EXHIBIT 10.3
AGREEMENT OF LIMITED PARTNERSHIP
OF
FIVE TOWER BRIDGE ASSOCIATES
Dated as of November 3, 1997
TABLE OF CONTENTS
Page
BACKGROUND STATEMENT...........................................................1
ARTICLE I
DEFINITIONS..................................................................1
1.01. Acquisition Terms...................................................1
1.02 Act.................................................................1
1.03. Additional Capital Balance. ......................................2
1.04. Additional Capital Contributions....................................2
1.05. Administrative General Partner......................................2
1.06. Book Value..........................................................2
1.07. BOP Preference Capital..............................................2
1.08. BOP Preferred Cumulative Return.....................................2
1.09. Building............................................................3
1.10. Capital Accounts....................................................3
1.11. Capital Balance.....................................................3
1.12. Capital Contributions...............................................3
1.13. Certificate.........................................................3
1.14. Code................................................................3
1.15. Construction and Acquisition Loan...................................3
1.16. Construction Contract...............................................3
1.17. Construction Costs..................................................3
1.18. Construction Costs Budget...........................................3
1.19. Contribution Percentage.............................................4
1.20. Cumulative Net Loss.................................................4
1.21. Cumulative Net Profit...............................................4
1.22. Depreciation........................................................4
1.23. Fiscal Year.........................................................4
1.24. Hypothetical Capital Account........................................4
1.25. Land................................................................4
1.26. Land Acquisition Agreement..........................................4
1.27. Managing General Partner............................................5
1.28. Minimum Gain........................................................5
1.29. Minimum Gain Share..................................................5
1.30. Net Cash Flow.......................................................5
1.31. Net Refinancing Proceeds............................................5
1.32. Net Sale Proceeds...................................................5
1.33. Nonrecourse Deductions..............................................6
1.34. Operating Budget....................................................6
Page
1.35. Participation Percentage............................................6
1.36. Partner or Partners.................................................6
1.37. Partner Minimum Gain................................................6
1.38. Partner Nonrecourse Debt............................................6
1.39. Partner Nonrecourse Deductions......................................6
1.40. Partners' Loans.....................................................6
1.41. Partners' Priority Loans............................................6
1.42. Plans and Specifications............................................6
1.43. Preferred Cumulative Return.........................................7
1.44. Profits or Losses...................................................7
1.45. Project.............................................................8
1.46. Project Budget......................................................8
1.47. Project Costs.......................................................8
ARTICLE II
GENERAL PROVISIONS...........................................................9
2.01. Formation...........................................................9
2.02. Business and Term...................................................9
2.03. Name................................................................9
2.04. Purpose.............................................................9
2.05. Places of Business..................................................9
2.06. Nature of Partners' Interests; Non-Partition........................9
2.07. Partnership Income..................................................9
ARTICLE III
CAPITAL CONTRIBUTIONS; LOANS................................................11
3.01. Capital Contributions..............................................11
3.02. Capital Accounts...................................................11
3.03 Capital Calls......................................................12
3.04. Additional Capital Contributions; Partners' Loans..................12
3.05. Procedures Upon a Failure to Make an Additional Capital Contribution;
Partners' Priority Loans...........................................13
3.06 Partner Affiliate Guaranties; Partners' Priority Loans........... .13
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Page
3.07 BOP Preference Capital.............................................14
ARTICLE IV
MANAGEMENT OF THE PARTNERSHIP...............................................14
4.01. Duties and Powers of the General Partners..........................14
4.02. Fees, Compensation and Reimbursement of Expenses...................19
4.03. Concerning the Limited Partners....................................20
4.04. Sale or Refinancing................................................20
4.05. Bank Accounts......................................................20
4.06. Consents and Approvals.............................................20
4.07. Concerning Persons Other Than Partners.............................21
4.08. Indemnification of the General Partners............................21
4.09. Representations and Warranties of the Managing General Partner.....22
4.11. Certain Definitions................................................25
ARTICLE V
DISTRIBUTIONS AND ALLOCATIONS...............................................25
5.01. Distributions of Net Cash Flow.....................................25
5.02. Distributions of Net Refinancing Proceeds and Net Sale Proceeds....26
5.03. Availability of Funds..............................................27
5.04 Tax Withholding....................................................27
5.05 Allocation of Profits and Losses...................................27
ARTICLE VI
BOOKS AND RECORDS; TAX MATTERS..............................................31
6.01. Accounting.........................................................31
6.02. Statements.........................................................31
6.03. Inspection.........................................................32
6.04. Tax Matters........................................................32
ARTICLE VII
TRANSFER OF PARTNERSHIP INTERESTS;
WITHDRAWAL OF PARTNERS;
REMOVAL OF THE MANAGING GENERAL PARTNER.....................................33
7.01. Transfer of General Partnership Interests..........................33
7.02. Transfer of Limited Partnership Interests..........................37
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Page
7.03. Expenses...........................................................38
7.04. Withdrawal of Partners.............................................38
7.05. Death, Incompetency, Dissolution or Bankruptcy of a Limited
Partner............................................................38
7.06. Deadlock of the General Partners...................................38
7.07. Right of First Refusal.............................................40
7.08. Status of Interests Transferred....................................41
7.09. Removal of the Managing General Partner............................41
7.10. Deadlock on Sale...................................................44
7.11 Arbitrable Disputes................................................45
7.12 Right of Contribution in Favor of Managing General Partner.........47
ARTICLE VIII
ADDITIONAL LIMITED PARTNERS.................................................52
8.01. Additional Limited Partners and Their Contributions................52
ARTICLE IX
INSURANCE...................................................................53
9.01. Coverage...........................................................53
9.02. Certificates; Notices..............................................54
9.03. Concerning Liability Insurance.....................................54
9.04. Miscellaneous......................................................54
ARTICLE X
DISSOLUTION AND TERMINATION.................................................54
10.01. Dissolution........................................................54
10.02. Appointment of Liquidating Partner.................................56
10.03. Distributions and Other Matters....................................56
10.04. Distributions of Property..........................................57
10.05. Actions of the Liquidating Partner; Statements of Account..........57
ARTICLE XI
NOTICES AND COMMUNICATIONS..................................................58
11.01. Notices............................................................58
11.02. Change of Address..................................................59
11.03. Time of Communications.............................................59
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ARTICLE XII
MISCELLANEOUS...............................................................59
12.01. Filings............................................................59
12.02. Power of Attorney..................................................59
12.03. Inspections........................................................60
12.04. Other Remedies.....................................................60
12.05. Partners as Creditors..............................................61
12.06. Independent Ventures...............................................61
12.07. Partial Invalidity.................................................61
12.08. Governing Law; Parties in Interest.................................61
12.09. Amendment..........................................................61
12.10. Execution in Counterpart...........................................61
12.11. Computation of Time................................................61
12.12. Table of Contents; Titles and Captions.............................62
12.13. Pronouns and Plurals...............................................62
12.14. Approval by General Partners.......................................62
12.15. Exhibits...........................................................62
12.16. Entire Agreement...................................................62
12.17. Filing with Securities Exchange Commission.........................62
12.18. Non-Recourse.......................................................62
EXHIBITS
Exhibit "A" - Acquisition Terms
Exhibit "B" - Schedule of Partnership Participation and Capital
Exhibit "C" - Land Description
Exhibit "D" - Leasing Agency Agreement Form
Exhibit "E" - Management Agreement Form
Exhibit "F" - Balance Sheet of Brandywine Operating Partnership, L.P.
v
AGREEMENT OF LIMITED PARTNERSHIP
OF
FIVE TOWER BRIDGE ASSOCIATES
THIS AGREEMENT OF LIMITED PARTNERSHIP (this "Agreement") is made and
entered into as of November 3, 1997, by and among FIVE XXXXXX TOWER
ASSOCIATES, a Pennsylvania limited partnership with offices at c/o Oliver Xxxxxx
Xxxxxx Corporation, One Tower Bridge, 000 Xxxx Xxxxx Xxxxxx, Xxxx Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000, as Managing General Partner ("Managing General Partner"),
BRANDYWINE TB III, L.P., a Pennsylvania limited partnership with offices at c/o
Brandywine Realty Trust, Newtown Corporate Campus, 00 Xxxxxx Xxxxxxxxx, Xxxxx
000, Xxxxxxx Xxxxxx, Xxxxxxxxxxxx 00000, as Administrative General Partner
("Administrative General Partner"), and XXXXXX X. XXXXXX, with offices at c/o
Oliver Xxxxxx Xxxxxx Corporation, One Tower Bridge, 000 Xxxx Xxxxx Xxxxxx, Xxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 ("Limited Partner"). Managing General Partner
and Administrative General Partner are sometimes hereinafter referred to
collectively as the "General Partners" or individually as a "General Partner."
The General Partners and the Limited Partner are sometimes hereinafter referred
to collectively as the "Partners," or individually as a "Partner."
BACKGROUND STATEMENT
The parties hereto desire to organize and form a limited partnership (the
"Partnership") under the laws of the Commonwealth of Pennsylvania, and in that
connection wish to set forth their agreements and understandings as stated
herein.
NOW, THEREFORE, in consideration of the mutual covenants and premises
hereinafter set forth, the parties hereto, intending to be legally bound, hereby
agree as follows:
ARTICLE I
DEFINITIONS
Certain terms when used in this Agreement shall have the meanings set forth
in the context hereof. The following terms when used in this Agreement shall
have the respective meanings set forth below:
1.01. Acquisition Terms. The terms and related agreements relating to
the acquisition and purchase of the Land, all as set forth on Exhibit "A"
hereto.
1.02 Act. The Pennsylvania Uniform Limited Partnership Act, 59 Pa.
C.S.A. Section 3.01 et seq., as amended.
1.03. Additional Capital Balance. The Additional Capital
Contributions of a Partner; in each case as reduced from time to time by all
cash distributions to such Partner which are in reduction of a Partner's
Additional Capital Balance; and in each case as increased from time to time by
any contributions by such Partner which are Additional Capital Contributions.
1.04. Additional Capital Contributions. Any additional cash
contributions of a Partner to the capital of the Partnership made pursuant to
Section 3.03 hereof.
1.05. Administrative General Partner. The entity identified as
Administrative General Partner in the caption hereof.
1.06. Book Value. With respect to any asset, the asset's adjusted
basis for federal income tax purposes, except that (i) where an asset has been
revalued on the books of the Partnership the Book Value of such asset shall be
adjusted to reflect such revaluation; (ii) where an asset has been contributed
by a Partner to the Partnership or distributed by the Partnership to a Partner
its Book Value shall be its agreed fair market value; and (iii) the Book Value
of Partnership assets shall be adjusted to reflect the Depreciation taken into
account with respect to such assets for purposes of determining Profits or
Losses.
1.07. BOP Preference Capital. The BOP Preference Capital Contributions
to be made by Administrative General Partner as set forth in Section 3.07
hereof. BOP Preference Capital shall be part of the Administrative General
Partner's Capital Balance and Capital Account.
1.08. BOP Preferred Cumulative Return. The cumulative right given to
Administrative General Partner, which right is hereby granted, to receive in
respect of each quarter of each Fiscal Year a sum equal to ten percent (10%) per
annum, compounded annually, of such Partner's then aggregate, outstanding BOP
Preference Capital (computed from time to time during any such Fiscal Year to
reflect reductions in or additions to such BOP Preference Capital); and if such
BOP Preference Capital shall at any time be reduced to zero, then the BOP
Preferred Cumulative Return shall thereupon cease and shall not be renewed by
virtue of any future capital. The BOP Preferred Cumulative Return shall begin
on the date the BOP Preference Capital is advanced. Any amounts to be
distributed in connection with the foregoing during the first Fiscal Year in
which the BOP Preferred Cumulative Return begins shall be reduced ratably in the
same ratio as the number of days remaining in such first Fiscal Year bears to
365, and all amounts to be distributed on other than the last day of a Fiscal
Year shall be computed ratably based on the elapsed portion of such Fiscal Year.
The BOP Preferred Cumulative Return shall be payable as specified in this
Agreement only from funds available to the Partnership from Net Cash Flow, Net
Refinancing Proceeds, Net Sale Proceeds or proceeds upon the Partnership's
liquidation, and shall not (i) create a debt of the Partnership to any Partner
to the extent that any such funds are not available for distribution, or (ii)
constitute a guaranteed payment as defined in Section 707(c) of the Code.
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1.09. Building. The office building or buildings to be known as Five
Tower Bridge, consisting of an office building consisting of approximately
000,000 xxxxxx xxxx xx xxxxx xxxx ratio, with the structured parking area
physically incorporated therein or located thereon.
1.10. Capital Accounts. The capital accounts of the Partners, as
described in Section 3.01 hereof and Exhibit "B".
1.11. Capital Balance. The Capital Contributions and Additional
Capital Contributions of a Partner; in each case as reduced from time to time by
all cash distributions to such Partner which are in reduction of a Partner's
Capital Balance or a Partner's Capital Account; and in each case as increased
from time to time by any contributions by such Partner which are Capital
Contributions or Additional Capital Contributions. With respect to Managing
General Partner and Limited Partner, the Capital Balance shall initially be as
stated on Exhibit "B" hereof by reason of the adjustment of fair market value as
set forth in Section 3.01 hereof.
1.12. Capital Contributions. The cash capital contributions of the
Partners as described in Section 3.01 hereof and in Exhibit "B" hereto.
1.13. Certificate. The certificate of limited partnership with respect
to the Partnership, which is executed now or hereafter by the General Partners
and is filed for record as required by the Act.
1.14. Code. The Internal Revenue Code of 1986, as amended from time to
time, and all successors thereto.
1.15. Construction and Acquisition Loan. The loan obtained at the time
of or immediately following the acquisition of the Land which shall be used to
fund (1) acquisition of the Land and (2) construction of the Project.
1.16. Construction Contract. A construction contract or construction
management agreement for the Project with a general contractor satisfactory to,
and otherwise in form and substance approved by, all of the General Partners and
providing for the full construction, completion and equipping of the Project.
1.17. Construction Costs. The dollar amounts actually expended by or
on behalf of the Partnership for the full construction, completion and equipping
of the Project in accordance with the Plans and Specifications therefor.
1.18. Construction Costs Budget. The budgeted amount of Construction
Costs for the Project as set forth in the Project Budget as the same may be
hereafter approved, revised and amended in accordance with this Agreement.
3
1.19. Contribution Percentage. The Contribution Percentages of the
Partners, as set forth in Exhibit "B" hereto.
1.20. Cumulative Net Loss. For any Partner, the extent (if any) to
which the aggregate amount of Losses and other items of loss or deduction
allocated to such Partner in the current and all prior Fiscal Years shall exceed
the aggregate amount of Profits and other items of income or gain allocated to
such Partner in the current and all prior Fiscal Years.
1.21. Cumulative Net Profit. For any Partner, the extent (if any) to
which the aggregate amount of Profits and other items income or gain allocated
to such Partner in the current and all prior Fiscal Years shall exceed the
aggregate amount of Losses and other items of loss or deduction allocated to
such Partner in the current and all prior Fiscal Years.
1.22. Depreciation. For each Fiscal Year or other period, an amount
equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that if
the Book Value of an asset differs from its adjusted basis for federal income
tax purposes at the beginning of such Fiscal Year (as a result of the
revaluation of such asset or its contribution to the Partnership by a Partner),
Depreciation shall be an amount which bears the same ratio to such beginning
Book Value as the federal income tax depreciation, amortization or other cost
recovery deduction for such Fiscal Year or other period bears to such beginning
adjusted tax basis; provided that if the beginning adjusted tax basis is zero,
Depreciation for such Fiscal Year or other period shall be determined with
reference to such beginning Book Value using any reasonable method selected by
the Managing General Partner.
