-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SCbjZpdZR9o/1qHlC2zzRi4J0PlfRuRWHmjxwIzaS17KKcSkuJlESaD5OCYSs7IB 99PBD1nGIWmVBfc/ZX8Qjg== 0000912057-97-027487.txt : 19970814 0000912057-97-027487.hdr.sgml : 19970814 ACCESSION NUMBER: 0000912057-97-027487 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRANDYWINE REALTY TRUST CENTRAL INDEX KEY: 0000790816 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 232413352 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09106 FILM NUMBER: 97658170 BUSINESS ADDRESS: STREET 1: 16 CAMPUS BOULEVARD STREET 2: STE 100 CITY: NEWTOWN SQUARE STATE: PA ZIP: 19073 BUSINESS PHONE: 1-610-325-5600 MAIL ADDRESS: STREET 1: TWO GREENTREE CENTRE STREET 2: SUITE 100 CITY: MARLTON STATE: NJ ZIP: 08053 FORMER COMPANY: FORMER CONFORMED NAME: LINPRO SPECIFIED PROPERTIES DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1997 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (No Fee Required) For the transition period from ___________ to ___________ Commission file number 1-9106 ------ Brandywine Realty Trust ------------------------------------------------------ (Exact name of registrant as specified in its charter) Maryland 23-2413352) -------------------------------- ------------------- State or other jurisdiction (I.R.S. Employer of incorporation or organization Identification No.) 16 Campus Boulevard, Newtown Square, Pennsylvania 19073 ------------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) (610) 325-5600 ----------------------------- Registrant's telephone number Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] A total of 21,045,040 Common Shares of Beneficial Interest were outstanding as of August 13, 1997. BRANDYWINE REALTY TRUST TABLE OF CONTENTS PART I--FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheet as of June 30, 1997 (unaudited) and December 31, 1996 Consolidated Statements of Operations for the three months ended June 30, 1997 (unaudited) and June 30, 1996 (unaudited) Consolidated Statements of Operations for the six months ended June 30, 1997 (unaudited) and June 30, 1996 (unaudited) Consolidated Statements of Cash Flow for the six months ended June 30, 1997 (unaudited) and June 30, 1996 (unaudited) Notes to Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures about Market Risk--Not applicable PART II--OTHER INFORMATION Item 1. Legal Proceedings Item 2. Changes in Securities--Not applicable Item 3. Defaults Upon Senior Securities--Not applicable Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K Signatures 2 PART I--FINANCIAL INFORMATION ITEM 1.--FINANCIAL STATEMENTS BRANDYWINE REALTY TRUST CONSOLIDATED BALANCE SHEETS (in thousands)
JUNE 30, DECEMBER 31, 1997 1996 ----------- ------------ (UNAUDITED) ASSETS Real estate investments Operating properties..................................... $ 358,597 $ 161,284 Accumulated depreciation................................. (14,388) (9,383) ----------- ------------ 344,209 151,901 Cash and cash equivalents................................. 10,777 18,279 Escrowed cash............................................. 1,213 2,044 Accounts receivable....................................... 2,755 1,366 Due from affiliates....................................... 293 517 Investment in management company.......................... 202 -- Deferred costs and other assets........................... 4,980 4,219 ----------- ------------ Total assets............................................ $ 364,429 $ 178,326 ----------- ------------ ----------- ------------ LIABILITIES AND BENEFICIARIES' EQUITY Mortgage notes payable.................................... $ 46,960 $ 36,644 Notes payable, Credit Facility............................ 130,775 -- Accrued interest.......................................... 395 202 Accounts payable and accrued expenses..................... 2,650 3,119 Distributions payable..................................... 4,192 2,255 Excess of losses over investment in management company.... -- 14 Tenant security deposits and deferred rents............... 2,721 1,324 ----------- ------------ Total liabilities....................................... 187,693 43,558 ----------- ------------ Minority interest......................................... 5,508 6,398 ----------- ------------ Convertible preferred shares--$0.01 par value, 5,000,000 preferred shares authorized............................ -- 26,444 ----------- ------------ Beneficiaries' equity Shares of beneficial interest, $0.01 par value, 25,000,000 common shares authorized, 11,045,040 shares issued and outstanding............................................ 111 70 Additional paid-in capital............................... 186,426 113,047 Share warrants........................................... 962 962 Cumulative earnings (deficit)............................ 460 (3,248) Cumulative distributions................................. (16,731) (8,905) ----------- ------------ Total beneficiaries' equity............................. 171,228 101,926 ----------- ------------ Total liabilities and beneficiaries' equity............. $ 364,429 $ 178,326 ----------- ------------ ----------- ------------
The accompanying condensed notes are an integral part of these consolidated financial statements. 3 BRANDYWINE REALTY TRUST CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share information) (Unaudited)
THREE MONTHS SIX MONTHS ENDED JUNE 30, ENDED JUNE 30, -------------- -------------- 1997 1996 1997 1996 ---- ---- ---- ---- Revenue: Rents................................................... $ 9,890 $ 930 $ 16,889 $ 1,907 Tenant reimbursements................................... 1,958 38 3,285 68 Other................................................... 272 14 544 52 ---------- ------- ----------- -------- Total revenue.......................................... 12,120 982 20,718 2,027 ---------- ------- ----------- -------- Operating Expenses: Interest................................................ 2,084 209 3,059 416 Depreciation and amortization........................... 3,465 223 5,775 465 Property operating expenses............................. 4,222 409 7,032 859 Management fees......................................... 442 10 757 22 Administrative expenses................................. 261 137 430 259 ---------- ------- ----------- -------- Total operating expenses............................... 10,474 988 17,053 2,021 ---------- ------- ----------- -------- Income (loss) before equity in income of management company and minority interest............................ 1,646 (6) 3,665 6 Equity in income of management company................... 92 -- 217 ---------- ------- ----------- -------- Income (loss) before minority interest................... 1,738 (6) 3,882 6 Minority interest in income.............................. (80) (3) (174) (5) ---------- ------- ----------- -------- Net Income (loss)........................................ 1,658 (9) 3,708 1 Income allocated to Preferred Shares..................... -- -- (499) -- ---------- ------- ----------- -------- Income (loss) allocated to Common Shares................. $ 1,658 $ (9) $ 3,209 $ 1 ---------- ------- ----------- -------- ---------- ------- ----------- -------- PER SHARE DATA: Earnings per share of beneficial interest Income (loss) allocated to Common Shares................ $ 0.17 $(0.01) $ 0.36 $ 0.00 ----------- ------- ----------- -------- ----------- ------- ----------- -------- Weighted average number of shares outstanding, including share equivalents...................................... 9,830,234 635,510 8,809,379 629,641 ----------- ------- ----------- -------- ----------- ------- ----------- --------
The accompanying condensed notes are an integral part of these consolidated financial statements. 4 BRANDYWINE REALTY TRUST CONSOLIDATED STATEMENTS OF CASH FLOW
SIX MONTHS ENDED JUNE 30, --------------------- 1997 1996 ---------- --------- (UNAUDITED AND IN THOUSANDS) Cash flows from operating activities: Net income.................................................................. $ 3,708 $ 1 Adjustments to reconcile net income to net cash provided by operating activities: Minority interest in income of affiliates................................. 174 5 Depreciation and amortization............................................. 5,775 465 Equity in income of affiliate............................................. (216) -- Changes in assets and liabilities: (Increase) decrease in accounts receivable.............................. (1,389) (33) Decrease in affiliate receivable........................................ 224 -- (Increase) decrease in other assets..................................... 69 (19) Increase (decrease) in accounts payable and accrued expenses............ 565 -- Increase (decrease in accrued mortgage interest......................... 193 -- Increase (decrease) in other liabilities................................ 1,397 (25) ---------- --------- Net cash provided by operating activites............................ 10,500 394 ---------- --------- Cash flows from investing activities: Acquisition of properties................................................... (194,604) -- Decrease (increase) in escrowed cash........................................ 831 526 Capital expenditures and leasing commissions paid........................... (4,573) (633) ---------- --------- Net cash used in investing activities............................... (198,346) (107) ---------- --------- Cash flows from financing activites: Proceeds from issuance of shares, net....................................... 45,404 338 Distributions paid to shareholders.......................................... (5,975) (204) Distributions paid to minority partners..................................... (177) (5) Proceeds from note payable to shareholder................................... -- 992 Proceeds from mortgage notes payable........................................ 13,277 -- Repayment of mortgage notes payable......................................... (2,961) (53) Proceeds from notes payable, Credit Facility................................ 137,775 -- Repayment of notes payable, Credit Facility................................. (7,000) -- Costs associated with new ventures.......................................... -- (560) Other....................................................................... 1 8 ---------- --------- Net cash provided by (used in) financing activities................. 180,344 516 ---------- --------- Increase (decrease) in cash and cash equivalents.............................. (7,502) 803 Cash and cash equivalents at beginning of period.............................. 18,279 840 ---------- --------- Cash and cash equivalents at end of period.................................... $ 10,777 $ 1,643 ---------- --------- ---------- ---------
The accompanying condensed notes are an integral part of these consolidated financial statements. 5 BRANDYWINE REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1997 1. ORGANIZATION AND NATURE OF OPERATIONS: Brandywine Realty Trust (the "Company"), is a Maryland real estate investment trust. As of June 30, 1997, the Company owned 75 properties (collectively, the "Properties"). The Company's interest in 74 of the Properties is held through Brandywine Operating Partnership, L.P. (the "Operating Partnership"). The Company is the sole general partner of the Operating Partnership and as of June 30, 1997, the Company held a 96.9% interest in the Operating Partnership. Brandywine Realty Services Corporation (the "Management Company"), is owned by the Operating Partnership through a 100% interest in the non-voting preferred stock and a 5% interest in the voting common stock. The Management Company is responsible for managing and leasing 74 of the Company's Properties and other properties on behalf of third parties, as well as development opportunities as they arise. As of June 30, 1997, the Company's portfolio aggregated approximately 4.3 million square feet available for lease for office and industrial purposes. As of June 30, 1997, the overall occupancy rate of the Properties was approximately 92.8%. The Company's Properties are primarily located within the suburban Philadelphia office and industrial market area. 2. GENERAL: BASIS OF PRESENTATION The financial statements have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. In the opinion of the Company, all adjustments (consisting solely of normal recurring matters) necessary to fairly present the financial position of the Company as of June 30, 1997, and the results of its operations and its cash flows for the three and six month periods ended June 30, 1997 and 1996 have been included. The results of operations for such interim periods are not necessarily indicative of the results for a full year. For further information, refer to the Company's consolidated financial statements and footnotes thereto included in the Annual Report on Form 10-K (as amended by Form 10-K/A) for the year ended December 31, 1996. RECLASSIFICATIONS Certain previously reported amounts have been reclassified to conform to the current presentation. Net Income (Loss) Per Share Net income (loss) per share is based on the weighted average number of common shares of beneficial interest ("Common Shares") outstanding adjusted to give effect to common share equivalents. In February, 1997, the Financial Accounting Standards Board issued Statement No. 128, "Earnings per Share", which is effective for financial statements for periods ending after December 15, 1997. At that time, the Company will be required to change the method currently used to compute and disclose earnings per share and to restate all 6 prior periods. The impact of Statement No. 128 on the calculation of primary and fully diluted earnings per share for the interim periods presented is expected to be immaterial. 3. ACQUISITIONS OF REAL ESTATE INVESTMENTS: All acquisitions since January 1, 1996 were accounted for by the purchase method. For the year ended December 31, 1996, the Company acquired 33 properties aggregating 1.7 million net rentable square feet. During the period January 1, 1997 through June 30, 1997, the Company acquired 38 properties (32 office and 6 industrial) totaling 2.3 million net rentable square feet. The following table summarizes certain information regarding acquisition activity from January 1, 1997 through June 30, 1997:
NET PURCHASE DATE OF NUMBER OF RENTABLE PRICE ACQUISITION PROPERTIES TYPE LOCATION SQUARE FEET (IN MILLIONS) - ---------------------- --------------- ----------- ------------------------------ ----------- ------------- January 24 3 Office Marlton, NJ 89,186 (a) 2 Office Mt. Laurel, NJ 200,436 (a) March 4 7 Office Voorhees, NJ 235,209 $ 21.5 March 6 1 Office East Goshen, PA 38,470 $ 3.6 April 3 2 Industrial King of Prussia, PA 124,960 $ 3.5 April 18 4 Office Marlton, NJ 201,970 $ 14.5 May 23 4 Industrial Westampton, NJ 388,767 (b) 1 Office Marlton, NJ 43,719 (b) 3 Office Langhorne, PA 115,390 (b) 2 Office Lower Gwynedd, PA 139,467 (b) May 30 5 Office Mt. Laurel, NJ 495,103 (c) 1 Office King of Prussia, PA 112,905 (c) June 5 2 Office Exton, PA 64,594 $ 5.3 June 16 1 Office Broomall, PA 62,934 $ 4.1 --- ---------- 38 2,313,110
- ------------------------ (a) These properties were acquired for an aggregate purchase price of $31.3 million. (b) These properties were acquired for an aggregate purchase price of $41.6 million. (c) These properties were acquired for an aggregate purchase price of $66.2 million. On July 29, 1997, the Company purchased three office properties (the "Berwyn Park Properties") containing an aggregate of approximately 241,458 net rentable square feet located in Tredyffrin Township, Chester County, Pennsylvania and approximately 12.5 acres of land adjacent to such properties for an aggregate cash purchase price of approximately $37.2 million (the "Berwyn Park Acquisition"). On July 31, 1997, the Company purchased five office properties (the "Green Hills Properties") containing an aggregate of approximately 574,241 net rentable square feet located in Reading, Berks County, Pennsylvania and approximately 133 acres of additional unimproved land for an aggregate purchase price of approximately $40.0 million (the "Green Hills Acquisition"). A $38.5 million cash payment was made at closing funded with $15.0 million of Credit Facility borrowings and $23.5 million from existing cash reserves. The $1.5 million balance of the purchase price is payable in equal installments on August 1, 1998, 1999 and 2000, subject to a 5% interest rate. 7 As of August 13, 1997, the Company's portfolio consists of 83 properties (74 office and 9 industrial) aggregating approximately 5.1 million net rentable square feet. The results of operations for each of the properties acquired since January 1, 1996 have been included from their respective purchase dates. The following unaudited pro forma financial information of the Company has been prepared as if the sales of securities in 1996 (refer to the Company's Form 10-K for the year ended December 31, 1996 for more information), the March 1997 Offering (see Note 5), the July 1997 Offering (see Note 5), and the acquisitions of the 79 properties (including the eight properties acquired subsequent to June 30, 1997) acquired from July 19, 1996 through July 31, 1997 had all occurred on January 1, 1996. The pro forma financial information is unaudited and is not necessarily indicative of the results which actually would have occurred if the acquisitions had occurred on January 1, 1996, nor does it purport to represent the results of operations for future periods.
SIX MONTHS YEAR ENDED ENDED JUNE 30, DECEMBER 31, 1997 1996 -------------- ------------ (UNAUDITED AND IN THOUSANDS) Pro forma total revenues........................................................... $ 35,962 $ 67,364 Pro forma net income............................................................... $ 10,455 $ 17,054 Pro forma net income per Common Share.............................................. $ 0.51 $ 0.77
4. INDEBTEDNESS: As of June 30, 1997, the Company had notes payable under its revolving credit facility (the "Credit Facility") and an interim credit facility of $130.8 million. The Credit Facility, which was established in December 1996, is secured by mortgages on certain of the Company's properties and enables borrowings to fund acquisitions, working capital and other business needs. During July 1997, the maximum amount of borrowings available under the Credit Facility was increased from $80 million to $150 million. At the time of such increase, the interim credit facility was no longer necessary and was fully satisfied. On July 28, 1997, amounts outstanding under the Credit Facility were repaid in full using proceeds from the July 1997 Offering (see Note 5 below). The Company borrowed $15 million under the Credit Facility on July 31, 1997 in connection with the Green Hills Acquisition. 5. ISSUANCE OF SHARES AND WARRANTS: In March 1997, the Company completed the sale of 2,375,500 Common Shares to the public at a price of $20 5/8 per share (the "March 1997 Offering"). The net proceeds of the March 1997 Offering were used to fund the Company's acquisitions, repay certain indebtedness and for working capital purposes. In March 1997, 54,397 of the Series A Convertible Preferred Shares ("Preferred Shares") were converted into 181,323 Common Shares. In June 1997, the remaining 427,421 Preferred Shares were converted into 1,424,736 Common Shares. On July 28, 1997, the Company completed the sale of 10,000,000 Common Shares to the public at a price of $20 3/4 per share (the "July 1997 Offering"). Although not exercised as of August 13, 1997, the underwriters have the right to exercise their over-allotment option, which (if exercised) would result in the Company issuing up to an additional 1,500,000 Common Shares at a price of $20 3/4. The net proceeds of the July 1997 Offering were used by the Company to repay approximately $130.8 million of indebtedness under the Credit Facility and for working capital and investment purposes. 8 6. DISTRIBUTIONS: On June 23, 1997, the Company declared a distribution of $0.36 per share which was paid on July 10, 1997 to shareholders of record as of June 30, 1997. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Form 10-Q contains forward looking statements within the meaning of Section 27A of the Securities Act of 1993 and Section 21E of the Securities Exchange Act of 1934. The words "believe", "expect", "anticipate", "intend", "estimate" and other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters identify forward-looking statements. The Company's actual results could differ materially from those set forth in the forward-looking statements. Certain factors that might cause such a difference include the following: Real estate investment considerations, such as the effect of economic and other conditions in the market area on cash flows and values; the need to renew leases or relet space upon the expiration of current leases, and the ability of a property to generate revenues sufficient to meet debt service payments and other operating expenses; and risks associated with borrowings, such as the possibility that the Company will not have sufficient funds available to make principal payments on outstanding debt, outstanding debt may be refinanced at higher interest rates or otherwise on terms less favorable to the Company and interest rates under the Credit Facility may increase. The following discussion and analysis of the financial condition and results of operations should be read in conjunction with the accompanying financial statements and notes thereto. RESULTS OF OPERATIONS Comparison of Three and Six Months Ended June 30, 1997 and June 30, 1996 Net income for the three and six months ended June 30, 1997 was $1.7 million and $3.7 million, respectively, compared with a net loss of $9,000 and net income of $1,000 for the corresponding periods in 1996. The increase in net income was primarily attributable to the operating results contributed by the 71 properties (the "Acquisition Properties") acquired during 1996 and through June 30, 1997. The Acquisition Properties have increased the Company's leaseable area from approximately 254,000 net rentable square feet on June 30, 1996 to approximately 4.3 million net rentable square feet on June 30, 1997. Revenues, which include rental income, recoveries from tenants and other income, increased by $11.1 million and $18.7 million for the three and six months ended June 30, 1997, respectively, as compared to the corresponding prior year period as a result of the Acquisition Properties. The impact of the straight-line rent adjustment increased revenues by $521,000 for the six months ended June 30, 1997. Property expenses, depreciation and amortization and management fees increased in aggregate by $7.5 million and $12.2 million for the three and six months ended June 30, 1997 as compared with the corresponding prior year periods primarily as a result of the Acquisition Properties. Interest expense increased as a result of additional indebtedness incurred to finance certain of the Company's acquisitions. Administrative expenses increased primarily as a result of the increase in management personnel, professional fees and public filing costs associated with the Company's growth. Minority interest primarily represents the portion of the Operating Partnership which is not owned by the Company. 9 LIQUIDITY AND CAPITAL RESOURCES STATEMENT OF CASH FLOWS During the six months ended June 30, 1997, the Company generated $10.5 million in cash flow from operating activities, and together with $137.8 million in borrowings under the Company's Credit Facility, $13.3 million in additional mortgage notes payable, $45.4 million in net proceeds from share issuances, escrowed cash of $0.8 million and existing cash reserves of $7.5 million, used an aggregate $215.3 million to (i) purchase 38 Properties for $194.6 million, (ii) fund capital expenditures and leasing commissions of $4.6 million, (iii) pay distributions to shareholders and minority partners totaling $6.1 million, (iv) pay scheduled amortization on mortgage principal of $0.5 million, (v) satisfy $2.5 million of mortgage notes payable, and (vi) pay down its outstanding borrowings on its Credit Facility by $7.0 million. CAPITALIZATION As of June 30, 1997, the Company had approximately $177.7 million of debt outstanding, consisting of mortgage loans totaling $47.0 million and notes payable under the Company's revolving Credit Facility of $130.8 million. The mortgage loans mature between December 1997 and November 2004. The Credit Facility provides for borrowings up to $150.0 million and bears interest at a per annum floating rate equal to the 30, 60 or 90-day LIBOR, plus 175 basis points. For the six months ended June 30, 1997, the weighted average interest on the Company's debt was 8.99%. The Company's debt to market capitalization was 43.5% as of June 30, 1997 (at the June 30, 1997 closing share price of $20.25). After application of the net proceeds from the July 1997 Offering and the subsequent acquisitions of the Berwyn Park Properties and the Green Hills Properties, the Company's debt to market capitalization decreased to 12.3% (based on the $20.75 per share pricing). As a general policy, the Company intends, but is not obligated, to adhere to a policy of maintaining a debt to market capitalization ratio of no more than 50%. This policy is intended to provide the Company with financial flexibility to select the optimal source of capital to finance its growth. SHORT AND LONG TERM LIQUIDITY The Company believes that its cash flow from operations is adequate to fund its short-term liquidity requirements for the foreseeable future. Cash flow from operations is generated primarily from rental revenues and operating expense reimbursements from tenants and the management services income from providing services to third parties. The Company intends to use these funds to meet its principal short-term liquidity needs which are to fund operating expenses, debt service requirements, recurring capital expenditures, tenant allowances, leasing commissions and the minimum distribution required to maintain the Company's REIT qualifications under the Internal Revenue Code. For the quarter ended June 30, 1997, the Company declared distributions totaling $0.36 per Common Share amounting to approximately $4.0 million. In addition, during this period, the Company's distributions declared to minority partners totaled approximately $126,000. The Company expects to meet its long-term liquidity requirements, such as for property acquisitions and development, scheduled debt maturities, renovations, expansions and other non-recurring capital improvements, through its Credit Facility and other long-term secured and unsecured indebtedness and the issuance of additional Operating Partnership units and equity securities. FUNDS FROM OPERATIONS Management generally considers Funds from Operations ("FFO") as one measure of REIT performance. The Company adopted the NAREIT definition of FFO in 1996 and has used this definition for all periods presented in the financial statements included herein. FFO is calculated as net income (loss) adjusted 10 for depreciation expense attributable to real property, amortization expense attributable to capitalized leasing costs, gains on sales of real estate investments and extraordinary and nonrecurring items. FFO should not be considered an alternative to net income as an indication of the Company's performance or to cash flows as a measure of liquidity. FFO for the three and six months ended June 30, 1997 and June 30, 1996 is summarized in the following table (in thousands, except share and per share data).
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, --------------------------- ------------------------- 1997 1996 1997 1996 ------------ --------- ---------- ------------ Income before minority interest........................... $ 1,738 $ (6) $ 3,882 $ 6 Add (Deduct): Depreciation attributable to real property.............. 3,124 182 5,093 384 Amortization attributable to leasing costs.............. 160 33 339 65 Minority interest not attributable to unit holders...... (5) (3) (16) (5) ------------ --------- --------- ------------ Funds from Operations before minority interest............ $ 5,017 $ 206 $ 9,298 $ 450 ------------ --------- --------- ------------ ------------ --------- --------- ------------ Weighted average Common Shares, including common share equivalents............................................. 11,423,396(1) 635,510 10,595,612(1) 629,641 ------------ --------- ---------- ------------ ------------ --------- ---------- ------------ Funds from Operations per share........................... $ 0.44 $ 0.32 $ 0.88 $ 0.71 ------------ --------- ---------- ------------ ------------ --------- ---------- ------------
- ------------------------ (1) Includes the weighted average effect of 1,424,736 Common Shares issued upon the conversion of the Preferred Shares for the period prior to conversion, the weighted average effect of 349,325 Common Shares issuable upon the conversion of 349,325 Operating Partnership units and the weighted average effect of the 50,242 Common Shares issued upon the conversion of 50,242 Operating Partnership units for the period prior to conversion. 11 Part II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is not currently involved (nor was it involved at June 30, 1997) in any material legal proceedings nor, to the Company's knowledge, is any material legal proceeding currently threatened against the company, other than routine litigation arising in the ordinary course of business, substantially all of which is expected to be covered by liability insurance. ITEM 2. CHANGES IN SECURITIES (a) On May 12, 1997, the Company held its Annual Meeting of Shareholders. At the Meeting, the shareholders approved an amendment to the Company's Declaration of Trust to permit the Board of Trustees to alter the number of authorized shares of beneficial interest of the Company. Reference is hereby made to the discussion of the amendment contained in the Company's Proxy Statement prepared in connection with the Annual Meeting of Shareholders and filed with the Securities and Exchange Commission. (b) Not applicable. (c) During the three months ended June 30, 1997, the Company issued an aggregate of 50,242 common shares upon the conversion of units of limited partnership interest in Brandywine Operating Partnership, L.P. by the holders of such units. In addition, during such three month period, an aggregate of 427,421 preferred shares were converted by the holder into 1,424,736 Common Shares. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On May 12, 1997, the Company held its Annual Meeting of Shareholders. Reference is hereby made to the information contained in Item 5 of the Company's Current Report on Form 8-K dated June 9, 1997 filed with the Securities and Exchange Commission with respect to the business transacted at the Annual Meeting of Shareholders. ITEM 5. OTHER INFORMATION As previously reported in a Current Report on Form 8-K dated June 27, 1997, the Company: (i) entered into an agreement of sale to purchase three office properties (the "Berwyn Park Properties") containing an aggregate of approximately 241,458 net rentable square feet located in Tredyffrin Township, Chester County, Pennsylvania and approximately 12.5 acres of land adjacent to such properties for an aggregate purchase price of approximately $37.2 million (the "Berwyn Park Acquisition") and (ii) entered into an agreement of sale to purchase five office properties (the "Green Hills Properties") containing an aggregate of approximately 574,241 net rentable square feet located in Reading, Berks County, Pennsylvania and approximately 133 additional acres of unimproved land for an aggregate purchase price of approximately $40.0 million (the "Green Hills Acquisition"). On July 29, 1997, the Company consummated the Berwyn Park Acquisition and on July 31, 1997, the Company consummated the Green Hills Acquisition. The Company based its determination of the price that was paid for each of the above acquisitions on the expected cash flow, physical condition, location, competitive advantages, existing tenancies and opportunities to retain and attract additional tenants. The purchase price of each of the above acquisitions was determined by arm's-length negotiation between the Company and the sellers. 12 As of July 31, 1997: (i) the Berwyn Park Properties were approximately 98.7% leased to 21 tenants, with a remaining weighted average lease term of approximately 50 months and (ii) the Green Hills Properties were approximately 84.2% leased to 15 tenants, with a remaining weighted average lease term of approximately 84 months. The table set forth below shows certain information regarding rental rates and lease expirations for the Green Hills Properties. Scheduled Lease Expirations (Green Hills Properties)
RENTABLE SQUARE FINAL ANNUALIZED PERCENTAGE OF TOTAL YEAR OF NUMBER OF LEASES FOOTAGE SUBJECT BASE RENT UNDER FINAL ANNUALIZED LEASE EXPIRING WITHIN TO EXPIRING EXPIRING LEASES BASE RENT UNDER EXPIRATION THE YEAR (1) LEASES (2) EXPIRING LEASES - -------------- ------------------- ----------------- ------------------ ------------------- 1997 ............ 2 515 $ 6,946 0.1% 1998 ............ 2 2,173 27,299 0.3% 1999 ............ 1 6,946 37,925 0.4% 2000 ............ 5 13,217 185,696 2.0% 2001 ............ 1 10,306 123,672 1.3% 2002 ............ 1 14,951 242,954 2.6% 2003 ............ 4 53,295 1,296,294 14.0% 2004 ............ 8 182,064 3,442,657 37.1% 2005 ............ 4 200,000 3,914,000 42.2% 2006 and Thereafter ...... -- -- -- 0.0% ---- --------- ------------- ------ Total ......... 28 483,467 $ 9,277,443 100.0% ------ --------- ------------- ------ ------ --------- ------------- ------
(1) A lease is considered to expire if, and at any time, it is terminable by the tenant without payment of penalty or premium. (2) "Final Annualized Base Rent" for each lease scheduled to expire represents the cash rental rate in the final month prior to expiration multiplied by twelve. 13 The table set forth below shows certain information regarding rental rates and lease expirations for the Berwyn Park Properties. Scheduled Lease Expirations (Berwyn Park Properties)
RENTABLE SQUARE FINAL ANNUALIZED PERCENTAGE OF TOTAL YEAR OF NUMBER OF LEASES FOOTAGE SUBJECT BASE RENT UNDER FINAL ANNUALIZED LEASE EXPIRING WITHIN TO EXPIRING EXPIRING LEASES BASE RENT UNDER EXPIRATION THE YEAR (1) LEASES (2) EXPIRING LEASES - ----------------------- --------------------- ----------------- ------------------ ------------------- 1997 .................. 3 4,240 $ 45,495 1.0% 1998 .................. 11 42,609 729,203 15.8% 1999 .................. 3 17,577 368,721 8.0% 2000 .................. 2 11,897 234,541 5.1% 2001 .................. 6 63,089 1,306,256 28.2% 2002 .................. 5 34,456 780,390 16.9% 2003 .................. -- -- -- 0.0% 2004 .................. 4 64,460 1,164,297 25.2% 2005 .................. -- -- -- 0.0% 2006 and Thereafter ............ -- -- -- 0.0% ---- ------- ------------ ------ Total ............... 34 238,328 $ 4,628,903 100.0% ---- ------- ------------ ------ ---- ------- ------------ -------
