" to the best of First Commercial's
knowledge, (i) no Hazardous Substances (defined below) and no Hazardous Wastes
(defined below) are present on the Property including, without limitation,
asbestos, flammable substances, explosives, radioactive materials, hazardous
wastes, toxic substances, pollutants, pollution, contaminant, polychlorinated
byphenyls ("PCBs"), urea formaldehyde foam insulation, radon, corrosive,
irritant, biologically infectious materials, petroleum product, garbage,
refuse, sludge, hazardous or waste materials, and (ii) there has been no use
of the Property that may, under any federal, state or local environmental
statute, ordinance or regulation, require, at any time, any closure or
cessation of the use or occupancy of the Property and/or impose, at any time,
upon the owner of
-22-
the Property any clean-up or other monetary obligation. To the best of First
Commercial's knowledge, neither the Property nor any portion thereof, have
been identified on the federal CERLIS, the National Priorities List (40 C.F.R.
Part 300, App. B) or any state or local list of potential hazardous waste
disposal sites or as an industrial establishment. There are no underground
storage tanks located on the Property.
(20) To the best of First Commercial's knowledge, all adequate
utilities, useable public sanitary and storm sewers, public water facilities,
electric facilities and, if any, gas facilities (collectively, the
"Utilities"), are installed in, and are duly connected to, the Real Property,
and can be used without charge except the normal and usual metered utility
charges and water and sewer charges. To the best of First Commercial's
knowledge, all Utilities required for the operation of the Property either
enter the Property through adjoining public streets or, if they pass through
adjoining public land, do so in accordance with valid public easements or
private easements which will inure to the benefit of the Partnership at no
cost to the owner of the Property. All of said Utilities are installed and
operating and all installation, connection and "tap-in" charges have been paid
for in full.
(21) No work has been performed or is in progress at, and no
materials have been furnished to the Property which, though not presently the
subject of, might give rise to construction, mechanic's, materialmen's,
municipal or other liens against the Property or any portion thereof, except
that for which full and complete releases have been obtained. If any lien for
any such work is filed before Closing, First Commercial shall promptly
discharge the same prior to Closing.
(22) To the best of First Commercial's knowledge, none of the
artwork being a part of the Personal Property was prepared on a "work for
hire" basis and none of the artwork was commissioned after 1991.
(23) To the best of First Commercial's knowledge, all
applicable charges, fees and assessments (including condominium fees, to the
extent applicable) and any and all other sums due under declarations,
cross-easements and like agreements to which the Property or any portion
thereof may be subject, have been paid, and no special assessments thereunder
are pending, and all consents and approvals required to be obtained under any
such declarations, cross-easements and like agreements have been obtained
pursuant to the requirements of such documentation.
(24) To the best of First Commercial's knowledge, all
debts, liabilities, and obligations of First Commercial arising out of the
construction, ownership, and operation of the Property including, but not
limited to, construction costs, salaries, taxes, accounts payable and the
like, have been paid as they became due and payable and shall continue to be
so paid from the date hereof until the Closing Date.
-23-
(25) There are no equity, revenue, cash flow, profit or other
participations or similar rights of lenders, Tenants or other third parties,
which apply to the Real Property.
(b) Each of the Members who is acquiring Units, on its own behalf, hereby
represents and warrants as follows, all of which shall be true and correct on,
and as of, the Effective Date:
(1) That it has received a copy of the Trust's Annual Reports
on Form 10-K, as amended, for the fiscal years ended December 31, 1997 and
1996 (together, the "10-Ks"), the Trust's Quarterly Reports on Form 10-Q, as
amended, for the fiscal quarters ended March 31, 1997, June 30, 1997 and
September 30, 1997 (collectively, the "10-Qs"), and all Current Reports on
Form 8-K filed by the Trust during the period between January 1, 1997 and the
date hereof (collectively, the "8-Ks"), the Trust's proxy statement for its
annual meeting of shareholders held on May 12, 1997 and a copy of the
Partnership Agreement;
(2) That the Units and the Underlying Shares (collectively, the
"Securities"), are being acquired for its own account without a view to public
distribution or resale and that it has no contract, undertaking, agreement or
arrangement to sell or otherwise transfer or dispose of any Securities or any
portion thereof to any other person;
(3) That it understands that the Securities have not been
registered under the Securities Act or the securities laws of any state, and,
as a result thereof, the Securities are "restricted securities" as defined in
Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"),
and are subject to substantial restrictions on transfer;
(4) That it understands that the certificates evidencing the
Securities shall bear a legend indicating that such Securities have not been
registered under the Securities Act or any applicable state securities laws
and the transferability thereof is subject to compliance with the Securities
Act and applicable state securities laws;
(5) That it will not sell or otherwise transfer or dispose of
any Securities or any portion thereof unless the Securities are registered
under the Securities Act and any applicable state securities laws or it
obtains an opinion of counsel which is reasonably satisfactory to the
Partnership or the Trust, as appropriate, that the Securities may be sold in
reliance on an exemption from such registration requirements, and that the
Securities and certificates evidencing the same will bear a legend reflecting
such restrictions;
(6) That it understands that (i) except as expressly set forth
in the Registration Rights Agreement attached hereto as Exhibit "K", neither
the Partnership nor the Trust has any obligation or intention to register the
Securities for resale under any federal or state securities laws and (ii) it
therefore may be precluded from selling or
-24-
otherwise transferring or disposing of any Securities or any portion thereof
for an indefinite period of time or at any particular time;
(7) That in determining to acquire the Securities, it has
relied solely upon its independent investigation, including the advice of its
legal counsel and accountants or other financial and tax advisers and has,
during the course of discussions concerning the acquisition of the Securities,
been offered the opportunity to ask such questions and inspect such documents
concerning the Partnership and the Trust and their respective businesses and
affairs as it has requested so as to more fully understand the nature of the
investment and to verify the accuracy of the information supplied;
(8) THAT IT UNDERSTANDS THAT THE ACQUISITION OF THE SECURITIES
INVOLVES CERTAIN RISKS, and that it can bear the economic risk of the
acquisition of the Securities, including the total loss of its investment;
(9) That (i) it has adequate means of providing for its current
needs and financial contingencies, (ii) it has no need for liquidity in this
investment, (iii) it has no debts or other obligations, and cannot reasonably
foresee any other circumstances, that are likely in the future to require it
to dispose of the Securities, (iv) all its investments in and commitments to
non-liquid investments are, and after its acquisition of the Securities will
be, reasonable in relation to its net worth and current needs, and (v) it was
not formed for the specific purpose of making an investment in the Securities;
(10) That it understands that no federal or state agency
has approved or disapproved the Securities, passed upon or endorsed the merits
of the offering of the Securities hereunder, or made any finding or
determination as to the fairness of the Securities for investment;
(11) That it is making an investment without the influence of
any general advertising or general solicitation by the Partnership or the
Trust;
(12) That it understands that the Securities are being
offered and distributed in reliance on specific exemptions from the
registration requirements of federal and state securities laws and that each
of the Partnership and the Trust is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings
set forth herein in order to determine the applicability of such exemption and
the suitability of First Commercial and the Members to acquire the Securities.
In this regard, it understands that Common Shares may only be issued upon the
redemption of the Units, if an exception from the registration requirements of
the Securities Act is then available for such issuance;
(13) It is an accredited investor, as defined in Rule 501(a) of
Regulation D adopted under the Securities Act; and
-25-
(14) The number of Common Shares which are owned by such Member
on the date hereof do not exceed that number that is equal to 1% of the number
of outstanding Common Shares of the Trust.
(c) The Initial Members hereby represent and warrant, as follows, all of
which shall be true and correct at, and as of, the Effective Date:
(1) Schedule "1" attached hereto is a true and correct list of
all existing partners of First Commercial as shown on the books of First
Commercial. Each existing Partner is the sole owner of the First Commercial
Partnership Interests to be contributed by he, she or it to the Partnership
and has good, valid and marketable title to such First Commercial Partnership
Interests, free and clear of all liens, except for those liens created by the
partnership agreement of First Commercial (which shall be discharged on or
before the Closing). The First Commercial Partnership Interests have been
issued in compliance with the partnership agreement (as then in effect) of
First Commercial, as applicable, and such interests were not issued in
violation of any federal or state securities laws;
(2) There are no rights, subscriptions, warrants, options,
rights of first refusal, conversion rights or agreements of any kind
outstanding to purchase or to otherwise acquire any securities or obligations
of any kind convertible into any partnership interest or other equity
interests or participation interests of any kind in First Commercial or the
Real Property (or any part thereof) except for those rights created by the
partnership agreement of First Commercial;
(3) The balance sheets of First Commercial as of December 31,
1996, 1995 and 1994, and the related combined statements of operations,
owners' deficit, and cash flows for each of the three years in the period
ended December 31, 1996, together with the notes thereto, present fairly in
all material respects the financial position of First Commercial and the
results of its operations and its cash flows for each of the three years in
the period ended December 31, 1996 in conformity with generally accepted
accounting principles.
i) When delivered to the Partnership not later than March 31,
1998, the balance sheets of First Commercial as of December 31, 1997 and
related combined statements of operations, owners' deficit and cash flows for
the period ended December 31, 1997 together with the notes thereto, and when
delivered to the Partnership not later than ten (10) days after the Effective
Date, the statement of operations, for the period ending February 28, 1998,
each present fairly in all material respects the financial position of First
Commercial and the results of its operations and its cash flows for the period
ended December 31, 1997 and for the period ending February 28, 1998, in
conformity with generally accepted accounting principles.