1.23. Fiscal Year. The calendar year.
1.24. Hypothetical Capital Account. With respect to any Partner, such
Partner's Capital Account, after giving effect to the following adjustments:
(i) Such Capital Account shall be reduced to reflect the items
described in clauses (4), (5) and (6) of Regulation Section
1.704-1(b)(2)(ii)(d); and
(ii) Such Capital Account shall be increased by any amount such
Partner is obligated to restore or is treated as being obligated to restore for
purposes of Regulation Section 1.704-1(b)(2)(ii)(d), including such Partner's
Minimum Gain Share and such Partner's share of Partner Minimum Gain.
1.25. Land. The real estate described in Exhibit "C" hereto.
1.26. Land Acquisition Agreement. The Purchase Option Agreement, with
Terms and Conditions of Sale attached thereto executed, or to be executed,
between the Partnership and Tower Bridge Land Holding Associates II for
acquisition of the Land, as the same may be
4
modified, or any other agreement executed and delivered by the Partnership
and Tower Bridge Land Holding Associates II for acquisition of the Land.
1.27. Managing General Partner. Five Xxxxxx Tower Associates, a
Pennsylvania limited partnership.
1.28. Minimum Gain. An amount determined by computing, with respect to
each nonrecourse liability of the Partnership, the amount of gain (of whatever
character), if any, that would be realized by the Partnership if it disposed of
(in a taxable transaction) the Partnership property subject to such liability in
full satisfaction thereof, and by then aggregating the amounts so computed.
Such amount shall be determined in a manner consistent with Regulation Section
1.704-2(d).
1.29. Minimum Gain Share. For each Partner, such Partner's share of
any Minimum Gain for the Fiscal Year (after taking into account any decrease in
the Minimum Gain for such year), as determined under Regulation Section
1.704-2(g).
1.30. Net Cash Flow. Net Cash Flow of the Partnership with respect to
any calendar period shall mean gross receipts from the ownership or operation of
the Project (excluding Net Refinancing Proceeds and Net Sale Proceeds), reduced
by (i) cash disbursements, including, but not limited to, any payment to any
creditor of the Partnership (other than on account of a Partners' Loan or
Partners' Priority Loan) or any tenant entitled to a share of any such receipts,
and (ii) a reasonable amount for, and any additions to, a reserve for
contingencies, working capital, repairs, improvements, tenant improvements,
tenant concessions, replacements, expenses and the payment of Partnership
obligations, the amount of and any additions to such reserve to be established
by the Managing General Partner and as approved by the Administrative General
Partner.
1.31. Net Refinancing Proceeds. The proceeds realized by the
Partnership upon any refinancing of a Partnership indebtedness, net of expenses
incident to such refinancing and satisfaction of any indebtedness being
refinanced and any right of any other creditor of the Partnership (other than on
account of a Partners' Loan or Partners' Priority Loan) or any tenant to receive
such proceeds or a portion thereof for repayment of indebtedness or as
additional interest.
1.32. Net Sale Proceeds. The proceeds realized by the Partnership upon
the sale of any Partnership asset, net of expenses incident to such sale, the
payment of any Partnership indebtedness secured by or related to such asset and
satisfaction of any right of any other creditor of the Partnership (other than
on account of a Partners' Loan or Partners' Priority Loan) or any tenant to
receive such proceeds or a portion thereof for repayment of indebtedness or as
additional interest.
5
1.33. Nonrecourse Deductions. For each Fiscal Year, the Partnership
deductions that are characterized as "nonrecourse deductions" under Regulation
Section 1.704-2(b)(1).
1.34. Operating Budget. A budget proposed by the Managing General
Partner and approved by the Administrative General Partner for each fiscal year
of the Partnership, and reviewed each calendar quarter, all in accordance with
Section 4.0l.C(10) and Section 4.01(D) hereof.
1.35. Participation Percentage. The Participation Percentages of the
Partners, as set forth in Exhibit "B" hereto.
1.36. Partner or Partners. Individually, a General Partner or a
Limited Partner, and collectively, the General Partners and Limited Partner,
including Persons admitted to the Partnership after the date hereof in
accordance with the terms hereof.
1.37. Partner Minimum Gain. An amount determined by computing, with
respect to each Partner Nonrecourse Debt, the Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a nonrecourse liability,
determined in accordance with Regulation Section 1.704-2(i)(3).
1.38. Partner Nonrecourse Debt means nonrecourse Partnership debt for
which one or more Partners bears an economic risk of loss, determined in
accordance with Regulation Section 1.704-2(b)(4).
1.39. Partner Nonrecourse Deductions means, for each Fiscal Year, the
Partnership deductions which are attributable to Partner Nonrecourse Debt and
are characterized as "partner nonrecourse deductions" under Regulation Section
1.704-2(i)(1).
1.40. Partners' Loans. All amounts loaned by the Partners to the
Partnership pursuant to Section 3.04 hereof or in satisfaction of a Partner's
own obligation under Section 3.05(A) hereof. Partners' Loans shall be payable,
as set forth in this Agreement, from and out of Partnership assets, but
otherwise shall be made on a "no-recourse" basis and no Partner shall have any
personal liability in respect of any thereof.
1.41. Partners' Priority Loans. All amounts loaned by a Partner to the
Partnership on behalf of another Partner pursuant to Section 3.05 hereof and all
amounts loaned by reason of satisfaction of a Guaranty by a Partner Affiliate as
set forth in Section 3.06 hereof. Partners' Priority Loans shall be payable, as
set forth in this Agreement, from and out of Partnership assets, but otherwise
shall be made on a "no-recourse" basis and no Partner shall have any personal
liability in respect of any thereof.
1.42. Plans and Specifications. The final plans and specifications for
the Project in the form approved in writing by all of the General Partners.
6
1.43. Preferred Cumulative Return. The cumulative right given to each
Partner, which right is hereby granted, to receive in respect of each quarter of
each Fiscal Year a sum equal to ten percent (10%) per annum, compounded
annually, of such Partner's Additional Capital Balance (computed from time to
time during any such Fiscal Year to reflect reductions in or additions to such
Additional Capital Balance; and if such Partner's Additional Capital Balance
shall at any time be reduced to zero, then the Preferred Cumulative Return shall
thereupon be suspended until such time as such Partner's Additional Capital
Balance returns to a positive figure). The Preferred Cumulative Return shall
begin on the date of the first Additional Capital Contribution. Any amounts to
be distributed in connection with the foregoing during the first Fiscal Year in
which the Preferred Cumulative Return begins shall be reduced ratably in the
same ratio as the number of days remaining in such first Fiscal Year bears to
365, and all amounts to be distributed on other than the last day of a Fiscal
Year shall be computed ratably based on the elapsed portion of such Fiscal Year.
The Preferred Cumulative Return shall be payable as specified in this Agreement
only from funds available to the Partnership from Net Cash Flow, Net Refinancing
Proceeds, Net Sale Proceeds or proceeds upon the Partnership's liquidation, and
shall not (i) create a debt of the Partnership to any Partner to the extent that
any such funds are not available for distribution, or (ii) constitute a
guaranteed payment as defined in Section 707(c) of the Code.
1.44. Profits or Losses. The Partnership's net taxable income or loss
for a Fiscal Year, as computed for federal income tax purposes (including all
items of Partnership income, gain, loss or deduction regardless of whether such
items are required to be separately stated under Section 702(a) of the Code),
with the following adjustments:
(i) Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in determining Profits or
Losses shall be added to such Profits or Losses;
(ii) Any expenditures of the Partnership described in Section
705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) expenditures
pursuant to Regulation Section 1.704-1(b)(2)(iv)(i) and not otherwise taken
into account in computing Profits or Losses shall be subtracted from such
Profits or Losses;
(iii) In any case where, in accordance with Regulation Section
1.704-1(b)(2)(iv)(e) or (f), Partnership property is revalued on the books
of the Partnership to reflect its fair market value, the amount of such
upward or downward adjustment (to the extent not previously taken into
account) shall be taken into account as gain or loss from a taxable
disposition of such property for purposes of computing Profits or Losses;
(iv) Gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized for federal
income tax purposes shall be computed by reference to the Book Value of the
property disposed of, notwithstanding that the adjusted tax basis of such
property differs from such Book Value;
7
(v) In lieu of the depreciation, amortization and other cost recovery
deductions taken into account for federal income tax purposes, Depreciation
as defined herein shall be taken into account in computing Profits or
Losses; and
(vi) Notwithstanding any other provision of this definition,
Nonrecourse Deductions, Partner Nonrecourse Deductions and any items of
income, gain, loss or deduction which are specially allocated pursuant to
subsections C, E or F of Section 5.05(a) below shall not be taken into
account in computing Profits or Losses.
1.45. Project. The acquisition of the Land and the construction,
development, ownership and leasing to others of the Building, together with
related improvements, parking and amenities.
1.46. Project Budget. A budget for the development of the Project to
be proposed by the Managing General Partner and approved by the Administrative
General Partner.
1.47. Project Costs. All costs and expenses associated with the
acquisition of the Land, site preparation and development, construction, leasing
and carrying of the Project, any future improvements, whether for tenants or
otherwise, which have been or are incurred or committed to by the Partnership
prior to or after the date hereof, including, without limitation, all costs and
expenses heretofore or hereafter incurred in acquiring the Land; preparing the
site; design fees, permit fees and non-refundable deposits; fees (including,
without limitation, financing fees, fees paid for or in connection with any
loans to the Partnership, origination or other fees paid in connection with any
loan of the Partnership); debt service payments, including, but not limited to,
interest, principal and other costs and charges, on all loans to or borrowings
by the Partnership (excluding Partners' Loans and Partners' Priority Loans);
costs of closing loans to the Partnership; real estate taxes; insurance
premiums; promotional, legal, accounting, management and other incidental fees
and expenses incurred or committed to by the Partnership; costs incurred in
leasing space in or maintaining and operating the Project (including, but not
limited to, brokerage fees or commissions paid to brokers); and all other costs
or expenses paid, incurred or committed to by the Partnership prior to or after
the date hereof relating to the Project.
ARTICLE II
GENERAL PROVISIONS
2.01. Formation. The parties hereto do hereby form a limited
partnership pursuant to the Act and agree to execute all certificates and
documents, in addition to this Agreement, required by the Act in order that the
Partnership shall be a limited partnership pursuant to the Act.
2.02. Business and Term. The Partners hereby agree to conduct the
business of the Partnership pursuant to the provisions of the Act and on the
terms set forth in this Agreement.
8
The term of the Partnership commenced or commences on the date on which the
Certificate was first filed for record as provided by the Act, and shall
continue until the Partnership is dissolved pursuant to Article X hereof.
2.03. Name. The business of the Partnership shall be carried on under
the name "Five Tower Bridge Associates" or under such other name as the General
Partners (acting by their unanimous consent) may from time to time designate.
2.04. Purpose. The purpose and character of the business of the
Partnership shall be to (i) acquire, control and own the Project in accordance
with the terms of this Agreement, (ii) operate and maintain the Project and
lease space in the Project to others, and (iii) do all things necessary or
appropriate to effect any part or all of the foregoing.
2.05. Places of Business. The Partnership's principal place of
business shall be at c/o Oliver Xxxxxx Xxxxxx Corporation, Xxx Xxxxx Xxxxxx,
Xxxxx 000, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, or at such other principal office
of the Managing General Partner as it may from time to time establish.
The Partnership may have such other or additional places of business
within or without the Commonwealth of Pennsylvania as the General Partners
(acting by their unanimous consent) may from time to time designate.
2.06. Nature of Partners' Interests; Non-Partition. The interests of
the Partners in the Partnership shall be personal property for all purposes.
All property owned by the Partnership, whether real or personal, tangible or
intangible, shall be owned by the Partnership as an entity, and no Partner
individually shall have any ownership of such property. No Partner shall be
entitled to seek partition of any Partnership property.
2.07. Partnership Income. Managing General Partner acknowledges and
agrees that Brandywine Realty Trust, the general partner of Brandywine Operating
Partnership, L.P. ("BOP"), a limited partner in Administrative General Partner,
is a real estate investment trust, as defined in the Code. So long as BOP is a
partner in Administrative General Partner, the Partnership shall endeavor to
manage its affairs such that the Partnership does not intentionally earn any
income for tax purposes or intentionally acquire any assets other than income
and assets as follows:
(i) at least 95% of the Partnership's annual gross income to be
derived from (A) dividends; (B) interest; (C) rents from real property; (D) gain
from the sale or other disposition of stock, securities and real property
(including interests in real property and interests in mortgages on real
property) which is not property described in section 1221(1); (E) abatements and
refunds of taxes on real property; (F) income and gain derived from foreclosure
property (as defined in subsection (e)); (G) amounts (other than amounts the
determination of which depends in whole or in part on the income or profits of
any person) received or accrued as consideration
9
for entering into agreements (a) to make loans secured by mortgages on real
property or on interests in real property or (b) to purchase or lease real
property (including interests in real property and interests in mortgages on
real property); and (H) gain from the sale or other disposition of a real
estate asset which is not a prohibited transaction solely by reason of Code
Section 857(b)(6);
(ii) at least 75% of the Partnership's annual gross income
(excluding gross income from prohibited transactions as defined for purposes of
Code Section 865(c)(3)) to be derived from (A) rents from real property; (B)
interest on obligations secured by mortgages on real property or on interests in
real property; (C) gain from the sale or other disposition of real property
(including interests in real property and interest in mortgages on real
property) which is not property described in Code Section 1221(1); (D) dividends
or other distributions on, and gain (other than gain from prohibited
transactions) from the sale or other disposition of, transferable shares (or
transferable certificates of beneficial interest) in other real estate
investment trusts which meet the requirements of Code Section 856; (E)
abatements and refunds of taxes on real property; (F) income and gain derived
from foreclosure property (as defined in Code Section 856(e)); (G) amounts
(other than amounts the determination of which depends in whole or in part on
the income or profits of any person) received or accrued as consideration for
entering into agreements (a) to make loans secured by mortgages on real property
or on interests in real property or (b) to purchase or lease real property
(including interests in real property and interests in mortgages on real
property); (H) gain from the sale or other disposition of a real estate asset
which is not a prohibited transaction solely by reason of Code Section
857(b)(6); and (I) qualified temporary investment income; and
(iii) at the close of each quarter of each taxable year (A) at
least 75% of the value of its total assets is represented by real estate assets,
cash and cash items (including receivables), and Governmental securities; and
(B) not more than 25 percent of the value of its total assets is represented by
securities (other than those includible in calculating the 75% test in the
preceding clause) for purposes of this calculation limited in respect of any one
issuer to an amount not greater in value than 5 percent of the value of the
total assets of the Partnership and to not more than 10 percent of the
outstanding voting securities of such issuer.
Notwithstanding anything to the contrary contained herein, the
Partnership may have income and assets which do not comply with the above
subsections (i),(ii) and (iii) if the effect of such noncompliance does not and
would not reasonably be expected to cause Brandywine Realty Trust to violate the
provisions of Code Section 856. All terms used in this section 2.07 shall have
the meaning ascribed to them for purposes of Code Section 856. Receipt of
income or acquisition of assets which does not satisfy the criteria set forth in
this Section 2.07 shall not give rise to any claim for damages, consequential or
otherwise.
10
ARTICLE III
CAPITAL CONTRIBUTIONS; LOANS
3.01. Capital Contributions.
A. The Partners shall make Capital Contributions in the amounts and
at the times, and on the other terms and conditions, set forth in Sections
3.01(B) and 3.07 below.
B. On or prior to the date hereof the Partners have contributed to
the capital of the Partnership cash in the amounts and as described in Exhibit
"B" hereto, the receipt whereof is hereby acknowledged, which amounts comprise a
portion of the Partners' respective Capital Contributions hereunder.