(1) A lease is considered to expire if, and at any time, it is terminable by the tenant without payment of penalty or premium. (2) "Final Annualized Base Rent" for each lease scheduled to expire represents the cash rental rate in the final month prior to expiration multiplied by twelve. After giving effect to the Berwyn Park Acquisition and the Green Hills Acquisition, the Company's portfolio consists of 74 office properties and nine industrial properties that contain an aggregate of approximately 5.1 million net rentable square feet. The audited statement of revenue and certain expenses of the Green Hills Properties for the year ended December 31, 1996 and the unaudited statement of revenue and certain expenses for the six months ended June 30, 1997 are included on pages F-13 to F-16. The audited combined statement of revenue and certain expenses of the Berwyn Park Properties for the year ended December 31, 1996 and the unaudited combined statement of revenue and certain expenses for the six months ended June 30, 1997 are included on pages F-17 to F-20. Pro forma financial information which reflects the Company's acquisition of the Green Hills Properties and the Berwyn Park Properties and the effects of the July 1997 Offering as of and for the six months ended June 30, 1997 and for the year ended December 31, 1996 is included on pages F-1 to F-12. 14 Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 10.1 Agreement of Sale dated June 26, 1997 between the Company and Salient 3 Communications, Inc. relating to the Green Hills Acquisition. 10.2 Sale Agreement dated July 7, 1997 between the Company and Berwyn Development Associates relating to the Berwyn Park Acquisition. 10.3 Separation Agreement between the Company and Brian Belcher. 23.1 Consent of Arthur Andersen LLP. 27.1 Financial Data Schedule. (b) Reports on Form 8-K: During the three months ended June 30, 1997, and through August 13, 1997, the Company filed the following: (i) a Current Report on Form 8-K dated April 18, 1997 (reporting under Items 5 and 7) regarding the Company's acquisition of 201 and 221 King Manor Drive, two industrial facilities, containing an aggregate of approximately 125,000 square feet and located in Montgomery County, Pennsylvania. (ii) a Current Report on Form 8-K/A No. 1 dated April 29, 1997 (amending Item 7, as originally filed) regarding the Company's acquisition of the Main Street Properties, located in southern New Jersey. Such Form 8-K/A No. 1 incorporated an audited combined statement of revenue and certain expenses of the Main Street Properties for the year ended December 31, 1996; and pro forma financial information as of and for the year ended December 31, 1996. (iii) a Current Report on Form 8-K dated May 1, 1997 (reporting under Items 5 and 7) regarding the Company's acquisitions of a 6.8 acre parcel of undeveloped land located in Montgomery County, Pennsylvania, the Greentree Executive Campus, a multi-building garden office complex located in Burlington County, New Jersey, and Five Eves Drive, a midrise office building, located in Burlington County, New Jersey. (iv) a Current Report on Form 8-K dated May 9, 1997 (reporting under Item 5) regarding the Company's earnings for the three months ended March 31, 1997 and certain other financial information. (v) a Current Report on Form 8-K dated June 9, 1997 (reporting under Item 2, Item 5 and Item 7) regarding the Company's acquisitions of the TA Properties (a ten property portfolio of office and flex/ warehouse space containing an aggregate of approximately 687,821 net rentable square feet located in Langhorne, Bucks County, PA; Lower Gwynedd, Montgomery County, PA; Evesham Township, Burlington County, NJ; and Westampton, Burlington County, NJ, and eight undeveloped parcels with an area of approximately 37 acres) and the Emmes Properties (a six property portfolio of office space containing an aggregate of approximately 608,008 net rentable square feet located in Mount Laurel, NJ and King of Prussia, PA). The Current Report also included the voting results on matters considered at the Annual Meeting of Shareholders of the Company held on May 12, 1997. Such Form 8-K also included audited combined statements of revenue and certain expenses of the TA Properties and the Emmes Properties for the year ended December 31, 1996 and pro forma financial information as of and for the three months ended March 31, 1997 and for the year ended December 31, 1996. 15 (vi) a Current Report on Form 8-K dated June 26, 1997 (reporting under Item 5 and Item 7) regarding the Company's acquisition of 1974 Sproul Road, an office property located in Broomall, Pennsylvania containing approximately 62,934 net rentable square feet. Such Form 8-K also included audited combined statements of revenue and certain expenses of the Greentree Executive Campus and of 748 & 855 Springdale Drive for the year ended December 31, 1996 and pro forma financial information as of and for the three months ended March 31, 1997 and for the year ended December 31, 1996. (vii) a Current Report on Form 8-K dated June 27, 1997 (reporting under Item 5 and Item 7) regarding the Company entering into an agreement of sale to purchase five office properties containing an aggregate of approximately 574,241 net rentable square feet located in Reading, Berks County, Pennsylvania and approximately 147 acres of land; and an agreement of sale to purchase three office properties containing approximately 241,458 net rentable square feet located in Tredyffrin Township, Chester County, Pennsylvania and approximately 12.5 acres of land. (viii) a Current Report on Form 8-K/A No. 1 dated July 21, 1997 (amending Item 5 as originally filed) regarding the Company's acquisition of a 6.8 acre parcel of undeveloped land located in Montgomery County, Pennsylvania, the Greentree Executive Campus, a multi-building garden office complex located in Burlington County, New Jersey and Five Eves Drive, a midrise office building, located in Burlington County, New Jersey. (ix) a Current Report on Form 8-K dated July 23, 1997 (reporting under Item 5 and Item 7) regarding the Company increasing the amount available for borrowing under its revolving credit facility to up to $150.0 million and the Company entering into an underwriting agreement with various underwriters pursuant to which the Company agreed to sell an aggregate of 10,000,000 common shares of beneficial interest, $.01 par value per share, and granted the underwriters an option to purchase up to an additional 1,500,000 common shares solely to cover over-allotments, if any. (x) a Current Report on Form 8-K dated August 7, 1997 (reporting under Item 5) regarding the Company's earnings for the three and six months ended June 30, 1997 and certain other financial information. 16 BRANDYWINE REALTY TRUST SIGNATURES OF REGISTRANT Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BRANDYWINE REALTY TRUST (Registrant) Date: August 13, 1997 By: /s/ Gerard H. Sweeney ------------------------------------- Gerard H. Sweeney, President and Chief Executive Officer (Principal Executive Officer) Date: August 13, 1997 By: /s/ Mark S. Kripke -------------------------------------- Mark S. Kripke, Chief Financial Officer and Secretary (Principal Financial and Accounting Officer) 17 BRANDYWINE REALTY TRUST INDEX TO FINANCIAL STATEMENTS I. UNAUDITED PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Pro Forma Condensed Consolidating Balance Sheet as of June 30, 1997............... F-3 - Pro Forma Condensed Consolidating Statement of Operations for the Year Ended December 31, 1996.................................................... F-4 - Pro Forma Condensed Consolidating Statement of Operations for the Six Months Ended June 30, 1997.................................................. F-5 - Notes and Management's Assumptions to Unaudited Pro Forma Condensed Consolidating Financial Information............................................. F-6 II. GREEN HILLS PROPERTIES - Report of Independent Public Accountants........................................... F-12 - Statements of Revenue and Certain Expenses for the Year Ended December 31, 1996 (audited) and for the Six Month Period Ended June 30, 1997 (unaudited)................................ F-13 - Notes to Statements of Revenue and Certain Expenses................................ F-14 III. BERWYN PARK PROPERTIES - Report of Independent Public Accountants........................................... F-16 - Combined Statements of Revenue and Certain Expenses for the Year Ended December 31, 1996 (audited) and for the Six Month Period Ended June 30, 1997 (unaudited)................................ F-17 - Notes to Combined Statements of Revenue and Certain Expenses....................... F-18
BRANDYWINE REALTY TRUST PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION The following sets forth the pro forma condensed consolidating balance sheet of Brandywine Realty Trust ("the Company") as of June 30, 1997 and the pro forma condensed consolidating statements of operations for the six months ended June 30, 1997 and for the year ended December 31, 1996. The pro forma condensed consolidating financial information should be read in conjunction with the historical financial statements of the Company and those acquisitions deemed significant pursuant to the rules and regulations of the Securities and Exchange Commission. The unaudited pro forma condensed consolidating financial information is presented as if the following events occurred no later than June 30, 1997, for balance sheet purposes, and at the beginning of the period presented, for purposes of the statements of operations: - The Company acquired the properties described in Note 1 to these pro forma financial statements. - The Company acquired its partnership interests in Brandywine Operating Partnership, L.P. (the "Operating Partnership"). - The Company issued 4,600,000 Common Shares at $16.50 per share, of which 600,000 shares related to the underwriter's exercise of the over-allotment option (the "1996 Offering"). - The Company issued 636,363 Common Shares at $16.50 per share to a voting trust established for the benefit of the Pennsylvania State Employees Retirement System ("SERS"), in exchange for $10.5 million (the "SERS Offering") and contributed such proceeds to the Operating Partnership in exchange for 636,363 units of general partnership interest ("GP Units") in the Operating Partnership. - The Company issued 709,090 Common Shares at $16.50 per share to two investment funds managed by Morgan Stanley Asset Management Inc. (the "Morgan Stanley Offering") and contributed the proceeds to the Operating Partnership in exchange for 709,090 GP Units. - The Operating Partnership repaid $49,805,000 of mortgage indebtedness and $764,000 of loans made by Safeguard Scientifics, Inc. and paid a $500,000 prepayment penalty with a portion of the proceeds of the 1996 Offering, the SERS Offering and the Morgan Stanley Offering. - The Company issued 2,375,500 Common Shares at $20.625 per share, of which 175,500 shares related to the underwriter's exercise of the over-allotment option (the "March 1997 Offering"). - The Company issued 10,000,000 Common Shares at $20.75 per share (the "July 1997 Offering"). The net proceeds from the July 1997 Offering were contributed to the Operating Partnership in exchange for 10,000,000 GP Units. - The Operating Partnership repaid $130,775,000 of indebtedness under the Company's revolving credit facility using proceeds from the July 1997 Offering. The pro forma condensed consolidating financial information is unaudited and is not necessarily indicative of what the actual financial position would have been at June 30, 1997, nor does it purport to represent the future financial position and the results of operations of the Company. BRANDYWINE REALTY TRUST PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET AS OF JUNE 30, 1997 (NOTES 1 AND 2) (UNAUDITED) (IN THOUSANDS)
BRANDYWINE REALTY TRUST GREEN HILLS BERWYN PARK HISTORICAL JULY 1997 PROPERTIES PROPERTIES PRO FORMA CONSOLIDATED OFFERING(A) (B) (C) CONSOLIDATED ------------ ----------- ----------- ------------ ------------ ASSETS: Real estate investments, net............... $ 344,209 $ -- $ 40,444 $ 37,664 $ 422,317 Cash and cash equivalents.................. 10,777 65,475 (23,944) (37,664) 14,644 Escrowed cash.............................. 1,213 -- -- -- 1,213 Accounts receivable........................ 2,755 -- -- -- 2,755 Due from affiliates........................ 293 -- -- -- 293 Investment in management company........... 202 -- -- -- 202 Deferred costs and other assets............ 4,980 -- -- -- 4,980 ------------ ----------- ----------- ------------ ------------ Total assets........................... 364,429 65,475 16,500 -- 446,404 ------------ ----------- ----------- ------------ ------------ ------------ ----------- ----------- ------------ ------------ LIABILITIES: Mortgage notes payable..................... 46,960 -- 1,500 -- 48,460 Notes payable, Credit Facility............. 130,775 (130,775) 15,000 15,000 Accrued interest........................... 395 -- -- -- 395 Accounts payable and accrued expenses...... 2,650 -- -- -- 2,650 Distributions payable...................... 4,192 -- -- -- 4,192 Tenant security deposits and deferred rents.................................... 2,721 -- -- -- 2,721 ------------ ----------- ----------- ------------ ------------ Total liabilities...................... 187,693 (130,775) 16,500 -- 73,418 ------------ ----------- ----------- ------------ ------------ MINORITY INTEREST............................ 5,508 -- -- -- 5,508 ------------ ----------- ----------- ------------ ------------ BENEFICIARIES' EQUITY: Common shares of beneficial interest....... 111 100 -- -- 211 Additional paid-in capital................. 186,426 196,150 -- -- 382,576 Share warrants............................. 962 -- -- -- 962 Cumulative earnings........................ 460 -- -- -- 460 Cumulative distributions................... (16,731) -- -- -- (16,731) ------------ ----------- ----------- ------------ ------------ Total beneficiaries' equity............ 171,228 196,250 -- -- 367,478 ------------ ----------- ----------- ------------ ------------ Total liabilities and beneficiaries' equity............................... $ 364,429 $ 65,475 $ 16,500 $ -- $ 446,404 ------------ ----------- ----------- ------------ ------------ ------------ ----------- ----------- ------------ ------------
BRANDYWINE REALTY TRUST PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996 (NOTES 1 AND 3) (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
BRANDYWINE REALTY TRUST HISTORICAL 1996 CONSOLIDATED (A) EVENTS (B) SUBTOTAL ---------------- ---------- -------- REVENUE: Base rents...................................... $ 8,462 $12,646 $21,108 Tenant reimbursements........................... 1,372 2,838 4,210 Other........................................... 196 100 296 ---------------- ---------- -------- Total Revenue............................... 10,030 15,584 25,614 ---------------- ---------- -------- OPERATING EXPENSES: Interest........................................ 2,751 513 3,264 Depreciation and amortization................... 2,836 4,687 7,523 Property expenses............................... 3,709 6,830 10,539 General and administrative...................... 825 148 973 ---------------- ---------- -------- Total operating expenses.................... 10,121 12,178 22,299 ---------------- ---------- -------- Income (loss) before minority interest...... (91) 3,406 3,315 Minority interest in (income) loss................ (45) (429) (474) ---------------- ---------- -------- Income (loss) before uncombined entity............ (136) 2,977 2,841 Equity in income of management company............ (26) 66 40 ---------------- ---------- -------- Net income (loss)................................. (162) 3,043 2,881 (Income) loss allocated to Preferred Shares....... (401) (1,847) (2,248) ---------------- ---------- -------- Income (loss) allocated to Common Shares.......... $ (563) $ 1,196 $ 633 ---------------- ---------- -------- ---------------- ---------- -------- Earnings (loss) per Common Share.................. $ (0.43) ---------------- ---------------- Weighted average number of shares outstanding including share equivalents.......... 1,302,648 ---------------- ---------------- 1997 EVENTS ------------------------------------------------- JULY 1997 1997 GREEN HILLS BERWYN PARK OTHER OFFERING PROPERTIES PROPERTIES EVENTS (C) (E) (F) (G) ---------- -------- ----------- ----------- REVENUE: Base rents..................................... $24,375 $ -- $7,700 $3,815 Tenant reimbursements.......................... 4,636 -- -- 720 Other.......................................... 396 -- -- 108 ---------- -------- ----------- ----------- Total Revenue.............................. 29,407 -- 7,700 4,643 ---------- -------- ----------- ----------- OPERATING EXPENSES: Interest....................................... 10,805 (9,808) 1,200 -- Depreciation and amortization.................. 6,119 -- 1,294 1,205 Property expenses.............................. 11,805 -- 3,419 1,991 General and administrative..................... -- -- -- -- ---------- -------- ----------- ----------- Total operating expenses................... 28,729 (9,808) 5,913 3,196 ---------- -------- ----------- ----------- Income (loss) before minority interest..... 678 9,808 1,787 1,447 Minority interest in (income) loss............... 342 (100) (28) (27) ---------- -------- ----------- ----------- Income (loss) before uncombined entity........... 1,020 9,708 1,759 1,420 Equity in income of management company........... 215 -- (115) 166 ---------- -------- ----------- ----------- Net income (loss)................................ 1,235 9,708 1,644 1,586 (Income) loss allocated to Preferred Shares...... -- -- -- -- ---------- -------- ----------- ----------- Income (loss) allocated to Common Shares......... $ 1,235 $ 9,708 $1,644 $1,586 ---------- -------- ----------- ----------- ---------- -------- ----------- ----------- Earnings (loss) per Common Share................. Weighted average number of shares outstanding including share equivalents......... TOTAL PRO FORMA CONSOLIDATED ------------ REVENUE: Base rents..................................... $ 56,998 Tenant reimbursements.......................... 9,566 Other.......................................... 800 ------------ Total Revenue.............................. 67,364 ------------ OPERATING EXPENSES: Interest....................................... 5,461 Depreciation and amortization.................. 16,141 Property expenses.............................. 27,754 General and administrative..................... 973 ------------ Total operating expenses................... 50,329 ------------ Income (loss) before minority interest..... 17,035 Minority interest in (income) loss............... (287) ------------ Income (loss) before uncombined entity........... 16,748 Equity in income of management company........... 306 ------------ Net income (loss)................................ 17,054 (Income) loss allocated to Preferred Shares...... (2,248) ------------ Income (loss) allocated to Common Shares......... $ 14,806 ------------ ------------ Earnings (loss) per Common Share................. $ 0.77 ------------ ------------ Weighted average number of shares outstanding including share equivalents....... 19,291,406 ------------ ------------
BRANDYWINE REALTY TRUST PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997 (NOTES 1 AND 3) (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
BRANDYWINE 1997 EVENTS REALTY ------------------------------------------------------------ TRUST 1997 TOTAL HISTORICAL OTHER JULY 1997 GREEN HILLS BERWYN PARK PRO FORMA CONSOLIDATED (A) EVENTS (D) OFFERING (E) PROPERTIES (F) PROPERTIES (G) CONSOLIDATED ---------------- ----------- ------------- --------------- --------------- ------------ REVENUE: Base rents...................... $ 16,889 $ 7,159 $ -- $ 3,936 $ 2,128 $ 30,112 Tenant reimbursements........... 3,285 1,636 -- -- 321 5,242 Other........................... 544 33 -- -- 31 608 ---------------- ----------- ------------- ------------ --------------- ------------ Total Revenue............... 20,718 8,828 -- 3,936 2,480 35,962 ---------------- ----------- ------------- ------------ --------------- ------------ OPERATING EXPENSES: Interest........................ 3,059 3,804 (4,864) 595 -- 2,594 Depreciation and amortization... 5,775 1,902 -- 642 598 8,917 Property operating expenses..... 7,032 3,242 -- 1,775 916 12,965 Other expenses.................. 1,187 -- -- -- -- 1,187 ---------------- ----------- ------------- ------------ --------------- ------------ Total operating expenses.... 17,053 8,948 (4,864) 3,012 1,514 25,663 ---------------- ----------- ------------- ------------ --------------- ------------ Income (loss) before minority interest......... 3,665 (120) 4,864 924 966 10,299 Minority interest in (income) loss............................ (174) 39 (8) (14) (17) (174) ---------------- ----------- ------------- ------------ --------------- ------------ Income (loss) before uncombined entity.......................... 3,491 (81) 4,856 910 949 10,125 Equity in income of management company......................... 217 88 -- (57) 82 330 ---------------- ----------- ------------- ------------ --------------- ------------ Net income (loss)................. 3,708 7 4,856 853 1,031 10,455 (Income) loss allocated to Preferred Shares................ (499) -- -- -- -- (499) ---------------- ----------- ------------- ------------ --------------- ------------ Income (loss) allocated to Common Shares.......................... $ 3,209 $ 7 $ 4,856 $ 853 $ 1,031 $ 9,956 ---------------- ----------- ------------- ------------ --------------- ------------ ---------------- ----------- ------------- ------------ --------------- ------------ Earnings (loss) per Common Share........................... $ 0.36 $ 0.51 ---------------- ------------ ---------------- ------------ Weighted average number of shares outstanding including share equivalents..................... 8,809,379 19,655,886 ---------------- ------------ ---------------- ------------
BRANDYWINE REALTY TRUST NOTES AND MANAGEMENT'S ASSUMPTIONS TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS) 1. BASIS OF PRESENTATION: Brandywine Realty Trust (the "Company") is a Maryland real estate investment trust. As of August 13, 1997, the Company owned 83 properties. The Company's interest in 82 of the Properties is held through Brandywine Operating Partnership, L.P. (the "Operating Partnership"). The Company is the sole general partner of the Operating Partnership and as of August 13, 1997, the Company held a 98.4% interest in the Operating Partnership. These pro forma financial statements should be read in conjunction with the historical financial statements and notes thereto of the Company, the SSI/TNC Properties, the LibertyView Building, the nine properties (the "SERS Properties") acquired in November 1996 from SERS and its subsidiaries, Delaware Corporate Center I, 700/800 Business Center Drive, the Columbia Acquisition Properties, the Main Street Acquisition Properties, the TA Properties, the Emmes Properties, the Greentree Executive Campus Acquisition Properties, 748 & 855 Springdale Drive, the Green Hills Properties and the Berwyn Park Properties. In management's opinion, all adjustments necessary to reflect the effects of the 1996 Offering, the SERS Offering, the Morgan Stanley Offering, the March 1997 Offering, the July 1997 Offering, the acquisitions of the SSI/TNC Properties, the LibertyView Building, the 1996 Additional Acquisition Properties (consisting of the SERS Properties, Delaware Corporate Center I, 700/800 Business Center Drive and 8000 Lincoln Drive), the Columbia Acquisition Properties, the Main Street Acquisition Properties, 1336 Enterprise Drive, the Greentree Executive Campus, Five Eves Drive, Kings Manor, the TA Properties, the Emmes Properties, 748 & 855 Springdale Drive, 1974 Sproul Road, the Green Hills Properties and the Berwyn Park Properties by the Company have been made. 2. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET: (A) Reflects the July 1997 Offering and the use of a portion of the net proceeds to repay $130.8 million of indebtedness under the Credit Facility. (B) Reflects the Company's acquisition of the Green Hills Properties as follows:
GREEN HILLS PROPERTIES ----------- Purchase Price....................................................................................... $ 40,000 Closing Costs........................................................................................ 444 ----------- $ 40,444
(C) Reflects the Company's acquisition of Berwyn Park as follows: BERWYN PARK PROPERTIES ------------ Purchase Price.............................. $ 37,150 Closing Costs............................... 514 ------------ $ 37,664 3. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS: (A) Reflects the historical consolidated operations of the Company. (B) Reflects the historical operations of the SSI/TNC Properties, LibertyView Building and the 1996 Additional Acquisition Properties from January 1, 1996 through the respective dates of acquisition, plus the pro forma 1996 Offering adjustments. The table below reflects the adjustments:
SSI/TNC PROPERTIES AND 700/800 LIBERTYVIEW DELAWARE BUSINESS CENTER BUILDING SERS PROPERTIES CORPORATE CENTER DRIVE ----------- --------------- ---------------- --------------- Revenue: Base rents............. $ 5,714 $4,008 $2,036 $651 Tenant reimbursements.. 2,511 249 -- 76 Other.................. 100 -- -- -- ----------- ------ ------ ----- Total revenue...... 8,325 4,257 2,036 727 Operating Expenses: Interest............... 3,783 194 -- -- Depreciation and amortization......... 2,819 818 374 212 Property expenses...... 2,831 2,217 552 270 General and administrative....... 715 -- -- -- ----------- ------ ------ ----- Total operating expenses......... 10,148 3,229 926 482 Income (loss) before minority interest...... (1,823) 1,028 1,110 245 Minority interest in (income) loss.......... 513 -- -- -- Income (loss) before uncombined entity...... (1,310) 1,028 1,110 245 Equity in income of management company..... 75 -- -- -- ----------- ------ ------ ----- Net income (loss)........ (1,235) 1,028 1,110 245 Income allocated to Preferred Shares....... -- -- -- -- ----------- ------ ------ ----- Income (loss) allocated to Common Shares....... $(1,235) $1,028 $1,110 $245 ----------- ------ ------ ----- ----------- ------ ------ ----- 1996 PRO FORMA 8000 LINCOLN & OTHER OFFERING TOTAL PRO FORMA DRIVE ADJUSTMENTS 1996 EVENTS --------------- ---------------- --------------- Revenue: Base rents............. $237 $-- $12,646 Tenant reimbursements.. 2 -- 2,838 Other.................. -- -- 100 ----- ------- ------- Total revenue...... 239 -- 15,584 Operating Expenses: Interest............... -- (3,464) 513 Depreciation and amortization......... 89 375 4,687 Property expenses...... 231 729 6,830 General and administrative....... -- (567) 148 ----- ------- ------- Total operating expenses......... 320 (2,927) 12,178 Income (loss) before minority interest...... (81) 2,927 3,406 Minority interest in (income) loss.......... -- (942) (429) Income (loss) before uncombined entity...... (81) 1,985 2,977 Equity in income of management company..... -- (9) 66 ----- ------- ------- Net income (loss)........ (81) 1,976 3,043 Income allocated to Preferred Shares....... -- 1,847 1,847 ----- ------- ------- Income (loss) allocated to Common Shares....... $(81) $ 129 $ 1,196 ----- ------- ------- ----- ------- -------
(C) Reflects the pro forma statements of operations of the Columbia Acquisition Properties, the Main Street Acquisition Properties, 1336 Enterprise Drive, Kings Manor, Greentree Executive Campus, Five Eves Drive, the TA Properties, the Emmes Properties, 748 & 855 Springdale Drive, 1974 Sproul Road for the year ended December 31, 1996 and other pro forma adjustments to reflect the March 1997 Offering for the year ended December 31, 1996. The operating results reflected below include the historical results and related pro forma adjustments to reflect the period January 1, 1996 through the earlier of the respective acquisition dates or December 31, 1996. Operating results from those dates forward are included in the historical results of the Company.
COLUMBIA MAIN STREET 1336 GREENTREE ACQUISITION ACQUISITION ENTERPRISE KINGS EXECUTIVE PROPERTIES PROPERTIES DRIVE MANOR CAMPUS ------------- ----------- ------------- ----------- ----------- Revenue: Base rents....................................... $ 5,146 $ 3,141 $ 437 $ 411 $ 1,862 Tenant reimbursements............................ 359 347 75 107 175 Other............................................ 376 -- -- -- -- ------ ----------- ----- ----- ----------- Total revenue................................ 5,881 3,488 512 518 2,037 ------ ----------- ----- ----- ----------- Operating Expenses: Interest (i)..................................... 1,680 -- -- -- 841 Depreciation and amortization (ii)............... 1,007 629 117 114 359 Property expenses................................ 1,979 2,194 107 170 1,018 General and administrative....................... -- -- -- -- -- ------ ----------- ----- ----- ----------- Total operating expenses..................... 4,666 2,823 224 284 2,218 ------ ----------- ----- ----- ----------- Income (loss) before minority interest............. 1,215 665 288 234 (181) Minority interest in (income) loss................. (20) (11) (5) (4) 3 ------ ----------- ----- ----- ----------- Income (loss) before uncombined entity............. 1,195 654 283 230 (178) Equity in income of management company (iii)....... -- -- -- -- -- ------ ----------- ----- ----- ----------- Net income (loss).................................. 1,195 654 283 230 (178) Income allocated to Preferred Shares............... -- -- -- -- -- ------ ----------- ----- ----- ----------- Income (loss) allocated to Common Shares........... $ 1,195 $ 654 $ 283 $ 230 $ (178) ------ ----------- ----- ----- ----------- ------ ----------- ----- ----- ----------- FIVE EVES DRIVE ----------- Revenue: Base rents....................................... $ 348 Tenant reimbursements............................ 39 Other............................................ 1 ----------- Total revenue................................ 388 ----------- Operating Expenses: Interest (i)..................................... 254 Depreciation and amortization (ii)............... 108 Property expenses................................ 151 General and administrative....................... -- ----------- Total operating expenses..................... 513 ----------- Income (loss) before minority interest............. (125) Minority interest in (income) loss................. 2 ----------- Income (loss) before uncombined entity............. (123) Equity in income of management company (iii)....... -- ----------- Net income (loss).................................. (123) Income allocated to Preferred Shares............... -- ----------- Income (loss) allocated to Common Shares........... $ (123) ----------- -----------
748 & 855 EMMES SPRINGDALE 1974 SPROUL MARCH 1997 TOTAL OTHER TA PROPERTIES PROPERTIES DRIVE ROAD OFFERING 1997 EVENTS ------------- ----------- ------------- ------------- ------------- ----------- Revenue: Base rents................................ $ 5,102 $ 6,214 $ 940 $ 774 $ -- $ 24,375 Tenant reimbursements..................... 735 2,681 -- 118 -- 4,636 Other..................................... 9 10 -- -- -- 396 ------ ----------- ----- ----- ----- ----------- Total revenue......................... 5,846 8,905 940 892 -- 29,407 ------ ----------- ----- ----- ----- ----------- Operating Expenses: Interest (i).............................. 3,168 4,987 400 -- (525) 10,805 Depreciation and amortization (ii)........ 1,352 2,128 171 134 -- 6,119 Property expenses......................... 1,962 3,482 250 492 -- 11,805 General and administrative................ -- -- -- -- -- -- ------ ----------- ----- ----- ----- ----------- Total operating expenses.............. 6,482 10,597 821 626 (525) 28,729 ------ ----------- ----- ----- ----- ----------- Income (loss) before minority interest...... (636) (1,692) 119 266 525 678 Minority interest in (income) loss.......... 9 27 (2) (5) 348 342 ------ ----------- ----- ----- ----- ----------- Income (loss) before uncombined entity...... (627) (1,665) 117 261 873 1,020 Equity in income of management company (iii)..................................... 105 65 23 22 -- 215 ------ ----------- ----- ----- ----- ----------- Net income (loss)........................... (522) (1,600) 140 283 873 1,235 Income allocated to Preferred Shares........ -- -- -- -- -- -- ------ ----------- ----- ----- ----- ----------- Income (loss) allocated to Common Shares.... $ (522) $ (1,600) $ 140 $ 283 $ 873 $ 1,235 ------ ----------- ----- ----- ----- ----------- ------ ----------- ----- ----- ----- -----------
(i) Pro forma interest expense is presented assuming an effective rate of 7.5% on borrowings under the Company's revolving credit facility. The adjustment for the Columbia Acquisition Properties also reflects an effective interest rate of 9.5% on assumed debt. The adjustment for the March 1997 Offering represents interest savings related to the payoff of $7 million of credit facility borrowings at an effective rate of 7.5%. (ii) Pro forma depreciation expense is presented assuming an 80% building and 20% land allocation of the purchase price and capitalized closing costs and assumes a useful life of 25 years. (iii) Pro forma equity in income of management company is presented based on management fees less incremental costs estimated to be incurred. (D) Reflects the pro forma adjustments relating to the Columbia Acquisition Properties, the Main Street Acquisition Properties, 1336 Enterprise Drive, Kings Manor, Greentree Executive Campus, Five Eves Drive, the TA Properties, the Emmes Properties, 748 & 855 Springdale Drive and 1974 Sproul Road for the six months ended June 30, 1997 and other pro forma adjustments to reflect the March 1997 Offering for the six months ended June 30, 1997. The operating results reflected below include the historical results and related pro forma adjustments to reflect the period January 1, 1997 through the earlier of the respective acquisition date or June 30, 1997.