-26-
ii) There has been no material adverse change in the financial
position of First Commercial from December 31, 1997 to the date hereof.
(4) Except for (i) liabilities disclosed in the financial
statements referred to in Paragraph 9(c)(3) , (ii) liabilities arising in the
ordinary course of business which, if material (individually or in the
aggregate), are disclosed in Exhibit "U" attached hereto, (iii) liabilities at
the date hereof which are specifically disclosed in the Exhibits attached to
this Agreement and (iv) current liabilities incurred in the ordinary course of
business after the date hereof (consistent with the past practice), First
Commercial is not subject to liabilities of any nature, whether matured or
unmatured, fixed or contingent, which could reasonably be expected to have,
individually or in the aggregate, a material adverse effect upon First
Commercial.
(5) First Commercial (i) has filed or has had filed on its
behalf all Tax Returns (as defined below) on a timely basis which are required
to be filed as of the date hereof, and such Tax Returns are correct and
complete in all material respects, (ii) has paid or has had paid on its behalf
on a timely basis all Taxes (as defined below) shown to be due on such Tax
Returns and (iii) with respect to any period for which Tax Returns have not
yet been filed, or for which Taxes are not yet due or owing, has made due and
sufficient current accruals for such Taxes in its books and records in
accordance with generally accepted accounting principles and shall pay all
such Taxes as they become due and owing. For purposes of this subsection,
"Tax" shall mean any Federal, state or local tax of any kind whatsoever,
including any interest or penalty, and "Tax Return" shall mean any return,
declaration, report, claim for refund, information return, statement or other
similar document relating to Taxes;
(6) All payments of principal and interest on all Mortgage Debt
are current as of the date hereof. First Commercial is not in default in any
material respect of any loan or any other agreement to which it is a party
and, no event has occurred which with the giving of notice or passage of time
would become a default in any material respect under any such loan or under
any such agreement;
(7) First Commercial has not engaged in any business other than
the ownership, development, leasing and management of the Real Property and
the Excluded Assets, the Other Properties and the activities listed on Exhibit
"V" and has no subsidiaries and has never owned stock, shares or interests of
any kind whatsoever in any entity.
(d) It is agreed and understood that the Partnership intends to perform
its own due diligence, investigation and analysis in connection with the
transaction contemplated by this Agreement. If and to the extent that the
Partnership determines prior to the Due Diligence Termination Date that any or
all of the representations and warranties made in this Agreement by the
Members shall be untrue as a result of such due diligence, investigation or
analysis, the Partnership shall not be entitled to rely on such
representation(s) and warranty(ies) contained in this Agreement and the same
shall be deemed to have been deleted from this Agreement as to
-27-
such matters. Accordingly, in the event that the Partnership has now or
hereafter acquires prior to the Due Diligence Termination Date actual
knowledge that one or more of the representations and warranties of the
Members are not true, no such fact or circumstance known to the Partnership
shall be made the basis of a claim by the Partnership of a breach of
representation or warranty by a Member, as the case may be.
(e) Notwithstanding anything to the contrary contained in this Agreement,
in the event any representation, agreement or undertaking made by the Members
in this Agreement shall prove to be false and the cost or expense incurred or
likely to be incurred by the Partnership as a result thereof shall not exceed
$100,000 in the aggregate, such misrepresentation, agreement or undertaking
shall be deemed "immaterial" and shall not give rise to any right of the
Partnership to terminate or refuse to close under this Agreement or give rise
to any right of action for money damages or specific performance and the
Partnership hereby waives all its rights, claims and remedies relating
thereto. The Partnership's sole remedy in the event any representation,
agreement or undertaking of the Members which is discovered by the Partnership
at or prior to the Closing herein shall prove to be false and the cost or
expense incurred or likely to be incurred by the Partnership as a result
thereof exceeds $100,000 shall be to terminate this Agreement by written
notice given at or prior to Closing, which notice shall specify in detail the
nature of the misrepresentation and identify in detail the costs incurred or
likely to be incurred by the Partnership, and thereupon the Partnership shall
receive a refund of the Deposit, and First Commercial shall reimburse the
Partnership for the Partnership's Reasonable Costs and Due Diligence Costs. To
the extent the Partnership has actual knowledge that any representation,
agreement or undertaking is false at or prior to the Closing, and does not or
is not permitted to terminate this Agreement, the Partnership hereby waives
all of its rights, claims and remedies relating thereto.
(f) The Partnership hereby represents and warrants as follows, all of
which shall be true and correct at, and as of, the Effective Date:
(1) The Partnership is a limited Partnership duly formed and
validly existing under the laws of the State of Delaware, and is in good
standing with the State of Delaware. The Partnership is duly registered as a
limited partnership under the laws of the Commonwealth of Pennsylvania and as
presently subsisting under such laws. The Trust is a real estate investment
trust duly formed and validly existing under the laws of the State of
Maryland, and is in good standing with the State Department of Assessments and
Taxation of Maryland.
(2) Subject to Paragraph 9(f)(5), below, the Partnership has
all necessary power and authority to enter into this Agreement, to perform its
obligations hereunder, and to consummate the transactions contemplated hereby,
without the consent or authorization of, or notice to, any third party, except
those third parties to whom such consents or authorizations have been or will
be obtained, or to whom notices have been or will be given, prior to the
Closing. This Agreement constitutes, and the other documents and instruments
to be
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delivered by the Partnership and the Trust pursuant hereto when delivered will
constitute, the legal, valid and binding obligations of the Partnership and
the Trust, as the case may be, enforceable against the Partnership and the
Trust in accordance with their respective terms.
(3) Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will (a) violate any
provision of any organizational document of the Partnership or the Trust, or
(b) constitute a violation of or be in conflict with or constitute a default
under any term or provision of any material agreement, instrument or lease to
which the Partnership or the Trust is a party.
(4) There is no litigation, proceeding or action pending, or,
to the best of the Partnership's knowledge, threatened against or relating to
the Partnership or the Trust which might materially and adversely affect the
ability of the Partnership or the Trust to consummate the transactions
contemplated hereby or which questions the validity of this Agreement or any
action taken or to be taken by the Partnership or the Trust pursuant hereto.
(5) The execution and delivery of this Agreement shall have
been approved by the Board of Trustees of the Trust on or prior to the Due
Diligence Termination Date and no further action shall thereupon be required
on the part of the Partnership or the Trust to consummate the transaction
contemplated hereby. The signatories for the Partnership are authorized and
empowered to bind the Partnership to this Agreement.
(6) Except as otherwise set forth in Paragraph 9(f)(5) above,
in connection with the listing application with the NYSE pursuant to Paragraph
17(d) and the registration of the Underlying Shares pursuant to the
Registration Rights Agreement attached hereto as Exhibit "K" and as required
by any applicable state securities or "blue sky laws", no consent, approval or
authorization of, or declaration, filing or registration with, any
governmental agency is required in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereunder by the Trust or the Partnership.
(7) The Partnership has sufficient funds available to
consummate the transactions contemplated by this Agreement, without the
necessity of third-party financing other than the Partnership's existing
revolving credit facility administered by NationsBank, N.A. The Partnership
acknowledges that its obligations hereunder are not conditioned upon any third
party financing or capital infusion by another party.
(8) The Units and any Common Shares issuable upon redemption of
the Units, upon issuance, if any, will be duly and validly issued, fully-paid
and non-assessable.
(9) The information contained in the 10-Ks, 10-Qs and 8-Ks were
prepared in all material respects in accordance with and complied in all
material respects with the requirements of the rules of the Securities and
Exchange Commission, and did
-29-
not at the time that they were filed contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(10) Since September 30, 1997, there has been no event or
development that has had a material adverse effect on the business, assets or
financial condition of the Trust and its subsidiaries taken as a whole.
(11) The consolidated balance sheet of the Company and
its subsidiaries at September 30, 1997 reflects all liabilities of the Company
and its subsidiaries that are of a nature required to be set forth as a
liability on a consolidated balance sheet prepared in accordance with
generally accepted accounting principles, and since September 30, 1997 and
except as disclosed in the Trust's Quarterly Report for the Quarter ended
September 30, 1997 and in Current Reports on Form 8-K filed by the Trust
subsequent to such Quarterly Report, neither the Trust nor any of its
consolidated subsidiaries has incurred any liabilities which, individually or
in the aggregate, could reasonably be expected to have a material adverse
effect on the Trust and its subsidiaries taken as a whole.