3.02. Capital Accounts. A Capital Account shall be determined and
maintained for each Partner on the books and records of the Partnership in
accordance with the following provisions:
A. As of the date of this Agreement, each Partner's Capital Account
shall be as set forth on Exhibit "B" hereto. After the date hereof, each
Partner's Capital Account shall (i) be increased by the amount of money
contributed by it to the Partnership, by the fair market value of property
contributed by it to the Partnership (net of liabilities secured by such
contributed property) and the amount of Profits and other items of Partnership
income or gain allocated to such Partner under Section 5.05, and (ii) be
decreased by the amount of money distributed to it by the Partnership, by the
fair market value of property distributed to it by the Partnership (net of
liabilities secured by such distributed property) and the amount of Losses and
other items of Partnership deduction, loss or expense allocated to such Partner
under Section 5.05.
B. Except as otherwise expressly provided herein, it is intended
that the Capital Accounts shall be determined and maintained throughout the full
term of the Partnership in accordance with the capital accounting rules of
Regulation Section 1.704-1(b)(2)(iv), and that all provisions in this Agreement
of the Regulations relating to the maintenance of Capital Accounts shall be
interpreted and applied in a manner consistent with such Regulations. In the
event the General Partners shall determine that it is prudent to modify the
manner in which the Capital Accounts, or any credits or charges thereto, are
computed in order to comply with such Regulations, the General Partners shall
make such modification, provided that it is not likely to have a material effect
on the amounts distributable to the Limited Partner upon the dissolution and
liquidation of the Partnership.
C. In the event of a transfer of an interest in the Partnership, the
Capital Account of the transferor Partner that is attributable to the
transferred interest shall be carried over to the transferee of such interest
and adjusted as provided in the Regulations under section 704 of the Code.
11
3.03 Capital Calls.
A. Whenever any General Partner determines that additional capital
is required by the Partnership for Project Costs, such General Partner may, by
written notice to all Partners, call for Additional Capital Contributions from
all partners (each, a "Capital Call"). These Additional Capital Contributions
shall be payable in cash or, if such General Partner making the Capital Call so
permits, a note to the Partnership no later than the date specified in the
notice, which date shall be no sooner than fifteen (15) days after notice is
given. Each Partner shall contribute the sum required based upon such Partner's
Contribution Percentage in the Partnership. In the event of a failure of any
Partner to make a requested Additional Capital Contribution the rights of the
Partners and the Partnership shall be governed by Section 3.04 and 3.05 hereof.
B. The Capital Contributions of the Partners, all Partnership
borrowings, and any Additional Capital Contributions, Partners' Loans and
Partners' Priority Loans made pursuant to this Agreement shall be used and
applied only (i) in accordance with an Operating Budget; (ii) Project Costs; or
(iii) for any other Partnership purpose as determined and agreed to by all of
the General Partners.
3.04. Additional Capital Contributions; Partners' Loans.
A. Except as expressly set forth in this Article III, no Partner
shall be required to make any Additional Capital Contributions, Partners' Loans
or Partners' Priority Loans to the Partnership.
B. If any Partner advances any funds to the Partnership after the
date of this Agreement (except as provided for in Section 3.03. above or 3.05
below), which advances are not otherwise specifically designated as Capital
Contributions, Additional Capital Contributions, or Partners' Priority Loans,
such advances will be treated as Partners' Loans, will not increase such
Partner's Participation Percentage, and the amount thereof will be a debt due
from the Partnership to such Partner, entitled to the priorities described in
Article V and Section 10.03 hereof, to be repaid with such interest as will be
expressly agreed upon by all of the General Partners, or, in the absence of
agreement, with interest at a rate equal to ten percent (10%) per annum.
C. Except as set forth in Section 3.05 hereof, in no event may any
Partner advance any funds to the Partnership after the date of this Agreement
and have such advances treated as Partners' Loans unless such advances are
approved by each of the General Partners.
3.05. Procedures Upon a Failure to Make an Additional Capital
Contribution; Partners' Priority Loans .
A. In the event any Partner (a "Non-Contributing Partner") shall
fail for any reason, in accordance with the provisions of Section 3.03 hereof,
to provide all or any part of the
12
advances due the Partnership from it hereunder within the period provided by
such notice, then each Partner which has made the advance, if any, required
to be made by it pursuant to such Section (a "Contributing Partner") shall
have and is hereby given the right and election, but not the obligation, in
all cases exercisable within ten (10) consecutive days following expiration
of the period provided by such notice as aforesaid, (i) to withdraw the
advance so made by it, or (ii) not to withdraw the advance so made and, at
its election, thereupon to advance all or any part of the deficiency. The
amount to be contributed by each Partner electing to contribute such
non-contributed funds shall be as agreed among such electing Partners or, in
the absence of an agreement, shall be in proportion to their respective
relative Contribution Percentage in the Partnership. The amount contributed
by the Contributing Partner in satisfaction of its own obligation shall be
treated as a Partner Loan, and any deficiency amounts advanced on behalf of a
Non-Contributing Partner shall be treated as a Partners' Priority Loan to the
Partnership. Neither such Partner Loan nor such Partners' Priority Loan will
increase such Contributing Partner's Participation Percentage or Contribution
Percentage, and the amount thereof will be a debt due from the Partnership to
such Contributing Partner, entitled to the priorities described in Article V
and Section 10.03 hereof, to be repaid with such interest as will be
expressly agreed upon by all of the General Partners, or in the absence of
agreement with interest at a rate equal to ten percent (10%) per annum.
B. The rights, powers and remedies set forth in the foregoing
provisions of this Section 3.05 shall be the sole and exclusive remedies in the
event of a failure or series of failures to fund Capital Calls provided for in
Section 3.03.
3.06 Partner Affiliate Guaranties; Partners' Priority Loans. In the event
any person or entity which owns an interest in, directly or indirectly, any of
the General Partners (a "Partner Affiliate") guarantees or agrees to become
surety for payment or performance under any loan (other than a Partners' Loan
or Partners' Priority Loan) to the Partnership, and any amount which is required
to be advanced by such Partner Affiliate under such guaranty is advanced by or
for the benefit of the Partnership, then the sum so advanced shall be deemed to
be a Partners' Priority Loan of such Partner. Such Partners' Priority Loan will
not increase such contributing Partner's Participation Percentage or
Contribution Percentage, and the amount thereof will be a debt due from the
Partnership to such contributing Partner, entitled to priorities described in
Article V and Section 10.03 hereof, to be repaid with such interest as will be
expressly agreed upon by all of the General Partners, or in the absence of
agreement, with interest at a rate equal to ten percent (10%) per annum.
3.07 BOP Preference Capital. In addition to and not in limitation of
Administrative General Partner's Capital Contribution as set forth on Exhibit
"B" attached hereto and made a part hereof, Administrative General Partner
hereby agrees to contribute capital to the Partnership in the following amounts
and at the following times:
A. A contribution of BOP Preference Capital in an amount equal to
the option payments required under the Land Acquisition Agreement and any other
amounts
13
necessary to fund the acquisition of the Land. It is the anticipation of
the parties hereto that the BOP Preference Capital referred to in this
Section 3.07(A) shall be repaid from, and all interest accrued thereon shall
be paid from, the proceeds of the construction and acquisition loan to be
obtained by the Partnership at the time of or following the acquisition of
the Land (the "Construction and Acquisition Loan"), unless and to the extent
such amounts are necessary to fund equity under the Construction and
Acquisition Loan.
B. Upon the date of the funding of the Permanent Loan, as
hereinafter defined, a contribution of BOP Preference Capital equal to the
difference between (i) the amount of Project Costs incurred prior to the date
the Permanent Loan, as hereinafter defined, is closed and funded (including, but
not limited to, the amount of any previous Partners' Loans, if any, which have
not previously been repaid) (but only if such Project Costs have been incurred
consistent with a Construction Budget approved by both General Partners, as the
same may be amended from time to time with the consent of both General Partners)
and (ii) the amount of the Permanent Loan. The term "Permanent Loan," as used
herein, shall mean the loan obtained by the Partnership as the refinance of the
Construction and Acquisition Loan. Unless the parties shall otherwise agree,
the amount of the BOP Preference Capital under this subsection 3.07(B) shall be
equal to thirty-five percent (35%) of the Project Costs incurred prior to the
date of the Permanent Loan.
ARTICLE IV
MANAGEMENT OF THE PARTNERSHIP
4.01. Duties and Powers of the General Partners.
A. The Partnership will be managed and the conduct of its business
will be controlled solely by the General Partners. Any action to be taken or
determination to be made by the General Partners shall mean action taken or
determination made by the General Partners acting by their unanimous approval.
B. Each General Partner, subject to the terms, conditions,
restrictions and limitations contained herein, will possess all of the powers
and rights of a general partner under the Act.
C. Except as otherwise provided in this Agreement, the Managing
General Partner shall have the following powers and duties and the Managing
General Partner is authorized on behalf of the Partnership to do or cause to be
done the following at Partnership expense (subject, however, to the terms,
conditions, restrictions and limitations contained herein):
(1) acquiring the Land on behalf of the Partnership for the
price, and on the acquisition terms, set forth in the Land Acquisition
Agreement;
(2) obtain title insurance on Partnership property, and execute
all affidavits and other documents necessary in connection therewith (the
identity of the title insurer and the amount, extent, nature, terms and
conditions of the insurance coverage shall in all cases be subject to the
approval of the Administrative General Partner);
(3) prepare and distribute, or cause to be prepared and
distributed, the statements and reports described in Article VI hereof;
(4) provide for the full construction and completion of the
Project pursuant to the construction contracts, schedules and budgets to be
prepared by Managing General Partner and approved by Administrative General
Partner (all with the understanding, nevertheless, that the Managing General
Partner is not intended to be, and is not made hereby, a guarantor of any such
work or of the costs thereof), and in any case in accordance with and pursuant
to the Construction Contract and the Plans and Specifications therein or herein
described or hereafter developed (subject to such change orders or other changes
required by the Project's architect or by field work which, individually or in
combination, do not (i) adversely affect the overall quality or concept of the
Project, (ii) reduce the Project's gross or net rentable areas, or (iii)
increase the Construction Costs of the Project by $25,000 or more for any
individual or series of related change orders, or $250,000 or more in the
aggregate for all change orders, whether or not related); and in connection with
the foregoing execute, on behalf of the Partnership: (i) the Construction
Contract, and (ii) contracts for all necessary architectural, engineering,
designing, planning and surveying work for the construction and completion of
the Project; obtain labor, materials and supplies therefor; and use its best
efforts, at Partnership expense, to perform and accomplish any and all other
activities relating to the foregoing, including, without limitation, the
following:
(a) obtain such approvals, to the extent required by
applicable law or any effective restrictive covenant affecting the Land, of the
Plans and Specifications for the Project by all governmental bodies having
jurisdiction and the beneficiaries of any such covenant, respectively;
(b) seek and obtain all permits and approvals necessary so
that the Project may be hooked up to public sanitary sewer service, which public
sanitary sewer service shall be available to the full extent required for the
full operation of the Project and shall permit the discharge of sewage of the
types and amounts anticipated to be produced from the Project;
(5) with the prior approval of all General Partners, enter into
agreements for construction, long term, standby and any other loans to or
borrowings by the Partnership; execute, with the prior approval of all of the
General Partners and in the name and on behalf of the Partnership, all notes,
mortgages and other agreements, instruments or documents necessary in connection
therewith; and confess judgment against the Partnership as part of or in
connection with any loan or borrowing by the Partnership approved by the General
Partners; it being understood and recognized that unless the General Partners
shall expressly agree to the
15
contrary, every mortgage, note or other evidence of indebtedness, and every
lease, sublease, contract or other agreement of any kind entered into by or
on behalf of the Partnership shall contain a provision, satisfactory to the
General Partners, limiting the claims of all third parties to the assets of
the Partnership and expressly waiving all rights of such third parties to
proceed against any Partner individually, or against any officer, director,
shareholder or partner of a corporate or partnership Partner, except to the
extent of their interest in the Partnership;
(6) with the prior approval of all General Partners, pay to any
person or persons placing the same, in respect of the placing of any loans to or
borrowings by the Partnership, a mortgage brokerage, placement or similar fee;
(7) enter into a leasing agency contract with Xxxxxx Xxxxxx
Xxxxxx Corporation substantially in the form of Exhibit "D" hereto, which may be
modified only with the consent of the Administrative General Partner. No other
contract for leasing agency shall be entered into except with the consent of the
Administrative General Partner.
(8) purchase and maintain fire and extended coverage; liability,
workmen's compensation, rental loss and other insurance with respect to the
Land, Project and other property of the Partnership, or otherwise, all in
accordance with the provisions of Article IX hereof;
(9) enter into a management contract substantially in the form
of Exhibit "E" attached hereto between the Partnership and Xxxxxx Xxxxxx Xxxxxx
Corporation, which may be modified only with the consent of the Administrative
General Partner. No other management contract shall be entered into except with
the consent of the Administrative General Partner.
(10) prepare and deliver to each General Partner for its
approval, on the date hereof and thereafter at least thirty (30) days prior to
the beginning of each calendar year, an Operating Budget with respect to such
calendar year. Each Operating Budget shall set forth all receipts projected for
the period of such Operating Budget, all expenses, by category, of owning and
operating the Project (including capital improvements not included in Project
Costs) projected to be incurred during such period and a contingency reserve in
an amount of not less than 10% of the other budgeted expenses. Each General
Partner shall have fifteen (15) business days next following receipt to respond
to such Operating Budget, and its failure so to respond within such fifteen day
period shall be deemed an acceptance and approval of such Operating Budget.
Following the approval of an Operating Budget by all General Partners, the
Managing General Partner shall have the power to do all of the following with
respect to the period covered by such approved Operating Budget without the
consent or joinder of any other Partner, so long as the aggregate of
expenditures for all items included (i) within the entire Operating Budget
approved for such period does not exceed the total amount allocated therein, and
(ii) within each category in the Operating budget approved for such period does
not exceed (x) the total amount allocated therein for such category, plus (y)
the amount of any unused contingency, plus (z) the
16
amount unused or unneeded from any other category if the work or services
covered in such other category have been fully performed to the satisfaction
of all General Partners (and provided further that if the General Partners
are unable to agree on an Operating Budget for any specific period, then the
Managing General Partner shall be permitted to act under the most recently
approved Operating Budget (without restriction for the amounts allocated, for
taxes, insurance and utilities) until the new Operating Budget is approved or
unless the provisions of Section 7.06 hereof have become operative):
(a) effect normal operating repairs, replacements or
improvements to the Project, as needed, and, subject to subsection (b) below and
the approved Operating Budget, any such work required by a tenant of the Project
in connection with the leasing or releasing of space in the Project in the
ordinary course of business;
(b) enter into leases for the occupancy of space in the
Project by tenants (including Partners or their affiliates), at rentals no less
than those set forth in the then approved Operating Budget and on such lease
form and within such leasing guidelines as may then have been approved by all
General Partners;
(c) make all required payments of principal and interest
with respect to any indebtedness of the Partnership;
(d) pay all taxes and assessments levied against the Land,
Project and other property of the Partnership, or any part thereof;
(e) employ and dismiss from employment any and all
employees and agents, and obtain all legal, leasing, accounting and other
services necessary in connection with the operation or management of the Project
or other property of the Partnership; provided, however, that Managing General
Partner shall have no right to dismiss the asset manager of the Project without
the consent of Administrative General Partner; and
(f) generally, and except as expressly prohibited herein,
do all things in connection with any of the foregoing, generally manage and
administer the day-to-day business and affairs of the Partnership and execute
all documents on behalf of the Partnership in connection therewith, pay as a
Partnership expense all costs or expenses connected with the operation or
management of the Partnership or the Project (except as otherwise provided
herein), and sign or accept all checks, notes and drafts on the Partnership's
behalf except as otherwise provided herein all in a manner consistent with the
Operating Budget.