COLUMBIA MAIN STREET 1336 GREENTREE ACQUISITION ACQUISITION ENTERPRISE KINGS EXECUTIVE PROPERTIES PROPERTIES DRIVE MANOR CAMPUS --------------- ------------- ------------- ----------- ----------- Revenue: Base rents....................................... $ 338 $ 542 $ 78 $ 105 $ 602 Tenant reimbursements............................ 24 60 13 27 17 Other............................................ 25 -- -- -- -- ----- ----- --- ----- ----- Total revenue................................ 387 602 91 132 619 ----- ----- --- ----- ----- Operating Expenses: Interest (i)..................................... 110 -- -- -- 249 Depreciation and amortization (ii)............... 66 109 21 29 106 Property expenses................................ 130 379 19 43 272 General and administrative....................... -- -- -- -- -- ----- ----- --- ----- ----- Total operating expenses..................... 306 488 40 72 627 ----- ----- --- ----- ----- Income (loss) before minority interest............. 81 114 51 60 (8) Minority interest in (income) loss................. (1) (2) (1) (1) -- ----- ----- --- ----- ----- Income (loss) before uncombined entity............. 80 112 50 59 (8) Equity in income of management company............. -- -- -- -- -- ----- ----- --- ----- ----- Net income (loss).................................. 80 112 50 59 (8) Income allocated to Preferred Shares............... -- -- -- -- -- ----- ----- --- ----- ----- Income (loss) allocated to Common Shares........... $ 80 $ 112 $ 50 $ 59 $ (8) ----- ----- --- ----- ----- ----- ----- --- ----- ----- FIVE EVES DRIVE ----------- Revenue: Base rents....................................... $ 103 Tenant reimbursements............................ 12 Other............................................ -- ----- Total revenue................................ 115 ----- Operating Expenses: Interest (i)..................................... 75 Depreciation and amortization (ii)............... 32 Property expenses................................ 45 General and administrative....................... -- ----- Total operating expenses..................... 152 ----- Income (loss) before minority interest............. (37) Minority interest in (income) loss................. 1 ----- Income (loss) before uncombined entity............. (36) Equity in income of management company............. -- ----- Net income (loss).................................. (36) Income allocated to Preferred Shares............... -- ----- Income (loss) allocated to Common Shares........... $ (36) ----- -----
748 & 855 EMMES SPRINGDALE 1974 SPROUL MARCH 1997 TOTAL OTHER TA PROPERTIES PROPERTIES DRIVE ROAD OFFERING 1997 EVENTS ------------- ----------- ------------- ------------- ------------- ----------- Revenue: Base rents................................ $ 2,053 $ 2,570 $ 414 $ 354 $ -- $ 7,159 Tenant reimbursements..................... 299 1,130 -- 54 -- 1,636 Other..................................... 6 2 -- -- -- 33 ------ ----------- ----- ----- ----- ----------- Total revenue......................... 2,358 3,702 414 408 -- 8,828 ------ ----------- ----- ----- ----- ----------- Operating Expenses: Interest (i).............................. 1,241 2,049 171 -- (91) 3,804 Depreciation and amortization (ii)........ 530 875 73 61 -- 1,902 Property expenses......................... 698 1,332 99 225 -- 3,242 General and administrative................ -- -- -- -- -- -- ------ ----------- ----- ----- ----- ----------- Total operating expenses.............. 2,469 4,256 343 286 (91) 8,948 ------ ----------- ----- ----- ----- ----------- Income (loss) before minority interest...... (111) (554) 71 122 91 (120) Minority interest in (income) loss.......... 1 9 (1) (2) 36 39 ------ ----------- ----- ----- ----- ----------- Income (loss) before uncombined entity...... (110) (545) 70 120 127 (81) Equity in income of management company (iii)..................................... 41 27 10 10 -- 88 ------ ----------- ----- ----- ----- ----------- Net income (loss)........................... (69) (518) 80 130 127 7 Income allocated to Preferred Shares........ -- -- -- -- -- -- ------ ----------- ----- ----- ----- ----------- Income (loss) allocated to Common Shares.... $ (69) $ (518) $ 80 $ 130 $ 127 $ 7 ------ ----------- ----- ----- ----- ----------- ------ ----------- ----- ----- ----- -----------
(i) Pro forma interest expense is presented assuming an effective rate of 7.5% on borrowings under the Company's revolving credit facility. The adjustment for the Columbia Acquisition Properties also reflects an effective interest rate of 9.5% on assumed debt. The adjustment for the March 1997 Offering represents interest savings related to the payoff of $7 million of credit facility borrowings at an effective rate of 7.5%. (ii) Pro forma depreciation expense is presented assuming an 80% building and 20% land allocation of the purchase price and capitalized closing costs and assumes a useful life of 25 years. (iii) Pro forma equity in income of management company is presented based on management fees less incremental costs estimated to be incurred. (E) Reflects pro forma adjustments to reflect interest savings related to the repayment of $130,775,000 of Credit Facility borrowings at an effective interest rate of 7.5% with proceeds from the July 1997 Offering. (F) Reflects the pro forma statements of operations of the Green Hills Properties for the six months ended June 30, 1997 and for the year ended December 31, 1996. All amounts represent historical operations except for the pro forma adjustments noted:
GREEN HILLS PROPERTIES -------------------------------- YEAR ENDED DECEMBER 31, SIX MONTHS ENDED 1996 JUNE 30, 1997 ------------- ----------------- Revenue: Base rents.................................................................... $ 7,700 $ 3,936 Tenant reimbursements......................................................... -- -- Other......................................................................... -- -- ------ ------ Total revenue............................................................. 7,700 3,936 Operating Expenses: Interest (i).................................................................. 1,200 595 Depreciation and amortization (ii)............................................ 1,294 642 Property expenses (iii)....................................................... 3,419 1,775 General and administrative.................................................... -- -- ------ ------ Total operating expenses.................................................. 5,913 3,012 Income (loss) before minority interest.......................................... 1,787 924 Minority interest in (income) loss.............................................. (28) (14) Income (loss) before uncombined entity.......................................... 1,759 910 Equity in income of management company (iv)..................................... (115) (57) ------ ------ Net income (loss)............................................................... 1,644 853 Income allocated to Preferred Shares............................................ -- -- ------ ------ Income (loss) allocated to Common Shares........................................ $ 1,644 $ 853 ------ ------ ------ ------
(i) Pro forma interest expense is presented assuming an effective rate of 7.5% on $15 million of borrowings under the Company's revolving credit facility and an effective rate of 5% on $1.5 million of borrowings under a mortgage note payable to the seller. (ii) Pro forma depreciation expense is presented assuming an 80% building and 20% land allocation of the purchase price and capitalized closing costs and assumes a useful life of 25 years. (iii) Pro forma property expenses exclude $666,000 and $333,000 from historical amounts for the year ended December 31, 1996 and the six months ended June 30, 1997, respectively. Such amounts represent expected salary savings. (iv) Pro forma equity in income of management company is presented based on management fees less incremental costs estimated to be incurred. (G) Reflects the pro forma statements of operations of the Berwyn Park Properties for the six months ended June 30, 1997 and for the year ended December 31, 1996. All amounts represent historical operations except for the pro forma adjustments noted:
BERWYN PARK PROPERTIES ------------------------------ YEAR ENDED SIX MONTHS DECEMBER 31, ENDED JUNE 30, 1996 1997 ------------- --------------- Revenue: Base rents....................................................................... $ 3,815 $ 2,128 Tenant reimbursements............................................................ 720 321 Other............................................................................ 108 31 ------ ------ Total revenue................................................................ 4,643 2,480 Operating Expenses: Interest......................................................................... -- -- Depreciation and amortization (i)................................................ 1,205 598 Property expenses................................................................ 1,991 916 General and administrative....................................................... -- -- ------ ------ Total operating expenses..................................................... 3,196 1,514 Income (loss) before minority interest............................................. 1,447 966 Minority interest in (income) loss................................................. (27) (17) Income (loss) before uncombined entity............................................. 1,420 949 Equity in income of management company (ii)........................................ 166 82 ------ ------ Net income (loss).................................................................. 1,586 1,031 Income allocated to Preferred Shares............................................... -- -- ------ ------ Income (loss) allocated to Common Shares........................................... $ 1,586 $ 1,031 ------ ------ ------ ------
(i) Pro forma depreciation expense is presented assuming an 80% building and 20% land allocation of the purchase price and capitalized closing costs and assumes a useful life of 25 years. (ii) Pro forma equity in income of management company is presented based on management fees less incremental costs estimated to be incurred. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Salient 3 Communications, Inc.: We have audited the statement of revenue and certain expenses of the Green Hills Properties for the year ended December 31, 1996. This financial statement is the responsibility of the Properties' management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. The statement of revenue and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in the Current Report on Form 8-K of Brandywine Realty Trust, as described in Note 1, and is not intended to be a complete presentation of the Green Hills Properties' revenue and expenses. In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenue and certain expenses of the Green Hills Properties for the year ended December 31, 1996 in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Philadelphia, Pa., July 21, 1997 GREEN HILLS PROPERTIES STATEMENTS OF REVENUE AND CERTAIN EXPENSES (NOTE 1)
FOR THE FOR THE SIX YEAR ENDED MONTHS ENDED DECEMBER 31, JUNE 30, 1996 1997 ------------ ------------- (UNAUDITED) REVENUE: Base rents (Notes 2 and 3)........................................................ $7,700,000 $ 3,936,000 CERTAIN EXPENSES: Maintenance and other operating expenses.......................................... 2,083,000 1,084,000 Utilities......................................................................... 1,111,000 534,000 Real estate taxes................................................................. 891,000 490,000 ------------ ------------- Total certain expenses........................................................ 4,085,000 2,108,000 ------------ ------------- REVENUE IN EXCESS OF CERTAIN EXPENSES............................................... $3,615,000 $ 1,828,000 ------------ ------------- ------------ -------------
The accompanying notes are an integral part of these financial statements. GREEN HILLS PROPERTIES NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES DECEMBER 31, 1996 1.BASIS OF PRESENTATION: The statements of revenue and certain expenses reflect the operations of the Green Hills Properties, located in Berks County, Pennsylvania. The Green Hills Properties are expected to be acquired by Brandywine Realty Trust (the "Company") from Salient 3 Communications, Inc. The Green Hills Properties have an aggregate net rentable area of approximately 550,000 square feet and are approximately 90% leased as of December 31, 1996. The accounting records of the Green Hills Properties are maintained on a modified cash basis. Adjusting entries have been made to present the accompanying financial statements in accordance with generally accepted accounting principles. The accompanying financial statements exclude certain expenses such as interest, depreciation and amortization, and other costs not directly related to the future operations of the Green Hills Properties, pursuant to the rules and regulations of the Securities and Exchange Commission. The statement of revenue and certain expenses for the six months ended June 30, 1997 is unaudited. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments, necessary to present fairly the revenue and certain expenses for the six months ended June 30, 1997 have been included. The results for such interim period are not necessarily indicative of the results for the full year. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenue and expenses during the reporting period. The ultimate results could differ from such estimates. 2. OPERATING LEASES: Base rents presented for the year ended December 31, 1996 and for the six months ended June 30, 1997 include straight-line adjustments for rental revenue increases in accordance with generally accepted accounting principles. The aggregate rental revenue increase resulting from the straight-line adjustment for the year ended December 31, 1996 and for the six months ended June 30, 1997 were $288,000 and $144,000 (unaudited), respectively. Tenants whose minimum rental payments equaled 10% or more of total base rents in 1996 were as follows: Parsons................................................. $3,068,000 Penske.................................................. 2,562,000 UGI..................................................... 758,000
The Green Hills Properties are leased to tenants under operating leases with expiration dates extending to the year 2005. Future minimum rentals under noncancelable operating leases as of December 31, 1996, are as follows: 1997........................................................ $ 7,653,000 1998........................................................ 7,806,000 1999........................................................ 7,812,000 2000........................................................ 7,443,000 2001........................................................ 7,267,000 Thereafter.................................................. 20,556,000
3. RELATED PARTY TRANSACTIONS: Salient rents office space from the Green Hills Properties under the terms of a net operating lease. During 1996, Salient paid $196,000 in minimum rent under this lease which expires in December 31, 1997. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Brandywine Realty Trust: We have audited the combined statement of revenue and certain expenses of Berwyn Park Properties, described in Note 1, for the year ended December 31, 1996. This financial statement is the responsibility of management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. The combined statement of revenue and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in the Current Report on Form 8-K of Brandywine Realty Trust as described in Note 1 and is not intended to be a complete presentation of the Berwyn Park Properties' revenue and expenses. In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenue and certain expenses of the Berwyn Park Properties for the year ended December 31, 1996, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Philadelphia, Pa., July 21, 1997 BERWYN PARK PROPERTIES COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
FOR THE FOR THE SIX YEAR ENDED MONTHS ENDED DECEMBER 31, JUNE 30, 1996 1997 ------------ ------------- (UNAUDITED) REVENUE: Base rents (Note 2)............................................................... $3,815,000 $ 2,128,000 Tenant reimbursements............................................................. 720,000 321,000 Other............................................................................. 108,000 31,000 ------------ ------------- Total revenue................................................................. 4,643,000 2,480,000 ------------ ------------- CERTAIN EXPENSES: Maintenance and other operating expenses.......................................... 1,020,000 425,000 Utilities......................................................................... 591,000 296,000 Real estate taxes................................................................. 380,000 195,000 ------------ ------------- Total certain expenses........................................................ 1,991,000 916,000 ------------ ------------- REVENUE IN EXCESS OF CERTAIN EXPENSES............................................... $2,652,000 $ 1,564,000 ------------ ------------- ------------ -------------
The accompanying notes are an integral part of these financial statements. BERWYN PARK PROPERTIES NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES DECEMBER 31, 1996 1. BASIS OF PRESENTATION: The combined statements of revenue and certain expenses reflect the operations of Berwyn Park Properties located in Berwyn, Pennsylvania which are expected to be acquired by Brandywine Realty Trust (the "Company") from Berwyn Development Associates in the third quarter of 1997. Berwyn Park Properties has an aggregate net rentable area of approximately 241,000 square feet (92% leased as of December 31, 1996). The combined statements of revenue and certain expenses reflect the operations of Berwyn Park Properties. These combined statements of revenue and certain expenses are to be included in the Company's Current Report on Form 8-K, as the acquisition has been deemed significant pursuant to the rules and regulations of the Securities and Exchange Commission. The accounting records of Berwyn Park Properties are maintained on a modified cash basis. Adjusting entries have been made to present the accompanying financial statements in accordance with generally accepted accounting principles. The accompanying financial statements exclude certain expenses such as interest, depreciation and amortization, professional fees, and other costs not directly related to the future operations of Berwyn Park Properties. The combined statement of revenue and certain expenses for the six months ended June 30, 1997 are unaudited. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments, necessary to present fairly the revenue and certain expenses of Berwyn Park Properties for the six months ended June 30, 1997 have been included. The combined revenue and certain expenses for such interim periods are not necessarily indicative of the results for the full year. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities which affect the reported amounts of revenue and expenses during the reporting period. The ultimate results could differ from those estimates. 2. OPERATING LEASES: Base rents for the year ended December 31, 1996 and for the six months ended June 30, 1997, include straight-line adjustments for rental revenue increases in accordance with generally accepted accounting principles. The aggregate rental revenue increase resulting from the straight-line adjustments for the year ended December 31, 1996 and the six months ended June 30, 1997 were $152,000 and ($17,000) (unaudited), respectively. During 1996, rental revenues earned under leases with Devon Direct Advertising, Inc. and Delaware Valley Financial were $637,000 and $798,000, respectively. Each of these leases individually represented greater than 10% of Berwyn Park Properties' total rental revenue in 1996. The Berwyn Park Properties is leased to tenants under operating leases with expiration dates extending to the year 2004. Future minimum rentals under noncancelable operating leases, excluding tenant reimbursements of operating expenses as of December 31, 1996, are as follows: 1997........................................................ $4,152,000 1998........................................................ 3,658,000 1999........................................................ 3,430,000 2000........................................................ 2,955,000 2001........................................................ 2,215,000 Thereafter.................................................. 2,890,000
Certain leases also include provisions requiring tenants to reimburse Berwyn Park Properties for management costs and other operating expenses up to stipulated amounts. 3. RELATED PARTY TRANSACTIONS: An affiliate of Berwyn Park Properties performs various services on behalf of the property, including accounting, data processing, leasing and maintenance services, among others. Total costs for these services was $188,000 in 1996 and are included in maintenance and other operating expenses in the accompanying statements of revenue and certain expenses. Berwyn Park Properties leases office space to certain affiliates at market rental rates. Total rental payments during 1996 to Berwyn Park Properties under these lease agreements was approximately $163,000. EX-10.1 2 EXHIBIT 10.1 AGREEMENT OF SALE for GREEN HILLS CORPORATE CENTER between BRANDYWINE REALTY TRUST and GILBERT ASSOCIATES, INC. Dated: June ____, 1997 AGREEMENT OF SALE INDEX Section Page I. PROPERTY BEING SOLD..................................... 1 A. Real Property........................................... 1 B. Personal Property....................................... 1 C. Leases.................................................. 2 D. Right to Names.......................................... 2 II. PURCHASE PRICE AND MANNER OF PAYMENT.................... 2 A. Purchase Price.......................................... 2 B. Manner of Payment....................................... 2 1. Deposit............................................ 2 2. Additional Deposit................................. 2 3. Cash at Closing.................................... 2 4. Purchase Money Mortgage............................ 3 C. Allocation.............................................. 3 III. TITLE................................................... 3 IV. COVENANTS............................................... 3 A. Maintenance............................................. 3 B. Alterations............................................. 3 C. Lease................................................... 4 D. Security Deposits....................................... 4 E. Bill Tenants............................................ 4 F. Notice to Buyer......................................... 4 G. Update Rent Roll........................................ 4 H. Comply with Leases...................................... 4 I. No New Agreements....................................... 4 J. Tax Disputes............................................ 5 K. No Removal of Personalty................................ 5 V. REPRESENTATIONS AND WARRANTIES.......................... 5 A. Certain Definitions..................................... 5 B. Organization............................................ 5 C. Authority............................................... 6 D. Consents and Approvals.................................. 6 E. Litigation.............................................. 6 F. Absence of Certain Changes or Events; Material Agreements............................................. 6 G. No Violation of Law..................................... 7 H. Brokers or Finders...................................... 7 I. Real Estate............................................. 7 J. Taxes................................................... 8 K. Compliance with Laws and Recorded Declarations.......... 9 L. Absence of Undisclosed Liabilities and Contractual Obligations............................................. 10 M. Leases.................................................. 10 N. Condemnation or Governmental Proceedings................ 11 O. Insurance............................................... 11 P. No Defaults............................................. 11 Q. Significant Agreements.................................. 11 R. Service Contracts....................................... 12 S. Right to Cancel......................................... 12 T. Required Improvements................................... 12 U. Subdivided Parcel....................................... 12 V. Environmental........................................... 12 W. Zoning.................................................. 13 X. Flood Plain............................................. 13 A. Organization............................................ 14 B. Consents and Approvals.................................. 14 C. Litigation.............................................. 14 D. Absence of Certain Changes or Events; Material Agreements............................................ 14 E. No Violation of Law..................................... 15 F. Brokers or Finders...................................... 15 VI. POSSESSION.............................................. 15 VII. BUYER'S REVIEW AND APPROVAL OF TITLE AND SURVEY......... 15 A. Title Binder............................................ 15 B. Survey.................................................. 16 C. Physical Inspection..................................... 16 1. Contracts, Licenses, Permits....................... 17 2. Utility Costs...................................... 17 3. Inventory.......................................... 17 4. Three Years' Maintenance Expenses.................. 17 5. Three Years' Tax Bills............................. 17 7. Schedule of Violations............................. 17 8. Schedule of Notices................................ 18 9. Schedule of Replacements and Repairs............... 18 10. Zoning, Site Plan, Subdivision Plan or Plat........ 18 11. Takings or Changes................................. 18 12. Tax Assessments, Appeals and Increases............. 18 13. Litigation......................................... 18 14. Insurance Policies................................. 18 D. Seller's Failure to Deliver............................. 18 E. Notification of Certain Matters......................... 18 F. Board of Trustees Approval.............................. 19 VIII. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.............. 19 IX. FIRE OR OTHER CASUALTY.................................. 19 A. Maintain Insurance...................................... 19 B. Minimal Damage.......................................... 19 C. Substantial Damage...................................... 19 D. Closing After Substantial Damage........................ 20 E. Rent Insurance.......................................... 20 X. CONDEMNATION............................................ 20 XI. EXPENSE ALLOCATIONS..................................... 20 XII. CLOSING................................................. 21 A. Time and Date and Place................................. 21 B. Documents............................................... 21 1. Seller's Documents and Other Items................. 21 2. Buyer's Documents.................................. 24 3. Title Insurance.................................... 24 4. Necessary Documents................................ 24 XIII. DEFAULT; REMEDIES....................................... 24 XIV. CONDITIONS PRECEDENT TO CLOSING......................... 25 A. Correctness of Warranties and Representations........... 25 C. Buyer's Satisfaction with Inspection.................... 25 D. Trustee Approval........................................ 26 E. Estoppels............................................... 26 F. Lease With Seller....................................... 26 XV. PRORATIONS.............................................. 26 A. Operating Expenses...................................... 26 1. Taxes.............................................. 26 2. Sewer Rents........................................ 26 3. Permit Fees........................................ 26 4. Operating Costs.................................... 26 5. Rents.............................................. 26 6. Security Deposits.................................. 28 7. Project Contracts.................................. 28 B. Custom and Practice..................................... 28 C. Future Installments of Taxes............................ 28 D. Application of Prorations............................... 29 E. Schedule of Prorations.................................. 29 F. Escalations............................................. 29 G. Readjustments........................................... 29 H. Indemnification for Seller's Tax Obligations............ 29 XVI. BROKERS................................................. 29 XVII. ESCROW AGENT............................................ 29 A. Payment to Seller...................................... 30 B. Notice of Dispute...................................... 30 C. Escrow Subject to Dispute.............................. 30 D. Escrow Agent's Rights and Liabilities.................. 30 XVIII. GENERAL PROVISIONS..................................... 30 A. Notices................................................ 30 B. Binding Effect......................................... 31 C. Entire Agreement....................................... 31 D. Governing Law.......................................... 32 E. No Recording........................................... 32 F. Tender................................................. 32 G. Execution in Counterparts.............................. 32 H. Further Instruments.................................... 32 I. Time................................................... 32 J. Designation of Nominee; Assignment of Agreement........ 32 K. Effective Date......................................... 32 L. Time for Acceptance.................................... 33 M. Confidentiality........................................ 33 N. Delivery of Documents.................................. 33 XIX. SEC REPORTING (8-K) REQUIREMENTS....................... 33 XX. INDEMNIFICATION........................................ 33 XXI. EXCULPATION............................................ 34 AGREEMENT OF SALE AGREEMENT OF SALE made this 26 day of June, 1997, between BRANDYWINE REALTY TRUST, a Maryland Real Estate Investment Trust, its assignee or nominee, having its principal office at 16 Campus Boulevard, Suite 150, Newtown Square, Pennsylvania 19073 ("Buyer"), and SALIENT 3 COMMUNICATIONS, INC., a corporation, having its principal office at P.O. Box 1498, Reading, PA 19603 ("Seller"). BACKGROUND The Background of this Agreement is as follows: A. Seller is the owner of a certain tract of land containing approximately 192 acres, together with the buildings and improvements thereon, including five buildings containing approximately 574,241 net rentable square feet, commonly known as 100 Gundy, 200 Gundy, 100 Davis, 300 Gundy and 100 Kachel Boulevard located in Cumru and Robeson Townships, Berks County, Pennsylvania; and B. Seller desires to sell to Buyer and Buyer desires to purchase from Seller the property referred to in this Agreement, upon the terms and conditions set forth herein. TERMS AND CONDITIONS NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and with the preceding Background paragraphs incorporated by reference, the parties hereto, intending to he legally bound hereby, covenant and agrees as follows: I. PROPERTY BEING SOLD. Seller shall sell, transfer and convey to Buyer on the Closing Date (as hereinafter defined), A. Real Property. Fee simple interest in the parcels of land, all as more fully described on Exhibit "A", with the building and improvements thereon, including the five buildings containing approximately 574,241 net rentable square feet, commonly known as 100 Gundy, 200 Gundy, 100 Davis, 300 Gundy and 100 Kachel Boulevard located in Cumru and Robeson Townships, Berks County, Pennsylvania, and all of the easements, licenses, rights of way, privileges, hereditaments, appurtenances, and rights to any land lying in the beds of any street, road or avenue, open or proposed, adjoining thereto, and inuring to the benefit of said land (hereinafter collectively referred to as the "Premises"); and B. Personal Property. All equipment, fixtures, machinery and personalty of every description attached to or used in connection with the Premises (and not owned by tenants under leases of the Premises), including, without limitation, those listed on the Schedule of Inventory attached hereto as Exhibit "B", all artwork, renderings, flags, awnings, trade dress, and all assignable intangible personal property owned by Seller and used in connection with the ownership, operation and maintenance of the land, improvements and other property, including without limitation, all contract rights, guaranties and warranties of any nature, all architects', engineers', surveyors' and other real estate professionals' plans, specifications, certifications, contracts, reports, data or other technical descriptions, reports or audits (including, without limitation, all environmental, structural and mechanical inspection reports), and all marketing materials ("Contract Documents"), all governmental permits, licenses, certificates, and approvals in connection with the ownership of the Premises ("Licenses"), all escrow accounts, deposits, instruments, documents of title, general intangibles, all computers, computer software programs and data and business records pertaining to the Premises, and all of Seller's rights, claims, and causes of action if any, to the extent they are assignable, under any warranties and/or guarantees of manufacturers, contractors or installers, all rights against tenants and others relating to the Premises or the operation or maintenance thereof, including to the extent applicable, any warranties from any previous owners of the Premises (hereinafter collectively referred to as "Personal Property"); and C. Leases. All leases, licenses and other occupancy agreements for any part of the Premises, and all prepaid rent and unapplied security deposits (the "Leases"); and D. Right to Names. Any and all right, title and interest of Seller in and to the name "Green Hills Corporate Center", and the right to all printing styles, trademarks and logos ("Name"). The Premises, Personal Property, Leases and Name are sometimes hereinafter referred to as "Property." II. PURCHASE PRICE AND MANNER OF PAYMENT. A. Purchase Price. Buyer shall pay the total sum of Forty Million Dollars ($40,000,000.00) (hereinafter referred to as the "Purchase Price") subject to adjustment, on a per diem basis. B. Manner of Payment. The Purchase Price shall be paid in the following manner: 1. Deposit. By delivery, upon Seller's execution and delivery of this Agreement, of Buyer's good check in the amount of $100,000.00 to the Title Company (hereinafter referred to as "Escrow Agent" or "Escrowee"). This sum, the sum specified in Section II.B.(2) below, and all other sums paid by Buyer to the Escrow Agent under this Agreement (hereinafter referred to as the "Deposit") shall be held by Escrow Agent in a federally-insured, segregated money market account at an institution to be designated by Buyer until termination or consummation of this Agreement. Interest on the Deposit shall be credited to Buyer at Closing, or paid to the party otherwise entitled to the Deposit in the event of the termination of this Agreement prior to Closing. 2. Additional Deposit. By delivery, within two (2) business days next following the Inspection Period Expiration Date (as hereinafter defined in Section VII.C.), of Buyer's good check in the amount of $50,000.00. 3. Cash at Closing. Thirty-eight Million Three Hundred Fifty Thousand Dollars ($38,350,000) by delivery to Seller on the Closing Date, by bank cashier's, title company, or certified check, or by wire transfer, in the amount of Thirty-eight Million Three Hundred Fifty Thousand Dollars $38,350,000.00, subject to adjustment as herein provided. 4. Purchase Money Mortgage. One Million Five Hundred Thousand Dollars ($1,500,000) by delivery to Seller on the Closing Date of Buyer's Purchase Money Mortgage evidenced by Buyer's Note substantially in the form of Exhibit "I-1" attached hereto and made a part hereof (the "Note") and secured by a mortgage encumbering the Premises substantially in the form of Exhibit "I-2") attached hereto and made a part hereof (the "Mortgage"). The Note will bear interest at the rate of five (5%) percent per annum. Principal under the Note will be paid in three annual installments each in the amount of Five Hundred Thousand Dollars ($500,000), payable on the first, second and third anniversaries of the Closing Date. The Note will be non-recourse to Buyer. Seller agrees to subordinate the Mortgage to an institutional first mortgage securing a line of credit extended to Buyer provided that such line of credit is also secured by mortgages encumbering a majority of the properties other than the Premises owned directly or indirectly by Buyer. In lieu of subordinating the Mortgage to an institutional first mortgage, Seller shall have the right to confine the lien of the Mortgage to the undeveloped portions of the Premises in which event the Mortgage will remain as a first mortgage encumbering the undeveloped portions of the Premises until the Note is paid in full. C. Allocation. The Purchase Price shall be allocated between realty and personalty in the manner provided on Schedule 2.3 attached hereto. III. TITLE. On the Closing Date, Seller shall convey to Buyer good and marketable fee simple title to the Premises subject only to those rights of way, easements, covenants restrictions, and objections to title (hereinafter "Permitted Exceptions") listed on Exhibit "C" hereto, unless identified by Buyer as "Title Objections" as hereinafter provided, and subject to the rights of tenants listed on the rent roll attached hereto as Exhibit "D", which title shall be insurable at regular rates by a reputable title insurance company ("Title Company") under an ALTA 1970 Form B (Revised 10/17/70 and 3/30/84) title insurance policy ("Title Policy"), with the endorsements and affirmative insurance specified in Section XII.B.