(12) The Trust meets the requirements for qualification as a
real estate investment trust under Sections 856 through 860 of the Internal
Revenue Code and the rules and regulations thereunder as currently in effect.
(g) The Initial Members hereby represent and warrant, as follows, all of
which shall be true and correct at, and as of, the Effective Date:
(1) There is no litigation, proceeding or action pending or, to
the best of First Commercial's knowledge, threatened against or relating to
the Excluded Assets or the Other Properties (collectively "Other Assets")
which might materially and adversely affect First Commercial;
(2) First Commercial has not been served with written notice
that it has been named as a party in any litigation, administrative proceeding
or investigation naming First Commercial as a responsible party or potentially
responsible party for any liability for clean-up costs, natural resource
damages or other damages or liability for prior disposal or release of
Hazardous Substances, Hazardous Wastes or other environmental pollutants or
contaminants affecting the Other Assets. First Commercial has not received any
summons, citation, directive, letter or other written communication, from any
governmental or quasi-governmental authority concerning any intentional or
unintentional action or omission on First Commercial's part which either (a)
resulted in the releasing, spilling, leaking, pumping, pouring, emitting,
emptying or dumping of Hazardous Substances or Hazardous Wastes at the Other
Assets, or (b) related in any way to the generation, storage, transport,
treatment or disposal of Hazardous Substances or Hazardous Wastes at the Other
Assets.
-30-
(3) First Commercial has not received written notice from any
governmental agency or authority of outstanding material violations issued by
governmental authorities having jurisdiction over the Other Assets.
(4) To the best of First Commercial's knowledge, the Other
Assets and the continued operation and use thereof comply with all other
applicable requirements of federal, state and local law, and all applicable
requirements of governmental bodies or agencies having jurisdiction thereof.
(5) (i) To the best of First Commercial's knowledge, no
Hazardous Substances and no Hazardous Wastes are present on the Other Assets
including, without limitation, asbestos, flammable substances, explosives,
radioactive materials, hazardous wastes, toxic substances, pollutants,
pollution, contaminant, PCBs, urea formaldehyde foam insulation, radon,
corrosive, irritant, biologically infectious materials, petroleum product,
garbage, refuse, sludge, hazardous or waste materials, and (ii) there has been
no use of the Other Assets that may, under any federal, state or local
environmental statute, ordinance or regulation, require, at any time, any
closure or cessation of the use or occupancy of the Other Assets and/or
impose, at any time, upon the owner of the Other Assets any clean-up or other
monetary obligation. To the best of First Commercial's knowledge, neither the
Other Assets nor any portion thereof, have been identified on the federal
CERLIS, the National Priorities List (40 C.F.R. Part 300, App. B) or any state
or local list of potential hazardous waste disposal sites or as an industrial
establishment. To the best of First Commercial's knowledge, during the period
of ownership of the Other Assets by First Commercial, there were no
underground storage tanks located on the Other Assets except as set forth on
Exhibit "BB" hereto, and there are no underground storage tanks located on the
Other Assets.
(6) To the best of First Commercial's knowledge, all debts,
liabilities, and obligations of First Commercial arising out of the ownership
and operation of the Other Assets have been paid as they become due and
payable and shall continue to be so paid from the date hereof until the
Closing Date.
(7) First Commercial is not and will not, at Closing, be
subject to liabilities of any nature, with respect to the Other Assets,
whether matured or unmatured, fixed or contingent, which could reasonably be
expected to have, individually or in the aggregate, a material adverse effect
upon First Commercial.
(8) For the purpose of Paragraph 9(g), all representations and
warranties with respect to the Other Properties for the period after First
Commercial sold to third parties such Other Property shall be limited such
that knowledge shall be based solely on written notice received by First
Commercial from third parties.
(h) As to any representation or warranty made in this Agreement which is
qualified as being to the best knowledge of the Partnership, the Members or
First
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Commercial, it is agreed and understood that such party shall be under no
obligation to conduct any independent investigation or inquiry regarding the
matters covered by such representation and warranty.
(i) All of the representations and warranties set forth in this
Paragraph 9 shall be deemed renewed by the applicable Members and the
Partnership on the Closing Date of the Initial Contribution, but not on the
Closing Date of the Subsequent Contribution (except that the representation
and warranties set forth in Paragraphs 9(b) and 9(c)(1) and (2), insofar as
such Paragraphs relate to the Members making the Subsequent Contribution,
shall be deemed renewed on the Closing Date of the Subsequent Contribution),
and shall, as a condition to each party's obligation to close on such date, be
recertified by each party as being true and correct in all material respects
as of the Closing Date as if made at such time (it being understood that
specific, numbered representations and warranties that speak of a specified
date shall only continue to speak as of the date so specified).
10. Access To The Property.
(a) The Partnership and/or its agents and representatives,
during normal business hours and after reasonable advance notice to First
Commercial, may enter into the office of First Commercial where its books and
records are located and enter upon any of the Real Property from time to time
prior to the Closing Date, accompanied by an agent of First Commercial, for
purposes of conducting such inspections, investigations and/or studies as the
Partnership deems necessary, including, without limitation, financial,
operational and historical reviews of the Real Property and First Commercial,
physical inspections, lease reviews and environmental reviews and testing,
which activities may include test borings and soil samplings (the
"Partnership's Due Diligence Activities"). The Partnership's access to the
Real Property shall be subject to the rights of the Tenants of any of the Real
Property, who shall not be unreasonably disturbed during any such inspection
by the Partnership. The Partnership shall not engage in any activity in or
about the Real Property which directly or indirectly violates the terms of any
governmental or quasi-governmental statute, rule, regulation, order or
practice. The Partnership shall not make any physical changes to any of the
Real Property, except for test borings and soil samplings which shall be
performed only by licensed engineers reasonably acceptable to First Commercial
and only after three (3) business days' prior notice to First Commercial. The
Partnership may contact any governmental or quasi-governmental authorities
concerning the Property without the prior written approval of First
Commercial. First Commercial shall have the opportunity to observe any and all
action taken by the Partnership or its representatives, consultants, agents,
etc. pursuant to this Paragraph 10. All information set forth in any document
which First Commercial has granted to the Partnership the express right to
review, if any, shall be held in strict confidence until Closing and
thereafter in the event Closing does not occur. If the Partnership violates
its obligations under this Paragraph 10(a) or in the event of any physical
damage to any of the Real Property or any Personal Property resulting,
directly or indirectly, from the exercise by the Partnership of its rights
under this Paragraph 10(a), the Partnership hereby agrees to restore the Real
Property and Personal Property to their
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respective conditions prior to incurring such damage. The Partnership hereby
agrees to indemnify, defend and hold harmless First Commercial from and
against all physical damage to any of the Real Property and Personal Property,
personal injury and/or any other claims or liability which may occur as a
result of the Partnership's (or the Partnership's agents, employees, invitees
or licensees) entry or activities upon any of the Real Property. The
provisions of this Paragraph 10(a) shall survive Closing or other termination
of this Agreement.
(b) The Partnership, or any of the Partnership's consultants
performing physical tests on the Real Property shall maintain public liability
insurance policies (naming First Commercial as an additional named insured
with respect to any liability occurring on the Real Property), with combined
single limit coverage of at least $1,000,000, insuring against claims arising
as a result of the inspections of the Partnership, its agents, employees or
such contractors at any of the Real Property. A certificate of insurance
evidencing the foregoing coverage shall be delivered to First Commercial prior
to the Partnership's or any of the Partnership's consultants' entry on to any
of the Real Property.
(c) In the event Closing does not occur or this Agreement is
terminated, the Partnership shall promptly return to First Commercial any
documents obtained from First Commercial or First Commercial's agents and
deliver to First Commercial upon request by First Commercial, without charge,
copies of all written test results, studies, reports and similar materials
obtained by or on behalf of the Partnership relating to any of the Real
Property.