D. The Managing General Partner shall meet with designated
representatives of the Administrative General Partner on a quarterly or such
other periodic basis as the General Partners may agree, at the offices of the
Managing General Partner, to report on the operations of the Partnership and
development of the Project and to report on and, if appropriate, jointly revise
the Operating Budget, the Project Budget, the development and marketing plans,
and to consider
17
and pass upon other matters which have been submitted to the Partners for
their review or approval. In amplification of the foregoing, it is expressly
recognized, acknowledged and agreed that all General Partners shall be
permitted to, and intend to, participate actively in the management of the
Partnership and its operations, including specifically, but without
limitation, participation in: the review and approval of the Project Budget
and Operating Budgets; development and revision of the plans and
specifications; the review and revision of leasing plans and guidelines, and
leasing and marketing plans and strategies; the approval of the general
contractor for the Project and the project architects and engineers; and the
review of capital improvement plans for the Project.
E. No principal or other affiliate of the Managing General Partner
shall be obligated to devote his or their exclusive time and effort to the
affairs of the Partnership, but each shall devote so much of his or their time
and effort to the management and other affairs of the Partnership as may be
reasonably required to promote the purposes of the Partnership in an efficient,
effective and diligent manner.
Notwithstanding anything to the contrary contained herein, the
Managing General Partner shall be obligated to employ and maintain such
employees and agents as shall be necessary in order to fully perform the duties
described herein, including, but not limited to, the creation and distribution
of monthly cash flow reports and balance sheets. The Partnership shall
reimburse the Managing General Partner for the expenses of such employees and
agents allocated to the affairs of the Partnership.
F. No General Partner shall be liable, responsible or otherwise
accountable to the Partnership or to any Partner for any acts or omissions in
good faith performed or omitted by it or on its behalf in furtherance of the
interests of the Partnership and within the scope of the authority hereunder,
unless such acts or omissions were fraudulent, in bad faith or a result of
wanton and willful misconduct or gross negligence. In amplification of the
foregoing, no General Partner shall be deemed to have violated any of its
responsibilities or duties hereunder if the performance of such responsibilities
or duties shall require the consent or approval of another Partner or Partners
and if such consent or approval shall have been withheld.
G. Notwithstanding anything to the contrary contained herein, (1)
exercise of the purchase option set forth in the Land Acquisition Agreement and
extension of such option from the first to the second anniversary date of the
Land Acquisition Agreement shall only be made with the consent of both General
Partners; provided, however, that in the event that a Bona Fide Third Party
Offer (as defined in Section 8 of the Option Agreement) is submitted to Tower
Bridge Land Holding Associates II, current owner of the Land, Administrative
General Partner shall have the sole and exclusive authority to determine on
behalf of the Partnership whether to exercise the said option; and (2) the terms
of the Construction and Acquisition Loan and the terms of the Permanent Loan
shall be subject to the review and approval of both General Partners.
18
4.02. Fees, Compensation and Reimbursement of Expenses.
A. Except as expressly set forth herein or in Exhibit "D" or "E"
hereto or Section 3.07, or as approved in writing by all the General Partners,
no Partner, no affiliate of a Partner, no shareholder, officer, director or
partner of a Partner or any affiliate, and no corporation or any other entity
owned or controlled by a Partner or by any affiliate shall be entitled to any
fees or other compensation, including without limitation any brokerage or other
commission or any other payment or compensation on account of the leasing,
operations, management, financing, refinancing or sale of the Land or the
Project or of any interest therein or part thereof. Each General Partner shall
be entitled to reimbursement for any reasonable expenses incurred or paid for by
any of them on behalf of the Partnership and in furtherance of the Partnership's
purposes (including specifically, but without limitation, reimbursement for the
reasonable fees and costs of their respective counsel in connection with the
negotiation and preparation of the Land Acquisition Agreement and the contracts
for designing and construction of the Project) in accordance with a budget to be
agreed upon by both of the General Partners.
B. Notwithstanding anything to the contrary contained herein, the
Managing General Partner shall be entitled to reimbursement for:
(i) general and administrative expenses in connection with the
development of the Project in a liquidated amount equal to Four Dollars ($4.00)
times the number of rentable square feet of building area of the Project, which
reimbursement shall commence on, and shall be included as a line item on, the
first draw request submitted to the Project's construction lender. One-tenth of
such amount shall be reimbursed when such draw request is funded and monthly
thereafter over a ten (10) month period; and
(ii) a development fee in connection with the Project equal to
one and one-half percent (1.5%) of the Project Costs anticipated to be incurred
prior to and during the course of construction, which fee shall commence on, and
shall be included as a line item on, the first draw request submitted to the
Project's construction lender. One-tenth of such amount shall be reimbursed
when such draw request is funded and monthly thereafter over a ten-month period.
4.03. Concerning the Limited Partners. The Limited Partners shall not
take part in the management or control of the business of the Partnership: nor
shall the Limited Partners have any personal liability with respect to
liabilities and obligations of the Partnership. Each Limited Partner, by its
execution hereof and without in any way limiting the powers and authority of the
General Partners contained elsewhere herein, hereby expressly consents to the
sale, mortgaging, leasing, exchange or other disposition of the Project or any
interest therein or part thereof and to any confession of judgment against the
Partnership, each of the foregoing to be on such terms and conditions as the
General Partners may approve.
4.04. Sale or Refinancing. No General Partner shall have the power or
authority, without the written joinder, consent and approval of all the General
Partners: (i) to sell, exchange, lease or otherwise dispose of (or enter into
any contracts for any such sale, exchange, lease or other disposition of) all or
any portion of the Land, Project or other Partnership property, or modify any of
the terms of any of the foregoing; or (ii) to borrow, whether such loans are
secured or unsecured, any funds on behalf of the Partnership or refinance,
increase, consolidate, extend or otherwise modify any of the terms of any
Partnership indebtedness. None of the foregoing limitations shall require the
consent, approval or any other action by any Limited Partner; nor shall
19
such limitations be applicable to the lease of space in the Project in the
ordinary course of Partnership business, and the Managing General Partner, on
behalf of the Partnership, shall be permitted from time to time to enter into
such leases without the approval of any other General Partner if such leases
are in accordance with the then approved Operating Budget and schedule of
rents, and are on the other terms and conditions, required by Section
4.0l.C(10)(b) above.
4.05. Bank Accounts. All funds of the Partnership will be deposited in
a bank located in Philadelphia, Pennsylvania, in such Partnership bank account
or accounts as designated from time to time by the General Partners.
Withdrawals from any such bank account or accounts will be made upon such
signature or signatures as the General Partners may from time to time designate.
4.06. Consents and Approvals.
A. Except as otherwise expressly provided for in Section 4.06(B)
hereof or elsewhere in this Agreement, whenever a Partner desires to take any
action which requires the consent or approval of any or all of the Partners, the
requesting Partner shall give written notice thereof (delivered in accordance
with the requirements of Article XI hereof) to each Partner from whom any such
consent or approval is required, describing the proposed action in sufficient
detail to enable such Partner or Partners to exercise an informed judgment with
respect thereto. As soon as practicable thereafter, each such Partner shall
give the requesting Partner written notice (delivered in accordance with the
requirements of Article XI hereof) that it either consents to or approves, or
does not consent to or approve the proposed action (setting forth its reasons
therefor if it does not so consent or approve). In the event that any such
Partner fails to respond (as provided herein) on or before the fifteenth (15th)
business day following notice (as provided herein) of any such proposed action
by a Partner, that Partner shall be conclusively presumed to have consented to
or approved such action.
B. Whenever the Managing General Partner shall require on an
expedited basis the consent of the other General Partner in connection with a
proposed change order pursuant to Section 4.01(C)(10) hereof, a proposed
deviation from the adopted leasing terms or lease form not permitted by the
leasing guidelines established pursuant to Subsection 4.01.C(10)(b) hereof, or a
proposed deviation from an Operating Budget adopted by the General Partners
pursuant to Subsection 4.0l.C(10) hereof, the Managing General Partner shall
notify the Administrative General Partner of such proposed change or deviation
in writing. If Administrative General Partner shall fail to approve or
disapprove of such deviation within forty-eight (48) hours after receipt by
Administrative General Partner of written request therefor, Administrative
General Partner shall be conclusively presumed to have consented to or approved
such action.
4.07. Concerning Persons Other Than Partners. The limitations on the
actions of the General Partners contained in this Article IV shall be effective
only as among the Partners themselves, and shall not be binding upon or have any
effect on persons other than Partners dealing with the General Partners,
including without limitation any lender or mortgagee, all of whom shall be
entitled to presume (without the necessity of any inquiry whatsoever) that any
General Partner has complete, unlimited and exclusive authority to borrow money
and to manage, supervise, control, transfer, sell, convey, pledge, mortgage,
encumber, lease or otherwise dispose of, or contract with respect to, all or any
part of the Partnership's property.
20
4.08. Indemnification of the General Partners. The Partnership shall
indemnify, defend and hold harmless each General Partner, each officer or
director of a corporate General Partner and each partner of a partnership
General Partner and each trustee or officer of any such partner, and any other
person acting as an agent of any General Partner of the Partnership and to which
agent the General Partners shall specifically and in writing have conferred
rights under this Section 4.08, against any loss, expense, damage, claim,
liability, obligation, judgment or injury suffered or sustained by him, it, them
or any of them by reason of any act, omission or alleged act or omission by him,
it, them or any of them arising out of his, its or their activities on behalf of
the Partnership or in furtherance of the interests of the Partnership,
including, without limitation, any judgment, award, settlement, reasonable
attorney's fees and other costs or expenses as incurred in connection with the
defense of any actual or threatened actions, proceedings or claims, all costs of
which shall be charged to and paid by the Partnership as incurred; provided,
however, that the acts, omissions or alleged acts or omissions upon which such
actual or threatened actions, proceedings or claims are based were performed or
omitted in good faith and were not fraudulent, in bad faith or as a result of
wanton and willful misconduct or gross negligence by the party to be
indemnified, defended and held harmless under this Section.
4.09. Representations and Warranties of the Managing General Partner.
A. To induce Administrative General Partner to become a Partner of
the Partnership, the Managing General Partner hereby represents, warrants and
certifies to Administrative General Partner that it has no actual knowledge
contrary to any of the following:
(1) The Managing General Partner is a limited partnership duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. The Managing General Partner conducts no business
other than its interest as a Partner of the Partnership. The Managing General
Partner has the power and authority to own its property, and to carry on its
business as presently conducted or contemplated. The Managing General Partner
has not, to its knowledge, committed any material default in the obligation to
pay money under any violation of any term of any indenture, mortgage, agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to it, nor has the Managing General Partner received any notice that
it has committed any other material default under any such instrument.
(2) The execution and delivery of this Agreement (including the
admission of the Administrative General Partner as a Partner of the Partnership)
will not result in a breach of, or constitute a default under, any indenture,
mortgage or agreement to which the Managing General Partner is a party or by
which its assets are bound, or any decree, order or rule of any court or
governmental agency or any provision of applicable law which is binding on
Managing General Partner or on any of its assets, or result in the creation or
imposition of any mortgage, lien, charge, assessment, encumbrance, claim or
restriction on such assets or give to others any interest or rights therein or
create in any third party the right to modify, terminate, accelerate or
otherwise declare a default under any instrument or contract to which the
Managing General Partner is a party or by which its assets are bound.
(3) All federal, state and local tax returns and reports
required by law to be filed by Managing General Partner have been duly and
timely filed (or extensions of the same have been timely filed), and all taxes,
assessments, fees and other governmental charges on
21
or against the Managing General Partner or upon its properties, assets,
income or franchises for which a penalty or interest would be payable if such
tax were not paid prior to the date hereof.
(4) There is no suit, action or legal, administrative,
arbitration or other proceeding or governmental investigation, pending or, to
the best of its knowledge, threatened, which might materially and adversely
affect the business or property of the Managing General Partner.
(5) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated herein in the manner herein
provided will violate any agreement to which the Managing General Partner is a
party or by which it is bound, or any law, order or decree.
(6) Xxxxxx X. Xxxxxx owns at least fifty-one percent of the
partnership interests in capital and profits of Managing General Partner.
B. The foregoing representations, warranties and covenants shall
survive for a period of one (1) year after the date hereof, including, but not
limited to, any portion of such period following the withdrawal by or removal of
the Managing General Partner as a Partner of the Partnership.
C. The Managing General Partner shall indemnify and hold
Administrative General Partner harmless from and against any losses, claims,
damages or expenses, including reasonable attorneys' fees, resulting either
directly or indirectly from any breach of a warranty or representation during
the period of its survival contained in this Section 4.09.
D. Notwithstanding anything to the contrary contained herein,
Administrative General Partner shall have no claim for damages for a breach of
any representation or warranty under this Section 4.09 unless such damages
exceed $10,000 for any one breach (in which case recovery shall be permitted on
account of such breach) or $30,000 for the aggregate of all breaches (in which
case recovery shall be permitted on account of all such breaches).
E. Administrative General Partner acknowledges and agrees that
Managing General Partner makes no representation or warranty with respect to the
physical condition of the Project, the structural or environmental condition
thereof, any repairs or replacements required thereto or the Net Cash Flow, Net
Refinancing Proceeds or Net Sales Proceeds which will be generated by the
Project. Any projections of cash flow used in negotiations are meant purely as
an example of possible outcomes and do not constitute a representation or
warranty of future profitability of the Project.
4.10 Representations and Warranties of the Administrative General Partner.
A. To induce Managing General Partner and Limited Partner to execute
this Second Amended and Restated Agreement of Limited Partnership, the
Administrative General Partner hereby represents, warrant and certifies to
Managing General Partner that it has no actual knowledge contrary to any of the
following:
(1) Administrative General Partner is a limited partnership duly
organized, validly existing and in good standing under the laws of the
Commonwealth of
22
Pennsylvania. The Administrative General Partner has the power and authority
to own its property, and to carry on its business as presently conducted or
contemplated. The Administrative General Partner has not, to its knowledge,
committed any material default in the obligation to pay money under any
indenture, mortgage, agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to it, nor has the Administrative
General Partner received any notice that it has committed any other material
default under any of the foregoing.
(2) The execution and delivery of this Agreement (including the
admission of the Administrative General Partner as a Partner of the Partnership)
has been authorized by all necessary action of its general partner and will not
result in a breach of, or constitute a default under, any indenture, mortgage or
agreement to which the Administrative General Partner is a party or by which its
assets are bound, or any decree, order or rule of any court or governmental
agency or any provision of applicable law which is binding on the Administrative
General Partner or on any of its assets, or result in the creation or imposition
of any mortgage, lien, charge, assessment, encumbrance, claim or restriction on
the Project or any of Administrative General Partner's such assets or give to
others any interest or rights therein or create in any third party the right to
modify, terminate, accelerate or otherwise declare a default under any
instrument or contract to which the Administrative General Partner is a party or
by which its assets are bound.
(3) Since the date of the balance sheet of Brandywine Realty
Trust attached hereto as Exhibit "H", there has been no material adverse change
in the financial condition of Brandywine Operating Partnership, L.P. ("BOP").
(4) All federal, state and local tax returns and reports
required by law to be filed by Administrative General Partner and BOP have been
duly and timely filed (or extensions of the same have been timely filed), and
all taxes, assessments, fees and other governmental charges on or against the
Administrative General Partner and BOP or upon their respective properties,
assets, income or franchises for which a penalty or interest would be payable if
such tax were not paid prior to the date hereof.
(5) There is no suit, action or legal, administrative,
arbitration or other proceeding or governmental investigation, pending or, to
the best of its knowledge, threatened, which might materially and adversely
affect the business or property of the Administrative General Partner or BOP.