(j) below. Seller and Buyer consent to use, at Buyer's option, Commonwealth Land Title Insurance Company, Lawyers Title Insurance Corporation or First American Title Insurance Company as the Title Company. IV. COVENANTS. In addition to the covenants contained in the other Sections of this Agreement, Seller covenants that it shall: A. Maintenance. At all times prior to the Closing Date, maintain the Property in good condition and repair, reasonable wear and tear alone excepted, operate the Property with first class management practices and leasing standards, and pay in the normal course of business prior to Closing, all sums due for work, materials or service furnished or otherwise incurred in the ownership and operation prior to Closing. B. Alterations. Not make or permit to be made any alterations, improvements or additions to the Property without the prior written consent of Buyer, except those made by tenants pursuant to the right to do so under their Leases, or by Seller if required by applicable law or ordinance, or as required under any Lease. C. Lease. Not enter into any new Lease, nor amend, modify or terminate any existing Lease without Buyer's consent. D. Security Deposits. Not apply any Tenant's security deposit to the discharge of such Tenant's obligations, without Buyer's consent. E. Bill Tenants. Timely bill all Tenants for all rent billable under Leases, and use its best efforts to collect any rent in arrears. F. Notice to Buyer. Notify Buyer promptly of the occurrence of any of the following: 1. a fire or other casualty causing damage to the Property, or any portion thereof; 2. receipt of notice of eminent domain proceedings or condemnation of or affecting the Property, or any portion thereof; 3. receipt of notice from any governmental authority or insurance underwriter relating to the condition, use or occupancy of the Property, or any portion thereof, or any real property adjacent to any of the Property, or setting forth any requirements with respect thereto; 4. receipt or delivery of any default or termination notice or claim of offset or defense to the payment of rent from any tenant; 5. receipt of any notice of default from the holder of any lien or security interest in or encumbering the Property, or any portion thereof; 6. a change in the occupancy of the leased portions of the Property; 7. notice of any actual or threatened litigation against Seller or affecting or relating to the Property, or any portion thereof; or 8. the commencement of any strike, lock-out, boycott or other labor trouble affecting the Property, or any portion thereof. G. Update Rent Roll. Provide Buyer with monthly updates of the rent roll attached as Exhibit "D", each warranted by Seller to be true, correct and complete, with a final update as of one day prior to the Closing Date, also warranted by Seller to be true, correct and complete. H. Comply with Leases. Perform all obligations of the landlord as required by the Leases or by any order or direction of any governmental authority having jurisdiction thereof, and to the extent required by law or by any of the Leases, maintain all security deposits held under all Leases in a segregated account, with interest thereon as required. I. No New Agreements. Except for agreements which can be terminated on not more than thirty (30) days' notice, not enter into any other agreements which affect the Property or the transactions contemplated by this Agreement, without the prior written consent of Buyer, and not permit the creation of any liability which shall bind Buyer or the Premises after Closing. J. Tax Disputes. Notify Buyer of any tax assessment disputes (pending or threatened) prior to Closing, and not agree to any changes in the real estate tax assessment, nor settle, withdraw or otherwise compromise any pending claims with respect to prior tax assessments, without Buyer's prior written consent. If any proceedings shall result in any reduction of assessment and/or tax for the tax year in which the Closing occurs, it is agreed that the amount of tax savings or refund for such tax year, less the reasonable fees and disbursements in connection with such proceedings, shall be apportioned between the parties as of the date real estate taxes are apportioned under this Agreement. The parties agree that from and after the execution and delivery of this Agreement, Buyer shall have the right to appeal the current tax assessment of each tax parcel comprising the Premises. Buyer shall consult with Seller prior to filing tax appeal documents, and shall afford Seller reasonable advance notice prior to any public hearings or proceedings at which said appeal will be considered. Seller agrees that Buyer may file such appeals in its name or in Seller's name, as may be required, and Seller shall cooperate with Buyer in the prosecution of such appeal; provided, however, that Buyer agrees to pay the reasonable legal fees incurred by Seller, if any, in connection with furnishing such cooperation. K. No Removal of Personalty. Not remove any non-consumable Personal Property from the Premises without replacing it with similar personal property, new and of equal or better quality. V. REPRESENTATIONS AND WARRANTIES. In order to induce Buyer to enter into this Agreement, Seller hereby represents and warrants to Buyer that the following representations and warranties are true now and will be true at Closing except as set forth on a Disclosure Schedule delivered by Seller concurrently with the execution and delivery of this Agreement (the "Seller Schedule"): A. Certain Definitions. As used in this Agreement, "Seller Material Adverse Effect" shall mean any fact, condition, event, development or occurrence which, individually or when taken together with all other such facts, conditions, events, developments or occurrences, has had or could reasonably be expected to have a material adverse effect on the ability of Seller to consummate the transactions contemplated hereby. B. Organization. Seller is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to be so organized, existing and in good standing or to have such power and authority would not have a Seller Material Adverse Effect. Seller is duly qualified or licensed to do business and in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so duly qualified or licensed and in good standing would not have a Seller Material Adverse Effect. Seller has heretofore made available to Buyer a complete and correct copy of the charter and by-laws or comparable organizational documents, each as amended to date, of Seller. Such charters, by-laws and comparable organizational documents are in full force and effect. Seller is not in violation of any provision of its charter, by-laws or comparable organizational documents, except for such violations that would not have a Seller Material Adverse Effect. C. Authority. Seller has the requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by Seller and the consummation by Seller of the other transactions contemplated hereby have been duly authorized by the Board of Directors of Seller, and no other corporate proceedings on the part of Seller are necessary to authorize this Agreement or to consummate the transactions so contemplated. This Agreement has been duly executed and delivered by Seller and constitutes a valid and binding obligation of Seller, enforceable against it in accordance with its terms. D. Consents and Approvals. None of the execution, delivery or performance of this Agreement by Seller or the consummation by Seller of the transactions contemplated hereby and compliance by Seller with any of the provisions hereof will (i) conflict with or result in any breach of any provisions of the charter or by-laws or comparable organizational documents of Seller, (ii) require any filing by Seller with, or any permit, authorization, consent or approval to be obtained by Seller of, any court, arbitral tribunal, administrative agency or commission or other governmental or other regulatory authority or administrative agency or commission (a "Governmental Entity") (except where the failure to obtain such permits, authorizations, consents, approvals or to make such filings would not have a Seller Material Adverse Effect), (iii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration) under, or result in the creation of any lien or other encumbrance on any property or asset of Seller pursuant to, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement, franchise, permit, concession or other instrument, obligation, understanding, commitment or other arrangement to which Seller is a party or by which it or any of its properties or assets may be bound or affected (each, a "Contract"), including, without limitation, the Leases, (iv) result in the triggering of any right of first refusal or other right under any stockholder, partnership or joint venture agreement to which Seller is a party or (v) violate any order, writ, injunction, decree, statute, ordinance, rule or regulation applicable to Seller except, in the case of clauses (iii), (iv) and (v), for violations, breaches or defaults which would not have a Seller Material Adverse Effect. E. Litigation. There is no suit, claim, action, proceeding or investigation pending (in which service of process has been received by an employee of Seller) or, to the knowledge of Seller, threatened against Seller or with respect to the Property before any Governmental Entity which, if adversely determined, individually or in the aggregate would have a Seller Material Adverse Effect. Seller is not subject to any outstanding order, writ, injunction or decree which, insofar as can be reasonably foreseen, individually or in the aggregate, in the future would have a Seller Material Adverse Effect. F. Absence of Certain Changes or Events; Material Agreements. Since September 30, 1996, Seller has conducted its business only in the ordinary and usual course consistent with past practice, and there has not been any change or development, or combination of changes or developments, which have a Seller Material Adverse Effect. As of the date of this Agreement, Seller has not become a party to any agreement or amendment to an existing agreement which would be required to be filed by Seller as an exhibit to its next Annual Report on Form 10-K, except for this Agreement. The transactions contemplated by this Agreement will not require the consent from or the giving of notice to a third party pursuant to the terms, conditions or provisions of any Contract to which Seller is a party or by which it is bound. G. No Violation of Law. To its knowledge, Seller is not in violation of, or is under investigation with respect to, and has not been given notice or been charged by any Governmental Entity with any violation of, any law, statute, order, rule, regulation, ordinance or judgment (including, without limitation, any applicable environmental law, ordinance or regulation) of any Governmental Entity, except for violations which, in the aggregate, do not have a Seller Material Adverse Effect. H. Brokers or Finders. Seller does not have any liability to any agent, broker, investment banker, financial advisor or other firm or person for any broker's or finder's fee or any other commission or similar fee in connection with this Agreement or any of the transactions contemplated hereby. I. Real Estate. 1. Included in the Seller Schedule is a description of all real property constituting the Premises. 2. At the Closing title to the Premises shall be good and marketable and insurable as such, together with Buyer's right to use all easements benefitting the Premises and the contiguity of all pieces or parcels of land, if there be more than one contained therein, by any reputable title insurance company licensed to do business in Pennsylvania at regular standard rates, free and clear of all pledges, liens, claims, security interests, restrictions, encumbrances, easements, leases, tenancies, claims or rights of use or possession and other title objections, including any lien or future claim for materials or labor supplied in improvement of the Premises ("Liens"), excepting only the Permitted Exceptions: (a) the matters referred to in the Seller Schedule, including, without limitation, the Leases; (b) all terms, covenants, conditions and restrictions of record not objected to by Buyer during the Review Period (as defined below); (c) water lines, sanitary sewer, drainage, gas distribution line and main, electrical and telephone easements and rights-of-way of record not objected to by Buyer during the Review Period; (d) zoning ordinances, sanitary and building codes and all statutes, ordinances, regulations, or other administrative enactments of any municipal authority having jurisdiction over the Premises not objected to by Buyer during the Review Period; (e) real property taxes not yet due and payable and assessments for improvements not yet due and payable as of the Closing Date, provided that if the Premises are affected by any assessment that is or may become payable in annual installments, of which one or more is then payable or has been paid, then for the purposes of this Agreement, any such assessment shall be deemed a lien on the Premises and shall be paid and discharged by Seller at or prior to Closing; and (f) any state of facts that an accurate survey of the Premises would disclose not objected to by Buyer during the Review Period. 3. Included in the Seller Schedule is a description of all leases and other possessory agreements pertaining to the Premises (collectively, the "Leases"). Each of the Leases is valid, binding and in full force and effect, all rent and other sums payable by or to Seller thereunder are current within applicable notice and grace periods, no notice of default or termination under any Lease has been given or received by Seller that describes a default that has not been cured and, to Seller's knowledge, except as identified on the Seller Schedule, no event has occurred that would, with the giving of notice or the passage of time or both, constitute a default under any of the Leases. 4. Included in the Seller Schedule is a description of all environmental reports known to Seller that affect the Premises, and Seller has delivered a complete copy of each such report to Buyer. Except as set forth therein or otherwise in the Seller Schedule, Seller has no knowledge of the presence or release of any toxic substance or hazardous material or of any other environmental condition or contamination in or from the Premises. In addition, the validity of Buyer's right to use all easements benefitting the Premises and the contiguity of all pieces or parcels of land, if there be more than one, shall be so insurable without additional premium. 5. The Premises are in good repair, order and condition in all material respects, subject to ordinary wear and tear. To the best of Seller's knowledge without independent investigation, there is no material latent or patent structural, mechanical or other significant defect or deficiency in the improvements. 6. Seller has received no notices, oral or written, and has no reason to believe, that any Government Entity having jurisdiction over the Premises intends to exercise the power of eminent domain or similar power with respect to all or any part of the Premises. Seller has not received any notice of violation of law or ordinance with respect to the Premises that will remain uncorrected at Closing. J. Taxes. 1. There are no liens for Taxes upon the Premises, except for liens for Taxes not yet due. 2. The Premises constitute separate tax parcels that are separately assessed for real estate tax purposes; to Seller's knowledge there is no proceeding pending for the adjustment of the assessed valuation of all or any portion of the Premises; to Seller's knowledge the Premises have been assessed and real estate taxes have been paid on the basis of the value of all improvements as completed; there is no abatement in effect with respect to all or any portion of the real estate taxes; the real estate tax bills previously delivered by Seller to Buyer and initialled by Seller and Buyer for identification are true and complete copies of all bills for taxes levied against or on account of the Premises or any rent or income from the Premises since January 1, 1994; and to the best of Seller's knowledge, there are no proposed reassessments of any of the Premises by any taxing authority and there are no threatened or pending special assessments or other actions or proceedings (other than county-wide reassessments and/or the usual increases in mileage rates that may be under consideration by the taxing authorities in the jurisdictions where the Premises are located) that could reasonably be expected to give rise to an increase in real property taxes or assessments against any of the Premises. 3. "Taxes" shall mean any and all taxes, charges, fees, levies or other assessments, including, without limitation, real or personal property, transfer and recording taxes, fees and charges, imposed by any taxing authority (whether domestic or foreign including, without limitation, any state, county, local or foreign government or any subdivision or taxing agency thereof (including a United States possession)), whether computed on a separate, consolidated, unitary, combined or any other basis; and such term shall include any interest whether paid or received, fines, penalties or additional amounts attributable to, or imposed upon, or with respect to, any such taxes, charges, fees, levies or other assessments. K. Compliance with Laws and Recorded Declarations. Except as disclosed on the Seller Schedule, no notice or communication of any kind has been issued to Seller by any governmental authority, insurance regulatory body or other person stating or alleging that the Premises or any business or activity conducted thereon, is in violation of any applicable law, rule or regulation, including without limitation, zoning, building, health or fire codes or that the Premises were being used or operated without first obtaining any applicable license, permit, certificate, entitlement, grant of right or other item or document. To the best of Seller's knowledge, Seller has complied with all laws and requirements of insurance bodies applicable to the ownership, leasing, use and operation of the Premises and secured all required consents and approvals and obtained all licenses, permits, certificates and other documents required by applicable law for the completion, ownership, leasing, use and occupancy of the Premises. Seller has not taken any action that would (or failed to take any action, the omission of which would) result in the revocation or suspension of such licenses, permits, certificates, entitlements, grants of right and other items and documents, and Seller has not received any notice of any violation from any federal, state or municipal entity or notice of an intention by any such governmental entity to revoke any certificate of occupancy or other certificate, license, permit, entitlement or grant of right issued by it in connection with the ownership, use and occupancy of any of the Premises that in each case has not been cured or otherwise resolved to the satisfaction of such governmental entity. Seller has not received or been informed in writing of the receipt of any written notice which is still in effect that there is, and, to the best of Seller's knowledge, there does not exist, any violation of a condition or agreement contained in any easement, restrictive covenant or any similar instrument or agreement affecting the Premises, or any portion thereof. To the best of Seller's knowledge, (i) any and all charges and other assessments under declarations and like agreements to which any of the Premises are subject have been paid and no special assessments thereunder against any of the Premises are pending, and (ii) all consents and approvals required to be obtained under such declarations and like agreements with respect to the Premises have been obtained. L. Absence of Undisclosed Liabilities and Contractual Obligations. Except for (i) liabilities disclosed in the Seller Schedule, (ii) liabilities arising in the ordinary course of business which, if material (individually or in the aggregate), are disclosed in Seller Schedule, (iii) liabilities at the date hereof which are specifically disclosed or otherwise reflected in the Exhibits attached to this Agreement and (iv) current liabilities incurred in the ordinary course of business after the date hereof, Seller has no, and the Premises are not subject to liabilities of any nature, whether matured or unmatured, fixed or contingent, which could reasonably be expected to have, individually or in the aggregate, a Seller Material Adverse Effect. None of the Premises is cross-defaulted and/or cross-collateralized with any other properties other than among the Premises. M. Leases. The rent roll attached hereto as Exhibit "D" (the "Rent Roll") lists each of the Leases in effect with respect to the Premises as the same have been amended or modified; there are no leases, licenses or other rights of occupancy affecting any of the Premises except for the Leases. Seller has made available to Buyer complete copies of all of the documents that constitute the Leases. The Leases are in full force and effect and, except as set forth on the Rent Roll, (A) to the best of Seller's knowledge, no uncured Event of Default (as defined in such Leases), has occurred and is continuing under any such Lease, no tenant has asserted a defense to, offset or claim against its rent or the performance of its obligations under its Lease and no tenant has asserted a default on the part of the landlord which would give it the right to terminate its Lease or set off against rent, (B) other than as set forth in a Lease, there are no rights of first refusal on, or options to purchase, any of the Premises, or any right to a participation interest (whether of profits, sale or refinancing proceeds, or calculated based on fair market value) with respect to any such property, in favor of any tenant, (C) there are no proposed modifications to any Lease that would reduce (i) the space leased to any tenant, (ii) the amount of any tenant's rent or (iii) the term of any lease, (D) other than as set forth in a Lease, no free rent or other rent concession is due any tenant under the Leases for periods after the Closing Date, (E) other than as set forth in a Lease, no landlord under a Lease is required to provide tenant improvements or refurbishments with respect thereto after the Closing Date (other than any tenant improvements that the landlord may be required to construct if an expansion option provided in a Lease is exercised), and (F) other than as set forth in a Lease, no tenant under a Lease has the option to terminate its lease prior to the stated expiration date; and, except as set forth on the Seller Schedule, Seller has received no written notice or, to the best of Seller's knowledge, any other notice, whether or not in writing, that any tenant as of the date hereof intends to vacate the Premises or attempt to abrogate its lease other than at the expiration of the term thereof. Except for (i) security deposits, (ii) the first full month's rent, whether or not the term of a Lease has commenced, or (iii) rents paid by tenants on an estimated basis, including, but not limited to, pass-throughs for additional or increased operating expenses and real estate taxes, no prepayments of rent more than thirty (30) days in advance have been made under the Leases. All decorating, repairs, alterations or other work required to be performed by the landlord under each of the Leases prior to the date hereof, or the cost of any such work performed by the tenant and to be reimbursed by the landlord prior to the date hereof, has been performed or reimbursed, as applicable. No rent or security deposits under the Leases have been assigned or encumbered. There are no agreements or understandings, written or oral, with any of the tenants other than as set forth in the Leases or otherwise set forth on the Rent Roll. All brokerage commissions and other compensation and fees payable by reason of the Leases have been paid in full, except as set forth in the Seller Schedule. Except as set forth on the Seller Schedule, all tenants under Leases are in actual possession of their leased premises. Seller has no obligation to pay rent or satisfy any other obligation of any tenant under any Lease for space in any other building, or to purchase any tenant's leasehold estate in any other building, or to contribute to any tenant for unfinished tenant leasehold improvements other than those listed on the Seller Schedule. N. Condemnation or Governmental Proceedings. No eminent domain, condemnation, incorporation, annexation or moratorium or similar proceeding has been commenced or, to the best of Seller's knowledge, threatened by an authority having the power of eminent domain to condemn any part of the Premises. To the best of Seller's knowledge without independent investigation, there are no pending or threatened governmental rules, regulations, plans, studies or efforts, or court orders or decisions, which do or could adversely affect the use or value of the Premises for their present use. O. Insurance. Exhibit "F" attached hereto lists the insurance policies relating to the Premises or any part thereof carried by Seller; all such policies are in full force and effect, and will be continued or renewed with the existing coverages and policy limits until the Closing Date, and all premiums thereunder have been paid to the extent due, and will be paid until the Closing Date; and no notice of cancellation has been received with respect thereto and, to the best knowledge of Seller, no cancellation is threatened. P. No Defaults. Seller is not in default of any Significant Agreement (as herein defined) and, to the best of Seller's knowledge, no event has occurred which with the giving of notice or passage of time would become a default under any such Significant Agreement. Q. Significant Agreements. To the best of Seller's knowledge, there are no Significant Agreements other than as set forth on Exhibit "E" attached hereto and made a part hereof. For purposes hereof, "Significant Agreement" means and includes any of the following to which Seller is a party and by which all or any portion of the Premises may be subject or bound, in each such case as amended and currently in effect, inclusive of any waivers relating thereto: 1. all agreements, instruments and documents (excluding the Leases and Service Contracts) with respect to the Premises evidencing, securing, or pertaining to the contractual obligations of a person that involve annual payments or receipts in excess of $10,000; 2. all leases where Seller is the lessee (including capital leases), contracts, agreements or commitments (whether written or oral) that are not terminable without penalty on not more than thirty (30) days notice and that involve annual gross payments or receipts in excess of $10,000; 3. all ground leases where Seller is a ground lessee; and 4. all reciprocal easement agreements affecting the Premises except as are set forth as Permitted Exceptions. Each of the Significant Agreements is valid and binding and in full force and effect, enforceable against the parties thereto in accordance with its terms. R. Service Contracts. All service agreements, if any, with respect to the maintenance and operation of the Premises are set forth on Exhibit "E" attached hereto and made a part hereof ("Service Contracts"); all Service Contracts are terminable by Seller within not more than thirty (30) days. Seller shall terminate any management agreement with respect to the Premises effective on the Closing Date. S. Right to Cancel. Except as set forth on the Seller Schedule, to the best of Seller's knowledge, no condition exists which, with the giving of notice or the passage of time, or both, would constitute a default by Seller, thereby permitting any party to cancel its obligations under any Significant Agreement benefitting the Premises. T. Required Improvements. To the best of Seller's knowledge, all alterations, improvements, or other work required to have been completed by Seller under any reciprocal easement agreement or development or similar agreement with any municipality or other governmental authority which relates to, or otherwise affects the Premises, and to which Seller is a party has heretofore been completed and paid for in full. U. Subdivided Parcel. The Premises are an independent unit which do not now rely on any facilities or facilities of municipalities or public utility and water companies located on any property not included in the Premises to fulfill any municipal or governmental requirement or for the furnishing to the Premises of any essential building systems or utilities. V. Environmental. To the best of Seller's knowledge and except as may be set forth on the Seller Schedule: 1. The Premises and all operations conducted thereon are now and always have been in compliance with all federal, state, and local statutes, ordinances, regulations, rules, standards, and requirements of common law concerning or relating to industrial hygiene and the protection of health and the environment (collectively, "the Environmental Laws"). There are no conditions on, about, beneath or arising from the Premises which might give rise to liability, the imposition of a statutory lien or require "Response," "Removal" or "Remedial Action," as defined herein, under any of the Environmental Laws. As used in this Agreement, the terms "Response," "Removal" and "Remedial Action" shall be defined with reference to Sections 101(23) - 101 (25) of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), as amended by the Superfund Amendments and Reauthorization Act ("SARA"), 42 U.S.C. Sections 9601(23) - 9601(25). 2. "Hazardous Substances," as defined below, have never been used, handled, generated, processed, treated, stored, transported to or from, released, discharged, or disposed of on, about or beneath the Premises. There are no transformers containing or contaminated with PCB's or storage tanks above or below the Premises. There is no asbestos or asbestos containing material on the Premises or in any Building. 3. As used in this Section, the term "Hazardous Substance" shall mean any substance regulated under any of the Environmental Laws including, without limitation, any substance which is: (A) gasoline, petroleum products, explosives, radioactive materials, including by-products, source and/or other nuclear material or solid waste, asbestos or asbestos-containing material or polychlorinated biphenyls or related or similar material; (B) defined, designated or listed as a "Hazardous Substance" pursuant to Sections 307 and 311 of the Clean Water Act, 33 U.S.C. Sections 1317, 1321, Section 101(14) of CERCLA, 42 U.S.C. Section 9601 or Section 103 of the Pennsylvania Hazardous Sites Cleanup Act, 35 Pa. C.S.A. Section 6020.103; (C) listed in the United States Department of Transportation Hazardous Material Table, 49 C.F.R. Section 172.101; (D) defined, designated or listed as a "Hazardous Waste" pursuant to Section 1004(5) of the Resource and Conservation and Recovery Act, 42 U.S.C. 6903(5) or Section 103 of the Pennsylvania Solid Waste Management Act, 35 Pa. C.S.A. Section 6018.103; or (E) regulated under the Pennsylvania Clean Streams Law, 35 Pa. C.S.A. Section 691.1-691.1001, and in the regulations adopted and publications promulgated pursuant thereto. 4. Seller has not received notice or actual or constructive knowledge of: (A) any claim, demand, investigation, enforcement, Response, Removal, Remedial Action or other governmental or regulatory action instituted or threatened against Seller or the Premises pursuant to any of the Environmental Laws; (B) any claim, demand, suit or action made or threatened by any person against Seller or the Premises relating to any form of damage, loss or injury resulting from, or claimed to result from, any Hazardous Substance on, about, beneath or arising from the Premises or any alleged violation of the Environmental Laws; and (C) any communication to or from any governmental or regulatory agency arising out of or in connection with Hazardous Substances on, about, beneath, arising from or generated at the Premises, including without limitation, any notice of violation, citation, complaint, order, directive, request for information or response thereto, notice letter, demand letter or compliance schedule. If discovered prior to Closing, Seller shall immediately advise Buyer of any of the claims or communications listed in clauses (A) through (C) above and also shall immediately advise Buyer of the discovery of any Hazardous Substances on, about, beneath, or arising from the Premises or the discovery of any condition on, about, beneath, or arising from the Premises which might give rise to liability, the imposition of a statutory lien or require Response, Removal or Remedial Action under any of the Environmental Laws. W. Zoning. To the best of Seller's knowledge, the current zoning classification of the Premises under the Zoning Code of Cumru Township is "Highway Commercial" and under the Zoning Code of Robeson Township is "Light Industrial" and the construction, operation and use of the buildings and other improvements constituting the Premises do not violate any zoning, subdivision, building or similar law, ordinance, order, regulation or recorded plat or any certificate of occupancy issued for the Premises; no zoning variances, special exceptions or zoning board of adjustment certificates were issued for the construction of the Premises or for its present use; and the buildings and improvements on the Premises are not non-conforming uses or structures. X. Flood Plain. To the best of Seller's knowledge without independent investigation, no portion of the Premises is located within an area designated as a flood hazard area or an area which will require the purchase of flood insurance for the obtaining of any federally insured or federally related loan; except as set forth on the Seller Schedule, no portion of the Premises is located in any area constituting a "wetland." Buyer represents and warrants to Seller as follows, except as set forth on a Disclosure Schedule delivered by Buyer concurrently with the execution and delivery of this Agreement (the "Buyer Schedule"): K. Organization. Buyer is a real estate investment trust duly formed and existing under and by virtue of the laws of the State of Maryland and is in good standing with the State Department of Assessments and Taxation of Maryland and has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted except where the failure to be so organized, existing and in good standing or to have such power and authority would not have a Buyer Material Adverse Effect. As used in this Agreement, "Buyer Material Adverse Effect" shall mean any fact, condition, event, development or occurrence which, individually or when taken together with all other such facts, conditions, events, developments or occurrences, has had or could reasonably be expected to have a material adverse effect on the ability of Buyer to consummate the transactions contemplated hereby. But in no case shall include the effects of facts, conditions, events, developments or occurrences that are generally applicable in (1) the commercial real estate industry, (ii) the United States economy or credit markets, or (iii) the United States securities markets. Buyer is duly qualified or licensed to do business and in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so duly qualified or licensed and in good standing would not in the aggregate have a Buyer Material Adverse Effect. Buyer has heretofore made available to Seller a complete and correct copy of the Declaration of Trust and by-laws or comparable organizational documents, each as amended to date, of Buyer. Such Declaration of Trust, by-laws and comparable organizational documents are in full force and effect. Buyer is not in violation of any provision of its Declaration of Trust, partnership agreement, charter, by-laws or comparable organizational documents, except for such violations that would not, individually or in the aggregate, have a Buyer Material Adverse Effect. L. Consents and Approvals. The execution, delivery or performance of this Agreement by Buyer; the consummation by Buyer of the transactions contemplated hereby; and the compliance by Buyer with any of the provisions hereof will not (i) conflict with or result in any breach of any provision of the Declaration of Trust or Bylaws of Buyer, (ii) require any filing by Buyer or its Subsidiaries with, or permit, authorization, consent or approval of, any Governmental Entity to be obtained by Buyer (except where the failure to obtain such permits, authorizations, consents or approvals or to make such filings would not have a Buyer Material Adverse Effect), or (iii) violate any order, writ, injunction, decree, statute, ordinance, rule or regulation applicable to Buyer except, in the case of clause (iii), for violations, breaches or defaults which would not have a Buyer Material Adverse Effect. M. Litigation. There is no suit, claim, action, proceeding or investigation pending (in which service of process has been received by an employee of Buyer) or, to the knowledge of Buyer, threatened against Buyer before any Governmental Entity which, if adversely determined, individually or in the aggregate would have a Buyer Material Adverse Effect. Buyer is not subject to any outstanding order, writ, injunction or decree which, insofar as can be reasonably foreseen, individually or in the aggregate, in the future would have a Buyer Material Adverse Effect. N. Absence of Certain Changes or Events; Material Agreements. Since December 31, 1996, Buyer has conducted its business only in the ordinary and usual course consistent with past practice, and there has not been any change or development, or combination of changes or developments, which have a Buyer Material Adverse Effect. The transactions contemplated by this Agreement will not constitute a change of control under or require the consent from or the giving of notice to a third party pursuant to the terms, conditions or provisions of any Contract to which Buyer is a party or by which it is bound. O. No Violation of Law. To its knowledge, Buyer is not in violation of, or, under investigation with respect to, or been given notice or been charged by any Governmental Entity with any violation of, any law, statute, order, rule, regulation, ordinance or judgment (including, without limitation, any applicable environmental law, ordinance or regulation) of any Governmental Entity, except for violations which, in the aggregate, do not have a Buyer Material Adverse Effect. P. Brokers or Finders. Buyer does not have any liability to any agent, broker, investment banker, financial advisor or other firm or person for any broker's or finder's fee or any other commission or similar fee in connection with this Agreement or any of the transactions contemplated hereby. VI. POSSESSION. Possession of the Premises is to be given to Buyer, subject to the right of tenants under the Leases on the Closing Date, by delivery of the Deed, and all keys, combinations and security codes at Closing. VII. BUYER'S REVIEW AND APPROVAL OF TITLE AND SURVEY. A. Title Binder. Buyer has secured a current title commitment (the "Title Binder") from the Title Company, and shall have until the Inspection Period Expiration Date (as hereinafter defined in Section VII.(C) to examine the condition of title, including the terms and provisions of all items and documents referred to in the Title Binder, and all information regarding title as disclosed on the Survey (hereinafter defined), and to approve or disapprove the same. If Buyer shall disapprove the condition of title, such disapproval shall be set forth in a notice given to Seller (the "Disapproval Notice") identifying the condition of title to the Property or any of the terms, provisions or contents of said items, documents or Survey which are disapproved by Buyer (the "Title Objections"). Subject to the provisions of the succeeding portion of this Section VII.A., Seller shall have until the date which is ten (10) days after the date of the Disapproval Notice (the "Title Cure Expiration Date") in which to cure or eliminate all items which Buyer disapproves in the Disapproval Notice, and to furnish evidence satisfactory to Buyer and the Title Company that all such items have been cured or eliminated or that arrangements have been made with the Title Company and any parties in interest to cure or eliminate the same at or prior to the Closing. If Seller fails to remove any Title Objection in accordance with the provisions of the immediately preceding sentence, Buyer, nevertheless, may elect (at or prior to the Closing) to consummate the transaction provided for in this Agreement subject to any such Title Objection(s) as may exist as of the Closing with a credit against the Purchase Price equal to the sum necessary to remove such Title Objection(s), and Seller shall remain liable (which liability shall survive the Closing) for the cost of removing any such Title Objection in excess of the credit granted against the cash portion of the Purchase Price, and Seller shall reimburse Buyer for any and all costs, claims, damages, obligations, liabilities and expenses (including, without limitation, reasonable legal fees and expenses) incurred by Buyer with respect to the Title Objection(s). If Buyer shall not so elect, Buyer may terminate this Agreement by notice in writing to Seller, whereupon the Deposit shall be immediately refunded to Buyer, and this Agreement shall be null and void, and the parties hereto shall be relieved of all further obligations and liability under this Agreement. B. Survey. Within five (5) business days after the date of this Agreement, Buyer shall order a current survey of Property (the "Survey"), prepared by a duly licensed land surveyor acceptable to Buyer. The Survey shall be currently dated, shall show the location on the Property of all buildings and improvements, building and set-back lines, easements, rights-of-way, encroachments, elevations between public roads providing access to the Property, and the boundary of the Property, and other such matters affecting the Property whether physically apparent from the ground, of record in public offices, or otherwise, and shall contain a legal description of the boundaries of the Premises by metes and bounds which shall include a reference to the recorded plat, if any. The surveyor shall certify to Buyer and to the Title Company and to any lender making a loan to Buyer secured by the Property that the Survey is correct and was made on the ground; and that there are no visible discrepancies, conflicts, encroachments, overlapping of improvements, violations of set-back lines, easements, rights-of-way or other such matters affecting the Property except as are shown on the Survey, and that the Survey conforms to all ACTA/ACSM and Pennsylvania Land Title Association standards and requirements for a Class A Survey. Any and all recorded matters shown on said Survey shall be legibly identified by appropriate volume and page recording references with dates of recording noted. Buyer shall have until the Inspection Period Expiration Date to approve or disapprove the material contained thereon. If Buyer shall disapprove such Survey, such disapproval shall be set forth in a Disapproval Notice as hereinabove provided in Section VII.A., and the provisions of Section VII.A. with respect to Disapproval Notices shall apply. C. Physical Inspection. For a period (the "Inspection Period") commencing on the second (2nd) business day next following the date upon which Buyer shall receive from Seller a fully-executed counterpart of this Agreement, and expiring twenty (20) days thereafter (such date is herein referred to as the "Inspection Period Expiration Date"), Buyer shall have the right to have performed a physical and mechanical inspection, measurement and audit of the Property, and Seller shall cooperate with Buyer and shall furnish to Buyer such information, materials and documents as Buyer may reasonably request. The inspection, audit and measurement of the Property's operation, condition and maintenance shall include, without limitation, such environmental and engineering inspections, reviews and assessments that Buyer deems appropriate. In the event Seller shall fail to deliver or make available any item or information material to Buyer's review of the Property and required to be delivered or made available pursuant to the terms of this Section within five (5) business days next following the date upon which Buyer shall receive from Seller a fully-executed counterpart of this Agreement, then at Buyer's election, the Inspection Period Expiration Date (and the Closing Date) shall be extended by one day for each day that the delivery or availability of such item is delayed. If Buyer, at Buyer's sole and absolute discretion, shall find such inspection(s) to be unsatisfactory for any reason whatsoever, Buyer shall have the right, at its option, to terminate this Agreement on or before the Inspection Period Expiration Date, and upon such termination, the Deposit shall be immediately refunded to the Buyer, and thereupon the parties hereto shall have no further liabilities one to the other with respect to the subject matter of this Agreement. Buyer agrees that it shall not unreasonably interfere with tenants in performing its inspection. Buyer further agrees that (i) all such activity shall be done in a good and workmanlike manner and the Property shall at all times be kept in a safe condition, (ii) immediately after each such survey, assessment or evaluation, Buyer shall restore to their prior condition those portions of the Premises disturbed or damaged by Buyer's activity, (iii) Buyer shall defend, indemnify and save Seller harmless from and against all claims, actions, suits, damages, losses, costs and expenses (including, without limitation, attorneys' fees) instituted against or incurred by Seller as a result of or relating to any activity on the Premises by Buyer, its agents, employees, designees, representatives and independent contractors, and (iv) if requested by Seller, Buyer shall provide Seller with a certificate of comprehensive general liability insurance, in form, in an amount and issued by a carrier reasonably acceptable to Seller, insuring Seller from all risks and loss associated with Buyer's exercise of its rights hereunder. During the Inspection Period, Buyer and its agents, employees, designees, representatives and independent contractors also shall have the right, at Buyer's expense, to perform such other due diligence investigations regarding the Property as Buyer deems necessary, including, without limitation, title, zoning, municipal code compliance and other investigations. Buyer may also conduct discussions with the appropriate local, state and federal agencies, authorities and governmental bodies regarding the Property. In connection with such inspection, and without limiting the generality of Seller's obligations hereunder, Seller agrees to deliver to Buyer, within five (5) days: 1. Contracts, Licenses, Permits. Copies of the Contract Documents, the Licenses, all building permits, certificates of occupancy, insurance policies applicable to the Property and any other documents evidencing rights described in Section I.