11. Due Diligence Period; Additional Provisions.
(a) During the period commencing on the Effective Date and
ending at 5:00 p.m. E.S.T. on the Due Diligence Termination Date, the
Partnership may, subject to the provisions set forth in Paragraph 10 above,
review the matters described in Paragraph 10 and all plans and specifications,
condition of title (including without limitation the Permitted Exceptions),
agreements relating to and the availability of utilities, environmental
conditions, the physical condition of the existing Improvements, compliance by
the Property with zoning, licensing and all other governmental requirements,
Leases for any of the Real Property, operating statements, service contacts,
other contracts, loan documentation, and janitorial company operations
pertaining to the Property and all other aspects and conditions of the
Property and pertaining to First Commercial and First Commercial's past and
present activities and operations, which the Partnership may decide to review
(collectively also, the "Partnership's Due Diligence Activities"), all as the
Partnership shall deem appropriate). The Partnership's Due Diligence
Activities may include environmental, mechanical and engineering inspections
deemed appropriate by the Partnership, including complete inspection of all
roofs and all mechanical systems. All inspections will be conducted by the
Partnership only when accompanied by a representative of First Commercial. All
such inspections will be scheduled so as to minimize tenant disruption. During
the due diligence period the Partnership plans on conducting tenant interviews
and agrees to obtain First Commercial's authorization prior to conducting such
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interviews. In connection with the Partnership's Due Diligence Activities,
First Commercial has delivered or will deliver to the Partnership various
documents, reports and materials (collectively, the "First Commercial Due
Diligence Materials"). THE PARTNERSHIP UNDERSTANDS AND HEREBY ACKNOWLEDGES AND
AGREES THAT THE FIRST COMMERCIAL DUE DILIGENCE MATERIALS ARE BEING DELIVERED
TO THE PARTNERSHIP WITHOUT ANY REPRESENTATION OR WARRANTY WHATSOEVER BY FIRST
COMMERCIAL, THE MEMBERS OR BY THE PREPARER OF SUCH FIRST COMMERCIAL DUE
DILIGENCE MATERIALS, WITH THE SOLE EXCEPTION OF ANY REPRESENTATION OR WARRANTY
AS TO THE CORRECTNESS, ACCURACY OR COMPLETENESS THEREOF WHICH IS EXPRESSLY SET
FORTH IN THIS AGREEMENT.
(b) If, as a result of the Partnership's Due Diligence
Activities or otherwise, the Partnership shall conclude, for any reason or for
no reason, that it does not wish to proceed with the transaction contemplated
by this Agreement, it may terminate this Agreement by written notice delivered
to and received by the Members on or before 5:00 P.M. E.S.T. on the Due
Diligence Termination Date (as to which date time shall be of the essence),
with a simultaneous copy thereof to the Escrow Agent. In the event of such
timely termination of this Agreement by the Partnership, the Escrow Agent
shall make the delivery of funds contemplated under Paragraph 1 of the Escrow
Terms, and this Agreement shall thereupon be null and void and of no further
force or effect, except as to those matters which expressly survive such
termination.
(c) First Commercial shall prepare certificates (the "Estoppel
Certificates") for execution by the Tenants which shall be either in the form
annexed hereto as Exhibit "W" or the form which the Tenants are required to
execute and deliver under their Leases. The Initial Members agree to send to
all Tenants initially certificates based on the form annexed hereto as Exhibit
"W". The Initial Members agree to deliver the Estoppel Certificates to the
Tenants promptly after the Effective Date and to use all reasonable and
diligent efforts to obtain executed copies of same from such Tenants prior to
the Closing. It shall be a condition to the Partnership's obligations
hereunder that, at or prior to Closing, Estoppel Certificates shall have been
obtained from at least 75% of the Tenants at each Property, including those
identified on Exhibit "X" annexed hereto and made a part hereof (the
"Identified Tenants").
(d) The Members shall deliver to the Partnership on or before
March 31, 1998, the balance sheets and related combined statement of
operations, owner's deficit and cash flows of First Commercial for the year
ending December 31, 1997 and on or before ten (10) days after the Effective
Date, the statement of operations for the period ending February 28, 1998.
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12. Condemnation. The Members covenant and warrant that First Commercial
has not received any written notice of any condemnation proceeding or other
proceeding in the nature of eminent domain in connection with the Real
Property, and First Commercial has no knowledge of any threatened
condemnation. As used herein, a "material taking" shall mean a taking of
either an entire Real Property, more than ten percent (10%) of a building or
more than 10% of the parking area of a single Real Property. If, prior to the
Closing, any such proceeding is commenced, First Commercial shall promptly
notify the Partnership thereof. In the event of a material taking or
commencement of proceedings in connection with such a taking, the Partnership
may, at its sole option exercised by delivery of written notice thereof within
ten (10) days after receipt of such written notice thereof, (x) proceed to
Closing as provided in this Paragraph 12 without an abatement of the
Consideration and at Closing, First Commercial shall assign to the
Partnership, without recourse, all condemnation proceeds paid or payable with
respect thereto; or (y) terminate this Agreement with respect to the Property
as to which a material taking has occurred, whereupon this Agreement shall
terminate with respect to such Real Property and this Agreement shall continue
in full force and effect with respect to all of the remaining Real Property,
and at Closing, the Partnership shall pay to the Members the Consideration
with respect to the remaining Real Property as the parties shall mutually
agree upon. Provided the Partnership shall have waived its right to terminate
this Agreement with respect to the Real Property so taken, as provided above,
First Commercial shall not, from and after the Due Diligence Termination Date,
settle or adjust any claims relating to a condemnation without the
Partnership's prior approval, which shall not be unreasonably withheld or
delayed.
13. Damage By Fire Or Other Casualty.
(a) First Commercial shall promptly notify the Partnership of
material damage to the Improvements occurring by reason of casualty during the
period between the Effective Date and the Closing Date. First Commercial shall
timely notify any insurance companies with respect to any damage and shall
promptly submit claims for such damage. Provided the Partnership shall have
waived its right to terminate this Agreement with respect to the Real Property
so damaged, as provided below, First Commercial shall not, from and after the
Due Diligence Termination Date, settle or adjust any claims relating to a
casualty without the Partnership's prior approval, which shall not be
unreasonably withheld or delayed.
(b) If (i) less than 10% of a building or less than 10% of a
parking area of a single Real Property is damaged by fire or casualty after
the Execution Date and the Improvements so damaged are not repaired or
restored on or before Closing to substantially the condition existing prior to
the damage, and (ii) at the time of Closing, there shall be no abatement or
adjustment in the Consideration and, provided the loss or damage is a covered
loss under First Commercial's insurance policy, the Partnership shall be
required to purchase all of the Real Property in accordance with the terms of
this Agreement and, at Closing, First Commercial shall assign to the
Partnership, without recourse, all insurance claims and proceeds with respect
thereto (less sums theretofore expended, if any, by First Commercial for
emergency repairs or barricades) and the Members shall credit the Partnership
at Closing with the amount of any
-35-
applicable deductible. The Members shall have no liability or obligation with
respect to the condition of any of the Real Property as a result of any such
fire or casualty. If more than 10% of a building or 10% of a parking area of a
single Real Property is so damaged and the Improvements so damaged have not
been completed as aforesaid, the Partnership may, at its sole option, (x)
proceed to Closing as provided in this Paragraph 13(b) without an abatement of
the Consideration and at Closing the Members shall assign to the Partnership,
without recourse, all insurance claims and proceeds with respect thereto (less
sums theretofore expended, if any, by First Commercial for emergency repairs
or barricades) and the Members shall credit the Partnership at Closing with
the amount of any applicable deductible; or (y) terminate this Agreement with
respect to the Property which suffered such damage whereupon this Agreement
shall terminate with respect to such damaged Real Property(s) and this
Agreement shall continue in full force and effect with respect to all of the
remaining Real Property, and at Closing, the Partnership shall pay to the
Members the Consideration with respect to the remaining Real Property as the
parties shall mutually agree upon. The Partnership shall assign, without
recourse, all of its right, title and interest in and to any and all insurance
policies and insurance proceeds relating to such of the Real Property for
which this Agreement has been terminated.
14. Default.
(a) If the Partnership shall default in its obligations to pay
the Consideration and complete Closing in accordance with the terms of this
Agreement, then, as the Members' sole and exclusive remedy therefor, the
Members shall be entitled to retain the Deposit as liquidated and agreed upon
damages for the losses and injuries which the Members shall have sustained and
suffered as a result of the Partnership's default, and thereupon this
Agreement and the Partnership's obligations hereunder shall be terminated
except as expressly provided in this Agreement. It is agreed that the
provisions of this Paragraph 14(a) for liquidated and agreed upon damages are
a bona fide provision for such and are not a penalty, the parties
understanding that by reason of the withdrawal of the Real Property from sale
to the general public at a time when other parties would be interested in
purchasing such Real Property, that the Members shall have sustained damages
which will be substantial, but will not be capable of determination with
mathematical precision. Therefore, this provision for liquidated and agreed
upon damages has been incorporated as part of this Agreement as a provision
beneficial to both parties.
(b) If the Members shall default in their obligation to deliver
any of items described in Paragraph 5 hereof, upon the Partnership's (i)
tender of the Initial Consideration and (ii) compliance with all of the
material terms and conditions of this Agreement, the Partnership shall have
the sole options of (x) terminating this Agreement and receiving the return of
the Deposit, together with payment by the Initial Members of the Partnership
Reasonable Costs, not to exceed in the aggregate Forty-Five Thousand ($45,000)
or (Y) to seek specific performance of the obligations of the Members and
First Commercial under this Agreement with no reduction of the Consideration
which is to be paid to the Members. If the Partnership elects to terminate
this Agreement, upon payment of the sums described above,
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First Commercial and the Members shall be released and relieved of any further
liability and this Agreement shall thereupon be null and void.