(6) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated herein in the manner herein
provided will violate any agreement to which the Administrative General Partner
or BOP is a party or by which either of them is bound, or any law, order or
decree.
B. The foregoing representations, warranties and covenants shall
survive for a period of one (1) year after the date hereof, including, but not
limited to, any portion of such period following any withdrawal by or removal of
the Administrative General Partner as a Partner of the Partnership.
C. The Administrative General Partner shall indemnify and hold the
Partnership, Managing General Partner and Limited Partner harmless from and
against any losses,
23
claims, damages or expenses, including reasonable attorneys' fees, resulting
either directly or indirectly from any breach of a warranty or representation
during the period of its survival contained in this Section 4.10.
D. Notwithstanding anything to the contrary contained herein,
Managing General Partner shall have no claim for damages for a breach of any
representation or warranty under this Section 4.10 unless such damages exceed
$10,000 for any one breach (in which case recovery shall be permitted on account
of such breach) or $30,000 for the aggregate of all breaches (in which case,
recovery shall be permitted on account of all such breaches).
4.11. Certain Definitions. Where representations are made to the
"knowledge," "actual knowledge," "or best of actual knowledge," or equivalent
words are used, unless specifically otherwise stated herein, such
representations are intended to reflect that the president of the general
partner of the Managing General Partner, as to Managing General Partner, and the
president of the member of the limited liability company which is the general
partner of the Administrative General Partner, as to Administrative General
Partner, have no actual knowledge to the contrary, but (a) shall not mean such
individuals are charged with the knowledge of the acts, omissions or knowledge
of any agents or employees of the entities making such representations; and (b)
shall not mean information or material which may be in the possession of the
entity generally or incidentally, but which is not actually known to the
individuals described above. None of the individuals described above shall have
any personal liability based upon this Agreement, including, but not limited to,
the representations and warranties contained herein.
ARTICLE V
DISTRIBUTIONS AND ALLOCATIONS
5.01. Distributions of Net Cash Flow. All Net Cash Flow, if any,
realized by or available to the Partnership for or during each Fiscal Year shall
be paid or distributed no less frequently than quarterly in the following order
of priority to the extent available:
A. To the Partners in repayment of the entire principal amounts of
any outstanding Partners' Priority Loans, together with all accrued but unpaid
interest thereon, first on account of accrued interest thereon (in proportion to
the interest so accrued) and then in repayment of the principal amounts thereof
(in proportion to the respective outstanding amounts of principal);
B. Next, to Administrative General Partner, in satisfaction of the
unpaid BOP Preferred Cumulative Return;
C. Next, to the Partners in repayment of the entire principal
amounts of any outstanding Partners' Loans, together with all accrued but unpaid
interest thereon, first on account of accrued interest thereon (in proportion to
the interest so accrued) and then in repayment of the principal amounts thereof
(in proportion to the respective outstanding amounts of principal);
24
D. Next, to the Partners, in proportion to the respective accrued
amounts of their Preferred Cumulative Returns, in satisfaction of their then
unpaid Preferred Cumulative Return;
E. Next, to the Partners, in proportion to their respective
Additional Capital Balances, in reduction of their Additional Capital Balances,
until such time as their respective Additional Capital Balances shall have been
reduced to zero (but if such Additional Capital Balances shall at any time
thereafter be increased, then this paragraph E shall again be operative); and,
thereafter,
F. To all Partners in accordance with their respective Participation
Percentages,
5.02. Distributions of Net Refinancing Proceeds and Net Sale Proceeds.
All Net Refinancing Proceeds and Net Sale Proceeds, if any, realized by or
available to the Partnership shall be distributed in the following order of
priority to the extent available:
A. To the Partners in repayment of the entire principal amounts of
any outstanding Partners' Priority Loans, together with all accrued but unpaid
interest thereon, first on account of accrued interest thereon (in proportion to
the interest so accrued) and then in repayment of the principal amounts thereof
(in proportion to the respective outstanding amounts of principal);
B. Next, to Administrative General Partner in satisfaction of the
then unpaid BOP Preferred Cumulative Return;
C. Next, to Administrative General Partner in reduction of its then
outstanding BOP Preference Capital until such time as the BOP Preference Capital
is reduced to zero;
D. Next, to the Partners in repayment of the entire principal
amounts of any outstanding Partners' Loans, together with all accrued but unpaid
interest thereon, first on account of accrued interest thereon (in proportion to
the interest so accrued) and then in repayment of the principal amounts thereof
(in proportion to the respective outstanding amounts of principal);
E. Next, to the Partners, in proportion to the respective accrued
amounts of their Preferred Cumulative Return, in satisfaction of their then
unpaid Preferred Cumulative Return;
F. Next, to the Partners, in proportion to their respective
Additional Capital Balances, in reduction of their Additional Capital Balances,
until such time as their respective Additional Capital Balances shall have been
reduced to zero (but if such Additional Capital Balances shall at any time
thereafter be increased, then this paragraph F shall again be operative); and,
thereafter,
G. To all Partners in accordance with their respective Participation
Percentages,
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5.03. Availability of Funds. The distributions to which the Partners
are entitled pursuant to this Article V are conditioned upon the availability of
funds to the Partnership, and such distributions do not and shall not constitute
interest, nor is there any guarantee or obligation by the Partnership to make
any distributions under this Agreement, except to the extent that the Managing
General Partner determines, in accordance with the Operating Budget, that cash
in excess of the requirements of the Partnership is available for distribution
to the Partners.
5.04 Tax Withholding. To the extent the Partnership pays any amount to any
federal, state or local taxing authority as a result of any obligation to
collect, pay over or withhold taxes with respect to any Partner's allocable
share of Partnership income or gain, the amount so collected, paid over or
withheld shall be treated for all purposes of this Agreement as having been paid
or distributed to such Partner and shall reduce, on a dollar for dollar basis,
amounts otherwise payable or distributable to such Partner under this Article V.
The Partnership may, in the discretion of either General Partner, require each
Partner to reimburse the Partnership, for any tax withholding payments made by
the Partnership on behalf of such Partner.
5.05 Allocation of Profits and Losses.
a. Profits. Profits for any Fiscal Year shall be allocated among
the Partners in the following order of priority:
A. First, if any Partner has a deficit balance in his or its
Capital Account, to the Partners in accordance with and to the extent of such
deficit balances, until no Partner has a deficit balance in his or its Capital
Account;
B. Next, if any Partner has a Cumulative Net Loss, to the
Partners in accordance with and to the extent of their Cumulative Net Losses,
until no Partner has a Cumulative Net Loss;
C. Next, if any Partner has received a payment on account of a
BOP Preferred Cumulative Return, to such Partner until such Partner has a
Cumulative Net Profit equal to the aggregate amount of such Partner's aggregate
BOP Preferred Cumulative Return as of the end of the Fiscal Year to which such
allocation relates;
D. Next, to the Partners entitled to receive payment on account
of a Preferred Cumulative Return, until each such Partner has a Cumulative Net
Profit equal to the aggregate amount of such Partner's aggregate Preferred
Cumulative Return as of the end of the Fiscal Year to which such allocation
relates;
E. Thereafter, to the Partners in accordance with their
respective Participation Percentages.
b. Losses. Losses for any Fiscal Year shall be allocated among the
Partners in the following order of priority:
A. If any Partner has a Cumulative Net Profit, then Losses
shall be allocated to the Partners with Cumulative Net Profit, until no Partner
has a Cumulative Net Profit, in the following order of priority:
26
i. First, Losses in an amount up to the amount of any
Profits previously allocated under Section 5.05(a)(E) above shall be allocated
among the Partners in the same manner as such Profits were previously allocated
under Section 5.05(a)(E).
ii. Next, Losses in an amount up to the amount of any
Profits previously allocated under Section 5.05(a)(D) above shall be allocated
among the Partners in the same manner as such Profits were previously allocated
under Section 5.05(a)(D);
iii. Next, Losses in an amount up to the amount of any
Profits previously allocated under Section 5.05(a)(C) above shall be allocated
among the Partners in the same manner as such Profits were previously allocated
under Section 5.05(a)(C);
B. Next, if no Partner has a Cumulative Net Profit, Losses
shall be allocated to the Partners in accordance with their respective
Contribution Percentages; provided, however, that no Losses shall be allocated
to a Partner under this Section 5.05(b)(B) to the extent that such allocation
would cause or increase a deficit balance in such Partner's Hypothetical Capital
Account;
C. Any remaining Losses shall be allocated (i) first, to the
Partners (if any) with positive balances in their Hypothetical Capital Accounts,
in proportion to and to the extent of such positive balances and (ii)
thereafter, any remaining Losses shall be allocated among the Partners in
accordance with their respective interests in the Partnership, in accordance
with Treasury Regulation Section 1.704-1(b)(3).
c. Allocations Upon Sale of Project. Gain or loss recognized upon
the sale of all or substantially all of the assets of the Partnership shall be
determined based upon the Book Value of the Partnership's assets and shall be
allocated so that, to the maximum extent possible, (i) no Partner has a negative
balance in its Capital Account and (ii) the positive balance in each Partner's
Capital Account (as determined immediately prior to the distribution of Net
Sales Proceeds) equals the aggregate amount of liquidating distributions such
Partner is entitled to receive upon the liquidation of the Partnership under
Section 10.03 below.
d. Changes in Interests. If the respective interests of the
Partners in the Partnership change during any Fiscal Year, then the amount of
all items to be allocated, credited or charged to the Partners for such entire
Fiscal Year (other than items of gain or loss from a sale of all or
substantially all of the Partnership's assets, which shall be allocated under
the interim closing of the books method) shall be allocated to the portion of
such Fiscal Year which precedes the date of each such change and to the portion
of the Fiscal Year which occurs on and after the date of each such change, in
proportion to the number of days in each such portion, and the amounts of the
items so allocated to each such portion shall be allocated, credited or charged
to each of the Partners in proportion to their respective interests during each
such portion of the Fiscal Year in question. Notwithstanding the foregoing, the
Managing General Partner may elect to use the closing of the books method or any
other method allowed by the Treasury Regulations in the event that a new Partner
is admitted to the Partnership or an existing Partner is redeemed during a
Fiscal Year.
e. Regulatory Allocations. Notwithstanding any other provisions to
the contrary in this Agreement, the following provisions shall apply:
27
A. All Nonrecourse Deductions for each Fiscal Year shall be
allocated to the Partners in proportion to their respective Contribution
Percentages. For purposes of Regulation Section 1.752-3, all excess nonrecourse
liabilities of the Partnership will be allocated among the Partners in
proportion to their respective Contribution Percentages.
B. All Partner Nonrecourse Deductions for each Fiscal Year
shall be allocated to the Partners who bear the economic risk of loss with
respect to the Partner Nonrecourse Debt giving rise to such deductions, in
accordance with Treasury Regulation Section 1.704-2(i)(1).
C. Any Partner who unexpectedly receives an adjustment,
allocation or distribution described in clauses (4), (5) or (6) of Treasury
Regulation Section 1.704-1(b)(2)(ii)(d) which produces a deficit in its
Hypothetical Capital Account shall, to the extent required by the Treasury
Regulations, be allocated items of income and gain in amount and manner
sufficient to eliminate the deficit in its Hypothetical Capital Account as
quickly as possible. This Section 5.05(e)(C) is intended to comply with the
"qualified income offset" requirement in Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(3), and shall be interpreted consistently therewith.
D. If there is a net decrease in Minimum Gain during a Fiscal
Year, then before any other allocation is made for such year, the Partners shall
be allocated items of income and gain for such year (and, if necessary,
subsequent years) in the amount and in the proportions necessary to satisfy the
requirements of a "minimum gain chargeback" under Treasury Regulation Section
1.704-2(f).
E. If there is a net decrease in Partner Minimum Gain during a
Fiscal Year, then before any other allocation is made for such year, the
Partners shall be allocated items of income and gain for such year (and, if
necessary, subsequent years) in the amount and in the proportions necessary to
satisfy the requirements of a partner nonrecourse debt minimum gain chargeback
under Treasury Regulation Section 1.704-2(i)(4).
F. The allocations set forth in subsections A through E above
(the "Regulatory Allocations") are intended to comply with certain requirements
of Treasury Regulation Sections 1.704-1(b) and 1.704-2. Notwithstanding any
other provision of this Section 5.05 (other than the Regulatory Allocations),
the Regulatory Allocations shall be taken into account in allocating other items
of income, gain, loss and deduction among the Partners so that, to the extent
possible, the net amount of such allocation of other items and the Regulatory
Allocations to each Partner should be equal to the net amount that would have
been allocated to each such Partner if the Regulatory Allocations had not
occurred.
f. Contributed/Revalued Property. If any property is contributed to
the Partnership in kind, or if the Book Value of any Partnership property is
adjusted pursuant to applicable Regulations under section 704(b) of the Code and
this Agreement, all income, gain, loss and deduction with respect to such
contributed or revalued property shall, solely for tax purposes, be allocated
among the Partners so as to take account of any variation between the adjusted
basis of such property to the Partnership for federal income tax purposes and
its initial or revalued Book Value, in such manner as the General Partner may
determine in accordance with section 704(c) of the Code, the Treasury
Regulations promulgated thereunder and Treasury Regulation Section
1.704-1(b)(4)(i). Allocations pursuant to this Section 5.05(f) are solely for
purposes of federal and state taxes and shall not affect, or in any way be taken
into account in computing,
28
any Partner's Capital Account or share of Profit, Loss or distributions
pursuant to any provision of this Agreement.
g. Knowledge of Tax Consequences. The Partners are aware of and
consent to the income tax consequences of the allocations made by this
Section 5.05. The Partners hereby agree to be bound by the provisions of this
Section 5.05 in reporting their shares of Partnership income and loss for income
tax purposes. Upon the advice of an outside accountant or of legal counsel to
the Partnership, this Section 5.05 may be amended from time to time by the
Managing General Partner as may be necessary to comply with Section 704 of the
Code and the Treasury Regulations promulgated thereunder; provided, however,
that no such amendment shall become effective without the consent of those
Partners who would be materially adversely affected thereby.
ARTICLE VI
BOOKS AND RECORDS; TAX MATTERS
6.01. Accounting. Except as may be otherwise directed by all General
Partners, the Partnership shall maintain its books and records on a cash basis
and shall prepare (i) financial statements on the accrual basis used for federal
income tax purposes, and (ii) income tax returns on the accrual method of
accounting and on a calendar year basis. Appropriate records will be kept so
that upon each closing of the Partnership books it is possible to determine,
among other items defined in this Agreement: (i) the amount of capital actually
contributed by each Partner; (ii) the amount of cash or other property
distributed to each Partner; (iii) the effect, if any, of all Partnership items
of income, gain, loss, deduction or credit on each Partner's Capital Account;
and (iv) the amount of Partners' Priority Loans, Partners' Loans, Additional
Capital Contributions, Capital Balances (including, but not limited to, BOP
Preference Capital), Net Cash Flow, Net Refinancing Proceeds, Net Sale Proceeds,
and Preferred Cumulative Returns.
6.02. Statements.
A. Within thirty (30) days after the close of each calendar year,
the Managing General Partner shall endeavor to furnish, at Partnership expense,
to each Partner, with respect to such calendar year, (i) a profit and loss
statement, (ii) a statement of source and application of funds, (iii) a
Partnership balance sheet as of the close of such fiscal year, and (iv) such
other statements showing in detail each Partner's interest in each of the items
described in Section 6.01. hereof. The foregoing statements shall be audited by
certified public accountants acceptable to all of the General Partners, and the
cost of preparing the statements and the cost of each such audit shall be paid
for by the Partnership.