(B) hereof; 2. Utility Costs. A break-down of utility costs for the period the Property has been owned by Seller; 3. Inventory. Invoices, bills of sale, and other evidence supporting the Schedule of Inventory; 4. Three Years' Maintenance Expenses. Information concerning maintenance costs of the Property for the past three years, or lesser period, if owned less than three years by the Seller; 5. Three Years' Tax Bills. A copy of tax bills (i) for the current year, and (ii) if available, for the preceding two years; 6. Three Years' Operating Statements. Statements of operation of the Property for the past three years, or lesser period, if owned less than three years by Seller, and like statements for the balance of such three year period during which operations were by a prior owner, if available, and if not available, any statements as were received from such prior owner, and such other and further information as Buyer shall reasonably require in order to obtain a certified audit of the operation of the Property prepared in accordance with generally accepted accounting principles consistently applied, by an independent certified public accounting firm selected by Buyer; 7. Schedule of Violations. A schedule setting forth all violations of any law, ordinance, regulation, rule or requirement of any governmental body having jurisdiction, whether existing or prospective, of which Seller has received written notice, issued or noted by any governmental body during the past three years, and copies of any notices, terminations or correspondence relating thereto; 8. Schedule of Notices. A schedule of any written demands, requests, requirements or recommendations regarding the operation, maintenance, repair or replacement of the Property or any portion thereof, of which Seller has received notice during the past three years, from the holder of any mortgage or deed of trust or any insurance company or any board of fire underwriters or real estate associations or like body, and copies of all correspondence relating thereto; 9. Schedule of Replacements and Repairs. All documentation in Seller's possession regarding replacements and repairs to the Property; 10. Zoning, Site Plan, Subdivision Plan or Plat. All conditional and permanent zoning, site plan, subdivision, building, housing, safety, fire and health approvals, including, without limitation, the local governmental applications, resolutions and approvals supporting the same; 11. Takings or Changes. Copies of all written notices to Seller of proposed or threatened takings or changes with respect to the Property or major access roads within a reasonable radius which would affect the access to the Property, or any portion thereof, by prospective occupants; 12. Tax Assessments, Appeals and Increases. Copies of all written notices to Seller of all filed, proposed or threatened tax assessment appeals or tax assessment increases related to the Premises; 13. Litigation. Copies of all pending and written notices to Seller of threatened litigation, including litigation involving tenants, affecting the Property or this transaction; 14. Insurance Policies. Copies of all insurance policies of Seller related to the Property; and 15. Schedule of Employees. A schedule of all current employees of the Property, setting forth the name, residence, salary, hourly wages, benefit package, bonuses, vacation and sick pay and other prerequisites of their employment. D. Seller's Failure to Deliver. If Seller shall have failed to deliver to Buyer all documents required to be delivered under Section VII.C. hereof, Buyer may, at its option, at any time on or after such date, but prior to the curing of such failure by Seller, give Seller a five (5) day written notice specifying such default, and if Seller fails to cure such default within such five (5) day period, Buyer may terminate this Agreement, receive the return of the Deposit and pursue any other remedy available to it pursuant to the provisions hereof. E. Notification of Certain Matters. Seller shall give prompt notice to Buyer, and Buyer shall give prompt notice to Seller of (a) the occurrence, or nonoccurrence, of any event the occurrence, or non-occurrence, of which would be likely to cause (i) any representation or warranty contained in this Agreement to be untrue or inaccurate or (ii) any covenant, condition or agreement contained in this Agreement not to be complied with or satisfied and (b) any failure of Seller or Buyer, as the case may be, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section VII.E. shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice. F. Board of Trustees Approval. 1. Buyer's obligations hereunder are contingent upon Buyer obtaining the requisite authorization and approval of the Board of Trustees of Buyer with respect to Buyer's execution, delivery and performance of this Agreement on or before the Inspection Period Expiration Date. Upon Buyer's obtaining said authorization and approval, no other proceedings on the part of Buyer will be necessary to authorize this Agreement or permit Buyer to consummate the transactions so contemplated herein, and this Agreement will then constitute a valid and binding obligation of Buyer, enforceable in accordance with its terms. 2. In the event Buyer is unable to obtain said authorization and approval of the Board of Trustees of Buyer, within the above referenced period, Buyer shall have the right, at its option, to terminate this Agreement on or before the Inspection Period Expiration Date, and upon such termination, the Deposit shall be immediately refunded to Buyer, and thereupon the parties hereto shall have no further liabilities to each other with respect to the subject matter of this Agreement. VIII. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and warranties of Buyer and Seller set forth herein shall survive Closing and delivery of the deed for one (1) year. IX. FIRE OR OTHER CASUALTY. A. Maintain Insurance. Seller shall maintain in effect until the Closing Date the insurance policies (or like policies) now in effect with respect to the Premises and Personal Property as set forth in Exhibit "F". B. Minimal Damage. If prior to the Closing Date any portion of the Property is damaged or destroyed by fire or other casualty, and the cost of repair or restoration thereof shall be $50,000 or less (as established by good faith estimates obtained by Buyer), this Agreement shall remain in force. C. Substantial Damage. If prior to the Closing Date any portion of the Property is damaged or destroyed by fire or other casualty (a "Property Casualty") and if (i) the cost to repair the same as reasonably estimated by Seller and Buyer is less than $250,000, this Agreement shall not terminate as a result of the Property Casualty, Seller shall have no obligation to repair or restore the Property Casualty and Buyer shall receive at Closing a credit against the Purchase Price in the amount reasonably estimated by Seller and Buyer as the cost to fully repair and restore the Property Casualty. If a Property Casualty occurs prior to Closing and the cost to repair the same as reasonably estimated by Seller and Buyer is more than $250,000, or such damage results in the termination of the Lease with Penske Truck Leasing Co., LP, UGI Utilities, Inc., Gilbert/Commonwealth, Inc. or Parsons Power, Buyer may terminate this Agreement by giving notice to Seller within thirty (30) days after Buyer receives notice of the casualty, unless, prior to such date, Seller and Buyer shall have agreed (it being understood that neither the Seller nor Buyer shall have any obligation to so agree) to postpone the Closing Date for a period of time sufficient to permit Seller to fully repair and restore the Property Casualty prior to Closing. If there is any partial or total damage or destruction of any portion of the Property, as above set forth, and if Buyer elects not to terminate this Agreement, then all insurance proceeds paid or payable to Seller shall belong to Buyer and shall be paid over and assigned to Buyer at Closing, and Seller shall further execute all assignments and any other documents or other instruments as Buyer may reasonably request or as may be necessary to transfer all interest in all such proceeds to Buyer or to whomever Buyer shall direct. In the event that the Seller and Buyer are unable to agree on the amount required to repair or restore the Property Casualty, either Seller or Buyer may request that the amount to fully repair and restore the Property Casualty be conclusively determined by an insurance adjuster selected by Seller and Buyer jointly. D. Closing After Substantial Damage. So long as this Agreement shall remain in force under Sections IX.B. or IX.C., then either (a) (i) all proceeds of insurance collected prior to Closing, plus the amount of deductible under Seller's insurance policy, shall be adjusted subject to Buyer's approval and participation in any adjustment, and shall be credited to Buyer against the Purchase Price payable by Buyer at Closing, and (ii) all unpaid claims and rights in connection with losses shall be assigned to Buyer at Closing, or, (b) at Buyer's option, Seller shall (i) restore the Property by Closing to its condition immediately preceding the casualty, (ii) remain liable for any damages resulting from the failure to complete the repair by Closing, and (iii) include Buyer, and obtain Buyer's approval to, any adjustments made by Seller. E. Rent Insurance. All rental loss insurance and the proceeds thereof allocable to any period subsequent to Closing shall be paid or assigned to Buyer at Closing. X. CONDEMNATION. If, prior to the Closing Date, all or any portion of the Premises is taken by eminent domain or a notice of any eminent domain proceedings with respect to the Premises or any part thereof is received by Seller, then Seller shall within five (5) days thereafter give notice thereof to Buyer and Buyer shall have the option to (a) complete the purchase hereunder or (b) if such taking, in Buyer's sole and absolute discretion, adversely affects the Premises or its current economic viability, terminate this Agreement, in which event the Deposit shall be immediately refunded to Buyer, and this Agreement shall be null and void. Buyer shall deliver written notice of its election to Seller within ten (10) days after the date upon which the Buyer receives written notice of such eminent domain proceedings. If notice of condemnation is received by Buyer and it fails to deliver said written notice of its election within said time period, such failure shall constitute a waiver by Buyer of its right to terminate this Agreement. If this Agreement is not so terminated, Buyer shall be entitled to all awards or damages by reason of any exercise of the power of eminent domain or condemnation with respect to or for the taking of the Premises or any portion thereof, and until such time as closing has occurred, or this Agreement terminates. Any negotiation for, or agreement to, and all contests of any offers and awards relating to eminent domain proceedings shall be conducted with the joint approval and consent of Seller and Buyer. XI. EXPENSE ALLOCATIONS. A. Seller shall pay for one-half of all applicable realty transfer taxes related to the execution, delivery and recording of the Deed, Bill of Sale, and other Closing Documents, and all related recording charges. B. Buyer shall pay for one-half of all applicable realty transfer taxes, for Buyer's title examination, and for Buyer's title examination and premiums. C. Buyer and Seller shall be responsible for paying their own attorney's fees in connection with this transaction. XII. CLOSING. A. Time and Date and Place. The Closing on the sale of the Property (herein referred to as the "Closing") shall take place at a time specified by Buyer in writing to Seller at least five (5) days prior to the specified Closing Date, but in any event no later than the last to occur of (i) ten (10) days next following the Inspection Period Expiration Date, or (ii) July 30, 1997, at the offices of Drinker Biddle & Reath LLP, 1000 Westlakes Drive, Suite 300, Berwyn, PA 19312 commencing at 10:00 a.m. B. Documents. At Closing, the parties indicated shall simultaneously execute and deliver the following: 1. Seller's Documents and Other Items. Seller shall execute and deliver or cause to be executed and delivered to Buyer in proper form for recording: (a) Deed. A special warranty deed prepared by Buyer's counsel in form acceptable to Seller (the "Deed"), conveying the Premises to Buyer, duly executed by Seller for recording. The Deed description shall be based upon the metes and bounds description attached as Exhibit "A", unless Buyer requests that Seller convey the Premises by the metes and bounds description shown on the new survey, if any, obtained by Buyer, in which event the Premises shall be so conveyed. (b) Bill of Sale. A bill of sale prepared by Buyer's counsel in form acceptable to Seller, assigning, conveying and transferring to Buyer, all of the Personal Property. (c) Original Leases. All original Leases, tenant files, tenant correspondence and repair records. (d) Original Licenses, Contract Documents and Other Personal Property. All original Licenses, Contract Documents, and other Personal Property described in Section I.B. of this Agreement. (e) Assignment of Leases. An assignment and assumption agreement with reciprocal indemnities, prepared by Buyer's counsel in form acceptable to Seller (the "Assignment"), duly executed by Seller and Buyer, assigning, conveying and transferring to Buyer the Leases. (f) Assignment of Licenses, Contract Documents and Other Personal Property. An assignment agreement prepared by Buyer's counsel, in form acceptable to Seller, assigning, conveying and transferring to Buyer the Licenses, Contracts Documents and Other Personal Property, including, specifically, the Names. (g) FIRPTA Certificates. All certificate(s) required under Section 1445 of the Code. (h) Tenant Letter. Letters to each tenant advising of the change in ownership and directing the payment of rent to such party as the Buyer shall designate, said letter to be in form acceptable to Buyer. (i) Estoppel Certificate from Cumru and Robeson Townships. A Certification Statement or its equivalent issued by the zoning officer, building inspector or other official of the municipality in which the Property is located stating that the present use of the Property as an office building complex is lawful, that there are no violations of record, and that all conditions and required work have been performed in order that the Property be a legally subdivided parcel. Such Statement shall be dated not earlier than the date hereof. If such Certification Statement is not available, Seller shall have the right, but not the obligation, to substitute its own Certificate and Indemnity in place thereof. (j) Title Insurance Certificates. Such affidavits of title or other certifications as shall be required by the Title Company to insure Buyer's title to the Premises as set forth in Section III, and to provide affirmative endorsements (a) against mechanic's liens, (b) insuring against any violation of existing covenants, conditions or restrictions, and insuring that future violation will not result in forfeiture of title, (c) insuring that all foundations in place as of the date of such policy are within the lot lines and applicable set back lines, (d) insuring that the buildings and structures on the Premises do not encroach onto adjoining land or onto any easements, (e) insuring that confirming that there are no encroachments of improvements from adjoining land onto the Premises (f) removing any exceptions for matters which an accurate survey would disclose , and (g) providing affirmative insurance with respect to such other matters as Buyer or its lender shall specify. (k) Updated Rent Roll. An updated schedule of Leases, containing all information required to be set forth in Exhibit "D", which schedule is correct and complete as of the date of closing. (l) Seller Certificate. A written certification confirming that as of Closing no representation or warranty of Seller contained in this Agreement, nor any document or certificate delivered to Buyer pursuant to this Agreement or in connection with the transaction contemplated hereby, contains any untrue statement of a material fact or knowingly omits to state a material fact necessary to make any representation or warranty contained herein misleading. (m) Organization Certifications. Confirmation of the good standing and existence of Seller and the due authority of those executing for them, including, without limitation, the following documents issued no earlier than 30 days prior to Closing: (a) good standing certificate in state of organization and in the State in which the Premises are located, (b) articles of incorporation, partnership agreement or other formation instrument certified by the secretary of state of the state of incorporation, (c) a certificate from the secretary of the corporation or managing general partner of the partnership confirming the incumbency of the signatories and the current force and effect of the resolution authorizing their execution of the documents required under this Agreement. (n) Keys. All keys, combinations and security codes for all locks and security devices on the Property; (o) Tax Bills. Current tax bills and, if available, tax bills for each of the years of Seller's ownership of the Property; (p) Tax Reduction Rights. An instrument assigning to Buyer any claims for the reduction of real or personal property taxes assessed against any portion of the Property for the fiscal year in which the Closing takes place; any refund for such year shall be prorated when received; (q) Tenant's Estoppels. (1) Seller shall use its best efforts to obtain, and shall deliver to Buyer promptly as the same are received but in any event no later than the Closing Date, estoppel certificates ("Tenant Estoppel Certificates") dated no earlier than thirty (30) days prior to the Closing Date from all tenants (except as otherwise provided for herein below in subparagraph (2)) under Leases (in substantially the form of Exhibit "H" attached hereto and made a part hereof). In lieu of delivering such required Tenant Estoppel Certificates, if Seller shall have attempted in good faith but shall have been unable to secure the same, then Seller shall be permitted (but not obligated) to substitute its own Certificate and Indemnity, substantially in the form of Exhibit "H" for each tenant from whom Seller failed to receive a Tenant Estoppel Certificate. (2) Notwithstanding anything to the contrary contained herein, Seller shall obtain Tenant Estoppel Certificates for the following tenants: Penske Truck Leasing Co., L.P., UGI Utilities, Inc. and Parsons Power (the "Required Tenants"), and in no event shall Seller be permitted to substitute its own Certificate and Indemnity for any or all of the Required Tenants. 2. Buyer's Documents. Buyer shall deliver or cause to be delivered to Seller: (a) The amounts required to be paid to Seller pursuant to this Agreement; (b) Confirmation of the existence and subsistence of Buyer, and the authority of those executing for Buyer, including, without limitation, the following documents issued no earlier than thirty (30) days prior to Closing: (a) good standing certificate in State of Maryland, (b) Buyer's Amendment and Restatement of Declaration of Trust filed on August 27, 1996, as amended, (c) a certificate from any officer of Buyer confirming the incumbency of the signatories and the current force and effect of the resolution authorizing their execution of the documents required under this Agreement. 3. Title Insurance. As a condition to Buyer's obligations at Closing, Title Company shall furnish Buyer at Closing with the Title Policy, in the form approved by Buyer pursuant to Section III, in the full amount of the Purchase Price, wherein the Title Company shall insure fee simple title to the Property in Buyer or its designee as of the Closing Date containing no exceptions to title other than those which have been approved by Buyer in writing pursuant to Section III hereof and providing the title endorsements specified in Section XII.B.(1)(j) above. 4. Necessary Documents. Buyer and Seller shall execute and deliver such other documents and instruments as may be reasonably necessary to complete the transaction contemplated by this Agreement. XIII. DEFAULT; REMEDIES A. In the event that any of Seller's representations, warranties or covenants contained in this Agreement are untrue or if Seller shall have failed to have performed any of the covenants and/or agreements contained in this Agreement which are to be performed by Seller, on or before the date set forth in this Agreement for the performance thereof, or if any of the conditions precedent to Buyer's obligation to consummate the transaction contemplated by this Agreement shall have failed to occur, Buyer may, at its option, rescind this Agreement by giving written notice of such rescission to Seller and Seller shall immediately thereafter return the Deposit, and thereupon, subject to the provisions of Section XIII.C. below, the parties shall have no further liability to each other hereunder. In the alternative, but without limiting Buyer's right upon any default by Seller hereunder to receive the prompt return of the Deposit, Buyer may seek to enforce specific performance of this Agreement. B. Buyer recognizes that the Property will be removed by Seller from the market during the existence of this Agreement and that if this purchase and sale is not consummated because of Buyer's default Seller shall be entitled to compensation for such detriment. Seller and Buyer acknowledge that it is extremely difficult and impracticable to ascertain the extent of the detriment, and to avoid this problem, Seller and Buyer agree that if the purchase and sale contemplated in this Agreement is not consummated because of Buyer's default under this Agreement, Seller shall be entitled to retain the Deposit as liquidated damages. The parties agree that the sum stated above as liquidated damages shall be in lieu of any other relief to which Seller might otherwise be entitled, Seller hereby specifically waiving any and all rights which it may have to damages or specific performance as a result of Buyer's default under this Agreement. C. Buyer's Out-of-Pocket Costs. In the event of Seller's breach or default hereunder which results in Buyer's termination of this Agreement, or in the event that Seller shall fail to perform any term, covenant or agreement, or satisfy any condition herein stipulated (including, without limitation, a failure of title), then, in any such event, upon termination by Buyer hereunder, in addition to receiving the immediate return of the Deposit, anything in the Agreement contained to the contrary notwithstanding, Buyer shall also receive from Seller, upon demand, Buyer's actual, documented out-of-pocket costs and expenses associated with this Agreement and Buyer's anticipated acquisition of the Property including, without limitation, Buyer's reasonable counsel fees and costs, title expenses, survey costs, and other costs and expenses associated with Buyer's due diligence, including, without limitation, legal, financial and accounting due diligence, Buyer's structural inspection of the Property and Buyer's environmental assessment of the Property (collectively, "Transaction Costs"). The foregoing list is not intended to be exclusive, but representative of the costs and expenses that the parties anticipate that Buyer will incur in anticipation of this transaction. Seller's maximum reimbursement liability under this Section XIII.C. shall not exceed $50,000.00. XIV. CONDITIONS PRECEDENT TO CLOSING. The obligations of Buyer hereunder are subject to the fulfillment of the following conditions prior to or on the Closing Date (any one of which may be waived in whole or in part by Buyer at or prior to the Closing) and in the event any of the conditions are not complied with, Buyer may terminate this Agreement by notifying the Seller and Escrow Agent and thereupon shall be returned the Deposit and thereafter this Agreement shall be null and void: A. Correctness of Warranties and Representations. All of the representations and warranties of Seller contained in this Agreement shall have been true and correct when made, and shall be true and correct on the Closing date with the same effect as if made on and as of the Closing Date. In the event any representation or warranty is not true and correct on the Closing Date, Seller shall deliver to Buyer at Closing a certification explaining in what respects the representation or warranty is no longer true and correct. In the event Buyer determines, in its sole and absolute discretion, that the representation or warranty which is no longer true and correct is a Company Material Adverse Effect, Buyer shall have the right to (i) terminate this Agreement, or (ii) require as a condition of closing a specific indemnity from Seller with respect to the fact disclosed as not being true and correct on the Closing Date. B. Compliance with Terms and Conditions. Seller shall have performed and complied with all of the terms and conditions required by this Agreement to be performed and complied with by it prior to or on the Closing Date. C. Buyer's Satisfaction with Inspection. Buyer shall have notified Seller of Buyer's satisfaction with the title review performed under Section VII of this Agreement, or shall fail to notify Seller on or before the Title Review Expiration Date, of Buyer's dissatisfaction with the results of such review. D. Trustee Approval. This Agreement and the transactions contemplated hereby shall have received formal approval of Buyer's Board of Trustees at a meeting duly called to consider same. E. Estoppels. Seller shall have delivered to Buyer the required Estoppels. F. Lease With Seller. Buyer and Seller shall enter into a lease substantially in the form attached hereto as Exhibit "J" and made a part hereof. XV. PRORATIONS. A. Operating Expenses. The following items shall be prorated at Closing, as of close of business of the day immediately preceding Closing "Adjustment Date": 1. Taxes. Real estate taxes applicable to the Property for the tax year in which Closing occurs, based on the respective tax years for which such taxes are assessed and on the most recent assessment of the Property and the then applicable tax rates. All real estate taxes, charges and assessments shall be pro rated on a per diem basis as of midnight of the day preceding the Closing Date, disregarding any discount or penalty and on the basis of the fiscal year of the authority levying the same. If any of the same have not been finally assessed as of the Closing Date for the current fiscal year of the taxing authority, then the same shall be adjusted at Closing based upon the most recently issued bills therefor, and shall be re-adjusted immediately when and if final bills are issued. If any portion of the Property is a net leased property wherein the tenant(s) have paid or will pay all such taxes, charges and assessments directly to the person or entity entitled to receive the same (and not to Seller as landlord under the applicable Leases), no apportionment shall be made. 2. Sewer Rents. All sewer rents not based on meter readings. Seller shall cause all utility meters to be read and the municipalities or utility companies servicing the Property to issue final bills to Seller as of the date of Closing, and all such bills shall be paid by Seller. 3. Permit Fees. Fees payable with respect to assignable permits and governmental approvals; 4. Operating Costs. All items of operating cost or expense incurred by Seller, including but not limited to utilities and fuel oil, and reasonably allocable or attributable to periods after Closing; 5. Rents. All rents collected, both Basic Rents (as hereinafter defined) and Additional Rents (as hereinafter defined) shall be deemed to be applied first to the calendar month in which Closing occurs and thereafter to current rental periods and secondly to satisfy rental obligations arising from past rental periods prior to the date of Closing. As used herein, the term "Basic Rents" shall mean all rents and charges payable by any and all tenants, including, without limitation, occupancy rents, but excluding Additional Rents. As used herein, the term "Additional Rents" shall mean any amounts payable by tenants pursuant to any provisions of such leases relating to escalation and pass-through of operating and other similar expenses and any provisions therein in respect of tenant escrows and reimbursements. Basic Rents shall be apportioned as follows: (a) Buyer shall receive a credit at Closing for all Basic Rents actually collected prior to Closing relating to any period after Closing; and (b) With respect to Basic Rents uncollected as of Closing and owed by occupants of the Property at Closing for any period prior to the calendar month in which Closing occurs, Seller shall be reimbursed by Buyer following Buyer's collection of such Basic Rents, to the extent they are available in accordance with the provisions hereof, as follows: Buyer shall use its best efforts to collect such rents, and all amounts collected by Buyer, net of related costs of collection, shall be paid to Seller within ten (10) days following the month of collection until the entire amount of such uncollected rents shall have been paid. If Buyer is unable to collect any portion of such Basic Rents within one hundred eighty (180) days following Closing, Buyer may elect, with respect to such Basic Rents, either to (I) assign all such Basic Rents to Seller, after which Seller may pursue any remedies to collect such Basic Rents and retain any amounts so collected, or (II) retain such Basic Rents, in which event Buyer, within one hundred eighty (180) days following Closing, shall make a cash payment to Seller of the amount of such Basic Rents, less Buyer's reasonable expenses relating to efforts to collect such Basic Rents, after which any amounts collected by Buyer shall be retained by Buyer. Additional Rents shall be apportioned as follows: (a) With respect to Additional Rents uncollected at Closing and owed for any period prior to Closing and not yet billed, Buyer shall submit appropriate bills to the tenants as soon as is practicable after Buyer receives sufficient information from Seller concerning Additional Rents to enable Buyer to do so. Buyer shall use its best efforts to collect such Additional Rents for a period of three hundred sixty-five (365) days after the rentals become due. Seller's apportioned interest in any amounts collected by Buyer to the extent such amounts are available in accordance with the provisions hereof, net of the costs of collection, shall be paid to Seller within ten (10) days following receipt thereof. If after the applicable three hundred sixty-five (365) day period Buyer has been unable to collect any Additional Rents, Buyer may elect, with respect to one or more of the leases one of the two alternatives set forth under subsection (A)(2) above, with the same related cash payment or assignment of accounts as is therein provided; (b) With respect to Additional Rents billed and owed by occupants of the Property as of Closing, Buyer shall use its best efforts to collect such Additional Rents for a period of one hundred eighty (180) days after Closing. Any such amounts collected by Buyer, to the extent available pursuant to the provisions hereof, net of the costs of collection, shall be paid to Seller within ten (10) days following receipt thereof. If after the applicable one hundred eighty (180) day period Buyer has been unable to collect Additional Rents, Buyer may elect, with respect to any one or more of the leases one of the two alternatives set forth under subsection (A)(2) above, with the same related cash payment or assignment of accounts as is therein provided; (c) Additional Rents shall be allocated over the period with regard to which such operating expenses are incurred, notwithstanding the date on which such Additional Rents become payable; and (d) If the Premises are entirely net leased and the tenant(s) pay all Additional Rent directly to third parties, no apportionments or adjustments shall be made. 6. Security Deposits. Seller shall deliver to Buyer at Closing, in cash or by certified check without adjustment, the amounts of all security deposits which may have been received from tenants, together with interest thereon which is due to any tenant under the provisions of any Lease or applicable law. 7. Project Contracts. The unpaid monetary obligations of Seller under all Contracts shall, as a general matter, be pro rated on a per diem basis as of midnight of the day preceding the Closing Date, subject, nevertheless, to the following: With respect to all leasing, brokerage or other commission agreements relating to Property Leases, there shall be no apportionment or reimbursement of or for any leasing fees, commissions or other compensation ("Leasing Fees") which is in respect of any lease executed prior to the Closing, all of which shall be and remain the responsibility of Seller, and Seller shall pay the same when due and shall indemnify and hold Seller harmless from all thereof; and (ii) provided Closing occurs hereunder, Buyer shall be responsible for and shall pay when due and indemnify and hold Seller harmless from and against or reimburse to Seller if Seller has paid any Leasing Fees with respect thereto, all Leasing Fees which are due and payable subsequent to Closing on an "as collected" basis or all Leasing Fees which are due and payable for a renewal term which shall come into effect on or after the Closing Date; provided, however, Seller shall have disclosed to Buyer the existence of such Leasing Fee on the Company Schedule. Leasing Fees apportionable hereunder shall be apportioned and pro rated on a per diem basis as of midnight of the day preceding the Closing Date and as a function of (and calculated with respect to) the lease term for which the same were paid or will become due and payable. B. Custom and Practice. Except as set forth in this Agreement, the customs of the State and County in which the Premises are located shall govern prorations. C. Future Installments of Taxes. If at Closing, the Property or any part thereof shall be or shall have been affected by an assessment or assessments which are or may become payable in installments, then for purposes of this Agreement, all unpaid installments of any such assessment, including those which are to become due and payable and to be liens upon the Property shall be paid and discharged by Seller at Closing. D. Application of Prorations. If such prorations result in a payment due Buyer, the cash payable at Closing shall be reduced by such sum. If such prorations result in a payment due Seller, the same shall be paid by uncertified check at Closing. E. Schedule of Prorations. The parties shall endeavor to jointly prepare a schedule of prorations for the Property no less than five (5) days prior to Closing. F. Escalations. At least five (5) days prior to Closing, Seller shall deliver to Buyer a reasonably detailed statement setting forth, as of the date of Closing (a) the sums collected from tenants under Leases on account of or in reimbursement of landlord's operating expenses and/or any other payments made by tenants to landlord on account of sums which are attributable to expenses paid or incurred by the landlord ("escalation payments") for the current fiscal year under each such Lease (whether a lease year or calendar or other year); and (b) the amounts paid or incurred by Seller during the appropriate fiscal year as aforesaid which Seller expects will be paid or reimbursed by escalation payments made by tenants. If Seller shall have collected escalation payments for periods prior to Closing, whether pursuant to estimates which were in excess of the amounts actually required to be paid, or otherwise, there shall be an adjustment and credit to Buyer at Closing for such excess. If the charges were not billed or have not been collected as of the date of Closing, then, when the amount of such escalation payments is determined and collected by Buyer from tenants, Buyer will, upon collection, remit to Seller the portion thereof to which Seller is entitled to the date of Closing. Buyer shall have the right, in good faith, to settle or adjust any amount of such escalation payments due from any tenant without Seller's prior consent, provided that such settlement or adjustment applies ratably to all amounts of escalation payments due from such tenant. G. Readjustments. The parties shall correct any errors in prorations as soon after the Closing as amounts are finally determined. H. Indemnification for Seller's Tax Obligations. Seller shall indemnify, defend and save and hold harmless Buyer from any loss, cost, liability or expense (including, without limitation, reasonable counsel fees and court costs) incurred, paid or suffered by Buyer arising out of or by reason of any claim made by the Pennsylvania Department of Revenue or by any other state taxing or employment authorities asserting or indicating any claims or possible claims for unpaid taxes, penalties, interest or court costs related thereto of Seller or any related party, due the Commonwealth of Pennsylvania or its political subdivisions. The provisions of this Section XIV.H. shall specifically survive Closing hereunder. XVI. BROKERS. Each party hereby represents and warrants to the other that it has not employed or retained any broker or finder in connection with the transactions contemplated by this Agreement, and that neither has had any dealings with any other person or party which may entitle that person or party to a fee or commission. Each party shall indemnify the other of and from any claims for commissions by any person or party claiming such commission by or through the indemnifying party. XVII. ESCROW AGENT. The parties hereto have requested that the Deposit be held in escrow by the Escrow Agent to be applied at the Closing or prior thereto in accordance with this Agreement. The Escrow Agent will deliver the Deposit to Seller or to Buyer, as the case may be under the following conditions: A. Payment to Seller. To Seller on the Closing Date upon the consummation of Closing; B. Notice of Dispute. If either Seller or Buyer believes that it is entitled to the Deposit or any part thereof, it shall make written demand therefor upon the Escrow Agent. The Escrow Agent shall promptly mail a copy thereof to the other party in the manner specified in Section XVIII.A. below. The other party shall have the right to object to the delivery of the Deposit, by filing written notice of such objections with the Escrow Agent at any time within ten (10) days after the mailing of such copy to it in the manner specified in Section XVIII.A. below, but not thereafter. Such notice shall set forth the basis for objection to the delivery of the Deposit. Upon receipt of such notice, the Escrow Agent shall promptly deliver a copy thereof to the party who filed the written demand. C. Escrow Subject to Dispute. In the event the Escrow Agent shall have received the notice of objection provided for in XVII.B. above, of this Section, in the manner and within the time therein prescribed, the Escrow Agent shall continue to hold the Deposit until (i) the Escrow Agent receives written notice from both Seller and Buyer directing the disbursement of the Deposit in which case the Escrow Agent shall then disburse said Deposit in accordance with said direction, or (ii) litigation arises between Seller and Buyer, in which event the Escrow Agent shall deposit the Deposit with the Clerk of the Court in which said litigation is pending, or (iii) the Escrow Agent takes such affirmative steps as the Escrow Agent may, at the Escrow Agent's option elect in order to terminate the Escrow Agent's duties including, but not limited to, deposit in Court and an action for interpleader. D. Escrow Agent's Rights and Liabilities. Escrow Agent shall not be required to determine questions of fact or law, and may act upon any instrument or other writing believed by it in good faith to be genuine and to be signed and presented by the proper person, and shall not be liable in connection with the performance of any duties imposed upon Escrow Agent by the provisions of this Agreement, except for Escrow Agent's own willful default or gross negligence. Escrow Agent shall have no duties or responsibilities except those set forth herein. Escrow Agent shall not be bound by any modification of this Agreement, unless the same is in writing and signed by Buyer and Seller, and, if Escrow Agent's duties hereunder are affected, unless Escrow Agent shall have given prior written consent thereto. In the event that Escrow Agent shall be uncertain as to Escrow Agent's duties or rights hereunder, or shall receive instructions from Buyer or Seller which, in Escrow Agent's opinion, are in conflict with any of the provisions hereof, Escrow Agent shall be entitled to hold and apply the Deposit, pursuant to Section XVII.C., and may decline to take any other action. XVIII. GENERAL PROVISIONS. A. Notices. All notices or other communications required or permitted to be given under the terms of this Agreement shall be in writing, and shall be deemed effective when (i) sent by nationally-recognized overnight courier, (ii) facsimile with original following by regular mail, or (iii) deposited in the United States mail and sent by certified mail, postage prepaid, addressed as follows: If to Buyer, addressed to: Brandywine Realty Trust Newtown Square Corporate Campus 16 Campus Boulevard Suite 150 Newtown Square, PA 19073 Attn: Gerard H. Sweeney, President and Chief Executive Officer with a copy in each instance to: John W. Fischer, Esquire Drinker Biddle & Reath, LLP 1000 Westlakes Drive, Suite 300 Berwyn, PA 19312 If to Seller, addressed to: Salient 3 Communications, Inc. P.O. Box 1498 Reading, PA 19603 Attn: Paul Snyder with a copy in each instance to: Salient 3 Communications, Inc. P.O. Box 1498 Reading, PA 19603 Attn: Thomas F. Hafer, Esquire If to Escrow Agent, addressed to: Commonwealth Land Title Insurance Company 1700 Market Street Philadelphia, PA 19103-3990 Attn: M. Gordon Daniels, Esquire or to such-other address or addresses and to the attention of such other person or persons as any of the parties may notify the other in accordance with the provisions of this Agreement. B. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns. C. Entire Agreement. All Exhibits attached to this Agreement are incorporated herein and made a part hereof. This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior negotiations, understandings and agreements of any nature whatsoever with respect to the subject matter hereof. This Agreement may not be modified or amended other than by an agreement in writing. The captions included in this Agreement are for convenience only and in no way define, describe or limit the scope or intent of the terms of this Agreement. D. Governing Law. This Agreement shall be construed and interpreted in accordance with the laws of the Commonwealth of Pennsylvania. E. No Recording. This Agreement shall not be recorded in the Office for the Recording of Deeds or in any other office or place of public record. F. Tender. Tender of Deed by Seller and of the Purchase Price by Buyer, are hereby mutually waived. G. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories. H. Further Instruments. Seller will, whenever and as often as it shall be reasonably request so to do by Buyer, and Buyer will, whenever and as often as it shall be reasonably requested so to do by Seller, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, any and all conveyances, assignments, correction instruments and all other instruments and documents as may be reasonably necessary in order to complete the transaction provided for in this Agreement and to carry out the intent and purposes of this Agreement. All such instruments and documents shall be satisfactory to the respective attorneys for Buyer and Seller. The provisions of this Article shall survive the Closing. I. Time. Time is of the essence. In the event the last day permitted for the performance of any act required or permitted under this Agreement falls on a Saturday, Sunday, or legal holiday of the United States or the Commonwealth of Pennsylvania, the time for such performance will be extended to the next succeeding business day. Time periods under this Agreement will exclude the first day and include the last day of such time period. J. Designation of Nominee; Assignment of Agreement. Buyer shall have the right to designate one or more of its subsidiaries or affiliate entities to acquire title to the Premises hereunder. K. Effective Date. Whenever the term or phrase "effective date hereof" or "date hereof" or other similar phrases describing the date this Agreement becomes binding on Seller and Buyer are used in this Agreement, such terms or phrases shall mean and refer to the date on which a counterpart or counterparts of this Agreement executed by Seller and Buyer are deposited with the Escrow Agent. L. Time for Acceptance. This Agreement shall constitute an offer to buy or sell the Property, as case may be, on the terms herein set forth only when executed by the Seller or Buyer. This Agreement may be accepted by the party receiving such executed Agreement only by executing this Agreement and delivering an original signed copy hereof to the Escrow Agent and an originally signed copy hereof to the other party hereto within five (5) business days after such receipt. Failure to accept in the manner and within the time specified shall constitute a rejection and termination of such officer. M. Confidentiality. Each of the parties hereto covenants and agrees to hold the nature and content of this Agreement, including without limitation, the Purchase Price contained herein, in strict confidence, and other than disclosure required by the SEC and except as may be necessary to comply with this Agreement, neither party shall disclose the nature, content or the Purchase Price of this Agreement without the express written consent of the other party. N. Delivery of Documents. Promptly upon execution hereof by the parties hereto, Seller shall deliver to Buyer one (1) copy of this Agreement, complete with all Exhibits and Schedules. XIX. SEC REPORTING (8-K) REQUIREMENTS. For the period of time commencing on the date hereof and continuing through the first anniversary of the Closing Date, and without limitation of other document production otherwise required of Seller hereunder, Seller shall, from time to time, upon reasonable advance written notice from Buyer, provide Buyer and its representatives, with (I) access to all financial and other information pertaining to the period of Seller's ownership and operation of the Property, which information is relevant and reasonably necessary, in the opinion of Buyer's outside, third party accountants (the "Accountants"), to enable Buyer and its Accountants to prepare financial statements in compliance with any or all of (a) Rule 3-05 or 3-14 of Regulation S-X of the Securities and Exchange Commission (the "Commission"), as applicable; (b) any other rule issued by the Commission and applicable to Buyer; and (c) any registration statement, report or disclosure statement filed with the Commission by, or on behalf of Buyer; and (II) a representation letter, signed by the individual(s) responsible for Seller's financial reporting, as prescribed by generally accepted auditing standards promulgated by the Auditing Standards Division of the American Institute of Certified Public Accountants, which representation letter may be required by the Accountants in order to render an opinion concerning Seller's financial statements. XX. INDEMNIFICATION. Without limitation of any other Seller indemnity obligations set forth herein, from and after the Closing Date, Seller shall indemnify, defend and save and hold harmless Buyer, and its respective trustees, directors, officers and employees, of, from and against any and all loss, cost, expense, damage, claim, and liability, including reasonable attorney's fees and court costs, including, without limitation, attorney's fees and costs associated with the enforcement of Seller's indemnification obligations (hereinafter collectively, "Losses") which Buyer may suffer or incur, resulting from, relating to, or arising in whole or in part, from or out of (i) any misrepresentation or breach of a representation or warranty by Seller contained in this Agreement; (ii) any failure to fulfill any covenant or agreement of Seller contained in this Agreement; (iii) all litigation set forth in this Agreement and on Exhibit "D"; hereto; (iv) all claims relating to the construction, maintenance and operation of the Property prior to Closing, except that with respect to any construction related claims such indemnity obligations of Seller shall cease as of the second anniversary of the Closing hereunder; or (v) any and all actions, suits, investigations, proceedings, demands, assessments, audits, judgments, and/or claims arising out of or relating to any of the foregoing. Promptly after receipt by Buyer of written notice of the commencement of any suit, audit, demand, judgment, action, investigation or proceeding (a "Third Party Action") or promptly after Buyer incurs a Loss or has knowledge of the existence of a Loss, Buyer will, if a claim with respect thereto is to be made against Seller due to Seller's obligation to provide indemnification hereunder, give Seller written notice of such Loss or the commencement of any Third Party Action; provided, however, that the failure to provide such notice within a reasonable period of time shall not relieve Seller of any of its obligations hereunder. Promptly after receiving such notice, Seller will, upon notice to Buyer, have the right to assume and control the defense and settlement of any such Third Party Action at its own cost and expense; provided, however, that it shall be a condition precedent to the exercise of such right by Seller that Seller shall agree in writing that the Loss, or Third Party Action, as the case may be, is properly within the scope of the indemnification obligation and that as between the parties, Seller shall be responsible to satisfy and discharge such Third Party Action. Seller shall not enter into any resolution or other compromise of a Third Party Action without obtaining the complete release of Buyer for any liability to all claimants under or pursuant to such Third Party Action. Buyer shall have the right to participate in any such defense, contest or other protective action at its own cost and expense. Notwithstanding the foregoing, Buyer shall have the right to assume and control the defense and settlement of a Third Party Action (a) if such action includes claims for equitable relief which, if determined adversely to Buyer, could reasonably be expected to interfere with its intended business operations or damage its business reputation or (b) if Seller fails to do so in a timely manner. In any circumstances in which Buyer undertakes to control the Third Party Action as provided in this paragraph, it shall (i) not enter into any resolution or other compromise involving monetary damages without obtaining the prior written consent of Seller provided that such written consent may not be withheld if it would interfere with Buyer's business operation and (ii) keep Seller informed on an ongoing basis of the status of such Third Party Action and shall deliver to Seller, copies of all documents related to the Third Party Action reasonably requested by Seller. Buyer shall act to assure that all attorneys' fees and expenses incurred in connection therewith are reasonable. XXI. EXCULPATION. No recourse shall be had for any obligation of Buyer under this Agreement or under any document executed in connection herewith or pursuant hereto, or for any claim based thereon or otherwise in respect thereof, against any past, present or future trustee, shareholder, officer or employee of Buyer, whether by virtue of any statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being expressly waived and released by the Seller and all parties claiming by, through or under Seller. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed the day and year first above written. SALIENT 3 COMMUNICATIONS, INC. BRANDYWINE REALTY TRUST a Delaware Corporation a Maryland Real Estate Investment Trust By: /s/ Thomas F. Hafer By: /s/ Gerard H. Sweeney ----------------------------- --------------------------------- Thomas F. Hafer Gerard H. Sweeney, Senior Vice President, President and Chief Executive Officer General Counsel and Secretary Agreed to by Escrow Agent with regard to the obligations, terms, covenants and conditions contained in this Agreement relating to Escrow Agent. COMMONWEALTH LAND TITLE INSURANCE COMPANY By: /s/ Nancy Staino -------------------------------- Nancy Staino Vice President EXHIBITS TO AGREEMENT OF SALE "A" - Legal Description "B" - Schedule of Inventory "C" - Permitted Encumbrances "D" - Rent Roll "E" - Significant Agreements/Service Contracts "F" - Insurance "G" - Operating Statements "H" - Estoppel Certificate Form "I-1" - Purchase Money Note "I-2" - Purchase Money Mortgage "J" - Lease between Seller and Buyer SCHEDULE TO AGREEMENT OF SALE Schedule 2.3 - Allocation of Purchase Price EXHIBIT "A" Legal Description ----------------- EXHIBIT "B" Schedule of Inventory --------------------- TO BE ATTACHED AFTER EXECUTION EXHIBIT "C" Permitted Encumbrances ---------------------- EXHIBIT "D" Rent Roll --------- EXHIBIT "E" Significant Agreements/Service Contracts ---------------------------------------- TO BE ATTACHED AFTER EXECUTION EXHIBIT "F" Insurance --------- TO BE ATTACHED AFTER EXECUTION EXHIBIT "G" Operating Statements -------------------- TO BE ATTACHED AFTER EXECUTION EXHIBIT "H" Estoppel Certificate Form ------------------------- EXHIBIT "I-1" Purchase Money Note ------------------- TO BE ATTACHED AFTER EXECUTION EXHIBIT "I-2" Purchase Money Mortgage ----------------------- TO BE ATTACHED AFTER EXECUTION EXHIBIT "J" Lease between Seller and Buyer ------------------------------ TO BE ATTACHED AFTER EXECUTION EXHIBIT "I-1" Buyer Money Note ---------------- TO BE ATTACHED AFTER EXECUTION SCHEDULE 2.3 Allocation of Purchase Price ---------------------------- TO BE ATTACHED AFTER EXECUTION EX-10.2 3 EXHIBIT 10.2 Exhibit 10.2 BERWYN PARK SALE AGREEMENT BETWEEN BERWYN DEVELOPMENT ASSOCIATES a Pennsylvania general partnership AS SELLER, AND BRANDYWINE REALTY TRUST, a Maryland Real Estate Investment Trust, AS PURCHASER As of July 7, 1997 TABLE OF CONTENTS Page # ARTICLE I PURCHASE AND SALE Section 1.1 Agreement of Purchase and Sale 1 Section 1.2 Property Defined 2 Section 1.3. Purchase Price 2 Section 1.4 Payment of Purchase Price 2 Section 1.5 Deposit 2 Section 1.6 Escrow Agent 3 ARTICLE II TITLE AND SURVEY Section 2.1 Title Inspection Period 3 Section 2.2 Title Examination 4 Section 2.3 Pre-Closing "Gap" Title Defects 4 Section 2.4 Permitted Exceptions 4 Section 2.5 Conveyance of Title 5 ARTICLE III REVIEW OF PROPERTY Section 3.1 Right of Inspection 6 Section 3.2 Environmental Reports 6 Section 3.3 Right of Termination 7 Section 3.4 Review of Tenant Estoppels 7 Section 3.5 PECO Disclosure 8 ARTICLE IV CLOSING Section 4.1 Time and Place 8 Section 4.2 Seller's Obligations at Closing 8 Section 4.3 Purchaser's Obligations at Closing 10 Section 4.4 Credits and Prorations 11 Section 4.5 Transaction Taxes and Closing Costs 14 Section 4.6 Conditions Precedent to Obligation of Purchaser 15 Section 4.7 Conditions Precedent to Obligation of Seller 15 ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS Section 5.1 Representations and Warranties of Seller 15 Section 5.2 Knowledge Defined 16 Section 5.3 Survival of Seller's Representations and Warranties 17 Section 5.4 Covenants of Seller 17 Section 5.5 Representations and Warranties of Purchaser 18 Section 5.6 Survival of Purchaser's Representations and Warranties 18 ARTICLE VI DEFAULT Section 6.1 Default by Purchaser 19 Section 6.2 Default by Seller 19 Section 6.3 Recoverable Damages 19 ARTICLE VII RISK OF LOSS Section 7.1 Minor Damage 19 Section 7.2 Major Damage 20 Section 7.3 Definition of "Major" Loss or Damage 20 ARTICLE VIII COMMISSIONS Section 8.1 Brokerage Commissions 20 ARTICLE IX DISCLAIMERS AND WAIVERS Section 9.1 No Reliance on Documents 20 SECTION 9.2 AS-IS SALE; DISCLAIMERS 21 Section 9.3 Survival of Disclaimers 22 ARTICLE X MISCELLANEOUS Section 10.1 Confidentiality 22 Section 10.2 Public Disclosure 22 Section 10.3 Assignment 22 Section 10.4 Notices 23 Section 10.5 Modifications 24 Section 10.6 Entire Agreement 24 Section 10.7 Further Assurances 24 Section 10.8 Counterparts 24 Section 10.9 Facsimile Signatures 24 Section 10.10 Severability 24 Section 10.11 Applicable Law 25 Section 10.12 No Third-Party Beneficiary 25 Section 10.13 Captions 25 Section 10.14 Construction 25 Section 10.15 Recordation 25 Section 10.16 Time of Essence 25 Section 10.17 SEC Disclosure 25 Section 10.18 Exculpation 25 A DESCRIPTION OF LAND B LIST OF PERSONAL PROPERTY C LIST OF OPERATING AGREEMENTS D LIST OF ENVIRONMENTAL REPORTS E FORM OF TENANT ESTOPPEL CERTIFICATE F TENANT ESTOPPEL STANDARDS G FORM OF DEED H FORM OF BILL OF SALE I FORM OF ASSIGNMENT OF LEASES J FORM OF ASSIGNMENT OF CONTRACTS K FORM OF TENANT NOTICE L FORM OF FIRPTA CERTIFICATE M INTENTIONALLY OMITTED N LIST OF BROKERAGE AGREEMENTS O LIST OF SPECIFIED LITIGATION P RENT ROLL Q STATEMENT OF TENANT DELINQUENCIES R FORM OF REPRESENTATION LETTER SALE AGREEMENT THIS SALE AGREEMENT (this "AGREEMENT") is made as of July 7, 1997 (the "EFFECTIVE DATE"), by and between Berwyn Development Associates, a Pennsylvania general partnership ("SELLER" ), and Brandywine Realty Trust, a Maryland Real Estate Investment Trust ("PURCHASER"). W I T N E S S E T H: ARTICLE I PURCHASE AND SALE Section 1.1 AGREEMENT OF PURCHASE AND SALE. Subject to the terms and conditions hereinafter set forth, Seller agrees to sell and convey to Purchaser, and Purchaser agrees to purchase from Seller, the following: (a) that certain tract or parcel of land situated in Chester County, Pennsylvania, more particularly described in Exhibit A attached hereto and made a part hereof, together with all rights and appurtenances pertaining to such property, including any right, title and interest of Seller in and to adjacent streets, alleys or rights-of-way (the property described in clause (a) of this Section 1.1 being herein referred to collectively as the "Land"); (b) the buildings, structures, fixtures and other improvements affixed to or located on the Land, excluding fixtures owned by tenants (the property described in clause (b) of this Section 1.1 being herein referred to collectively as the "IMPROVEMENTS"); (c) any and all of Seller's right, title and interest in and to all tangible personal property located upon the Land or within the Improvements, including, without limitation, any and all appliances, furniture, carpeting, draperies and curtains, tools and supplies, and other items of personal property owned by Seller (excluding cash and any software), located on and used exclusively in connection with the operation of the Land and the Improvements, which personal property includes without limitation the personal property listed on Exhibit B attached hereto (the property described in clause (c) of this Section 1.1 being herein referred to collectively as the "PERSONAL PROPERTY"); (d) any and all of Seller's right, title and interest in and to the leases, licenses and occupancy agreements covering all or any portion of the Real Property, to the extent they are in effect on the date of the Closing (as such term is defined in Section 4.1 hereof) (the property described in clause (d) of this Section 1.1 being herein referred to collectively as the "LEASES"), together with all rents and other sums due thereunder (the "Rents") and any and all security deposits in Seller's possession in connection therewith (the "SECURITY DEPOSITS"); and (e) any and all of Seller's right, title and interest in and to (i) all assignable contracts and agreements (collectively, the "OPERATING AGREEMENTS") listed and described on Exhibit C attached hereto and made a part hereof, relating to the upkeep, repair, maintenance or operation of the Land, Improvements or Personal Property, and (ii) all assignable existing warranties and guaranties (express or implied) issued to Seller in connection with the Improvements or the Personal Property, and (iii) all assignable existing permits, licenses, approvals and authorizations issued by any governmental authority in connection with the Property and (iv) the non-exclusive right to the name "Berwyn Park" (the property described in clause (e) of this Section 1.1 being sometimes herein referred to collectively as the "INTANGIBLES"). Section 1.2 PROPERTY DEFINED. The Land and the Improvements are hereinafter sometimes referred to collectively as the "REAL PROPERTY." The Land, the Improvements, the Personal Property, the Leases and the Intangibles are hereinafter sometimes referred to collectively as the "PROPERTY." Section 1.3. PURCHASE PRICE. Seller is to sell and Purchaser is to purchase the Property for the amount of THIRTY SEVEN MILLION ONE HUNDRED FIFTY THOUSAND DOLLARS ($37,150,000) (the "PURCHASE PRICE"). Section 1.4 PAYMENT OF PURCHASE PRICE. The Purchase Price, as increased or decreased by prorations and adjustments as herein provided, shall be payable in full at Closing by one or more wire transfers of immediately available funds to a bank account or accounts designated by Seller in writing to Purchaser prior to the Closing. Section 1.5 DEPOSIT. Simultaneously with the execution and delivery of this Agreement, Purchaser is depositing with Commonwealth Land Title Insurance Company (the "ESCROW AGENT"), having its office at 1700 Market Street, Philadelphia, Pennsylvania Attention: Gordon Daniels, Esquire, the sum of Two Hundred Fifty Thousand Dollars ($250,000) (the "INITIAL DEPOSIT") in good funds, either by certified bank or cashier's check or by federal wire transfer. On or before the expiration of the "Inspection Period" (as defined in Section 3.1 below), Purchaser shall deliver to Escrow Agent the additional sum of Eight Hundred Fifty Thousand Dollars ($850,000) (the "Second Deposit") in good funds, either by certified check, or cashier's check or by federal wire transfer, and upon receipt thereof Escrow Agent immediately shall notify Seller of such receipt. The Initial Deposit and the Second Deposit, together with any interest earned thereon, are collectively referred to as the "Deposit". Notwithstanding that the stated period for the Inspection Period and/or Title Inspection Period (as hereinafter defined) may not otherwise have expired, upon the delivery of the Second Deposit to the Escrow Agent, the Inspection Period and Title Inspection Period shall be deemed to have expired. The Escrow Agent shall hold the Deposit in an interest-bearing account reasonably acceptable to Seller and Purchaser, in accordance with the terms and conditions of this Agreement. All interest on such sum shall be deemed income of Purchaser, and Purchaser shall be responsible for the payment of all costs and fees imposed on the Deposit account. The Deposit shall be distributed in accordance with the terms of this Agreement. The failure of Purchaser to timely deliver any portion of the Deposit hereunder shall be a material default, and shall entitle Seller, at Seller's sole option, to terminate this Agreement immediately. Section 1.6 ESCROW AGENT. Escrow Agent shall hold and dispose of the Deposit in accordance with the terms of this Agreement. At the Closing, the Deposit shall be paid by Escrow Agent to Seller. If the Closing does not occur, and either Seller or Purchaser shall make a written demand upon Escrow Agent for payment of the Deposit, Escrow Agent shall give written notice (the "Deposit Notice") to the other party of such demand and shall continue to hold the Deposit for seven (7) business days thereafter. Seller and Purchaser agree that the duties of the Escrow Agent hereunder are purely ministerial in nature and shall be expressly limited to the safekeeping and disposition of the Deposit in accordance with this Agreement. Escrow Agent shall incur no liability in connection with the safekeeping or disposition of the Deposit for any reason other than Escrow Agent's willful misconduct or gross negligence. In the event that Escrow Agent shall be in doubt as to its duties or obligations with regard to the Deposit, or in the event that Escrow Agent receives conflicting instructions from Purchaser and Seller with respect to the Deposit within seven (7) business days of furnishing the Deposit Notice, as aforesaid, Escrow Agent shall not be required to disburse the Deposit and may, at its option, continue to hold the Deposit until both Purchaser and Seller agree as to its disposition, or until a final judgment is entered by a court of competent jurisdiction directing its disposition, or Escrow Agent may interplead the Deposit in accordance with the laws of the state in which the Property is located. Seller and Purchaser agree that Escrow Agent is acting purely as a stakeholder at their request and for their convenience, and that Escrow Agent shall not be deemed to be the agent of either of the parties. Escrow Agent shall not be responsible for any interest on the Deposit except as is actually earned, or for the loss of any interest resulting from the withdrawal of the Deposit prior to the date interest is posted thereon or for any loss caused by the failure, suspension, bankruptcy or dissolution of the institution in which the Deposit is deposited. Escrow Agent shall execute this Agreement solely for the purpose of being bound by the provisions of Sections 1.5 and 1.6 hereof. ARTICLE II TITLE AND SURVEY Section 2.1 TITLE INSPECTION PERIOD. During the period beginning upon the Effective Date and ending at 5:00 p.m. (local time at the Property) on the twentieth (20th) day following the Effective Date (hereinafter referred to as the "TITLE INSPECTION PERIOD"), Purchaser shall have the right to review (a) a current preliminary title report on the Real Property, accompanied by copies of all documents referred to in the report, which shall be obtained by Purchaser promptly after the Effective Date (with a copy of the preliminary title report simultaneously furnished to Seller) (b) copies of the most recent property tax bills for the Property, which shall be obtained by Seller promptly after the Effective Date; (c) a survey of the Real Property prepared by a licensed surveyor or engineer hired by Purchaser (the "SURVEY"); and (d) a copy of Seller's existing title insurance policy and/or survey for the Real Property, if available, which policy and survey (if available) shall be provided by Seller promptly after the Effective Date. Section 2.2 TITLE EXAMINATION. Purchaser shall notify Seller in writing (the "TITLE NOTICE") prior to the expiration of the Title Inspection Period which exceptions to title (including survey matters), if any, will not be accepted by Purchaser. If Purchaser fails to notify Seller in writing of its disapproval of any exceptions to title by the expiration of the Title Inspection Period, or if pursuant to any other provision of this Agreement the Title Inspection Period shall be deemed to have expired, Purchaser shall be conclusively deemed to have approved the condition of title to the Real Property. If Purchaser notifies Seller in writing that Purchaser objects to any exceptions to title, Seller shall have ten (10) business days after receipt of the Title Notice to notify Purchaser (a) that Seller will remove such objectionable exceptions from title on or before the Closing; provided that Seller may extend the Closing for such period as shall be required to effect such cure, but not beyond thirty (30) days; or (b) that Seller elects not to cause such exceptions to be removed. The procurement by Seller of a commitment for the issuance of the Title Policy (as defined in Section 2.5 hereof) or an endorsement thereto insuring Purchaser against any title exception which was disapproved pursuant to this Section 2.2 shall be deemed a cure by Seller of such disapproval. If Seller gives Purchaser notice under clause (b) above, Purchaser shall have five (5) business days in which to notify Seller that Purchaser will nevertheless proceed with the purchase and take title to the Property subject to such exceptions, or that Purchaser will terminate this Agreement. If this Agreement is terminated pursuant to the foregoing provisions of this paragraph, then neither party shall have any further rights or obligations hereunder (except for any indemnity obligations of either party pursuant to the other provisions of this Agreement), the Deposit shall be returned to Purchaser and each party shall bear its own costs incurred hereunder. If Purchaser shall fail to notify Seller of its election within said five-day period, Purchaser shall be deemed to have elected to proceed with the purchase and take title to the Property subject to such exceptions. Section 2.3 PRE-CLOSING "GAP" TITLE DEFECTS. Purchaser may, at or prior to Closing, notify Seller in writing (the "GAP NOTICE") of any objections to title (a) raised by the Title Company between the expiration of the Title Inspection Period and the Closing and (b) not disclosed by the Title Company or otherwise known to Purchaser prior to the expiration of the Title Inspection Period; provided that Purchaser must notify Seller of such objection to title within two (2) business days of being made aware of the existence of such exception. If Purchaser sends a Gap Notice to Seller, Purchaser and Seller shall have the same rights and obligations with respect to such notice as apply to a Title Notice under Section 2.2 hereof. Section 2.4 PERMITTED EXCEPTIONS. The Property shall be conveyed subject to the following matters, which are hereinafter referred to as the "PERMITTED EXCEPTIONS": (a) those matters that either are not objected to in writing within the time periods provided in Sections 2.2 or 2.3 hereof, or if objected to in writing by Purchaser, are those which Seller has elected not to remove or cure, or has been unable to remove or cure, and subject to which Purchaser has elected or is deemed to have elected to accept the conveyance of the Property; (b) the rights of tenants under the Leases; (c) the lien of all ad valorem real estate taxes and assessments and water and sewer rents not yet due and payable as of the date of Closing, subject to adjustment as herein provided; (d) local, state and federal laws, ordinances or governmental regulations, including but not limited to, building and zoning laws, ordinances and regulations, now or hereafter in effect relating to the Property; (e) title to those portions of the Property within the bed of (i) Cassatt Avenue, (ii) Relocated Cassatt Avenue, and (iii) Swedesford Road; (f) restriction prohibiting explosives and fences as in Deed Book S-21, page 270; (g) Declaration of Easements and Covenants for Berwyn Park dated December 8, 1984, and recorded in Misc Deed Book 665, Page 80, as amended and recorded in Record Book 650, Page 290; (h) items shown on the Survey and not objected to by Purchaser or waived or deemed waived by Purchaser in accordance with Section 2.2 hereof; and (i) all mechanics', materialmen's and other similar liens, levies and charges against the Property, whether existing now or at the time of Closing, which is the obligation of any of the tenants of the Property or a portion thereof to discharge, whether under its respective Lease, or by law or otherwise. Section 2.5 CONVEYANCE OF TITLE. At Closing, Seller shall convey and transfer to Purchaser fee simple title to the Land and Improvements, by execution and delivery of the Deed (as defined in Section 4.2(a) hereof). Evidence of delivery of such title shall be the issuance by Commonwealth Land Title Insurance Company (the "TITLE COMPANY"), or another national title company, of an ALTA 1992 Form of Owner's Policy of Title Insurance (the "TITLE POLICY") covering the Real Property, in the full amount of the Purchase Price, subject only to the Permitted Exceptions. ARTICLE III REVIEW OF PROPERTY Section 3.1 RIGHT OF INSPECTION. During the period beginning upon the Effective Date and ending at 5:00 p.m. (local time at the Property) on the thirtieth (30th) day after the Effective Date (hereinafter referred to as the "INSPECTION PERIOD"), Purchaser shall have the right to make a physical inspection of the Real Property, including an inspection of the environmental condition thereof pursuant to the terms and conditions of this Agreement, and to examine at the Property (or the property manager's office, as the case may be) documents and files located at the Property or the property manager's office concerning the leasing, maintenance and operation of the Property, but excluding Seller's, and the Seller's partners', partnership or corporate records, internal memoranda, financial projections, budgets, appraisals, accounting and tax records and similar proprietary, confidential or privileged information (collectively, the "Confidential Documents"). Purchaser understands and agrees that any on-site inspections of the Property shall occur at reasonable times agreed upon by Seller and Purchaser after reasonable prior written notice to Seller and shall be conducted so as not to interfere unreasonably with the use of the Property by Seller or its tenants. Seller reserves the right to have a representative present during any such inspections. If Purchaser desires to do any invasive testing at the Property, Purchaser shall do so only after notifying Seller and obtaining Seller's prior written consent thereto, which consent may be subject to any terms and conditions imposed by Seller in its sole discretion, including without limitation the prompt restoration of the Property to its condition prior to any such inspections or tests, at Purchaser's sole cost and expense. At Seller's option, Purchaser will furnish to Seller copies of any reports received by Purchaser relating to any inspections of the Property. Purchaser agrees to protect, indemnify, defend and hold Seller harmless from and against any claim for liabilities, losses, costs, expenses (including reasonable attorneys' fees), damages or injuries arising out of or resulting from the inspection of the Property by Purchaser or its agents or consultants, and notwithstanding anything to the contrary in this Agreement, such obligation to indemnify and hold harmless Seller shall survive Closing or any termination of this Agreement. Section 3.2 ENVIRONMENTAL AND GEOTECHNICAL REPORTS. PURCHASER ACKNOWLEDGES THAT (1) PURCHASER HAS RECEIVED COPIES OF THE ENVIRONMENTAL AND/OR GEOTECHNICAL REPORTS LISTED ON EXHIBIT D ATTACHED HERETO, (2) IF SELLER DELIVERS ANY ADDITIONAL ENVIRONMENTAL AND/OR GEOTECHNICAL REPORTS TO PURCHASER, PURCHASER WILL ACKNOWLEDGE IN WRITING THAT IT HAS RECEIVED SUCH REPORTS PROMPTLY UPON RECEIPT THEREOF, (3) ANY ENVIRONMENTAL AND/OR GEOTECHNICAL REPORTS DELIVERED OR TO BE DELIVERED BY SELLER OR ITS REPRESENTATIVES OR CONSULTANTS TO PURCHASER ARE BEING MADE AVAILABLE SOLELY AS AN ACCOMMODATION TO PURCHASER AND MAY NOT BE RELIED UPON BY PURCHASER IN CONNECTION WITH THE PURCHASE OF THE PROPERTY, AND (4) SELLER MAKES NO REPRESENTATION OR WARRANTY THAT IT HAS PROVIDED TO PURCHASER ALL ENVIRONMENTAL AND/OR GEOTECHNICAL REPORTS THAT MAY HAVE BEEN PREPARED WITH RESPECT TO THE PROPERTY. PURCHASER AGREES THAT NEITHER SELLER NOR ITS PARTNERS SHALL HAVE ANY LIABILITY OR OBLIGATION WHATSOEVER FOR ANY INACCURACY IN OR OMISSION FROM ANY ENVIRONMENTAL AND/OR GEOTECHNICAL REPORT. PURCHASER HAS CONDUCTED, OR WILL CONDUCT PRIOR TO THE EXPIRATION OF THE INSPECTION PERIOD, ITS OWN INVESTIGATION OF THE ENVIRONMENTAL AND/OR GEOTECHNICAL CONDITION OF THE PROPERTY TO THE EXTENT PURCHASER DEEMS SUCH AN INVESTIGATION TO BE NECESSARY OR APPROPRIATE, AND PURCHASER SHALL DELIVER TO SELLER A COPY OF ALL WRITTEN ENVIRONMENTAL AND/OR GEOTECHNICAL REPORTS PURCHASER OBTAINS TOGETHER WITH A LETTER FROM THE COMPANY FROM WHICH ANY SUCH REPORT IS OBTAINED ENTITLING SELLER TO RELY THEREON. Section 3.3 RIGHT OF TERMINATION. If for any reason whatsoever Purchaser determines that the Property or any aspect thereof is unsuitable for Purchaser's acquisition, Purchaser shall have the right to terminate this Agreement by giving written notice thereof to Seller prior to the expiration of the Inspection Period, and if Purchaser gives such notice of termination within the Inspection Period, this Agreement shall terminate. If this Agreement is terminated pursuant to the foregoing provisions of this paragraph, then neither party shall have any further rights or obligations hereunder (except for any indemnity obligations of either party pursuant to the other provisions of this Agreement), the Deposit shall be returned to Purchaser and each party shall bear its own costs incurred hereunder. If Purchaser fails to give Seller a notice of termination prior to the expiration of the Inspection Period, or if pursuant to any other provision of this Agreement the Inspection Period shall be deemed to have expired, Purchaser shall be deemed to have approved all aspects of the Property (except title and survey, which shall be governed by Article II hereof) and to have elected to proceed with the purchase of the Property pursuant to the terms hereof. Section 3.4 REVIEW OF TENANT ESTOPPELS. Seller shall deliver to each tenant of the Property an estoppel certificate in substantially the form of Exhibit E attached hereto (the "FORM TENANT ESTOPPELS"), and shall request that the tenants complete and sign the Form Tenant Estoppels and return them to Seller. Seller shall deliver copies of the completed Form Tenant Estoppels to Purchaser as Seller receives them; provided, however, Purchaser acknowledges and agrees that each tenant only shall be obligated to return an estoppel as set forth in such tenant's lease (the "Lease Tenant Estoppels"). The Form Tenant Estoppels and/or Lease Tenant Estoppels that are executed by a tenant and delivered to Purchaser as aforesaid are hereafter collectively referred to as the Tenant Estoppels. Purchaser shall notify Seller within three (3) days of receipt of any Tenant Estoppel in the event Purchaser determines such Tenant Estoppel as executed and modified by a tenant is not acceptable to Purchaser along with the reasons for such determination, but no such Tenant Estoppel shall be deemed unacceptable by Purchaser if it complies with the applicable tenant's lease in all material respects. In the event Purchaser fails to give such notice within such three (3) day period then any such Tenant Estoppel shall be deemed to be acceptable to Purchaser. In the event that Seller fails to obtain the Tenant Estoppels (or in lieu thereof, at Seller's option, Seller estoppels therefor) that meet the tenant estoppel standards described on Exhibit F attached hereto on or before five (5) days prior to Closing, Purchaser shall have the right to terminate this Agreement by written notice to Seller. If this Agreement is terminated pursuant to the foregoing provisions of this paragraph, then neither party shall have any further rights or obligations hereunder (except for any indemnity obligations of either party pursuant to the other provisions of this Agreement), the Deposit shall be returned to Purchaser and each party shall bear its own costs incurred hereunder. If Purchaser fails to give Seller a notice of termination as set forth above, Purchaser shall be deemed to have approved the Tenant Estoppels (and Seller estoppels, if applicable) and to have elected to proceed with the purchase of the Property pursuant to the terms hereof. Any Tenant Estoppel which is received from a tenant after Seller provides its own estoppel may be substituted by Seller for Seller's estoppel and Seller shall have no further liability thereunder, provided that such Tenant Estoppel contains no changes or, if changed, complies in all material respects with the provisions of the applicable lease, or is otherwise reasonably acceptable to Purchaser. The provisions of this Section 3.4 shall survive the Closing. Section 3.5 PECO DISCLOSURE. Purchaser acknowledges that Seller has advised Purchaser that PECO has indicated its interest in taking by eminent domain an access road over the Property to serve PECO's intended development on PECO's adjacent property, but to the knowledge of the parties no declaration of taking has been filed with respect to the Property. In addition, Purchaser acknowledges that Seller has given to Purchaser copies of a PECO traffic study, comments thereon by Seller's consultant, and an update of the traffic study. ARTICLE IV CLOSING Section 4.1 TIME AND PLACE. The consummation of the transaction contemplated hereby (the "CLOSING") shall be held at the offices of Blank Rome Comisky & McCauley, 1200 Four Penn Center Plaza, Philadelphia, Pennsylvania on the forty fifth (45th) day after the Effective Date (unless such day is not a business day, in which case on the next business day), unless extended as specifically in this Agreement provided. At the Closing, Seller and Purchaser shall perform the obligations set forth in, respectively, Section 4.2 and Section 4.3 hereof, the performance of which obligations shall be concurrent conditions; provided that the Deed shall not be recorded until Seller receives confirmation that Seller has received the full amount of the Purchase Price, adjusted by prorations as set forth herein. At Seller's option, the Closing shall be consummated through an escrow administered by Escrow Agent. In such event, the Purchase Price and all documents shall be deposited with the Escrow Agent as escrowee. Section 4.2 SELLER'S OBLIGATIONS AT CLOSING. At Closing, Seller shall: (a) deliver to Purchaser a duly executed special warranty deed (the "DEED") in the form attached hereto as Exhibit G, conveying the Land and Improvements, subject only to the Permitted Exceptions; the warranty of title in the Deed will be only as to claims made by, through or under Seller and not otherwise; (b) deliver to Purchaser a duly executed bill of sale in the form attached hereto as Exhibit H (the "BILL OF SALE") conveying the Personal Property without warranty of title or use and without warranty, express or implied, as to merchantability and fitness for any purpose ; (c) assign to Purchaser, and Purchaser shall assume, the Seller's interest in and to the obligations with respect to the Leases, Rents and Security Deposits, including any and all obligations