15. Operations Between the Effective Date and the Closing. Between the
Effective Date and the Closing:
(a) First Commercial shall operate the Property in the same
general manner as First Commercial has operated the Property during the
immediately preceding six (6) month period, paying all costs and expenses as
they come due, and in any event prior to Closing, and maintaining all
insurance coverage currently in force.
(b) First Commercial shall comply with all of the obligations
of landlord under the Leases and all other agreements and contractual
arrangements affecting the Real Property by which First Commercial is bound or
to which the Real Property, or any of them, are subject.
(c) First Commercial shall notify the Partnership promptly of
First Commercial's receipt of any notice from any party alleging that First
Commercial is in default of its obligations under any of the Leases or any
Permit or agreement affecting the Real Property, or any portion or portions
thereof.
(d) No contract for or on behalf of or affecting the Real
Property shall be negotiated or entered into which cannot be terminated by First
Commercial upon the Closing without the payment of a specific charge, cost,
penalty or premium for such termination.
(e) Except with the prior written consent of the Partnership,
which the Partnership agrees it shall not unreasonably withhold, condition or
delay, First Commercial shall not enter into any new leases for any portion of
the Real Property. Any new lease shall be on the Partnership's customary form
(which may vary to reflect customary negotiated revisions thereto), or such
other form which is reasonably acceptable to the Partnership. Further, except
with the prior written consent of the Partnership, which the Partnership
agrees it shall not unreasonably withhold, condition or delay, or as set forth
above, First Commercial shall not amend, extend (except where required under
the terms of the Lease in question), terminate (except by reason of a tenant's
default), accept surrender of, or permit any assignments or subleases of, any
of the Leases (except as may be required under such Lease), nor accept any
rental more than one (1) month in advance (exclusive of any security deposit).
(f) First Commercial shall not make or permit to be made any
capital improvements or additions to the Real Property, or any portion
thereof, without the prior written consent of the Partnership, except those
made by First Commercial pursuant to the express requirements of this
Agreement, those made by tenants pursuant to the right to do so under their
Leases, or by First Commercial if required by applicable law or ordinance, or
as required under any Lease.
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(g) First Commercial shall timely bill all tenants for all rent billable
under Leases, and use commercially reasonable efforts to collect any rent in
arrears.
(h) First Commercial shall notify the Partnership of any tax assessment
disputes (pending or threatened) prior to Closing, and from and after the Due
Diligence Expiration Date, First Commercial agrees not to seek any changes in
the real estate tax assessment, nor settle, withdraw or otherwise compromise
any pending claims with respect to tax assessments relating to the current or
any subsequent year, without the Partnership's prior written consent, which
shall not be unreasonably withheld, delayed or conditioned. If any proceedings
shall result in any reduction of assessment and/or tax for the tax year in
which the Closing occurs, it is agreed that the amount of tax savings or
refund for such tax year, less the reasonable fees and disbursements in
connection with such proceedings, shall be apportioned between the parties as
of the date real estate taxes are apportioned under this Agreement. All
refunds relating to any tax year prior to the Closing shall be the sole
property of First Commercial, and all refunds relating to any year subsequent
to the year in which Closing occurs shall be the sole property of the
Partnership. Each party agrees to promptly remit to the other any refund
received by it which is the property of the other.
(i) First Commercial shall notify the Partnership promptly of the
occurrence of any of the following:
(i) Receipt of notice from any governmental or quasi-
governmental agency or authority or insurance underwriter relating to the
condition, use or occupancy of the Real Property, or any portion thereof;
(ii) Receipt of any notice of default from any tenant or from
the holder of any lien or security interest in or encumbering the Real
Property, or any portion thereof;
(iii) Notice of any actual or threatened litigation against
First Commercial or affecting or relating to the Real Property, or any portion
thereof which may materially and adversely affect the Real Property or First
Commercial's ability to consummate the transactions contemplated by this
Agreement; or
(iv) Vacancy of any demised Property by a tenant, other than in
accordance with a scheduled lease termination.
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16. PROPERTY CONVEYED "AS-IS, WHERE IS". IT IS UNDERSTOOD AND AGREED
THAT, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT, FIRST
COMMERCIAL AND THE MEMBERS ARE NOT MAKING AND SPECIFICALLY DISCLAIM ANY
WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE ECONOMICAL, FUNCTIONAL, ENVIRONMENTAL OR PHYSICAL
CONDITION OF ALL OF THE PROPERTY, INCLUDING, BUT NOT LIMITED TO: (I)
WARRANTIES OR REPRESENTATIONS AS TO MATTERS OF TITLE, ZONING, TAX
CONSEQUENCES, PHYSICAL OR ENVIRONMENTAL CONDITIONS, AVAILABILITY OF ACCESS,
INGRESS OR EGRESS, OPERATING HISTORY OR PROJECTIONS, VALUATION, GOVERNMENTAL
APPROVALS, GOVERNMENTAL REGULATION, (II) THE VALUE, CONDITION,
MERCHANTABILITY, MARKETABILITY, PROFITABILITY, SUITABILITY OR FITNESS FOR A
PARTICULAR USE OR PURPOSE OF ANY OF THE PROPERTY, (III) THE MANNER OR QUALITY
OF THE CONSTRUCTION OR MATERIALS INCORPORATED INTO ANY OF THE PROPERTY AND
(IV) THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF ANY OF THE
PROPERTY. THE PARTNERSHIP AGREES THAT WITH RESPECT TO THE PROPERTY, THE
PARTNERSHIP HAS NOT RELIED UPON AND WILL NOT RELY UPON, EITHER DIRECTLY OR
INDIRECTLY, ANY REPRESENTATION OR WARRANTY OF FIRST COMMERCIAL OR THE MEMBERS
OR ANY AGENT OF FIRST COMMERCIAL OR THE MEMBERS NOT EXPRESSLY SET FORTH IN
THIS AGREEMENT. THE PARTNERSHIP REPRESENTS THAT IT IS A KNOWLEDGEABLE
PURCHASER OF REAL ESTATE AND THAT IT IS RELYING SOLELY ON ITS OWN EXPERTISE
AND THAT OF THE PARTNERSHIP'S CONSULTANTS, AND THE REPRESENTATIONS AND
WARRANTIES OF THE MEMBERS CONTAINED IN THIS AGREEMENT, SUBJECT, HOWEVER, TO
THE LIMITATIONS CONTAINED HEREIN UPON SUCH REPRESENTATIONS AND WARRANTIES, AND
THAT THE MEMBERS AND FIRST COMMERCIAL HAVE OR SHALL HAVE AFFORDED THE
PARTNERSHIP WITH A FULL AND COMPLETE OPPORTUNITY TO MAKE ITS OWN INDEPENDENT
INVESTIGATION OF THE PROPERTY AND ALL MATTERS PERTAINING THERETO INCLUDING,
BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF AND,
UPON CLOSING, SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING, BUT NOT
LIMITED TO, ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN
REVEALED BY THE PARTNERSHIP'S INSPECTIONS AND INVESTIGATIONS. THE PARTNERSHIP
ACKNOWLEDGES AND AGREES THAT, UPON CLOSING, THE PROPERTY SHALL BE ACCEPTED "AS
IS, WHERE IS," WITH ALL FAULTS, AND THERE ARE NO ORAL AGREEMENTS, WARRANTIES
OR REPRESENTATIONS (EXCEPT AS HEREIN SPECIFICALLY PROVIDED), COLLATERAL TO OR
AFFECTING ANY OF THE PROPERTY BY FIRST COMMERCIAL, THE MEMBERS OR ANY AGENT OF
FIRST COMMERCIAL AND THE MEMBERS OR ANY THIRD PARTY. THE PARTNERSHIP EXPRESSLY
AGREES THAT THE TERMS AND CONDITIONS OF THIS PARAGRAPH 16 SHALL EXPRESSLY
SURVIVE THE CLOSING AND NOT MERGE THEREIN AND FIRST COMMERCIAL OR THE MEMBERS
ARE NOT
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LIABLE OR BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENTS,
REPRESENTATIONS, OR INFORMATION PERTAINING TO ANY OF THE PROPERTY FURNISHED BY
ANY REAL ESTATE BROKER, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON, UNLESS THE
SAME ARE SPECIFICALLY SET FORTH OR REFERRED TO IN THIS AGREEMENT.
17. Conditions Precedent to Closing.
(a) The obligations of the Partnership hereunder are subject to
the fulfillment of the following conditions prior to or on the Closing Date
(any one of which may be waived in whole or in part by the Partnership at or
prior to the Closing) and in the event any of the conditions are not complied
with, the Partnership may terminate this Agreement by notifying the Members
and Escrow Agent and thereupon the Deposit shall be returned and thereafter
this Agreement shall be null and void:
(i) Correctness of Warranties and Representations. The
warranties and representations made by the Members in this Agreement shall be
true and correct on the Closing Date as though such representations and
warranties were made on the Closing Date (except for changes in the Leases
permitted under the terms of this Agreement).