B. The Managing General Partner shall have prepared (at Partnership
expense) and shall provide the other General Partners with the following
additional materials: (i) quarterly reports, submitted not later than the
twentieth (20th) day following the close of each calendar quarter, which shall
include a rent roll indicating tenants, lease term, monthly rent and space or
suite identification, and space available for lease; (ii) at the specific
request of any of the other General Partners (a) copies of the disbursements
ledger detailing payees, dates, and amounts of disbursements, (b) copies of the
cash receipts ledger detailing the tenant, and other receipts, date of deposit,
and amount of the receipt, (c) copies of bank statements and cash
reconciliations
29
for all bank accounts, (d) journal entries and explanations thereof, and (e)
trial balances; (iii) a quarterly reconciliation form (in form and in detail
reasonably satisfactory to the requesting General Partner) detailing all
Partnership distributions of cash flow; and (iv) quarterly unaudited balance
sheets and income statements prepared on the cash method of accounting, to be
received within twenty (20) days of the close of the fiscal quarter.
C. During construction, the Managing General Partner shall have
prepared (at Partnership expense) and shall provide each General Partner with
the following additional materials: (i) a detailed construction cost budget by
major trade category/component and all amendments or other changes to the same
(the budget to be prepared and provided as soon as practicable following the
date hereof, and the amendments or other changes to be provided as soon as
practicable following their preparation); (ii) monthly construction progress
reports, submitted not later than the fifteenth (15th) day following the close
of the month, detailing the amounts expended by category/component (as budgeted
in 6.02.C(i) above) and the percentage of completion; and (iii) such other
materials, reports and other documentation as may be reasonably requested by
Administrative General Partner from time to time.
6.03. Inspection. All books of account and all other records of the
Partnership (including an executed counterpart of this Agreement and all
amendments hereto, and an executed counterpart of the Certificate and all
amendments thereto) shall at all times be kept by the Managing General Partner
at the Partnership's place of business and may be inspected at any reasonable
time by any Partner.
6.04. Tax Matters.
A. The Managing General Partner shall cause, at Partnership expense,
to be prepared and filed all income tax returns for the Partnership on an
accrual basis and shall furnish copies thereof to all Partners. At least thirty
(30) days prior to the filing of any tax return for the Partnership with the
Internal Revenue Service), the Managing General Partner shall deliver to each
other General Partner for its review and written approval before such filing a
draft copy of the Partnership's U.S. Partnership Return of Income for such
fiscal year (which copy shall be prepared by the Partnership's regular certified
public accountants, shall be delivered in accordance with the requirements of
Article XI hereof, and shall be accompanied by (i) a reconciliation, prepared by
such accountants, between the Partnership's financial statements and tax
returns; and (ii) a breakdown, prepared by such accountants, of Project
components qualifying for investment tax credit).
B. The Managing General Partner shall, within five (5) days of
receipt thereafter, forward to each General Partner a photocopy of any
correspondences (excluding routine correspondence relating to administrative
forms) relating to the Partnership received from the Internal Revenue Service.
The Managing General Partner shall, within five (5) days thereafter, advise each
General Partner in writing of the substance of any conversation held with any
representative of the Internal Revenue Service. Any reasonable costs incurred
by the Managing General Partner for retaining accountants or lawyers on behalf
of the Partnership in connection with any Internal Revenue Service audit or
state tax audit of the Partnership shall be expenses of the Partnership.
Without the consent of all of the General Partners, no Partner shall (a) take or
assert any position in connection with any Internal Revenue Service audit, state
tax audit, or administrative or court proceeding, which is inconsistent with any
item or position reflected in the Partnership's U.S. Partnership Return of
Income with respect to the fiscal period
30
in question, (b) commence or prosecute any proceeding in any court for the
adjustment of any item reflected in such return, or (c) take or suffer any
action which would impair the authority of any General Partner to bind the
Partnership or the Partners. In connection with the foregoing, any General
Partner shall be permitted to condition its consent hereunder on the
agreement of the Partner requesting the consent to (i) proceed, or refrain
from proceeding, in one or more specified administrative or judicial forums,
(ii) conduct any such proceeding in a particular manner, or (iii) abide by
any other terms or restrictions which the General Partner may impose in the
best interests of the Partnership as a condition of granting its consent
hereunder. The Managing General Partner shall notify all Partners of any
settlement offers from the Internal Revenue Service, and shall not, in any
case, enter into any settlement with the Internal Revenue Service on behalf
of the Partnership without the approval of all of the General Partners.
C. In connection with the assignment of a Limited Partner's interest
in the Partnership permitted by Article VII hereof, any General Partner shall
have the right, but shall not be obligated, on behalf of the Partnership and at
the time and in the manner provided by Section 754 of the Code (or any successor
section thereto) and the Regulations thereunder, to make an election to adjust
the basis of Partnership property in the manner provided in Sections 734(b) and
743(b) of the Code (or any successor sections thereto). All expenses incurred
by the Partnership to make such an election shall be paid by the transferee
benefitted by such election.
D. Should the Managing General Partner fail to fulfill or perform
any of its obligations under this Article VI, then any General Partner, in
addition to any other rights or remedies it may have pursuant to this Agreement,
may (i) engage such certified public accountants as it may select to cure the
default at Partnership expense unless such default is beyond the Managing
General Partner's reasonable control; or (ii) cause the Managing General Partner
to request an extension of the filing date of any income tax return for a period
ending at least thirty (30) days beyond the date on which such return and all
accompanying documentation were received by all of the General Partners pursuant
to Section 6.04.A. above.
ARTICLE VII
TRANSFER OF PARTNERSHIP INTERESTS;
WITHDRAWAL OF PARTNERS;
REMOVAL OF THE MANAGING GENERAL PARTNER
7.01. Transfer of General Partnership Interests.
A. During the entire term of the Partnership, except as hereinafter
permitted in subsection 7.01(B) or 7.01(C) hereof, none of the following shall
be permitted without the prior written consent of all General Partners, such
consent to be given or withheld by the General Partners in their sole
discretion: (i) no General Partner shall directly or indirectly sell, convey,
assign, pledge, hypothecate, transfer or otherwise dispose of or encumber all or
any part of its interest in the Partnership; (ii) no present general partner of
the Managing General Partner shall directly or indirectly sell, convey, assign,
pledge, hypothecate, transfer or otherwise dispose of or encumber all or any
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part of its interest in the Managing General Partner; nor shall any such general
partner withdraw or retire from the Managing General Partner, as the case may
be; and (iii) no present general partner of the Administrative General Partner
shall directly or indirectly sell, convey, assign, pledge, hypothecate, transfer
or otherwise dispose of or encumber all or any part of its interest in the
Administrative General Partner, nor shall any such general partner withdraw or
retire from the Administrative General Partner as the case may be; provided,
however, that following the receipt of the cash capital contributions required
by Section 3.07 hereof, the general partner of Administrative General Partner
may be an entity, all of which is owned directly or indirectly by Brandywine
Operating Partnership, L.P. and/or by Administrative General Partner and/or
Brandywine Realty Trust and which otherwise satisfies the qualifications set
forth in subsections (1)-(4) of subsection (B) hereof.
B. At any time following the receipt by the Partnership of the
Capital Contribution required by Section 3.07(B) hereof, the Partnership
interest of Administrative General Partner may be assigned to an entity, all of
which is owned, directly or indirectly, by Brandywine Operating Partnership,
L.P., a Delaware limited partnership and/or by Administrative General Partner or
Brandywine Realty Trust, which entity shall be admitted as a substituted
Administrative General Partner of the Partnership, provided that the following
conditions are met in each instance:
(1) A duly executed and acknowledged instrument of assignment
and Power of Attorney, setting forth the intention of the assignor that the
assignee become a substituted Administrative General Partner in its place and
confirming and restating the appointment and powers contained in Section 12.02.
hereof, is delivered to the Managing General Partner; and
(2) The Managing General Partner, at its request, shall have
been provided, at the expense of the transferor, with an opinion of counsel in
form and substance satisfactory to the Managing General Partner and from counsel
satisfactory to the Managing General Partner to the effect that such transfer or
assignment will not violate the registration provisions of the Securities Act of
1933, as amended, or the rules and regulations thereunder or the applicable
state securities or "Blue Sky" law or laws and the rules and regulations
thereunder; and
(3) The assignor and assignee execute and acknowledge such other
instruments as any Managing General Partner reasonably may deem necessary or
desirable to effect such admission, including the written acceptance and
adoption by the assignee of the provisions of this Agreement and the assumption
of any unperformed obligation of the assignor (provided that such assignor shall
not thereby be released from any of its unperformed obligations hereunder); and
(4) The entity shall have the following characteristics:
(a) It shall be formed for the sole purpose of acquiring
interests in the various partnerships formed to hold
all or portions of the area known as Tower Bridge,
located in Conshohocken and West Conshohocken,
Xxxxxxxxxx County, Pennsylvania, in partnerships formed
with Managing General Partner or affiliates thereof;
(b) It shall have no liabilities except those incurred in
connection with its obligations as a partner in such
partnerships and no other assets constituting real
property;
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(c) The Managing General Partner shall consent to the
admission of such substitute Administrative General
Partner, which consent shall not be unreasonably
withheld.
(d) All Partners will if required by the Act, no later than
thirty (30) days after the date of compliance with the
provisions of this Section 7.01(B), amend the
Certificate to reflect the admission of any such
assignee as a substituted limited partner.
C. Notwithstanding anything to the contrary contained herein, but
subject to Section 7.07 hereof, either General Partner shall have the right to
sell, transfer or assign all but not part (except as set forth in subsection
7.01(C)(6) hereof), of its interest in the Partnership, provided that the
following conditions are met in each instance:
(1) If the transferor is Administrative General Partner, a duly
executed and acknowledged instrument of assignment and Power of Attorney,
setting forth the intention of the assignor that the assignee become a
substituted Administrative General Partner in its place and confirming and
restating the appointment and powers contained in Section 12.02 hereof, shall
have been delivered to the Managing General Partner; and
(2) The other General Partner, at its request, shall have been
provided, at the expense of the transferor, with an opinion of counsel in form
and substance satisfactory to the other General Partner and from counsel
satisfactory to the other General Partner to the effect that such transfer or
assignment will not violate the registration provisions of the Securities Act of
1933, as amended, or the rules and regulations thereunder or the applicable
state securities or "Blue Sky" law or laws and the rules and regulations
thereunder; and
(3) The assignor and assignee execute and acknowledge such other
instruments as any General Partner reasonably may deem necessary or desirable to
effect such admission, including the written acceptance and adoption by the
assignee of the provisions of this Agreement and the assumption of any
unperformed obligation of the assignor (provided that such assignor shall not
thereby be released from any of its unperformed obligations hereunder); and
(4) The entity shall have the following characteristics:
(a) It shall be formed for the sole purpose of acquiring an
interest in the Partnership;
(b) It shall have no liabilities except those incurred in
connection with its obligations as a Partner in the
Partnership and no other assets constituting real
property;
(c) All Partners will, if required by the Act, no later
than thirty (30) days after compliance with the
provisions of this Section 7.01(C), amend the
Certificate to reflect the admission of any such
assignee as a substituted general partner; and
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(d) The transferee shall be one hundred percent (100%)
owned, directly or indirectly, by an "Institutional
Investor," as hereinafter defined. The term
"Institutional Investor," as used herein, shall mean an
entity which has a net worth in excess of $25 million
other than an entity which the parties have agreed in
writing is not a permitted transferee; and
(5) The transferee shall not be an entity with which, or
controlled by, under common control with or controlling any entity or person
with which, the remaining General Partner has engaged in any actual pending or
threatened litigation previously; and
(6) In the judgment of the non-transferring General Partner,
the transfer of the transferring General Partner's interests, either
individually or in combination with other transfers which have previously
occurred or which are then contemplated pursuant to good faith negotiations
which have commenced, will not result in any other negative tax consequences
for any Partner or the Partnership. Notwithstanding the foregoing, if it is
possible, in the judgment of the non-transferring General Partner, to
structure the transfer in a lawful manner at no cost to the Partnership and
the other Partners so as to avoid all negative tax consequences, the
non-transferring General Partner shall cooperate with such a transfer
provided the remaining requirements of this Subsection 7.01(C) are met and
provided that such transfer shall not result in the transferring General
Partner's interest being held by two general partners of the partnership. By
way of example and not limitation, if the negative tax consequences could be
avoided by transferring the General Partner's interests in stages over time,
the transferring General Partner shall initially transfer only so much of
such transferring General Partner's interest as will not, in the
non-transferring General Partner's judgment, result in such negative tax
consequences, with the remaining interest of such transferring General
Partner being converted to a limited partnership interest automatically upon
such event. The remaining partnership interest of the transferring Partner
would then be transferred one (1) day after the expiration of any period
required, in the judgment of the non-transferring General Partner, to avoid
the negative tax consequence. Such procedure is referred to herein as a "Tax
Staggered Transfer." In all instances requiring judgment of the
non-transferring General Partner under this Section 7.01(C)(6), the judgment
of such General Partner shall be deemed to permit the requested action of the
transferring General Partner unless the non-transferring General Partner does
not notify the transferring General Partner of an objection (and the general
basis therefor) within thirty (30) days after written notice from the
transferring General Partner of its proposed action.
7.02. Transfer of Limited Partnership Interests.
A. Subject to Section 7.05 hereof, the Partnership interest of a
Limited Partner, or any part thereof, may not be transferred or assigned, and no
such transferee or assignee may be admitted as a substituted limited partner of
the Partnership, unless in each instance:
(1) A duly executed and acknowledged instrument of assignment
and Power of Attorney, setting forth the intention of the assignor that the
assignee become a substituted limited partner in its place and confirming and
restating the appointment and powers contained in Section 12.02. hereof, is
delivered to the General Partners; and
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(2) The General Partners, if any or all of them shall so
request, shall have been provided, at the expense of the transferor, with an
opinion of counsel in form and substance satisfactory to the requesting General
Partner(s) and from counsel satisfactory to the requesting General Partner(s) to
the effect that such transfer or assignment will not violate the registration
provisions of the Securities Act of 1933, as amended, or the rules and
regulations thereunder or the applicable state securities or "Blue Sky" law or
laws and the rules and regulations thereunder; and
(3) The assignor and assignee execute and acknowledge such other
instruments as any General Partner reasonably may deem necessary or desirable to
effect such admission, including the written acceptance and adoption by the
assignee of the provisions of this Agreement and the assumption of any
unperformed obligation of the assignor ( provided that such assignor shall not
thereby be released from any of its unperformed obligations hereunder).
B. All Partners will if required by the Act, no later than thirty
(30) days after the date of compliance with the provisions of this Section
7.02., amend the Certificate to reflect the admission of any such assignee as a
substituted limited partner.
7.03. Expenses. Expenses of the Partnership or of any Partner (other
than the transferee) occasioned by transfers of interests held by Partners shall
be reimbursed to the Partnership or Partner, as the case may be, by the
transferring Partner.
7.04. Withdrawal of Partners.
A. Except for permitted transfers under Section 7.01, no General
Partner may voluntarily withdraw or retire from the Partnership without the
prior written consent of the other General Partner, such consent to be given or
withheld by the other General Partner in its sole discretion.
B. No Limited Partner may voluntarily withdraw or retire from the
Partnership except upon the assignment of its entire interest in the Partnership
(if and as permitted by this Article VII) or upon the surrender, abandonment or
other voiding of its interest pursuant to the next succeeding sentence hereof.
Any Limited Partner may at any time, by at least thirty (30) days prior written
notice delivered to all General Partners, renounce its interest in all current
and future profits, losses and distributions of the Partnership, and abandon to
the Partnership its capital contributions and its interest in all Partner's
Loans and Partner's Priority Loans made by it; provided, however, that any such
surrender, abandonment or other voiding shall not in any case affect the
withdrawing Partner's obligations hereunder.