to pay leasing commissions and finder's fees and Tenant Inducement Costs with respect to the Leases and amendments, renewals and expansions thereof, to the extent provided in Section 4.4(b)(v) hereof, by duly executed assignment and assumption agreement (the "ASSIGNMENT OF LEASES") in the form attached hereto as Exhibit I pursuant to which (i) Seller shall indemnify Purchaser and hold Purchaser harmless from and against any and all claims pertaining thereto arising prior to Closing and (ii) Purchaser shall indemnify Seller and hold Seller harmless from and against any and all claims pertaining thereto arising from and after the Closing, including without limitation, claims made by tenants with respect to tenants' Security Deposits to the extent such Security Deposits are paid, credited or assigned to Purchaser; (d) to the extent assignable, assign to Purchaser, and Purchaser shall assume, Seller's interest in and to the obligations with respect to the Operating Agreements and the other Intangibles by duly executed assignment and assumption agreement (the "ASSIGNMENT OF CONTRACTS") in the form attached hereto as Exhibit J pursuant to which (i) Seller shall indemnify Purchaser and hold Purchaser harmless from and against any and all claims pertaining thereto arising prior to Closing and (ii) Purchaser shall indemnify Seller and hold Seller harmless from and against any and all claims pertaining thereto arising from and after the Closing; (e) join with Purchaser to execute a notice (the "TENANT NOTICE") in the form attached hereto as Exhibit K, which Purchaser shall send to each tenant under each of the Leases promptly after the Closing, informing such tenant of the sale of the Property and of the assignment to and assumption by Purchaser of Seller's interest in, and obligations under, the Leases (including, if applicable, any Security Deposits), and directing that all Rent and other sums payable after the Closing under each such Lease be paid as set forth in the notice; (f) In the event that any representation or warranty of Seller needs to be modified due to material changes since the Effective Date, deliver to Purchaser a certificate, dated as of the date of Closing and executed on behalf of Seller by a duly authorized representative thereof, identifying any representation or warranty which is not, or no longer is, true and correct and explaining the state of facts giving rise to the change. In no event shall Seller or its partners be liable to Purchaser for, or be deemed to be in default hereunder by reason of, any breach of representation or warranty which results from any change that (i) occurs between the Effective Date and the date of Closing and (ii) is expressly permitted under the terms of this Agreement or is beyond the reasonable control of Seller to prevent; provided, however, that the occurrence of a change which is not permitted hereunder or is beyond the reasonable control of Seller to prevent shall, if materially adverse to Purchaser, constitute the non-fulfillment of the condition set forth in Section 4.6(b) hereof which shall entitle Purchaser, at Purchaser's sole option, to terminate this Agreement. If this Agreement is terminated pursuant to the foregoing provisions of this paragraph (f), then neither party shall have any further rights or obligations hereunder (except for any indemnity obligations of either party pursuant to the other provisions of this Agreement), and the Deposit shall be returned to Purchaser and each party shall bear its own costs incurred hereunder. If, despite changes or other matters described in such certificate, the Closing occurs, Seller's representations and warranties set forth in this Agreement shall be deemed to have been modified by all statements made in such certificate; (g) deliver to Purchaser such evidence as the Title Company may reasonably require as to the authority of the person or persons executing documents on behalf of Seller; (h) deliver to Purchaser a certificate in the form attached hereto as Exhibit L duly executed by Seller stating that Seller is not a "foreign person" as defined in the Federal Foreign Investment in Real Property Tax Act of 1980; (i) deliver to Purchaser the Leases and the Operating Agreements, together with such leasing and property files and records located at the Property or the property manager's office which are material in connection with the continued operation, leasing and maintenance of the Property, but excluding any Confidential Documents, and shall deliver to Purchaser all keys in Seller's possession and the combination to all combination locks under Seller's control. For a period of three (3) years after the Closing, Purchaser shall allow Seller and its partners and their agents and representatives access without charge to all files, records and documents delivered to Purchaser at the Closing, upon reasonable advance notice and at all reasonable times, to examine and make copies of any and all such files, records and documents, which right shall survive the Closing; (j) deliver such affidavits as may be customarily and reasonably required by the Title Company, in a form reasonably acceptable to Seller; (k) deliver to Purchaser possession and occupancy of the Property, subject to the Permitted Exceptions; (l) execute a settlement statement acceptable to Seller; and (m) deliver such additional documents as shall be reasonably required to consummate the transaction contemplated by this Agreement. Section 4.3 PURCHASER'S OBLIGATIONS AT CLOSING. At Closing, Purchaser shall: (a) pay to Seller the full amount of the Purchase Price (which amount shall include the Deposit), as increased or decreased by prorations and adjustments as herein provided, in immediately available wire transferred funds pursuant to Section 1.4 hereof; (b) join Seller in execution of the Assignment of Leases, Assignment of Contracts and Tenant Notices; (c) In the event that any representation or warranty of Purchaser set forth in Sections 5.5(a) or (b) hereof needs to be modified due to material changes since the Effective Date, deliver to Seller a certificate, dated as of the date of Closing and executed on behalf of Purchaser by a duly authorized representative thereof, identifying any such representation or warranty which is not, or no longer is, true and correct and explaining the state of facts giving rise to the change. In no event shall Purchaser be liable to Seller for, or be deemed to be in default hereunder by reason of, any breach of representation or warranty set forth in Sections 5.5(a) or (b) hereof which results from any change that (i) occurs between the Effective Date and the date of Closing and (ii) is expressly permitted under the terms of this Agreement or is beyond the reasonable control of Purchaser to prevent; provided, however, that the occurrence of a change which is not permitted hereunder or is beyond the reasonable control of Purchaser to prevent shall, if materially adverse to Seller, constitute the non-fulfillment of the condition set forth in Section 4.7(c) hereof which shall entitle Seller, at Seller's sole option, to terminate this Agreement. If this Agreement is terminated pursuant to this paragraph (c), and was by reason of a change beyond the reasonable control of Purchaser to prevent, then neither party shall have any further rights or obligations hereunder (except for indemnity obligations of either party pursuant to the provisions of this Agreement), and the Deposit shall be returned to Purchaser and each party shall bear its own costs incurred hereunder. If the change is within the reasonable control of Purchaser, the same shall constitute a default by Purchaser under Section 6.1. If, despite changes or other matters described in such certificate, the Closing occurs, Purchaser's representations and warranties set forth in this Agreement shall be deemed to have been modified by all statements made in such certificate; (d) deliver to Seller such evidence as the Title Company may reasonably require as to the authority of the person or persons executing documents on behalf of Purchaser; (e) deliver such affidavits as may be customarily and reasonably required by the Title Company, in a form reasonably acceptable to Purchaser; (f) execute a settlement statement acceptable to Purchaser; and (g) deliver such additional documents as shall be reasonably required to consummate the transaction contemplated by this Agreement. Section 4.4 CREDITS AND PRORATIONS. (a) All income and expenses of the Property shall be apportioned as of 12:01 a.m., on the day of Closing, as if Purchaser were vested with title to the Property during the entire day upon which Closing occurs. Such prorated items shall include without limitation the following: (i) all Rents, if any; (ii) taxes and assessments (including personal property taxes on the Personal Property) levied against the Property; (iii) utility charges for which Seller is liable, if any, such charges to be apportioned at Closing on the basis of the most recent meter reading occurring prior to Closing (dated not more than fifteen (15) days prior to Closing) or, if unmetered, on the basis of a current bill for each such utility; (iv) all amounts payable under brokerage agreements and Operating Agreements, pursuant to the terms of this Agreement; and (v) any other operating expenses or other items pertaining to the Property which are customarily prorated between a purchaser and a seller in the county in which the Property is located. (b) Notwithstanding anything contained in Section 4.4(a) hereof: (i) At Closing, (A) Seller shall, at Seller's option, either deliver to Purchaser any Security Deposits actually held by Seller pursuant to the Leases or credit to the account of Purchaser the amount of such Security Deposits (to the extent such Security Deposits have not been applied against delinquent Rents or otherwise as provided in the Leases), and (B) Purchaser shall credit to the account of Seller all refundable cash or other deposits posted with utility companies serving the Property, or, at Seller's option, Seller shall be entitled to receive and retain such refundable cash and deposits; (ii) Any taxes paid at or prior to Closing shall be prorated based upon the amounts actually paid. If taxes and assessments due and payable during the year of Closing have not been paid before Closing, Seller shall be charged at Closing an amount equal to that portion of such taxes and assessments which relates to the period before Closing and Purchaser shall pay the taxes and assessments prior to their becoming delinquent. Any such apportionment made with respect to a tax year for which the tax rate or assessed valuation, or both, have not yet been fixed shall be based upon the tax rate and/or assessed valuation last fixed. To the extent that the actual taxes and assessments for the current year differ from the amount apportioned at Closing, the parties shall make all necessary adjustments by appropriate payments between themselves within thirty (30) days after such amounts are determined following Closing, subject to the provisions of Section 4.4(d) hereof; (iii) Charges referred to in Section 4.4(a) hereof which are payable by any tenant to a third party shall not be apportioned hereunder, and Purchaser shall accept title subject to any of such charges unpaid and Purchaser shall look solely to the tenant responsible therefor for the payment of the same. If Seller shall have paid any of such charges on behalf of any tenant, and shall not have been reimbursed therefor by the time of Closing, Purchaser shall credit to Seller an amount equal to all such charges so paid by Seller; (iv) As to utility charges referred to in Section 4.4(a)(iii) hereof, Seller may on notice to Purchaser elect to pay one or more of all of said items accrued to the date hereinabove fixed for apportionment directly to the person or entity entitled thereto, and to the extent Seller so elects, such item shall not be apportioned hereunder, and Seller's obligation to pay such item directly in such case shall survive the Closing or any termination of this Agreement; (v) Purchaser shall be responsible for the payment of (A) all Tenant Inducement Costs (as hereinafter defined) and leasing commissions which become due and payable (whether before or after Closing) as a result of any new Leases, or any renewals, amendments or expansions of existing Leases, signed during the Lease Approval Period (as hereinafter defined) and, if required, approved or deemed approved in accordance with Section 5.4 hereof; and (B) all Tenant Inducement Costs and leasing commissions with respect to new Leases, or renewals, amendments or expansions of existing Leases, signed or entered into from and after the date of Closing; and (C) all leasing commissions listed on Exhibit N attached hereto to the extent due and payable from and after the date of Closing. If, as of the date of Closing, Seller shall have paid any Tenant Inducement Costs or leasing commissions for which Purchaser is responsible pursuant to the foregoing provisions, Purchaser shall reimburse Seller therefor at Closing. For purposes hereof, the term "TENANT INDUCEMENT COSTS" shall mean any out-of-pocket payments required under a Lease to be paid by the landlord thereunder to or for the benefit of the tenant thereunder which is in the nature of a tenant inducement, including specifically, without limitation, tenant improvement costs, lease buyout costs, and moving, design, refurbishment and club membership allowances. The term "Tenant Inducement Costs" shall not include loss of income resulting from any free rental period, it being agreed that Seller shall bear the loss resulting from any free rental period until the date of Closing and that Purchaser shall bear such loss from and after the date of Closing. For purposes hereof, the term "LEASE APPROVAL PERIOD" shall mean the period from the Effective Date until the date of Closing; (vi) Unpaid and delinquent Rent collected by Seller and Purchaser after the date of Closing shall be delivered as follows: (a) if Seller collects any unpaid or delinquent Rent for the Property, Seller shall, within fifteen (15) days after the receipt thereof, deliver to Purchaser any such Rent which Purchaser is entitled to hereunder relating to the date of Closing and any period thereafter, and (b) if Purchaser collects any unpaid or delinquent Rent from the Property, Purchaser shall, within fifteen (15) days after the receipt thereof, deliver to Seller any such Rent which Seller is entitled to hereunder relating to the period prior to the date of Closing. Seller and Purchaser agree that (i) all Rent received by Seller or Purchaser within the first ninety (90) day period after the date of Closing shall be applied first to unpaid Rents for the month in which the Closing occurred, then to current Rents and then to delinquent Rent, if any, in the order of their maturity, and (ii) all Rent received by Seller or Purchaser after the first ninety (90) day period after the date of Closing shall be applied first to current Rent and then to delinquent Rent, if any, in the inverse order of maturity. Purchaser will make a good faith effort after Closing to collect all Rents in the usual course of Purchaser's operation of the Property, but Purchaser will not be obligated to institute any lawsuit or other collection procedures to collect delinquent Rents. Seller may attempt to collect any delinquent Rents owed Seller and may institute any lawsuit or collection procedures, but may not evict any tenant. In the event that there shall be any Rents or other charges under any Leases which, although relating to a period prior to Closing, do not become due and payable until after Closing or are paid prior to Closing but are subject to adjustment after Closing (such as year end common area expense reimbursements and the like), then any Rents or charges of such type received by Purchaser or its representatives or Seller or its representatives subsequent to Closing shall, to the extent applicable to a period extending through the Closing, be prorated between Seller and Purchaser as of Closing and Seller's portion thereof shall be remitted promptly to Seller by Purchaser. (c) [Intentionally omitted] (d) Except as otherwise provided herein, any revenue or expense amount which cannot be ascertained with certainty as of Closing shall be prorated on the basis of the parties' reasonable estimates of such amount, and shall be the subject of a final proration sixty (60) days after Closing, or as soon thereafter as the precise amounts can be ascertained. Purchaser shall promptly notify Seller when it becomes aware that any such estimated amount has been ascertained. Once all revenue and expense amounts have been ascertained, Purchaser shall prepare, and certify as correct, a final proration statement which shall be subject to Seller's approval. Upon Seller's acceptance and approval of any final proration statement submitted by Purchaser, such statement shall be conclusively deemed to be accurate and final. (e) Subject to the final sentence of Section 4.4(d) hereof, the provisions of this Section 4.4 shall survive Closing. Section 4.5 TRANSACTION TAXES AND CLOSING COSTS (a) Seller and Purchaser shall execute such returns, questionnaires and other documents as shall be required with regard to all applicable real property transaction taxes imposed by applicable federal, state or local law or ordinance; (b) Seller shall pay the fees of any counsel representing Seller in connection with this transaction. Seller shall also pay the following costs and expenses: * one-half (1/2) of the escrow fee, if any, which may be charged by the Escrow Agent or Title Company; and * one-half (1/2) of any transfer tax which becomes payable by reason of the transfer of the Property from Seller to Purchaser. (c) Purchaser shall pay the fees of any counsel representing Purchaser in connection with this transaction. Purchaser shall also pay the following costs and expenses: *one-half (1/2) of the escrow fee, if any, which may be charged by the Escrow Agent or Title Company; * one-half (1/2) of any transfer tax which becomes payable by reason of the transfer of the Property from Seller to Purchaser. * the fee for the title examination and the Title Commitment and the premium for the Owner's Policy of Title Insurance to be issued to Purchaser by the Title Company at Closing, and all endorsements thereto; * the cost of the Survey; * the fees for recording the Deed; * any sales tax, documentary stamp tax or similar tax which becomes payable by reason of the transfer of the Property; (d) The Personal Property is included in this sale without charge, except that Purchaser shall pay to Seller the amount of any and all sales or similar taxes payable in connection with the transfer of the Personal Property and Purchaser shall execute and deliver any tax returns required of it in connection therewith; (e) All costs and expenses incident to this transaction and the closing thereof, and not specifically described above, shall be paid by the party incurring same; and (f) The provisions of this Section 4.5 shall survive the Closing. Section 4.6 CONDITIONS PRECEDENT TO OBLIGATION OF PURCHASER. The obligation of Purchaser to consummate the transaction hereunder shall be subject to the fulfillment on or before the date of Closing of all of the following conditions, any or all of which may be waived by Purchaser in its sole discretion: (a) Seller shall have delivered to Purchaser all of the items required to be delivered to Purchaser pursuant to the terms of this Agreement, including but not limited to, those provided for in Section 4.2 hereof; (b) All of the representations and warranties of Seller contained in this Agreement shall be to the best of Seller's knowledge, true and correct in all material respects as of the date of Closing (with appropriate modifications permitted under this Agreement); and (c) Seller shall have performed and observed, in all material respects, all covenants and agreements of this Agreement to be performed and observed by Seller as of the date of Closing. Section 4.7 CONDITIONS PRECEDENT TO OBLIGATION OF SELLER. The obligation of Seller to consummate the transaction hereunder shall be subject to the fulfillment on or before the date of Closing of all of the following conditions, any or all of which may be waived by Seller in its sole discretion: (a) Seller shall have received the Purchase Price as adjusted as provided herein, pursuant to and payable in the manner provided for in this Agreement; (b) Purchaser shall have delivered to Seller all of the items required to be delivered to Seller pursuant to the terms of this Agreement, including but not limited to, those provided for in Section 4.3 hereof; (c) All of the representations and warranties of Purchaser contained in this Agreement shall be true and correct in all material respects as of the date of Closing (with appropriate modifications permitted under this Agreement); and (d) Purchaser shall have performed and observed, in all material respects, all covenants and agreements of this Agreement to be performed and observed by Purchaser as of the date of Closing. ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS Section 5.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby makes the following representations and warranties to Purchaser as of the Effective Date, which representations and warranties shall be deemed to have been made again as of the Closing, subject to Section 4.2(f) hereof: (a) ORGANIZATION AND AUTHORITY. Seller has been duly organized and is validly existing under the laws of the Commonwealth of Pennsylvania. Seller has the full right and authority to enter into this Agreement and to transfer all of the Property and to consummate or cause to be consummated the transaction contemplated by this Agreement. The person signing this Agreement on behalf of Seller is or are authorized to do so. (b) PENDING ACTIONS. To Seller's knowledge, Seller has not received written notice of any action, suit, arbitration, unsatisfied order or judgment, government investigation or proceeding pending against Seller which, if adversely determined, could individually or in the aggregate materially interfere with the consummation of the transaction contemplated by this Agreement. (c) OPERATING AGREEMENTS. To Seller's knowledge, the Operating Agreements listed on Exhibit C are all of the agreements concerning the operation and maintenance of the Property entered into by Seller and affecting the Property, except those operating agreements that are not assignable or are to be terminated by Seller within thirty (30) days after the Closing, and except any agreement with Seller's property manager, which shall be terminated by Seller. (d) LEASE BROKERAGE. To Seller's knowledge, there are no agreements with brokers providing for the payment from and after the Closing by Seller or Seller's successor-in-interest of leasing commissions or fees for procuring tenants with respect to the Property, except as disclosed in Exhibit N hereto; (e) LITIGATION. To Seller's knowledge, except as set forth on Exhibit O attached hereto, and except tenant eviction proceedings, tenant bankruptcies, proceedings for the collection of delinquent rentals from tenants and proceedings related to claims for personal injury or damage to property due to events occurring at the Property, Seller has not received written notice of any litigation which has been filed against Seller that arises out of the ownership of the Property and would materially affect the Property or use thereof, or Seller's ability to perform hereunder; Seller agrees to indemnify and hold harmless Buyer from and against all loss, cost and expense it may suffer by reason of the claim asserted and referred to on Exhibit O attached hereto; and (f) LEASES. To Seller's knowledge, the rent roll attached hereto as Exhibit P is accurate in all material respects, and lists all of the leases currently affecting the Property. (g) PURCHASE RIGHTS. To Seller's knowledge, Seller has not granted any rights or options to purchase the Property to, or accepted any offers to purchase the property from, any party other than Purchaser. (h) EMPLOYEES OF SELLER. To Seller's knowledge, Seller has no employees at the Property. Purchaser shall not be responsible for or required to assume any employee benefit plans or severance obligations of Seller. (i) STATEMENT OF TENANT DELINQUENCIES. To Seller's knowledge, the Statement of Tenant Delinquencies attached hereto as Exhibit Q is accurate in all material respects and lists all overdue monetary obligations to Seller of tenants at the Property. (j) NAME. To Seller's knowledge, Seller has not assigned its rights, if any, to use the name "Berwyn Park" to any other person or entity. The use of such name by any tenant of the Property shall not be deemed a violation of this representation and warranty. Section 5.2 KNOWLEDGE DEFINED. References to the "knowledge" of Seller shall refer only to the current actual knowledge of the Designated Persons (as hereinafter defined), and shall not be construed, by imputation or otherwise, to refer to the knowledge of Seller or any affiliate of Seller, or to any officer, agent, manager, representative or employee of Seller or any affiliate thereof or to impose upon such Designated Persons any duty to investigate the matter to which such actual knowledge, or the absence thereof, pertains. As used herein, the term "DESIGNATED PERSONS" shall refer to the following persons: (a) Albert Griffith, (b) William Wilson, (c) Dean Lundahl and (d) J. Patrick Armstrong. Section 5.3 SURVIVAL OF SELLER'S REPRESENTATIONS AND WARRANTIES. The representations and warranties of Seller set forth in Section 5.1 hereof as updated as of the Closing in accordance with the terms of this Agreement, shall survive Closing for a period of one hundred eighty (180) days. No claim for a breach of any representation or warranty of Seller shall be actionable or payable if the breach in question results from or is based on a condition, state of facts or other matter which was known to Purchaser prior to Closing. Seller shall have no liability to Purchaser for a breach of any representation or warranty (a) unless the valid claims for all such breaches collectively aggregate more than Twenty-Five Thousand Dollars ($25,000), in which event the full amount of such valid claims shall be actionable, up to the Cap (as defined in this Section), and (b) unless written notice containing a description of the specific nature of such breach shall have been given by Purchaser to Seller prior to the expiration of said one hundred eighty (180) day period and an action shall have been commenced by Purchaser against Seller within two hundred forty (240) days of Closing. Purchaser agrees to first seek recovery under any insurance policies, service contracts and Leases prior to seeking recovery from Seller, and Seller shall not be liable to Purchaser if Purchaser's claim is satisfied from such insurance policies, service contracts or Leases. As used herein, the term "CAP " shall mean the total aggregate amount of Five Hundred Thousand Dollars ($500,000). Section 5.4 COVENANTS OF SELLER. Seller hereby covenants with Purchaser as follows: (a) From the Effective Date hereof until the Closing or earlier termination of this Agreement, Seller shall use reasonable efforts to operate and maintain the Property in a manner generally consistent with the manner in which Seller has operated and maintained the Property prior to the date hereof; (b) Except as provided hereinbelow, a copy of any amendment, renewal or expansion of an existing Lease (unless such renewal or expansion is pursuant to the terms of an existing Lease) or of any new Lease which Seller wishes to execute between the Effective Date and the date of Closing will be submitted to Purchaser prior to execution by Seller. Purchaser agrees to notify Seller in writing within five (5) business days after its receipt thereof of either its approval or disapproval thereof, including all Tenant Inducement Costs and leasing commissions to be incurred in connection therewith. In the event Purchaser informs Seller within such five business day period that Purchaser does not approve the amendment, renewal or expansion of the existing Lease or the new Lease, which approval shall not be unreasonably withheld, Seller will not enter into such renewal or expansion or new lease. In the event Purchaser fails to notify Seller in writing of its approval or disapproval within the five (5) business day period set forth above, Purchaser shall be deemed to have approved such new Lease, amendment, renewal or expansion. At Closing, Purchaser shall reimburse Seller for any Tenant Inducement Costs, leasing commissions or other expenses, including legal fees, incurred by Seller pursuant to an amendment, a renewal, an expansion or a new Lease approved (or deemed approved) by Purchaser. Section 5.5 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby makes the following representations and warranties to Seller as of the Effective Date, which representations and warranties shall be deemed to have been made again as of the Closing, subject to Section 4.3(c) hereof: (a) ORGANIZATION AND AUTHORITY. Purchaser has been duly organized and is validly existing under the laws of the State of Maryland. Purchaser has the full right and authority to enter into this Agreement and to consummate or cause to be consummated the transaction contemplated by this Agreement. The person(s) signing this Agreement on behalf of Purchaser is or are authorized to do so; (b) PENDING ACTIONS. To Purchaser's knowledge, there is no action, suit, arbitration, unsatisfied order or judgment, government investigation or proceeding pending against Purchaser which, if adversely determined, could individually or in the aggregate materially interfere with the consummation of the transaction contemplated by this Agreement. (c) ERISA. As of the Closing, (1) Purchaser will not be an employee benefit plan as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), which is subject to Title I of ERISA, nor a plan as defined in Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (each of the foregoing hereinafter referred to collectively as "PLAN"), and (2) the assets of the Purchaser will not constitute "plan assets" of one or more such Plans within the meaning of Department of Labor ("DOL") Regulation Section 2510.3-101. As of the Closing, if Purchaser is a "governmental plan" as defined in Section 3(32) of ERISA, the closing of the sale of the Property will not constitute or result in a violation of state or local statutes regulating investments of and fiduciary obligations with respect to governmental plans. As of the Closing, Purchaser will be acting on its own behalf and not on account of or for the benefit of any Plan. Purchaser has no present intent to transfer the Property to any entity, person or Plan which will cause a violation of ERISA. Purchaser shall not assign its interest under this Agreement to any entity, person, or Plan which will cause a violation of ERISA. Section 5.6 SURVIVAL OF PURCHASER'S REPRESENTATIONS AND WARRANTIES. The representations and warranties of Purchaser set forth in Section 5.5 hereof as updated as of the Closing in accordance with the terms of this Agreement, shall survive Closing for a period of one hundred eighty (180) days. Purchaser shall have no liability to Seller for a breach of any representation or warranty unless written notice containing a description of the specific nature of such breach shall have been given by Seller to Purchaser prior to the expiration of said one hundred eighty (180) day period and an action shall have been commenced by Seller against Purchaser within two hundred forty (240) days of Closing. ARTICLE VI DEFAULT Section 6.1 DEFAULT BY PURCHASER. In the event the sale of the Property as contemplated hereunder is not consummated due to Purchaser's default hereunder, Seller shall be entitled, as its sole remedy, to terminate this Agreement and receive the Deposit as liquidated damages for the breach of this Agreement, it being agreed between the parties hereto that the actual damages to Seller in the event of such breach are impractical to ascertain and the amount of the Deposit is a reasonable estimate thereof. Section 6.2 DEFAULT BY SELLER. In the event the sale of the Property as contemplated hereunder is not consummated due to Seller's default hereunder, Purchaser shall be entitled, as its sole remedy, either (a) to receive the retur nof the Deposit, which return shall operate to terminate this Agreement and release Seller from any and all liability hereunder, except that in such event Seller shall reimburse Purchaser for up to Twenty Five Thousand Dollars ($25,000) for reasonable expenses incurred by Purchaser and documented to Seller's reasonable satisfaction and incurred in connection with Purchaser's investigation of the Property or (b) to enforce specific performance of Seller's obligation to convey the Property to Purchaser in accordance with the terms of this Agreement, it being understood and agreed that the remedy of specific performance shall not be available to enforce any other obligation of Seller hereunder. Except as expressly set forth in clause (a) of this Section 6.2, Purchaser expressly waives its rights to seek damages in the event of Seller's default hereunder. Purchaser shall be deemed to have elected to terminate this Agreement and receive back the Deposit if Purchaser fails to file suit for specific performance against Seller in a court having jurisdiction in the county and state in which the Property is located, on or before thirty (30) days following the date upon which Closing was to have occurred. Section 6.3 RECOVERABLE DAMAGES. Notwithstanding Sections 6.1 and 6.2 hereof, in no event shall the provisions of Sections 6.1 and 6.2 limit the damages recoverable by either party against the other party due to the other party's obligation to indemnify such party in accordance with this Agreement. This Section shall survive the Closing or the earlier termination of this Agreement. ARTICLE VII RISK OF LOSS Section 7.1 MINOR DAMAGE. In the event of loss or damage to the Property or any portion thereof which is not "Major" (as hereinafter defined), this Agreement shall remain in full force and effect provided that Seller shall, at Seller's option, either (a) perform any necessary repairs, or (b) assign to Purchaser, without representation, warranty or recourse to Seller, all of Seller's right, title and interest in and to any claims and proceeds Seller may have with respect to any net casualty insurance policies or net condemnation awards relating to the premises in question (that is, after expense of collection), subject however, to Seller's right to receive reimbursement therefrom of any amounts paid or incurred by Seller for or on account of repairs and/or restoration of the Property prior to Closing. In the event that Seller elects to perform repairs upon the Property, Seller shall use reasonable efforts to complete such repairs promptly and the date of Closing shall be extended a reasonable time, not to exceed ninety (90) days, in order to allow for the completion of such repairs. If Seller elects to assign a casualty claim to Purchaser, the Purchase Price shall be reduced by an amount equal to the lesser of the deductible amount under Seller's insurance policy or the cost of such repairs as determined in accordance with Section 7.3 hereof. Upon Closing, full risk of loss with respect to the Property shall pass to Purchaser. Section 7.2 MAJOR DAMAGE. In the event of a "Major" loss or damage, Purchaser may terminate this Agreement by written notice to the Seller, in which event the Deposit shall be returned to Purchaser. If Purchaser does not elect to terminate this Agreement within ten (10) days after Seller sends Purchaser written notice of the occurrence of such Major loss or damage (which notice shall state the cost of repair or restoration thereof as opined by an architect in accordance with Section 7.3 hereof), then Purchaser shall be deemed to have elected to proceed with Closing, in which event Seller shall, at Seller's option, either (a) perform any necessary repairs, or (b) assign to Purchaser, without representation, warranty or recourse to Seller, all of Seller's right, title and interest in and to any claims and proceeds Seller may have with respect to any net casualty insurance policies or net condemnation awards relating to the premises in question (that is, after expense of collection), subject however, to Seller's right to receive reimbursement therefrom of any amounts paid or incurred by Seller for or on account of repairs and/or restoration of the Property prior to Closing. In the event that Seller elects to perform repairs upon the Property, Seller shall use reasonable efforts to complete such repairs promptly and the date of Closing shall be extended a reasonable time in order to allow for the completion of such repairs. Upon Closing, full risk of loss with respect to the Property shall pass to Purchaser. Section 7.3 DEFINITION OF "MAJOR" LOSS OR DAMAGE. For purposes of Sections 7.1 and 7.2, "MAJOR" loss or damage refers to the following: (a) loss or damage to the Property hereof such that the cost of repairing or restoring the premises in question to substantially the same condition which existed prior to the event of damage would be, in the opinion of an architect selected by Seller and reasonably approved by Purchaser, equal to or greater than One Million Dollars ($1,000,000), and (b) any loss due to a condemnation which permanently and materially impairs the current use of the Property. If Purchaser does not give written notice to Seller of Purchaser's reasons for disapproving an architect within five (5) business days after receipt of notice of the proposed architect, Purchaser shall be deemed to have approved the architect selected by Seller. ARTICLE VIII COMMISSIONS Section 8.1 BROKERAGE COMMISSIONS. With respect to the transaction contemplated by this Agreement, Seller and Purchaser each represent that it has not utilized a broker . Each party hereto agrees that if any person or entity makes a claim for brokerage commissions or finder's fees related to the sale of the Property by Seller to Purchaser, and such claim is made by, through or on account of any acts or alleged acts of said party or its representatives, said party will protect, indemnify, defend and hold the other party free and harmless from and against any and all loss, liability, cost, damage and expense (including reasonable attorneys' fees) in connection therewith. The provisions of this paragraph shall survive Closing or any termination of this Agreement. ARTICLE IX DISCLAIMERS AND WAIVERS Section 9.1 NO RELIANCE ON DOCUMENTS. Except as expressly stated herein, Seller makes no representation or warranty as to the truth, accuracy or completeness of any materials, data or information delivered by Seller or its representatives to Purchaser in connection with the transaction contemplated hereby. Purchaser acknowledges and agrees that all materials, data and information delivered by Seller to Purchaser in connection with the transaction contemplated hereby are provided to Purchaser as a convenience only and that any reliance on or use of such materials, data or information by Purchaser shall be at the sole risk of Purchaser, except as otherwise expressly stated herein. Neither Seller, nor any affiliate of Seller, nor the person or entity which prepared any report or reports delivered by Seller to Purchaser shall have any liability to Purchaser for any inaccuracy in or omission from any such reports. SECTION 9.2 AS-IS SALE; DISCLAIMERS. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, IT IS UNDERSTOOD AND AGREED THAT SELLER IS NOT MAKING AND HAS NOT AT ANY TIME MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. PURCHASER ACKNOWLEDGES AND AGREES THAT UPON CLOSING SELLER SHALL SELL AND CONVEY TO PURCHASER AND PURCHASER SHALL ACCEPT THE PROPERTY "AS IS, WHERE IS, WITH ALL FAULTS", EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN THIS AGREEMENT. PURCHASER HAS NOT RELIED AND WILL NOT RELY ON, AND SELLER IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESS OR IMPLIED WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PROPERTY OR RELATING THERETO (INCLUDING SPECIFICALLY, WITHOUT LIMITATION, OFFERING PACKAGES DISTRIBUTED WITH RESPECT TO THE PROPERTY) MADE OR FURNISHED BY SELLER, THE MANAGERS OF THE PROPERTY, OR ANY REAL ESTATE BROKER OR AGENT REPRESENTING OR PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN, DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS SPECIFICALLY SET FORTH IN THIS AGREEMENT. PURCHASER ALSO ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS AND TAKES INTO ACCOUNT THAT THE PROPERTY IS BEING SOLD "AS-IS." PURCHASER REPRESENTS TO SELLER THAT PURCHASER HAS CONDUCTED, OR WILL CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER DEEMS NECESSARY OR DESIRABLE TO SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY, AND WILL RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN SUCH REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT. UPON CLOSING, PURCHASER SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED TO, CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY PURCHASER'S INVESTIGATIONS, AND PURCHASER, UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLER (AND SELLER'S OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS) FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH PURCHASER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLER (AND SELLER'S OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS) AT ANY TIME BY REASON OF OR ARISING OUT OF ANY LATENT OR PATENT CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS, VIOLATIONS OF ANY APPLICABLE LAWS AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY. Section 9.3 SURVIVAL OF DISCLAIMERS. The provisions of this Article IX shall survive Closing or any termination of this Agreement. ARTICLE X MISCELLANEOUS Section 10.1 CONFIDENTIALITY. Purchaser and its representatives shall hold in strictest confidence all data and information obtained with respect to Seller or its business, whether obtained before or after the execution and delivery of this Agreement, and shall not disclose the same to others; provided, however, that it is understood and agreed that Purchaser may disclose such data and information to the employees, lenders, consultants, accountants and attorneys of Purchaser provided that such persons agree in writing to treat such data and information confidentially. In the event this Agreement is terminated or Purchaser fails to perform hereunder, Purchaser shall promptly return to Seller any statements, documents, schedules, exhibits or other written information obtained from Seller in connection with this Agreement or the transaction contemplated herein. It is understood and agreed that, with respect to any provision of this Agreement which refers to the termination of this Agreement and the return of the Deposit to Purchaser, such Deposit shall not be returned to Purchaser unless and until Purchaser has fulfilled its obligation to return to Seller the materials described in the preceding sentence. In the event of a breach or threatened breach by Purchaser or its agents or representatives of this Section 10.1, Seller shall be entitled to an injunction restraining Purchaser or its agents or representatives from disclosing, in whole or in part, such confidential information. Nothing herein shall be construed as prohibiting Seller from pursuing any other available remedy at law or in equity for such breach or threatened breach. The provisions of this Section 10.1 shall survive Closing or any termination of this Agreement. Section 10.2 PUBLIC DISCLOSURE. Prior to and after the Closing, except as required by federal and/or state securities laws, any release to the public of information with respect to the sale contemplated herein or any matters set forth in this Agreement will be made only in the form approved by Purchaser and Seller. The provisions of this Section 10.2 shall survive the Closing or any termination of this Agreement. Section 10.3 ASSIGNMENT. Subject to the provisions of this Section 10.3, the terms and provisions of this Agreement are to apply to and bind the permitted successors and assigns of the parties hereto. Except for an assignment of this Agreement to a wholly owned subsidiary or an affiliate controlled by or under common control by Purchaser which Seller agrees is permitted, Purchaser may not assign its rights under this Agreement without first obtaining Seller's written approval, which approval may be given or withheld in Seller's sole discretion. In the event Purchaser intends to assign its rights hereunder, and even if permitted as provided in this Section above (a) Purchaser shall send Seller written notice of its request at least ten (10) business days prior to Closing, which request shall include the legal name and structure of the proposed assignee, as well as any other information that Seller may reasonably request, and (b) Purchaser and the proposed assignee shall execute an assignment and assumption of this Agreement in form and substance satisfactory to Seller, and (c) in no event shall any assignment of this Agreement release or discharge Purchaser from any liability or obligation hereunder. Notwithstanding the foregoing, under no circumstances shall Purchaser have the right to assign this Agreement to any person or entity owned or controlled by an employee benefit plan if Seller's sale of the Property to such person or entity would, in the reasonable opinion of Seller's ERISA advisor, create or otherwise cause a "prohibited transaction" under ERISA. Any transfer, directly or indirectly, of any stock, partnership interest or other ownership interest in Purchaser shall constitute an assignment of this Agreement. For the purposes of this Section 10.3, the term "control" or "controlled" shall mean possessing a majority interest in ownership and voting rights. The provisions of this Section 10.3 shall survive the Closing or any termination of this Agreement. Section 10.4 NOTICES. Any notice pursuant to this Agreement shall be given in writing by (a) personal delivery, (b) reputable overnight delivery service with proof of delivery, (c) United States Mail, postage prepaid, registered or certified mail, return receipt requested, or (d) legible facsimile transmission, sent to the intended addressee at the address set forth below, or to such other address or to the attention of such other person as the addressee shall have designated by written notice sent in accordance herewith, and shall be deemed to have been given upon receipt or refusal to accept delivery, or, in the case of facsimile transmission, as of the date of the facsimile transmission provided that an original of such facsimile is also sent to the intended addressee by means described in clauses (a), (b) or (c) above. Unless changed in accordance with the preceding sentence, the addresses for notices given pursuant to this Agreement shall be as follows: If to Seller: Berwyn Development Associates C/O LCOR Inc. 300 Berwyn Park, Suite 115 Berwyn, PA 19312 Attention: Dean O. Lundahl Telephone No.(610) 408-4443 Telecopy No. (610) 640-0516 with a copy to: Metropolitan Life Insurance Company Real Estate Investments 8300 Boone Boulevard - Suite 750 Vienna, VA 22182 Attention: Christine Madigan Telephone No. (703) 506-8008 Telecopy No. (703) 848-2594 with a copy to: Metropolitan Life Insurance Company 200 Park Avenue, 12th Floor New York, New York 10166 Attention: William P. Gardella, Esquire Telephone No. (212) 578-5884 Telecopy No. (212) 685-5927 If to Purchaser: Brandywine Realty Trust 16 Campus Boulevard, Suite 150 Newtown Square, PA 19073 Attention: Gerard H. Sweeney Telephone No. (610) 325-5600 Telecopy No. (610) 325-5622 with a copy to: Brad A. Molotsky, Esquire Pepper, Hamilton & Scheetz 3000 Two Logan Square Philadelphia, PA 19103 Telephone No. (215) 981-4262 Telecopy No. (215) 981-4930 Section 10.5 MODIFICATIONS This Agreement cannot be changed orally, and no executory agreement shall be effective to waive, change, modify or discharge it in whole or in part unless such executory agreement is in writing and is signed by the parties against whom enforcement of any waiver, change, modification or discharge is sought. Section 10.6 ENTIRE AGREEMENT This Agreement, including the exhibits and schedules hereto, contains the entire agreement between the parties hereto pertaining to the subject matter hereof and fully supersedes all prior written or oral agreements and understandings between the parties pertaining to such subject matter, other than the confidentiality agreement executed by Purchaser and Seller in connection with the Property. Section 10.7 FURTHER ASSURANCES Each party agrees that it will execute and deliver such other documents and take such other action, whether prior or subsequent to Closing, as may be reasonably requested by the other party to consummate the transaction contemplated by this Agreement. The provisions of this Section 10.7 shall survive Closing. Section 10.8 COUNTERPARTS. This Agreement may be executed in counterparts, all such executed counterparts shall constitute the same agreement, and the signature of any party to any counterpart shall be deemed a signature to, and may be appended to, any other counterpart. Section 10.9 FACSIMILE SIGNATURES. In order to expedite the transaction contemplated herein, telecopied signatures may be used in place of original signatures on this Agreement. Seller and Purchaser intend to be bound by the signatures on the telecopied document, are aware that the other party will rely on the telecopied signatures, and hereby waive any defenses to the enforcement of the terms of this Agreement based on the form of signature. Section 10.10 SEVERABILITY. If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall nonetheless remain in full force and effect. Section 10.11 APPLICABLE LAW. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania. Purchaser and Seller agree that the provisions of this Section 10.11 shall survive the Closing or any termination of this Agreement. Section 10.12 NO THIRD-PARTY BENEFICIARY. The provisions of this Agreement and of the documents to be executed and delivered at Closing are and will be for the benefit of Seller and Purchaser only and are not for the benefit of any third party, and accordingly, no third party shall have the right to enforce the provisions of this Agreement or of the documents to be executed and delivered at Closing. Section 10.13 CAPTIONS. The section headings appearing in this Agreement are for convenience of reference only and are not intended, to any extent and for any purpose, to limit or define the text of any section or any subsection hereof. Section 10.14 CONSTRUCTION The parties acknowledge that the parties and their counsel have reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any exhibits or amendments hereto. Section 10.15 RECORDATION. This Agreement may not be recorded by any party hereto without the prior written consent of the other party hereto. The provisions of this Section 10.15 shall survive the Closing or any termination of this Agreement. Section 10.16 TIME OF THE ESSENCE. The time for the payment of money and all other times referred to for the performance by Purchaser of any provisions of this Agreement are hereby agreed to be of the essence of this Agreement. Section 10.17 SEC DISCLOSURE. During the period beginning on the Effective Date and ending on the first anniversary of the date of the Closing; and in addition to any other document production required of Seller hereunder, Seller shall, from time to time, upon reasonable advance written notice from Purchaser, provide Purchaser and its representatives with (i) access to all financial and other information pertaining to Seller's ownership and operation of the Property for the period of January 1, 1995 to and including Closing, but excluding any Confidential Documents (as defined in Section 3.1 of this Agreement), to enable Purchaser and Arthur Anderson & Co. (the "Accountant") to prepare financial statements in compliance with any or all of (a) Rule 3-05 or 3-14 of Regulation S-X of the Securities and Exchange Commission (the "Commission"), as applicable, and (b) any registration statement report or disclosure statement required to be filed with the Commission by or on behalf of the Purchaser, and (ii) if required by the Accountant in order to render an opinion concerning the operating statements for the Property, a representation letter substantially in the form attached hereto as Exhibit R. Section 10.18 EXCULPATION. No recourse shall be had for any obligation of Purchaser under this Agreement or under any document executed in connection with or pursuant to this Agreement or for any claim based thereon or otherwise in respect thereof, against any past, present or future trustee, shareholder, officer or employee of Brandywine Realty Trust, whether by virtue of any statue, or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being expressly waived and released by Seller and all parties claiming by, through or under Seller, it being agreed by Purchaser and Seller that recourse against Purchaser under this Agreement shall be limited to the assets of Brandywine Realty Trust. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the Effective Date. SELLER: BERWYN DEVELOPMENT ASSOCIATES, a Pennsylvania general partnership By: Linpro Berwyn Associates, general partner By: _______________________________ Name: Eric Eichler Title: Managing General Partner By: Metropolitan Life Insurance Company general partner By: _______________________________ Name: Title: PURCHASER: BRANDYWINE REALTY TRUST By: _______________________ Name: Gerard H. Sweeney Title: President/CEO Escrow Agent executes this Agreement below solely for the purpose of acknowledging that it agrees to be bound by the provisions of Sections 1.5 and 1.6 hereof. ESCROW AGENT: COMMONWEALTH LAND TITLE INSURANCE COMPANY a Pennsylvania corporation By: _______________________ Name: _____________________ Title: ____________________ EXHIBIT A DESCRIPTION OF LAND EXHIBIT B LIST OF PERSONAL PROPERTY EXHIBIT C LIST OF OPERATING AGREEMENTS VENDOR AGREEMENT PURPOSE TERM CANCELLATION DATE CLAUSE NAME EXHIBIT D LIST OF ENVIRONMENTAL AND GEOTECHNICAL REPORTS EXHIBIT E TENANT ESTOPPEL FORM ___________________________[Date] [PURCHASER] ____________________ ____________________ [SELLER] Berwyn Development Associates C/O LCOR Inc. 300 Berwyn Park, Suite 115 Berwyn, PA 19312 Re: Lease dated ________________, 199 _ (the "Lease") executed between ____________________________ ("Landlord"), and __________________ ("Tenant"), for those premises located at ________________________________. Gentlemen: The undersigned Tenant understands that you or your assigns intend to acquire fee title to that property located at _____________ (the "Property") from Berwyn Development Associates. The undersigned Tenant does hereby certify to you as follows: A. Tenant has entered into a certain lease together with all amendments (the "Lease") as described on Schedule 1 attached hereto. B. The Lease is in full force and effect and has not been modified, supplemented, or amended except as set forth on Schedule 1 attached hereto. C. Tenant has not given Landlord written notice of any dispute between Landlord and Tenant or that Tenant considers Landlord in default under the Lease. D. Tenant does not claim any offsets or credits against rents payable under the Lease. E. Tenant has not paid a security or other deposit with respect to the Lease, except as follows: ___________________________________. F. Tenant has fully paid rent to and including the month of ______________, 199_. G. Tenant has not paid any rentals in advance except for the current month of _________, 199_. H. The Lease expires on ____________________________. I. Tenant has no options, rights of first offer or rights of first refusal to purchase the Property, except as follows: TENANT: _________________________________ a _______________________________ By: _____________________________ Name: ___________________________ Title: __________________________ EXHIBIT F TENANT ESTOPPEL STANDARDS Tenants representing 70% or more of occupied space in the Property, including the following tenants (Required Estoppels): Berwyn 100 Shared Medical Berwyn 200 Devon Direct Berwyn 300 Delval Financial EXHIBIT G FORM OF DEED [A deed form is not included as it is a State specific document. The deed will be a limited or special warranty type deed in which the Property will be conveyed subject to the Permitted Exceptions (as described in Section 2.4 of the Sale Agreement) with a warranty of title by Seller as to the lawful claims of all persons claiming by, through or under Seller, but against none other.] EXHIBIT H FORM OF BILL OF SALE KNOW ALL MEN BY THESE PRESENTS, that BERWYN DEVELOPMENT ASSOCIATES, a Pennsylvania general partnership (the "Seller"), for and in consideration of the sum of Ten Dollars and other valuable consideration to it in hand paid by _________ , a _____________ the "Purchaser"), the receipt and sufficiency of which are hereby acknowledged, hereby sells, assigns, transfers and conveys unto said Purchaser any and all of Seller's right, title and interest in and to all tangible personal property located upon the land described in Schedule "1" attached hereto and hereby made a part hereof (the "Land") or within the improvements located thereon, including, without limitation, any and all appliances, furniture, carpeting, draperies and curtains, tools and supplies, and other items of personal property owned by Seller (excluding cash and any software), used exclusively in the operation of the Land and improvements, as is, where is, and without warranty of title or use, and without warranty, express or implied, of merchantability or fitness for a particular purpose. TO HAVE AND TO HOLD all of said personal property unto Purchaser, its successors and assigns, to its own use forever. IN WITNESS WHEREOF, Seller has executed this Bill of Sale as of the __day of ______________, 199_ BERWYN DEVELOPMENT ASSOCIATES, a Pennsylvania general partnership By: Linpro Berwyn Associates, general partner By: _______________________________ Name: Eric Eichler Title: Managing General Partner By: Metropolitan Life Insurance Company general partner By: _______________________________ Name: Title: [ACKNOWLEDGMENT AND/OR WITNESSES TO BE ADDED IF REQUIRED UNDER APPLICABLE STATE LAW] SCHEDULE "1" LEGAL DESCRIPTION [To be attached] EXHIBIT I FORM OF ASSIGNMENT OF LEASES THIS ASSIGNMENT OF LEASES (the "Assignment") is made as of this __day of ______________ , 199 __ between BERWYN DEVELOPMENT ASSOCIATES, a Pennsylvania general partnership ("Assignor") and ____________ , a _____________ ("Assignee"). For and in consideration of the sum of Ten Dollars ($10.00) and other valuable consideration to it in hand paid by Assignee to Assignor, the conveyance by Assignor to Assignee of all that certain real property being particularly described on Schedule "1" attached hereto and incorporated herein by this reference, more commonly known as Berwyn Park located in the Township of Tredyffrin, County of Chester, Commonwealth of Pennsylvania (the "Property"), and the mutual covenants herein contained, the receipt and sufficiency of the foregoing consideration being hereby acknowledged by the parties hereto, Assignor hereby assigns, transfers, sets over and conveys to Assignee all of Assignor's right, title and interest in, to and under any and all existing and outstanding leases, licenses and occupancy agreements (collectively, the "Leases"), of the improvements comprising a part of the Property, including without limitation, all those Leases described on Schedule "2" attached hereto and incorporated herein by this reference, together with all security deposits tendered under the Leases remaining in the possession of Assignor and described on Schedule "3" attached hereto and incorporated herein by this reference (the "Security Deposits"). Assignee does hereby assume and agree to perform all of Assignor's obligations under or with respect to the Leases accruing from and after the date hereof, including without limitation, any and all obligations to pay leasing commissions and finder's fees which are due or payable after the date hereof as specifically set forth on Schedule "4" attached hereto and incorporated herein by this reference, with respect to the tenants listed on said Schedule "4", and claims made by tenants with respect to the tenants' security deposits listed on Schedule "3". Assignee agrees to indemnify, protect, defend and hold Assignor harmless from and against any and all liabilities, losses, costs, damages and expenses (including reasonable attorneys' fees) directly or indirectly arising out of or related to any breach or default in Assignee's obligations hereunder. Assignor shall remain liable for all of Assignor's obligations under or with respect to the Leases accruing prior to the date hereof. Assignor agrees to indemnify, protect, defend and hold Assignee harmless from and against any and all liabilities, losses, costs, damages and expenses (including reasonable attorneys' fees) directly or indirectly arising out of or related to any breach or default in Assignor's obligations hereunder. This Assignment shall be binding upon and inure to the benefit of Assignor and Assignee and their respective heirs, executors, administrators, successors and assigns. This Assignment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, Assignor and Assignee have each executed this Assignment as of the date first written above. ASSIGNOR: BERWYN DEVELOPMENT ASSOCIATES By: Linpro Berwyn Associates, general partner By: ____________________________ Name: Title: By: Metropolitan Life Insurance Company general partner By: ____________________________ Name: Title: ASSIGNEE: ________________________ a _______________________ By: ______________________ Name: Title: [ADD STATE SPECIFIC ACKNOWLEDGMENTS AND/OR WITNESSES FOR ASSIGNOR AND ASSIGNEE] SCHEDULE "1" LEGAL DESCRIPTION SCHEDULE "2" LEASES [To be attached] SCHEDULE "3" SECURITY DEPOSITS SCHEDULE "4" LEASING COMMISSIONS AND TENANTS EXHIBIT J FORM OF ASSIGNMENT OF CONTRACTS THIS ASSIGNMENT AND ASSUMPTION OF CONTRACTS AND INTANGIBLES (the "Assignment") is made as of the ____ day of _________, 199 between BERWYN DEVELOPMENT ASSOCIATES, a Pennsylvania general partnership ("Assignor") and __________________ , a ______________________________("Assignee"). For and in consideration of the sum of Ten Dollars ($10.00) and other valuable consideration to it in hand paid by Assignee to Assignor, the conveyance by Assignor to Assignee of all that certain real property being particularly described on Schedule "1" attached hereto and incorporated herein by this reference, more commonly known as Berwyn Park located in the Township of Tredyffrin, County of Chester, Commonwealth of Pennsylvania (the "Property"), and the mutual covenants herein contained, the receipt and sufficiency of the foregoing consideration being hereby acknowledged by the parties hereto, Assignor hereby assigns, transfers, sets over and conveys to Assignee all of Assignor's right, title and interest, to the extent assignable, in, to and under any and all of the following, to wit: (i) the contracts and agreements listed and described on Schedule "2" attached hereto and incorporated herein by this reference (the "Contracts"), (ii) all existing warranties and guaranties (express or implied) issued to Assignor in connection with the improvements or the personal property being conveyed to Assignee by Bill of Sale on the date hereof, (iii) all existing permits, licenses, approvals and authorizations issued by any governmental authority in connection with the Property, and (iv) the non-exclusive right to the name "Berwyn Park." All items described in (ii), (iii) and (iv) above are hereinafter collectively referred to as "Intangible Property." Assignee does hereby assume and agree to perform all of Assignor's obligations under the Contracts and Intangible Property accruing from and after the date hereof. Assignee agrees to indemnify, protect, defend and hold Assignor harmless from and against any and all liabilities, losses, costs, damages and expenses (including reasonable attorneys' fees) directly or indirectly arising out of or related to any breach or default in Assignee's obligations hereunder. Assignor shall remain liable for all of Assignor's obligations under the Contracts and Intangible Property accruing prior to the date hereof. Assignor agrees to indemnify, protect, defend and hold Assignee harmless from and against any and all liabilities, losses, costs, damages and expenses (including reasonable attorneys' fees) directly or indirectly arising out of or related to any breach or default in Assignor's obligations hereunder. This Assignment shall be binding upon and inure to the benefit of Assignor and Assignee and their respective heirs, executors, administrators, successors and assigns. This Assignment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, Assignor and Assignee have each executed this Assignment as of the date first written above. ASSIGNOR: BERWYN DEVELOPMENT ASSOCIATES By: Linpro Berwyn Associates, general partner By: ____________________________ Name: Title: By: Metropolitan Life Insurance Company general partner By: ____________________________ Name: Title: ASSIGNEE: ________________________________ a _______________________________ By: _____________________________ [ADD STATE SPECIFIC ACKNOWLEDGMENTS AND/OR WITNESSES FOR ASSIGNOR AND ASSIGNEE] SCHEDULE "1" LEGAL DESCRIPTION SCHEDULE "2" CONTRACTS [To be attached] EXHIBIT K FORM OF TENANT NOTICE TENANT NOTIFICATION LETTER [DATE OF SALE CLOSING] HAND DELIVERED TO: All Tenants at BERWYN PARK, BERWYN, PA RE: Berwyn Park Notification Regarding Change of Ownership This letter is to notify you as a Tenant at Berwyn Park, Berwyn, Pennsylvania (the "Property"), that the Property has been sold by Berwyn Development Associates, ("Seller"), to ______________, a ________________- ("Purchaser"). As of the date hereof, your Lease has been assigned by Seller to Purchaser. From the date of this letter, any and all rent hereinafter due, or any other amounts hereinafter due under the terms of your Lease, shall be directed as follows: TO:___________________ ATTN: _______________ AT:___________________ _______________________ As part of the sale, all refundable tenant deposits, if any, actually held by Seller with respect to the Property have been transferred to, and Seller's obligations with respect to such deposits have been assumed by, Purchaser as of the date of this letter. Any and all payments of rent (or other sums due under your Lease) hereafter paid to any party other than Purchaser shall not relieve you of the obligation of making said payment to Purchaser. Seller: BERWYN DEVELOPMENT ASSOCIATES By: Linpro Berwyn Associates, general partner By: ____________________________ Name: Title: By: Metropolitan Life Insurance Company general partner By: ____________________________ Name: Title: Purchaser: ______________________ a ____________________ By: _______________________________ Name: Title: EXHIBIT L FORM OF FIRPTA CERTIFICATE CERTIFICATE REGARDING FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT (ENTITY TRANSFEROR) Section 1445 of the Internal Revenue Code provides that a transferee (purchaser) of a U.S. real property interest must withhold tax if the transferor (seller) is a foreign person. To inform the transferee (purchaser) that withholding of tax is not required upon the disposition of a U.S. real property interest by BERWYN DEVELOPMENT ASSOCIATES, a Pennsylvania general partnership ("Transferor") Transferor hereby certifies: 1. Transferor is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations). 2. Transferor's Federal Employer Identification Number is __________________ 3. Transferor's office address is: 300 Berwyn Park Suite 115 Berwyn, PA 19312 4. The address or description of the property which is the subject matter of the disposition is 100, 200 and 300 Berwyn Park, Berwyn, Pennsylvania. Transferor understands that this certification may be disclosed to the Internal Revenue Service by transferee and that any false statement contained herein could be punished by fine, imprisonment, or both. Transferor declares that it has examined this certification and to the best of its knowledge and belief, it is true, correct and complete, and further declares that the individual executing this certification on behalf of Transferor has full authority to do so. BERWYN DEVELOPMENT ASSOCIATES By: Linpro Berwyn Associates, general partner By: ____________________________ Name: Title: By: Metropolitan Life Insurance Company general partner By: ____________________________ Name: Title: Dated:___________________ EXHIBIT M INTENTIONALLY OMITTED EXHIBIT N LIST OF BROKERAGE AGREEMENTS [e.g. Lease Commission Agreement dated ______ by and between Berwyn Development Associates and XYZ Brokerage Company] EXHIBIT O LIST OF SPECIFIED LITIGATION [e.g. XYZ v. Berwyn Development Associates, action filed on ____ in ______ court] EXHIBIT P RENT ROLL EXHIBIT Q STATEMENT OF TENANT DELINQUENCIES EXHIBIT R FORM OF SEC REPRESENTATION LETTER EX-10.3 4 EXHIBIT 10.3 SEPARATION AGREEMENT THIS SEPARATION AGREEMENT is dated as of August 1, 1997 and is made by and between BRIAN F. BELCHER ("Belcher"), an individual who resides at 829 Juniper Drive, Lafayette Hill, PA 19444, as well as each and every dependent, heir, executor and assign of Belcher, and BRANDYWINE REALTY TRUST ("BRT"), a Maryland real estate investment trust, having its headquarters at 16 Campus Boulevard, Newtown Square, Pennsylvania 19073, together with each and every one of its predecessors, successors (by merger or otherwise), parents, subsidiaries (including but not limited to Brandywine Realty Services Corporation ("BRSC")), affiliates, divisions, trustees, directors, officers, employees and agents, whether present or former. WHEREAS, Belcher entered into an Employment Agreement dated as of July 31, 1996 (the "Employment Agreement") with BRSC; WHEREAS, BRSC assigned its rights and delegated its obligations under the Employment Agreement to BRT; WHEREAS, the parties intend that Belcher's employment with BRT will terminate on August 1, 1997 and that the Employment Agreement will terminate on that date; WHEREAS, Belcher and BRT desire to part on an amicable basis. NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth, Belcher and BRT, acting of their own free will and intending to be legally and irrevocably bound, hereby agree as follows: 1. Employment Termination. Belcher agrees that his employment with BRT is terminated, effective as of August 1, 1997, and Belcher resigns from all positions with BRT, effective as of August 1, 1997. Without limiting the generality of the foregoing, all rights and obligations of BRT and Belcher under the Employment Agreement shall terminate, effective as of August 1, 1997. Belcher waives any and all rights to reinstatement and/or consideration for future employment with BRT. 2. Salary Continuation. BRT agrees to pay Belcher salary continuation in the total amount of One Hundred Twenty-Five Thousand Dollars ($125,000.00) for the period from August 1, 1997 to August 1, 1998. This salary continuation will be paid in the same manner and with the same federal, state and local tax withholdings as Belcher's current salary. 3. COBRA. For the one-year period commencing August 1, 1997, BRT will provide, at its expense, Belcher with family coverage under the Company's group medical plan subject to the terms of the plan as in effect from time to time. All co-pays, deductibles and uninsured amounts will be the responsibility of Belcher. Belcher's employment, for purposes of continuation of benefits for himself and eligible dependents at his (or their) own cost under COBRA, shall terminate on August 1, 1997. Accordingly, Belcher's statutory right under COBRA to continue participation in BRT's group medical coverage for a period of up to eighteen (18) months, at his own cost, shall commence on August 1, 1997. Belcher agrees to promptly notify BRT by written notice to the President and Chief Executive Officer of BRT if he becomes eligible to participate in a comparable medical plan with a new employer. 4. Transfer of Partnership Interest. Belcher hereby transfers, effective automatically on August 1, 1997, all of his right, title and interest as a partner in Brandywine Realty Services Partnership ("BRSP") to BRSP in exchange for $25.00 and shall, on such date, withdraw as a partner of BRSP. 5. Fee Sharing. If at any time prior to April 30, 1998 Belcher renders services to Safeguard Scientifics, Inc. ("SSI") or any affiliate of SSI as of the date of this Agreement (an "SSI Affiliate"), then he shall remit to BRT forty percent (40%) of all fees earned on account of such services promptly following his receipt of payment, whether or not he receives payment before or after April 30, 1998. The foregoing obligation shall not apply to services rendered by Belcher to SSI or an SSI Affiliate on or after April 30, 1998. 6. Confidentiality. (a) Belcher agrees that he will not disclose or use, for his direct or indirect benefit or the direct or indirect benefit of any third party, any Confidential Information (as hereinafter defined) of BRT. "Confidential Information" means any and all proprietary or non-public information of BRT, including without limitation, information as to BRT's business and financial strategy and BRT's relationships with actual and prospective sellers or buyers of real estate or tenants of real estate. Confidential Information does not include information that is generally known or readily accessible in the real estate industry. (b) Belcher agrees that he will, effective as of August 1, 1997: (i) discontinue all use of Confidential Information; (ii) return to BRT all material furnished by BRT that contains Confidential Information; and (iii) erase any Confidential Information contained in computer memory under his ownership or control. (c) Belcher agrees to return to BRT on August 1, 1997 any documents and material whatsoever relating to the business of BRT. He also agrees that he will not make or retain copies of the foregoing. 7. Restricted Activities. Between August 1, 1997 and August 22, 1998: (A) Belcher agrees that he will not accept employment with, or act as a consultant to: (i) any real estate investment trust or real estate company that owns, purchases or sells office or industrial properties within any of 2 the counties in which BRT (or any subsidiary) currently owns a property or (ii) any of the companies (and any their respective subsidiaries and affiliates) listed on Exhibit A attached hereto and (B) Belcher agrees that he will not act as a broker or tenant representative for any of the tenants (or any of their subsidiaries or affiliates) of the Company or any of its subsidiaries that have leases that are scheduled to expire on or before December 31, 1998. The foregoing sentence shall not restrict Belcher from acting as a broker or tenant representative to any person or entity not covered by clause (B) thereof. In the event that, prior to August 22, 1998, any tenant with a lease scheduled to expire on or before December 31, 1998 contacts Belcher regarding his provision of services to it, Belcher will promptly notify either the Chairman of the Board or the President and Chief Executive Officer of the Company as to the substance of such contact. Belcher acknowledges that his agreement in this Paragraph 7 is reasonable in time and scope and is necessary to protect the business interests of BRT. Belcher further acknowledges that irreparable harm would be suffered by BRT if he were to violate such agreement and, accordingly, agrees that, in addition to legal relief and remedies, BRT will be entitled to equitable relief and remedies to enforce his compliance with such agreement. Belcher further acknowledges the adequacy of the consideration he is receiving under this Agreement in consideration for his agreement contained in this Paragraph 7. Without limiting the foregoing, and in addition to all other rights and remedies available to BRT, if Belcher violates his agreement in this Paragraph 7, he will immediately be required to pay to BRT an amount equal to all amounts paid to him by BRT pursuant to Paragraph 2 and BRT will have no further obligation to make payments to him pursuant to Paragraph 2 or to provide, at its expense, medical coverage for him or his family pursuant to Paragraph 3. 8. Waiver and Release of Claims. Belcher completely releases, relinquishes, waives and discharges BRT, its officers, trustees, directors, employees, agents, successors and assigns from all claims, liabilities, demands and causes of action, known or unknown, filed or contingent, which he may have or claim to have against BRT as of the date of termination of his employment arising out of or in any way related to his employment with BRT or the termination of that employment. Belcher agrees that he has executed this Agreement on his own behalf, and also on behalf of his dependents, heirs, agents, representatives and assigns. This release includes, but is not limited to, a release of any rights or claims he may have under: (a) the Age Discrimination in Employment Act, which prohibits age discrimination in employment; (b) Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991, which prohibits discrimination in employment based on race, color, national origin, religion or sex; (c) the Americans with Disabilities Act, which prohibits discrimination on the basis of a covered disability; 3 (d) the Employer Retirement and Income Security Act, which prohibits discrimination on the basis of entitlement to certain benefits; (e) any other federal, state or local laws or regulations prohibiting employment discrimination; (f) breach of any express or implied contract claims; (g) wrongful termination or any other tort claims, including claims for attorney's fees, whether based on common law or otherwise; (h) all claims to acquire or exercise any other rights or entitlements of stock, warrants, options, or other securities of BRT; provided that nothing contained herein shall terminate or restrict Belcher's rights under the warrants held by him on the date hereof exercisable for an aggregate of 40,000 common shares of beneficial interest of BRT at any time before 5:00 p.m. on August 22, 2002, as more fully provided in said warrants, or under the units of limited partnership interest held by him in Brandywine Operating Partnership, L.P. BRT agrees to release, relinquish, waive and discharge Belcher of all claims, liabilities, demands and causes of action, known or unknown, which it may have or claim to have against Belcher as of the date of the signing of this Agreement. The foregoing releases do not waive Belcher's or BRT's respective rights to enforce claims arising under this Agreement or any claims which by law may not be waived. 9. Cooperation. Belcher agrees to cooperate with BRT and its executives in facilitating an orderly transition with respect to matters relating to his responsibilities as a BRT executive, and, in furtherance of such agreement, agrees to provide, at no additional compensation, reasonable consultation to BRT's Chairman of the Board, President and Chief Executive Officer and such other executives, including BRT's Chief Financial Officer, as they may identify from time to time. Belcher agrees that he will not in the future voluntarily assist any individual or entity in preparing, or prosecuting any action or proceeding against BRT, its trustees, directors, officers, employees, or affiliates, including but not limited to, any administrative agency claims. Belcher also agrees that he will, at BRT's expense (and subject to payment to Belcher of reasonable compensation and without unreasonably interfering with his future employment obligations), cooperate with and assist BRT in its defense of any such action or proceeding. 10. Arbitration of Disputes Under this Agreement. The parties agree that any and all disputes arising out of the performance or breach of this Agreement or any promise or covenant herein shall be resolved by submission to arbitration in Philadelphia, Pennsylvania under, and in accordance with, the rules and procedures of the American Arbitration Association. 4 11. Enforcement. All remedies at law and equity shall be available for the enforcement of this Agreement. This Agreement may be pleaded as a full bar to the enforcement of any claim in any way related to or arising out of Belcher's employment with BRT and/or the termination of his employment to the extent of the waivers set forth in Paragraph 8 above. All sums due to Belcher hereunder shall be paid without reduction for compensation earned by Belcher in any subsequent employment and shall be payable to Belcher or his estate notwithstanding Belcher's death, disability or any other factor. 12. Opportunity to Review and Right to Revoke. Belcher acknowledges that he is acting of his own free will, that he has been afforded twenty-one (21) days to read and review the terms of this Agreement, that he has been advised to, and has had an opportunity to, seek the advice of counsel, and that he is voluntarily entering into this Agreement with full knowledge of its respective provisions and effects. Belcher also acknowledges that he has seven (7) days following his signing of this Agreement to revoke this Agreement in which case BRT will have no obligation to make any payment to him. 13. Contractual Effect. The parties understand and acknowledge that the terms of this Agreement are contractual and not a mere recital. Consequently, they expressly consent that this Agreement shall be given full force and effect according to each and all of its express terms and provisions, and that it shall be binding upon the respective parties as well as their heirs, executors, successors, administrators and assigns. 14. Invalidity. In case any one or more of the provisions contained in this Agreement shall, for any reason, be held to be illegal or unenforceable in any respect, such illegality or unenforceability shall not affect the validity of any other provision of this Agreement. 15. Governing Law. This Agreement shall be governed by the laws of the Commonwealth of Pennsylvania. IN WITNESS WHEREOF, Belcher and BRT each acknowledge that they are acting of their own free will, that they have had a sufficient opportunity to read and review the terms of this Agreement, they have each received the advice of their respective counsel with 5 respect hereto, and that they have voluntarily caused the execution of this Agreement and by reference herein as of the day and year set forth below. /s/ Brian F. Belcher Witness: /s/ Anthony A. Nichols, Sr. - --------------------------------- --------------------------- Brian F. Belcher On behalf of Brandywine Realty Trust: By: /s/ Gerard H. Sweeney Witness: /s/ Anthony A. Nichols, Sr. ------------------------- --------------------------- Title: President and Chief Executive Officer JOINDER Pursuant to Paragraph 4 of the above agreement, Brandywine Realty Services Partnership ("BRSP") hereby pays to Brian F. Belcher the sum of $25.00 in exchange for his entire right, title and interest as a partner in BRSP. BRANDYWINE REALTY SERVICES PARTNERSHIP By: /s/ Gerard H. Sweeney --------------------------------- Gerard H. Sweeney, a General Partner 6 Exhibit A --------- - - Pitcairn Companies - - Berwind Companies - - Partnerships/Corporations affiliated with Ira Lubert - - Preferred Properties - - O'Neil Properties - - LCOR, Inc. - - Kevin F. Donahue & Co. - - Bell Atlantic Properties - - Advanta Corporation - - GMAC 7 EX-23.1 5 EXHIBIT 23.1 Exhibit 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our reports dated July 21, 1997 included in this Form 10-Q, into the Company's previously filed Registration Statements on Forms S-3 (File No. 333-20991 and File No. 333-20999) and Forms S-8 (File No. 333-14243 and File No. 333-28427). ARTHUR ANDERSEN LLP Philadelphia, Pa., August 13, 1997 EX-27.1 6 EXHIBIT 27.1
5 1,000 6-MOS DEC-31-1996 JAN-01-1997 JUN-30-1997 11,990 0 2,755 0 0 14,745 358,597 14,388 364,429 2,650 0 0 0 171,228 0 364,429 0 20,718 0 0 13,994 0 3,059 3,708 3,708 3,708 0 0 0 3,708 0.36 0.36
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