(ii) Compliance with Terms and Conditions. First Commercial and
the Members shall have performed and complied in all material respects with
all of the terms and conditions required by this Agreement, including, without
limitation, the delivery of all required documents pursuant to Paragraphs 6(a)
and 6(b), to be performed and complied with by them prior to or on the Closing
Date.
(iii) The Partnership's Satisfaction with Inspection. The
Partnership shall have notified the Members of the Partnership's satisfaction
with the inspections performed under Paragraph 11 of this Agreement, or shall
fail to notify First Commercial on or before the Due Diligence Expiration
Date, of the Partnership's dissatisfaction with the results of such review.
(iv) Shareholder Approval; NYSE Approval. The Partnership shall
have received confirmation that the issuance of the Securities will not
require approval of the Trust's security holders under the rules of the NYSE.
In addition the Common Shares issuable upon redemption of the Units shall have
been approved for listing by the NYSE.
(v) 9.8% Limitation. The number of Underlying Shares shall not
exceed that number that is equal to 9.8% of the number of outstanding Common
Shares of the Trust.
(vi) Issuance of the Units. The issuance of the Units, if any,
shall be (A) exempt from the registration requirements of the Securities Act
and (B) either
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exempt from, or registered pursuant to, any applicable state securities or
"blue sky" registration requirements.
(b) The obligations of the Members hereunder are subject to the
fulfillment of the following conditions prior to or on the Closing Date (any
one of which may be waived in whole or in part by the Members at or prior to
the Closing) and in the event any of the conditions are not complied with, the
Members may terminate this Agreement by notifying the Partnership and Escrow
Agent and thereupon the Deposit shall be returned and thereafter this
Agreement shall be null and void:
(i) Corrections of Warranties and Representatives. The
warranties and representations made by the Partnership in this Agreement shall
be true and correct on the Closing Date as though such representations and
warranties were made on the Closing Date.
(ii) Compliance with Terms and Conditions. The Partnership
shall have performed and complied with all of the terms and conditions
required by this Agreement, including, without limitation, the delivery of all
required documents pursuant to Paragraphs 6(b) and 6(d), to be performed and
complied with by it prior to or on the Closing Date.
18. Brokers.
(a) The Members represent to the Partnership that neither the
Members nor First Commercial has dealt with any real estate broker, dealer or
salesman in connection with the subject transaction, except for Legg Mason
Real Estate Services, Inc. ("Broker") whose commission, fee and compensation
shall be paid by the Members pursuant to a separate agreement ("Legg Mason
Agreement") between the First Commercial and Broker. The Legg Mason Agreement
shall be assigned by First Commercial to the Members on or before the Closing.
The Members shall and hereby each agree to indemnify, defend, and hold
harmless the Partnership from and against any loss, damage, or claim resulting
from (i) a breach of the representation of the Members set forth in Paragraph
18(a) hereof or (ii) the Legg Mason Agreement.
(b) The Partnership represents to the Members that the Partnership has
not dealt with any real estate broker, dealer or salesman in connection with the
subject transaction, except for Broker whose commission, fee and compensation
shall be paid by the Members pursuant to the Legg Mason Agreement. The
Partnership shall and hereby agrees to indemnify, defend, and hold harmless
the Members from and against any loss, damage, or claim resulting from a
breach of the representation of the Partnership set forth in Paragraph 18(b)
hereof.
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(c) The provisions of this Paragraph 18 shall survive Closing
hereunder, or any other termination of this Agreement.
19. Notices. All notices, requests and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
delivered (i) in person, or (ii) by certified mail, return receipt requested,
or (iii) by recognized overnight delivery service providing positive tracking
of items (for example, Federal Express), or (iv) by confirmed telecopier, in
each case addressed as follows (or at such other address of which First
Commercial or the Partnership shall have given notice as herein provided):
If to the Partnership or First Commercial after Closing, addressed to:
Brandywine Operating Partnership, L.P.
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
Attn: Gerard H. Sweeney,
President and Chief Executive Officer
with a copy in each instance to:
Brad A. Molotsky, General Counsel
Brandywine Operating Partnership, L.P.
Newtown Square Corporate Campus
16 Campus Boulevard
Suite 150
Newtown Square, PA 19073
and to:
Norman B. Berlin, Esquire
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
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If to First Commercial prior to Closing or the Members, addressed to:
John S. Trogner, Jr.
P.O. Box 0779
Camp Hill, PA 17001-0779
and to:
Blair S. Trogner, Sr.
P.O. Box 0779
Camp Hill, PA 17001-0779
with a copy in each instance to:
Brad J. Gunnison, Esquire
Buchanan Ingersoll, Professional Corporation
30 North Third Street, 8th Floor
Harrisburg, PA 17101
If to Escrow Agent, addressed to:
M. Gordon Daniels, Vice President/Counsel
Commonwealth Land Title Insurance Company
1700 Market Street
Philadelphia, PA 19103
or to such other address or addresses and to the attention of such other
person or persons as any of the parties may notify the other in accordance
with the provisions of this Agreement. All such notices, requests and other
communications shall be deemed to have been sufficiently given for all
purposes hereof only if given pursuant to the foregoing requirements as to
both manner and address, and only upon receipt (or refusal to accept delivery)
by the party to whom such notice is sent. Notices by the parties may be given
on their behalf by their respective attorneys.
20. Successors And Assigns. The Partnership may not assign this Agreement
or any rights herein or any portion hereof without the prior written consent
of the Members, which may be withheld for any reason or for no reason, except
that no such consent shall be required to an assignment of this Agreement by
the Partnership to subsidiary or related party of the Partnership (other than
the Trust). The Members may not assign this Agreement or any rights herein or
any portion hereof without the prior written consent of the Partnership, which
may be withheld for any reason or for no reason. This Agreement shall apply
to, inure to the benefit of and be binding upon and enforceable against the
parties hereto and their respective permitted successors and assigns, to the
same extent as if specified at length throughout this Agreement.
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21. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original and all of which counterparts
together shall constitute one and the same Agreement.
22. Time Of The Essence. Time is of the essence of each and every
provision in this Agreement. If any time period or date ends on a day or time
which is a weekend, legal holiday or bank holiday, such period shall be
extended to the same time on the next business day.
23. Judicial Interpretation. Should any provision of this Agreement
require judicial interpretation, it is agreed that the court interpreting or
construing the same shall not apply a presumption that the terms hereof shall
be more strictly construed against one party by reason of the rule of
construction that a document is to be construed more strictly against the
party who itself or through its agent prepared the same, it being agreed that
the agents of all parties have participated in the preparation of this
Agreement.
24. Captions And Recitals. The captions contained herein are not a part
of this Agreement and are included solely for the convenience of the parties.
25. Entire Agreement. This Agreement and the Exhibits and
Schedules attached hereto contain the entire agreement between the parties
relating to the acquisition of the Property, all prior negotiations between
the parties are merged by this Agreement and there are no promises,
agreements, conditions, undertakings, warranties or representations, oral or
written, express or implied, between them other than as herein set forth. No
change or modification of this Agreement shall be valid unless the same is in
writing and signed by the parties hereto. No waiver of any of the provisions
of this Agreement, or any other agreement referred to herein, shall be valid
unless in writing and signed by the party against whom it is sought to be
enforced.
26. Governing Law; Venue.
(a) This Agreement and the rights and duties of the parties
hereto and the validity, construction, enforcement and interpretation of this
Agreement shall be governed by the laws of the Commonwealth of Pennsylvania.
(b) With regard to any litigation arising out of or involving
this Agreement, each party hereto: (i) irrevocably submits to the jurisdiction
of the state and federal courts of the Commonwealth of Pennsylvania and agrees
and consents to service of process being made upon it in any legal proceeding
arising out of or in connection herewith by service of process provided by the
law of the Commonwealth of Pennsylvania; (ii) irrevocably waives, to the
fullest extent permitted by law, any objection which it now or hereafter may
have to the laying of venue of any litigation arising out of or in connection
with this Agreement brought in the Courts of the Commonwealth of Pennsylvania
where the Property is located or the United States District Court for the
Middle District of Pennsylvania; (iii) irrevocably waives any claims
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that any litigation brought in any such court has been brought in an
inconvenient forum; and (iv) irrevocably agrees that any legal proceeding
against any party hereto arising out of or in connection with this Agreement
shall be brought in either the State Courts of Pennsylvania or the United
States District Court in the District of Pennsylvania where the Property is
situate.
27. Confidentiality. Each of the parties to this Agreement covenants that
it shall not communicate the terms or any aspect of this transaction prior to
the Closing with any person or entity other than the other parties to this
Agreement, except for the Trust, and the Partnership's agents, consultants,
counsel and representatives in connection with the Partnership's Due Diligence
Activities and financing purposes, and except for the Members' agents,
consultants, counsel and representatives in connection with this Agreement,
unless the Trust is advised by its counsel that applicable securities laws and
regulations require disclosure. In addition, the Partnership covenants that if
it undertakes any investigation of the Property, it shall conduct such
investigation of the Property as described herein and with the same degree of
confidentiality as the Partnership would apply with respect to its own
proprietary information. Notwithstanding the foregoing the Partnership may
file this Agreement as an exhibit to any filings of the Partnership or the
Trust with the Securities and Exchange Commission, and, at any time after
expiration of the Due Diligence Period, the Partnership may issue one or more
press releases which shall not identify the individual Members or the amount
of consideration received by individual Members, if necessary or appropriate
to comply with applicable securities laws and regulations, which press
releases, shall be reasonably satisfactory to the Members (provided, the
Members deliver any comments to the Partnership within twenty-four hours of
the Members receipt of the draft press release).