7.05. Death, Incompetency, Dissolution or Bankruptcy of a Limited
Partner. Upon the death, legal incompetency, dissolution or bankruptcy of a
Limited Partner, its or his personal representative will have all the rights of
such deceased, incompetent, dissolved or bankrupt Limited Partner for the
purpose of settling or managing its estate, and such power as the deceased,
incompetent, dissolved or bankrupt Limited Partner possessed to constitute a
successor as an assignee of its interest in the Partnership and to join with
such assignee in making application to substitute such assignee as a substituted
limited partner.
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7.06. Deadlock of the General Partners.
A. At any time after the date hereof, if the General Partners become
deadlocked on a material issue which, in the opinion of any one of them is
essential for the successful operation or prudent conduct of the Partnership's
business, or if in the opinion of any General Partner the Managing General
Partner has taken unauthorized action on behalf of the Partnership or has failed
to take action which is authorized hereby or which the General Partners have
authorized and has failed to correct such action or inaction within fifteen (15)
days after written notice from any General Partner to the Managing General
Partner specifying such action or inaction, then in either case the provisions
of this Section 7.06. shall apply and either of the aggrieved General Partners
(the "Declaring Partner(s)") shall be permitted to pursue the rights provided
for below.
B. For purposes of this Section 7.06., the following definitions and
other provisions shall apply:
(i) If the Declaring Partner is the Administrative General
Partner, then the "Offeror" shall be the Administrative General Partner and the
"Offeree" shall be the Managing General Partner and (so long as the Limited
Partner is Xxxxxx X. Xxxxxx, an entity at least fifty-one percent (51%) owned by
him or a transferee from him which has not been approved or which is not
required to be approved by Administrative General Partner) the Limited Partner;
(ii) If the Declaring Partner is the Managing General Partner,
then the "Offeror" shall be the Managing General Partner and (so long as the
Limited Partner is Xxxxxx X. Xxxxxx, an entity at least fifty-one percent (51%)
owned by him or a transferee from him which has not been approved or which is
not required to be approved by Administrative General Partner), the Limited
Partner, and the "Offeree" shall be the Administrative General Partner; and
(iii) An "Offer" or the "Offers" shall mean the offer(s) to
sell or purchase partnership interests pursuant to the provisions of this
Section 7.06.
C. In the event of a deadlock described in the foregoing Section
7.06.A., the Declaring Partner shall have the right to deliver to the other
General Partner(s) a written demand that the requested action be taken or that
the deadlocked issue be resolved in favor of the Declaring Partner, but if such
other General Partner does not, within ninety (90) days following the delivery
of such demand, respond affirmatively to the demand and commence and thereafter
continue diligently to perform the action requested or the resolution of the
issue as requested, then the Declaring Partner shall have the right to pursue
the compulsory buy-sell provisions appearing below in Section 7.06.D.
D. A Declaring Partner, at any time within thirty (30) days
following expiration of the ninety (90) day period established in Section
7.06.C. above, if the other General Partner does not respond affirmatively to
the demand and commence and thereafter continue diligently to perform the action
requested, shall be permitted to institute the following compulsory buy-sell
provisions:
(i) The Offeror may make to the Offeree an Offer to sell the
entire interests in the Partnership of the Offeror, and to purchase the entire
interests in the Partnership of the Offeree. Except as expressly provided in
clause (ii) of this Section 7.06.D., no Offer shall be
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subject to the provisions of this Section 7.06. unless such Offer is both an
Offer to sell the entire interests of the Offeror and an Offer to purchase
the entire interests of the Offeree, and such Offer must specify that the
price of the interests to be so transferred is payable by bank certified,
cashier's or treasurer's check. The selling price and the purchase price
specified in such Offer must be identical in amount for each percent of
interest in the Partnership and must be, except as provided for in the
parenthetical below, proportionate to the respective Participation
Percentages of the Offeree (that is, the selling price and the purchase price
so specified must be identical as to each other and for each percent of
interest in the Partnership which is subject to such Offer, except that such
price shall be appropriately adjusted to reflect, on a dollar-for-dollar
basis the difference, if any, between (a) the Additional Capital Balances and
BOP Preference Capital of the respective Offeror and Offeree plus (b) the
accrued and unpaid Preferred Cumulative Returns and BOP Preferred Cumulative
Return of the respective Offeror and Offeree, plus (c) the aggregate amount
of principal and interest, if any, owing to the respective Offeror and
Offeree by reason of advances made hereunder as Partners' Loans or Partners'
Priority Loans). Such Offer shall be irrevocable for a period of thirty (30)
days, and the Offeree may, on or before the thirtieth (30th) day after the
date of such offer, accept either the Offer to sell or the Offer to purchase
(but not both), and upon acceptance the Offeror shall be required to sell or
to purchase, as the case may be. If the Offeree fails within such thirty
(30) day period to accept either of such Offers, then the Offer shall
automatically expire and be of no further force or effect; provided, however,
that the Offeror shall thereupon have the right, on or before the fifteenth
(15th) day after the expiration of such thirty (30) day period, to purchase
the interests of the Offeree, at the applicable price specified in the
original Offer, and if the Offeror exercises such right the Offeree shall be
required to sell its interests herein. If the Offeror fails to exercise its
right to buy within the time specified, either General Partner may thereafter
make a new Offer pursuant to this Section 7.06.
(ii) If the Offeror or Offeree, as the case may be, exercises its
rights hereunder to buy or sell, a closing thereunder shall be held at the time
and place and on the date specified by the purchaser by written notice to the
seller(s), which date shall in any case be on or prior to the expiration of the
forty-fifth (45th) day after the Offer to buy or sell has been made. At such
closing, upon payment of the purchase price required by subsection D(i) hereof,
the purchasing party shall have the right to designate a substitute transferee.
7.07. Right of First Refusal.
A. Notwithstanding the consent of the Partners under Sections 7.01
and 7.02 hereof (or the absence of a need for consent under Section 7.01(C)), no
Partner may transfer or assign its partnership interest herein, or any part
thereof, unless such interest shall first be offered to the other Partners for a
period of thirty (30) days at a price (the "Refusal Right Purchase Price") equal
to that offered to the selling Partner pursuant to a bona fide offer arrived at
upon arm's length dealing, the terms of which and the identity of the offeror
having been disclosed to all of the Partners. If any Partner or Partners elect
to exercise the right of first refusal granted hereby, they collectively must
accept all of the interest being offered. If more than one Partner elects to
accept all of the interest being offered, such interest shall be allocated
according to the ratio of the respective Participation Percentages of the
accepting Partners. If the offering Partner has not received written acceptance
of its offer within such thirty (30) day period, it shall then be free, subject
to the provisions of this Article VII, to dispose of the interest offered to the
other Partners on the terms of the bona fide offer and to the offeror previously
disclosed to the Partners. If the offering Partner fails to do so within one
hundred twenty (120) days, following expiration of such 30-day period, the first
refusal procedure established by this Section 7.07 shall be reinstated.
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B. The Refusal Right Purchase Price payable hereunder, in the event
one or more Partners elects to exercise the right of first refusal granted
hereby, shall be payable in the manner and on the terms of the third party
offer, except that such Partner may elect to pay cash in the same amount as and
in lieu of any non-cash consideration.
C. The provisions of this Section 7.07 shall not apply to (i) any
transfer occurring by operation of law as a result of the incompetency or
incapacity of a Partner; or (ii) any transfer occurring by operation of law or
by bequest as a result of the death of a Partner; or (iii) any transfer
occurring by reason of the exercise of or a closing under the calls described in
Section 7.06. above; or (iv) any transfers permitted by Section 7.01(B); but the
provisions of this Section 7.07 shall in all cases be subject to the
prohibitions, consents and approvals and other conditions required by Sections
7.01 and 7.02 hereof.
D. Notwithstanding anything set forth in subsection A hereof, in the
event the selling Partner proposes to transfer or assign its partnership
interest pursuant to Section 7.01(C) hereof, the offering Partner shall give the
other Partners ninety (90) days prior written notice rather than thirty (30)
days provided above, and if the right of first refusal is exercised, the
exercising Partner shall have a period of two hundred seventy (270) days within
which to close the acquisition; provided, however, that in the event of a Tax
Staggered Transfer as required by Section 7.01(C), the exercising Partner shall
have such additional period of time as shall be necessary to make such event a
Tax Staggered Transfer.
7.08. Status of Interests Transferred. In any transfer, assignment or
conveyance of a general or limited partnership interest herein by a Partner to
any other Partner or other person, by the express terms of this Agreement or by
operation of law, subject to Article V hereof, the transferee or assignee shall
succeed to the same share of profits and losses of the Partnership and the same
Contribution Percentages, Participation Percentages, distribution priorities and
ownership rights as were incident to the interest so transferred, assigned or
conveyed.
7.09. Removal of the Managing General Partner.
A. Subject to the provisions of this Section 7.09, at any time after
the date hereof the Managing General Partner may be removed as a General Partner
of the Partnership upon the direction of the Administrative General Partner if
the Managing General Partner has:
(1) willfully, or as a result of its negligence, failed in any
year to distribute Net Cash Flow, Net Refinancing Proceeds or Net Sale Proceeds
as and to the extent required hereunder; or
(2) willfully, or as a result of its negligence, failed in any
year to deliver the statements and reports required by Article VI hereof; failed
to carry out any of its duties or obligations under Article IV hereof
(including, without limitation, any failure to devote sufficient time or
attention to the management and other affairs of the Partnership or any failure
to curtail other activities or projects as provided in Section 4.01. hereof); or
otherwise violated in a material respect any other provision of this Agreement
or any provision of applicable law, including, without limitation, if any of its
representations or warranties set forth herein shall have been wrong or
incorrect when made; in each instance under this clause (2) if such failure,
violation or misstatement has a material adverse effect on the Partnership or on
any Partner;
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(3) transferred or attempted to transfer its partnership
interest in the Partnership or other interests in or assets of the Partnership,
or withdrawn or retired or attempted to withdraw or retire as a General Partner,
other than in accordance with the provisions of this Agreement; or
(4) suffered the transfer of interests in Managing General
Partner or in its corporate general partner such that Xxxxxx X. Xxxxxx or an
individual entity who obtains an interest by death or incapacity of Xxxxxx X.
Xxxxxx shall no longer retain effective control over Managing General Partner
but only if any of the foregoing described grounds for removal has not been
completely and fully cured in its entirety, to the satisfaction of the
Administrative General Partner, within thirty (30) consecutive days following
the Managing General Partner's receipt of written notice specifying such
grounds.
B. Notice of intended removal (citing the failure to cure the cause
or causes for removal) (the "Removal Notice") shall be sent to the Managing
General Partner signed by or on behalf of the Administrative General Partner.
Within ten (10) consecutive days after such Removal Notice is received by the
Managing General Partner, the Managing General Partner shall send written notice
to the Administrative General Partner admitting or denying the grounds for
removal. If such grounds for removal are admitted, or if the Managing General
Partner fails timely to respond to the Removal Notice from any General Partner
required hereby, then the Managing General Partner shall be removed as of a date
which is one (1) day after the expiration of such ten (10) day period. If the
grounds for removal are denied, then the matter shall be handled as follows:
At the election of any General Partner, the matter shall be an
"Arbitrable Dispute" and shall be subject to the process set forth in Section
7.11 hereof, in which event the Managing General Partner shall retain all
rights, powers and duties hereunder as a General Partner, all authority in
respect of the Partnership and the conduct of its business until a final
determination of the matter has been rendered by the Arbitrator, as hereinafter
defined. If such determination is made to the effect that grounds for removal
exist, then (a) such determination, at the election of the Managing General
Partner exercised within sixty (60) days of the rendering thereof, shall not be
binding on the Managing General Partner or the Partnership, (b) the matter shall
be litigated, at the election of the Managing General Partner exercised within
sixty (60) days of the rendering of such determination, in any competent state
or federal court in the Commonwealth of Pennsylvania and in accordance with the
rules of court then obtaining, and (c) the Managing General Partner, on the date
on which such determination was made and thereafter during the period prior to
the Removal Date (the "Suspension Period") shall become divested of all powers
and duties hereunder as the Managing General Partner and all authority in
respect of the Partnership shall become vested in Administrative General
Partner. If such determination is made to the effect that no grounds for
removal exist, then (x) such determination, at the election of Administrative
General Partner exercised within sixty (60) days of the rendering thereof, shall
not be binding upon the Administrative General Partner or the Partnership, (y)
the Managing General Partner shall retain all rights, powers and duties
hereunder as a General Partner and all authority in respect of the Partnership
and the conduct of its business shall continue to be vested in the Managing
General Partner in accordance with the terms of this Agreement until such date,
if any, as a final, unappealable judicial decision is rendered to the effect
that grounds for removal exist (or if an appealable decision to that effect is
rendered, the date on which any period to appeal therefrom has expired without
an appeal therefrom having been taken), and (z) the matter shall be litigated,
at the election of the Administrative General Partner exercised within sixty
(60)
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days of the rendering of such determination, in any competent state or
federal court in the Commonwealth of Pennsylvania and in accordance with the
rules of court then obtaining.
C. The term "Removal Date," as used herein, shall mean the date, if
any, on which a decision (whether by the Arbitrator or a court of competent
jurisdiction) to the effect that grounds for removal exist becomes final and
unappealable. In addition to and not in limitation of any rights under Section
7.06 hereof, at any time after the Removal Notice and until the Removal Date,
Administrative General Partner shall have the right to implement the buy-sell
procedures set forth in Section 7.06. hereof.
D. On the Removal Date, the Managing General Partner shall thereupon
become a Limited Partner pursuant to, and with the rights, privileges and
priorities described in, Section 4.03 hereof. The removed or suspended Managing
General Partner shall not be liable or responsible for any actions taken or for
any contracts or other obligations entered into by any other General Partner (on
behalf of the Partnership) during the Suspension Period or on the Removal Date
and thereafter.
E. Upon any removal of the Managing General Partner, as promptly as
practicable following the Removal Date, the Administrative General Partner shall
select a Successor Managing General Partner. Once selected, the successor shall
assume all of the duties, responsibilities and obligations, and shall succeed to
the rights and powers of, the Managing General Partner hereunder. Any such
successor Managing General Partner may, at the election and direction of
Administrative General Partner, be Administrative General Partner or be any
person or entity affiliated with or otherwise related to Administrative General
Partner in any capacity; provided, however, that the manager of the Project may
be any unaffiliated or unrelated person or entity.
F. If, following the divesting of Managing General Partner of its
powers and duties as set forth in subsection B and C hereof, a final and
unappealable determination is made that no grounds for removal exist, Managing
General Partner shall be revested in all its powers and duties as Managing
General Partner immediately upon the date such determination becomes final and
unappealable.
7.10. Deadlock on Sale.
A. If at any time after the date hereof any General Partner receives
a bona fide written offer (the "Purchase Offer") to purchase all or any portion
of the Project, the General Partner receiving the Purchase Offer shall transmit
the same to the other Partners. Each General Partner shall communicate whether
it desires to accept or reject the Purchase Offer to the other Partners within
ten (10) days of its receipt of the Purchase offer; and, in the absence of
communication within such ten-day period, any non-communicating Partner shall be
deemed to have communicated its desire to reject the Purchase Offer. If any
General Partner wishes to accept the Purchase Offer, then the General Partner
who desires to reject the Purchase Offer shall have the option, but shall be
required, either (i) to accept the Purchase Offer, or (ii) to purchase the
Partnership interests of the General Partner who desires to accept the Purchase
Offer, and, if the Managing General Partner desires to accept such Purchase
Offer, Administrative Partner's offer must also be to purchase the Partnership
interest of Limited Partner so long as the Limited Partner is Xxxxxx X. Xxxxxx,
an entity at least 51% owned by him or a transferee from him which has not been
approved or which is not required to be approved by Administrative General
Partner.