28. Limitation Of Liability.
(a) No recourse shall be had for any obligation of the
Partnership or the Trust under this Agreement or under any document executed
in connection herewith or pursuant hereto, or for any claim based thereon or
otherwise in respect thereof, against any past, present or future trustee,
shareholder, partner, officer or employee by virtue of any statute or rule of
law or by the enforcement of any assessment or penalty or otherwise, all such
liability being expressly waived and released by the Members and all parties
claiming by, through or under the Member.
(b) The liability of each Member for any obligation of the
Members under this Agreement and any document executed in connection herewith
or pursuant hereto shall be limited to the portion of the Net Consideration
paid to such Member.
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29. SEC Reporting Requirements. For the period of time commencing on the
date hereof and continuing through the first anniversary of the Closing Date,
First Commercial and the Members shall, from time to time, upon reasonable
advance written notice from the Partnership, provide the Trust and its
representatives, with access to all financial and other information then in
First Commercial's possession pertaining to the period of First Commercial's
ownership and operation of the Real Property, which information is relevant
and reasonably necessary, in the opinion of the Trust's outside, third party
accountants (the "Accountants"), to enable the Trust and its Accountants to
prepare financial statements in compliance with any or all of (a) Rule 3-05 or
3-14 of Regulation S-X of the Securities and Exchange Commission (the
"Commission"), as applicable; (b) any other rule issued by the Commission and
applicable to the Trust; and (c) any registration statement, report or
disclosure statement filed with the Commission by, or on behalf of the Trust.
First Commercial and the Members shall deliver to the Trust's accountants a
representation letter (the "Letter"), in the form of Exhibit "Y" attached
hereto. The Partnership acknowledges that First Commercial and the Members are
not making any representation or warranty regarding such information as is
delivered in accordance with the terms of this Paragraph except to the extent
set forth in the Letter or otherwise expressly set forth in this Agreement.
30. Partial Invalidity. If any term, covenant or condition of this
Agreement, or the application thereof, to any person or circumstance shall be
invalid or unenforceable at any time or to any extent, then the remainder of
this Agreement, or the application of such term, covenant or condition to
persons or circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby. Each term, covenant and
condition of this Agreement shall be valid and enforced to the fullest extent
permitted by law.
31. No Recordation. Except as set forth in Paragraph 27, the Partnership
shall not be entitled to record this Agreement or a memorandum or other notice
of this Agreement in any public office. This Paragraph shall be deemed to be a
specific directive to the officials of such public office NOT to accept this
Agreement or a memorandum or other notice of this Agreement for recordation in
any form whatsoever. Any violation of the provisions of this Paragraph 31
shall constitute an immediate default by the Partnership under this Agreement.
32. Tender. Formal tender of an executed assignment of partnership
interests and purchase money is hereby waived by the Partnership.
33. Further Assurances. After the Closing, the Members shall execute,
acknowledge and deliver, for no further consideration, all assignments,
transfers, deeds and other documents as the Partnership may reasonably request
to vest in the Partnership and perfect the Partnership's right, title and
interest in and to the First Commercial Partnership Interests and the
Property.
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34. JURY TRIAL WAIVER. THE PARTNERSHIP AND THE MEMBERS HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE (TO THE EXTENT PERMITTED BY APPLICABLE LAW)
ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR
RELATING TO THIS AGREEMENT AND AGREE THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE
A JUDGE SITTING WITHOUT A JURY.
35. NO OFFER. THE DELIVERY OF THIS AGREEMENT DOES NOT CONSTITUTE AN OFFER
AND THIS AGREEMENT SHALL NOT BE BINDING AND SHALL HAVE NO FORCE AND EFFECT
UNLESS AND UNTIL A FULLY EXECUTED COUNTERPART HEREOF HAS BEEN DELIVERED TO
EACH OF THE PARTIES. IT IS EXPRESSLY UNDERSTOOD THAT THE PARTNERSHIP AND THE
MEMBERS HAVE NO OBLIGATION TO EXECUTE THIS AGREEMENT.
36. Indemnification. Subject to the limitations set forth in Paragraphs
14 and 28 of this Agreement:
(a) The Initial Members shall indemnify, defend and save and hold
harmless the Partnership and the Trust, and their respective partners,
trustees, directors, officers and employees, of, from and against any and all
loss, cost, expense, damage, claim, and liability, including reasonable
attorney's fees and court costs, including, without limitation, attorney's
fees and out-of-pocket costs associated with the enforcement of the Initial
Members' indemnification obligations (hereinafter collectively, "Losses")
which the Partnership or the Trust may suffer or incur, resulting from,
relating to, or arising in whole or in part, from or out of (A) any
misrepresentation or breach of a representation or warranty by the Members
contained in this Agreement; (B) any failure to fulfill any covenant or
agreement of the Members contained in this Agreement; (C) all litigation set
forth in this Agreement and on Exhibits hereto; (D) the Excluded Liabilities;
(E) the deposit, storage, disposal, burial, dumping, injecting, spilling,
leaking, or other placement or release in or on the Other Assets of Hazardous
Substances or Wastes during First Commercial's periods of ownership prior to
Closing; (F) Taxes of First Commercial relating to the period prior to
Closing; and (G) any and all actions, suits, investigations, proceedings,
demands, assessments, audits, judgments, and/or claims arising out of or
relating to any of the foregoing.
(b) The Partnership shall indemnify, defend and save and hold
harmless the Members from and against any and all loss, cost, expense, damage,
claim, and liability, including reasonable attorney's fees and court costs,
including, without limitation, attorney's fees and out-of-pocket costs
associated with the enforcement of the Partnership's indemnification
obligations (hereinafter collectively also, "Losses") which the Members may
suffer or incur, resulting from, relating to, or arising in whole or in part,
from or out of (A) any misrepresentation or breach of a representation or
warranty by the Partnership contained in this Agreement; (B) any failure to
fulfill any covenant or agreement of the Partnership contained in
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this Agreement; and (C) any and all actions, suits, investigations,
proceedings, demands, assessments, audits, judgments, and/or claims arising
out of or relating to any of the foregoing.
(c) Promptly after receipt by the indemnified party (the
"Indemnified Party") of written notice of the commencement of any suit, audit,
demand, judgment, action, investigation or proceeding (a "Third Party Action")
or promptly after the Indemnified Party incurs a Loss or has knowledge of the
existence of a Loss, the Indemnified Party will, if a claim with respect
thereto is to be made against the indemnifying party (the "Indemnifying
Party") due to the Indemnifying Party's obligation to provide indemnification
hereunder, give the Indemnifying Party written notice of such Loss or the
commencement of any Third Party Action; provided, however, that the failure to
provide such notice within a reasonable period of time shall not relieve the
Indemnifying Party of any of its obligations hereunder. Promptly after
receiving such notice, the Indemnifying Party will, upon notice to the
Indemnified Party, have the right to assume and control the defense and
settlement of any such Third Party Action at its own cost and expense;
provided, however, that it shall be a condition precedent to the exercise of
such right by the Indemnifying Party that the Indemnifying Party shall agree
in writing that the Loss, or Third Party Action, as the case may be, is
properly within the scope of the indemnification obligation and that as
between the parties, the Indemnifying Party shall be responsible to satisfy
and discharge such Third Party Action. The Indemnifying Party shall not enter
into any resolution or other compromise of a Third Party Action without
obtaining the complete release of the Indemnified Party, as appropriate, for
any liability to all claimants under or pursuant to such Third Party Action.
The Indemnified Party shall have the right to participate in any such defense,
contest or other protective action at its own cost and expense.
(d) Notwithstanding the foregoing, the Indemnified Party shall
have the right to assume and control the defense and settlement of a Third
Party Action (a) if such action includes claims for equitable relief which, if
determined adversely to the Indemnified Party could reasonably be expected to
interfere with its intended business operations or damage its business
reputation or (b) if the Indemnifying Party fails to do so in a timely manner.
In any circumstances in which the Indemnified Party undertakes to control the
Third Party Action as provided in this paragraph, it shall (i) not enter into
any resolution or other compromise involving monetary damages without
obtaining the prior written consent of the Indemnifying Party provided,
however that in the case of the Partnership or the Trust as the Indemnified
Party, such written consent may not be withheld if it would interfere with the
Partnership's or the Trust's, business operation and (ii) keep the
Indemnifying Party informed on an ongoing basis of the status of such Third
Party Action and shall deliver to the Indemnifying Party, copies of all
documents related to the Third Party Action reasonably requested by the
Indemnifying Party. The Indemnified Party shall act to assure that all
attorneys' fees and expenses incurred in connection therewith are reasonable.
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(e) The indemnification obligations under this Agreement shall
survive the Closing, with respect to Claims (hereinafter defined) which occur
during the applicable survival period, as follows:
(i) with respect to representations and warranties of the
Members: all indemnification obligations relating to the matters set forth in
Paragraphs 9(a) (other than Paragraph 9(a)(7)) and 9(b) shall survive for the
period ending December 31, 1998;
(ii) all indemnification obligations relating to the matters
set forth in Paragraph 9(c) and Paragraph 9(a)(7) shall survive for the period
ending March 31, 2000;
(iii) all indemnification obligations under Paragraphs 18 and
36(a)(E) and with respect to Paragraph 2(b) and Paragraph 5(a) but only in
regard to transfer taxes, shall survive indefinitely; and
(iv) all indemnification obligations under Paragraph 36(a)(F)
shall survive for a period ending on the applicable statute of limitations.
(v) In circumstances where an indemnification obligation
relates to a representation or warranty in Paragraphs 9(c) and/or 9(g) which
covers the same subject matter as a representation and warranty regarding the
Property (as opposed to First Commercial) in Paragraph 9(a), such
indemnification obligation shall survive for the period ending December 31,
1998 insofar as it covers such common subject matter;
(vi) with respect to other indemnities of the Members under
this Agreement, the indemnification obligations shall survive for the period
ending December 31, 1998 insofar as such indemnification obligations relate to
the Property and for the period ending March 31, 2000 insofar as such
indemnification obligations relate to the Other Assets.
(vii) With respect to the indemnification obligations of the
Partnership, the indemnification obligations of the Partnership shall survive
for the period ending December 31, 1998;
(viii) Notwithstanding the other provisions of Paragraph 36,
insofar as the indemnification obligations under Paragraphs 36(a)(B) and
36(b)(B) relate solely to the payment of the Subsequent Consideration and the
making of the Subsequent Contribution, such indemnification obligations shall
survive for the period ending three months after the scheduled closing date of
the Subsequent Contribution; and
(ix) For the purpose of this Paragraph 36(e), the term "Claim"
shall mean any written or oral demand, claim, suit, action, expense, cause of
action or potential cause of action, investigation, or notice by any person or
entity alleging actual or potential
-49-
liability or losses which is the subject of a notice from the Indemnified
Party to the Indemnifying Party on or before the expiration of the applicable
survival period.
(x) Except in the case of fraud by the Partnership, Members, or
by First Commercial prior to Closing, the indemnification obligations under
this Agreement shall be the sole and exclusive recourse of a party to this
Agreement in the event of a breach or alleged breach of any representation,
warranty, covenant, agreement or undertaking of any nature whatsoever under
this Agreement.
(xi) The indemnification obligations set forth under Paragraph
36(a)(G) shall survive for the period applicable to the relevant substantive
indemnification obligation as set forth in this Paragraph 36(e).
37. Representative of the Members; Actions of the Members; Reliance by
the Partnership. The affirmative approval of John S. Trogner, Jr. and Blair S.
Trogner, Sr. shall be sufficient to fully authorize prior to, on, or after the
Closing, on behalf of the Members, the exercise of any rights and the
performance of any obligations under this Agreement. All of the Members and
the Partnership shall be entitled to rely upon a document, agreement, or
instrument (collectively, "Instrument") signed by John S. Trogner, Jr. and
Blair S. Trogner, Sr. with respect to the matters set forth in the Instrument
in connection with any action required or permitted to be taken by or on
behalf of the Members under this Agreement. The Instrument attached hereto as
Exhibit "Z" is irrevocable and may be relied upon by all of the Members and
the Partnership. The Instrument shall specify the person who may deliver or
receive notices or take actions in connection with the matters set forth in
the Instrument. Such delivery, receipt or action shall be conclusively deemed
to have been made or taken on behalf of the Members, and the Members and the
Partnership and all persons shall be entitled to rely thereon in taking or
refraining from taking any action under or in connection with this Agreement.
38. Acts of First Commercial. Whenever this Agreement calls for certain
action to be undertaken by First Commercial on or before the Closing, the
Members shall have the obligation to cause First Commercial to undertake such
action and the failure of First Commercial to undertake such action shall
constitute a failure of the Members to perform their obligations under this
Agreement.
39. Acts of the Partnership. The Partnership hereby designates Gerard H.
Sweeney with respect to matters generally and George Hasenecz with respect to
leasing matters as its duly authorized communications representative for all
purposes of the transactions under this Agreement.
40. Facsimile Signatures. This Agreement may be executed by facsimile
signatures, which shall be followed by hard copy signatures as soon as is
practical. Facsimile signatures shall be sufficient to bind the signors to
this Agreement.
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41. Knowledge of Members and First Commercial. For purposes of this
Agreement, the terms "knowledge," "best knowledge," and "actual knowledge" or
similar words or phrases, in the case of the Members and First Commercial,
shall relate only to John S. Trogner, Jr., Blair S. Trogner, Sr., and John S.
Trogner, Sr.
[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, intending to be legally bound hereby,
the parties have duly executed this Agreement as of the day and year first
above stated.
THE MEMBERS LISTED ON SCHEDULE "1"
TO THIS AGREEMENT
/s/John S. Trogner, Sr.
-------------------------------------------------------
John S. Trogner, Sr.
/s/John S. Trogner, Jr.
-------------------------------------------------------
John S. Trogner, Jr.
/s/Blair S. Trogner, Sr.
-------------------------------------------------------
Blair S. Trogner, Sr.
/s/Emma B. Trogner
-------------------------------------------------------
Emma B. Trogner
/s/Ronalee B. Trogner
-------------------------------------------------------
Ronalee B. Trogner
/s/Candis S. Trogner
-------------------------------------------------------
Candis S. Trogner
/s/John S. Trogner, III
-------------------------------------------------------
John S. Trogner, III
/s/Christopher D. Trogner
-------------------------------------------------------
Christopher D. Trogner
/s/Matthew A. Trogner/John S. Trogner, Jr. as
-------------------------------------------------------
Matthew A. Trogner Guardian for
/s/Blair S. Trogner, Jr.
-------------------------------------------------------
Blair S. Trogner, Jr.
/s/Franklin C. Trogner
-------------------------------------------------------
Franklin C. Trogner
[EXECUTIONS CONTINUED ON NEXT PAGE]
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[EXECUTIONS CONTINUED FROM PREVIOUS PAGE]
/s/Kristen Trogner Barr
-------------------------------------------------------
Kristen Trogner Barr
/s/Steven A. Trogner
-------------------------------------------------------
Steven A. Trogner
[EXECUTIONS CONTINUED ON NEXT PAGE]
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[EXECUTIONS CONTINUED FROM PREVIOUS PAGE]
THE PARTNERSHIP:
BRANDYWINE OPERATING PARTNERSHIP,
L.P.
By: BRANDYWINE REALTY TRUST, its sole
general partner
By: /s/Gerard H. Sweeney
-------------------------------
Gerard H. Sweeney
President and Chief Executive Officer
The Undersigned Hereby Acknowledges
Receipt Of The Deposit And Agrees To
Hold And Apply The Same In Accordance
With The Provisions Of The Escrow Terms
Commonwealth Land Title Insurance Company
By: /s/M. Gordon Daniels
--------------------------------------------
M. Gordon Daniels, Vice President/Counsel
-54-
LIST OF EXHIBITS
Exhibit A Description of Land
Exhibit B List of Contracts
Exhibit C Leases and Certified Rent Roll; Options and Rights of First Refusals
Exhibit D Additional Permitted Exceptions
Exhibit E Excluded Personal Property
Exhibit F-1 Certain Excluded Assets
Exhibit F-2 Other Properties
Exhibit G List of Mortgage Debt
Exhibit H Form of Guaranty
Exhibit I Amended and Restated Agreement of Limited Partnership
Exhibit J Form of Non-Foreign Person Certification
Exhibit K Registration Rights Agreement
Exhibit L Tax Indemnification Agreement
Exhibit M Brokerage Commission - Lease Renewals
Exhibit N Members - Brokerage Commissions
Exhibit O Pending Litigation
Exhibit P Contracts Not Terminable with 30 days Notice
Exhibit Q Environmental Notices
Exhibit R Outstanding Brokerage Commissions, TI and Management Fees
Exhibit S Violations of Applicable Requirements
Exhibit T Historic Environmental Reports
Exhibit U Disclosed Liabilities
Exhibit V Historical Business Activities and Operations of First Commercial
Exhibit W Form of Estoppel Certificate
Exhibit X Identified Tenants
Exhibit Y Representation Letter
Exhibit Z Instrument - Members
Exhibit AA RFR Letters
Exhibit BB Underground Storage Tank Removed from Other Assets