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Any such purchase by Administrative General Partner or Managing General
Partner shall be on the terms and conditions set forth in this Section 7.10.
For purposes of this Section 7.10., the following definitions and other
provisions shall apply: (1) the Partner who wishes to accept the Purchase
Offer (together with, if such Partner is Managing General Partner, Limited
Partner) shall be the "Accepting Partners", and (2) the "Nonaccepting
Partner" shall be the General Partner who wishes to reject the Purchase Offer.
B. The terms and conditions of the option provided for herein shall
be as follows: (i) the option period shall commence on the date the Nonaccepting
Partner notifies the Accepting Partners that it does not wish to accept the
Purchase Offer (or on the date the Nonaccepting Partner is deemed to have
rejected the Purchase Offer), and the option period shall expire ten (10) days
after such commencement date; (ii) the purchase price (the "Sale Purchase
Price") for the partnership interests of the Accepting Partners shall, for
purposes of computing such Sale Purchase Price, be the total amount that would
be distributed in cash to the Accepting Partners in accordance with Section 5.02
hereof if the Partnership sold the Project pursuant to the Purchase Offer in an
all cash transaction; (iii) at the time of its or their exercise of the option
granted herein, the Nonaccepting Partner shall deliver to the Accepting Partners
its bank certified, treasurer's or cashier's check in amount equal to ten
percent (10%) of the Sale Purchase Price (the "Deposit"), which Deposit shall be
forfeited to the Accepting Partners if a closing hereunder shall not timely
occur (except for non-occurrence by reason of a default by the Accepting
Partners in their obligation so to close); (iv) a closing of the sale by the
Accepting Partners to the Nonaccepting Partner shall be held within eighty (80)
days of the Nonaccepting Partner's notice to the Accepting Partners of the
Nonaccepting Partner's exercise of its option to purchase hereunder; (v) at the
closing, the partnership interests of the Accepting Partners shall be assigned,
transferred and conveyed to the Nonaccepting Partner, or its nominee(s), free
and clear of all liens, charges, security interests and other encumbrances; and
(vi) at the closing, the Nonaccepting Partner, or its nominee(s), shall deliver
to the Accepting Partners cash or a bank certified, treasurers or cashier's
check in the aggregate amount of the Sale Purchase Price less the Deposit.
C. If the Nonaccepting Partner shall not exercise the option granted
it by the foregoing provisions of this Section 7.10. by written notice
(accompanied by the Deposit) to the Accepting Partners within the option period
provided for hereby, it then shall be obligated to accept the Purchase Offer and
conclude the sale and purchase of the Project on the terms and conditions
provided for thereby; but if such Purchase Offer (and any agreement of sale
executed in connection therewith) is not consummated in accordance with its
terms, then the deadlock procedure established by this Section 7.10. shall be
reinstated.
7.11 Arbitrable Disputes.
A. (i) All disputes and claims under this Agreement which are
designated "Arbitrable Disputes" shall follow the dispute resolution mechanism
set forth in this Section.
(ii) Where no procedure for invoking this mechanism is set forth
in the section in which a particular dispute is designated as an Arbitrable
Dispute, such procedure shall be invoked as follows: any party to the dispute
(hereinafter, an "Arbitration Party") may invoke the process set forth in this
Section 7.11 by written notice (each, an "Arbitration Notice") to the other
Arbitration Party, which Arbitration Notice shall set forth in reasonable detail
the nature of the Arbitrable Dispute, including, without limitation, the
monetary sums which are in dispute.
41
Within ten (10) days from the date of the Arbitration Notice, the other
Arbitration Party shall set forth a summary of its version of the dispute
("Answer") in a notice to the Arbitration Party sending the Arbitration
Notice.
(iii) The Arbitration Parties agree to first attempt to
settle any Arbitrable Dispute by mediation ("Mediation") administered in
accordance with the Commercial Mediation Rules of the American Arbitration
Association, prior to any Arbitration pursuant to Section 7.11(B).
(iv) The Mediation shall take place on a date or dates (each, a
"Mediation Date") mutually agreed to by the Arbitration Parties, which date(s),
unless the Arbitration Parties otherwise agree in writing, shall be no later
than thirty (30) days after the date of the Answer. The Mediation shall take
place at the office of the Managing General Partner or such other location in
the Philadelphia Metropolitan Area as the Arbitration Parties shall mutually
agree.
(v) The Mediation shall be conducted by a mediator selected by
the mutual agreement of the Arbitration Parties (provided, if the Arbitration
Parties are unable to agree as to a mediator, the mediator may be selected by a
third party meeting the qualifications set forth in Section 7.11(B)(ii) for a
third party selecting an arbitrator in the event of a dispute) meeting the
qualifications for an Arbitrator (defined later) as set forth in Section
7.11(B)(ii) below.
B. (i) In the event the Arbitrable Dispute is not finally resolved
by mutual written agreement of the Arbitration Parties within ten (10) days from
the Mediation Date ("Arbitration Commencement Date"), the Arbitrable Dispute
shall be resolved by Arbitration pursuant to the provisions of this Section
7.11(B).
(ii) Within ten (10) days after the Arbitration Commencement
Date, if the Arbitration Parties have not agreed upon an Arbitrator, the General
Partners shall each (a) appoint one lawyer actively engaged in the licensed and
full-time practice of law (including experience in resolving partnership
disputes) in the Philadelphia Metropolitan area for a continuous period
immediately preceding the Arbitration Commencement Date of not less than ten
(10) years, but who has at no time ever represented or acted on behalf of any of
the Arbitration Parties, and (b) deliver written notice of the identity of such
lawyer to the other Arbitration Party. In the event that any Arbitration Party
fails to so act, such lawyer shall be appointed pursuant to the same procedure
that is followed when agreement cannot be reached as to the Arbitrator (as set
forth below). Within ten (10) days after such appointment and notice, such
lawyers shall appoint a third lawyer of the same qualification and background
and shall deliver written notice of the identity of such lawyer and notice of
the acceptance by such lawyer of such appointment to each of the Arbitration
Parties. Such third lawyer shall be deemed to be the "Arbitrator" as used
herein. In the event that agreement cannot be reached on the appointment of an
Arbitrator within such period, such appointment and notification shall be made
as quickly as possible by any court of competent jurisdiction, by any licensing
authority, agency or organization having jurisdiction over such lawyers, by any
professional association of lawyers in existence for not less than ten (10)
years at the time of such dispute or disagreement and the geographical
membership boundaries of which extend to the Philadelphia metropolitan area, or
by any arbitration association or organization in existence for not less than
ten (10) years at the time of such dispute or disagreement and the geographical
boundaries of which extend to the
42
Philadelphia Metropolitan area, as determined by the Arbitration Party giving
such Notice of Dispute and simultaneously confirmed in writing delivered by
such Arbitration Party to the other Arbitration Party. Any such court,
authority, agency, association or organization shall be entitled either to
directly select such third lawyer or to designate in writing, delivered to
each of the Arbitration Parties, an individual who shall do so. In the event
of any subsequent resignation or inability to perform by the Arbitrator, the
Arbitrator shall be replaced in accordance with the provisions of this
Section 7.11(B)(ii) as if such replacement was an initial appointment to be
made under this Section 7.11(B)(ii) within the time constraints set forth in
this Section 7.11(B)(ii), measured from the date of notice of such
resignation or inability to the person or persons required to make such
appointment, with all the attendant consequences of failure to act timely if
such appointed person is an Arbitration Party hereto.
(iii) Consistent with the provisions of this Section 7.11,
the Arbitrator shall utilize his utmost skill and shall apply himself diligently
so as to hear and decide the outcome and resolution of any Arbitrable Dispute
submitted to the Arbitrator as promptly as possible, but in any event on or
before the expiration of ninety (90) days after the appointment of the
Arbitrator. The Arbitrator shall not have any liability whatsoever for any acts
or omissions performed or omitted in good faith pursuant to the provisions of
this Section 7.11(B).
(iv) The Arbitrator shall, having in mind the ninety (90) day
time limitation set forth above for resolving disputes, (a) enforce and
interpret the rights and obligations set forth in this Agreement with respect to
the Arbitrable Dispute to the extent not prohibited by law, (b) fix and
establish any and all rules as it shall consider appropriate, in its discretion,
to govern the proceedings before it, including any and all rules of procedure
and/or evidence, and (c) make and issue any and all orders, final or otherwise,
and any and all awards, as a court of competent jurisdiction sitting at law or
in equity could make and issue, and as it shall consider appropriate in its sole
and absolute discretion, including the awarding of monetary damages (but shall
not award punitive damages except in situations involving knowing fraud), the
awarding of reasonable attorneys' fees and costs to the prevailing Arbitration
Party as determined by the Arbitrator, in his discretion, and the issuance of
injunctive relief.
(v) The Arbitration Parties shall allow and participate in
discovery in accordance with the Federal Rules of Civil Procedure for a period
of forty-five (45) days after the Arbitration Commencement Date. Unresolved
discovery disputes may be brought to the attention of, and resolved by, the
Arbitrator.
(vi) The Arbitrator shall be compensated for any and all services
rendered under this Section 7.11(B) at a rate of compensation equal to the
then-prevailing rate for arbitrators of similar experience and qualifications as
the Arbitrator, plus reimbursement for any and all expenses incurred in
connection with the rendering of such services, payable in full promptly upon
conclusion of the proceedings before the Arbitrator. Such compensation and
reimbursement shall be borne by the nonprevailing Arbitration Party as
determined by the Arbitrator in its sole and absolute discretion.
7.12 Right of Contribution in Favor of Managing General Partner. At any
time during the term of this Partnership Agreement after the third anniversary
hereof and subject to compliance with federal and state securities laws
applicable to private placements of securities, the Managing General Partner and
Limited Partner, or any successor to their respective interests herein, shall
have the right, in their sole discretion, to contribute all of their respective
interests in
43
and to the Partnership to Brandywine Operating Partnership, L.P., and in
exchange to receive Equivalent Units, as hereinafter defined, of Brandywine
Operating Partnership, L.P. (such contribution right, hereinafter, the
"Contribution Election"). The Contribution Election shall be exercised in
accordance with the following procedure:
A. At any time after the date which is the third anniversary hereof,
and from time to time but no more than once in any Fiscal Year, Managing General
Partner shall have the right, by notice to Administrative Partner, to request
that the Fair Market Value of the Project be determined in accordance with
Section 7.12(F) hereof.
B. Managing General Partner and Limited Partner shall jointly notify
Administrative General Partner of their exercise of the Contribution Election
not less than thirty (30) days prior to the Closing Date, as hereinafter defined
(such notice hereinafter being referred to as the "Election Notice"), but in any
event leaving such time as is necessary, if any, to determine the Fair Market
Value of the Project as set forth herein. If the Fair Market Value has not yet
been determined and no request by Managing General Partner in accordance with
Section 7.12(A) has been made, immediately upon the giving of the Election
Notice, the parties shall determine the Fair Market Value of the Project in
accordance with Section 7.12(F) hereof.
C. On the Closing Date, as hereinafter defined, Managing General
Partner and Limited Partner shall deliver to Administrative General Partner or
its designee an assignment, without recourse, but with a representation that the
partnership interest is free of liens except those disclosed to and consented to
by Administrative General Partner of all of Managing General Partner's and
Limited Partner's right, title and interest in and to the Partnership,
including, but not limited to, all of Managing General Partner's and Limited
Partner's interest as partners in the Partnership, and Administrative General
Partner shall deliver to Managing General Partner and Limited Partner or their
respective designees an assignment, without recourse, of the Equivalent Units in
Brandywine Operating Partnership, L.P., convertible into common shares of
beneficial interest of Brandywine Realty Trust as aforesaid. The Partners agree
that they shall execute such other instruments as shall be necessary to effect
such assignments as any of them may reasonably request.
D. In no event shall Brandywine Operating Partnership, L.P. be
required to issue upon contribution by the Managing General Partner and the
Limited Partner of their respective interests in the Partnership a number of
Equivalent Units which are convertible into a number of common shares of
beneficial interest of Brandywine Realty Trust in excess of the Stock Exchange
Limit. The term "Stock Exchange Limit" means the maximum number of common
shares of beneficial interest which Brandywine Realty Trust would be permitted
to issue upon conversion of Equivalent Units without obtaining prior shareholder
approval under New York Stock Exchange Rules (or the rules of any other stock
exchange on which the common shares of beneficial interest of Brandywine Realty
Trust are then listed). In addition, in no event shall the Managing General
Partner and Limited Partner (or any successor to their respective interests)
have the right to contribute their respective interests in the Partnership to
Brandywine Operating Partnership, L.P. unless the Fair Market Value is a
positive number.
E. The term "Closing Date," as used above, shall mean the date
mutually agreed upon by the Administrative General Partner and the Managing
General Partner or, if no such date is agreed upon, upon the date which is
thirty (30) days following the later of the date the Election Notice is deemed
delivered or the date upon which the Fair Market Value
44
has been determined as set forth in subsection 7.12(F) hereof.
Notwithstanding anything to the contrary contained herein, at any time prior
to the Closing Date, Managing General Partner may withdraw the Contribution
Election provided that Managing General Partner pays all fees and expenses of
the appraiser or appraisers who perform(s) the appraisal identified in
subsection (F) hereof.
F. "Fair Market Value," as used in this Section 7.12, shall mean, as
of any date, the amount a willing buyer would pay to a willing seller, as of
such date, for the Project in an arms length transaction in which neither party
is compelled to buy or sell, as the case may be. If Managing General Partner
and Administrative General Partner cannot agree on the Fair Market Value, or if
either Managing General Partner or Administrative General Partner elects by
written notice to the other within ten (10) days after the date the Contribution
Notice is delivered in accordance with Article 11 hereof, the Fair Market Value
shall be determined by an appraisal of the Project conducted by independent MAI
appraisers or members of the American Society of Real Estate Appraisers in
accordance with the following appraisal procedures:
(1) In determining Fair Market Value, it is understood and
agreed by Managing General Partner and Administrative
General Partner that the Project shall be appraised free and
clear of all mortgage indebtedness, Partners' Loans and
Partners' Priority Loans and excluding other liabilities of
the Partnership and that the appraiser or appraisers may, in
connection with its or their appraisal, take into account
such factors affecting Fair Market Value, including, without
limitation, the present value of any benefit of the below
market-rate loans secured by the Project which were made by
any federal, state or local governmental unit, redevelopment
authority, industrial development authority or similar body
("Public Loans") for Project Costs in relation to the
then-current market-rate indebtedness (net of (a) any
principal, if any, payable upon an acceleration of such
Public Loans, if any, by reason of the transfer but
otherwise assuming that such Public Loans would be repaid at
maturity and otherwise according to the terms and (b) the
present value of any future participation payments to the
holders of the documents evidencing and securing such Public
Loans based upon the then-current cash flow and then-current
value of the Project, assuming that the Project will be
refinanced at the end of the then-current term of the first
mortgage but not sold prior to maturity of the Public
Loans), the identity and creditworthiness of the tenants of
the Project, the terms and expiration dates of such tenants'
leases, prevailing rental rate and rental concession and
tenant build-out terms, prevailing leasing commission rates
on lease renewals and new leases, general market conditions
in the Conshohocken/West Conshohocken submarket, prevailing
capitalization and discount rates, and comparable sales, as
well as the various assets and liabilities of the
Partnership (excluding the liabilities to be subtracted from
Fair Market Value under subsection H(1)) hereof as such
appraiser or appraisers deem necessary or appropriate; and
45
(2) Within ten (10) days after Managing General Partner's or
Administrative General Partner's election by written notice
to the other to determine Fair Market Value of the Project
by appraisal, Managing General Partner and Administrative
General Partner each shall select one appraiser who
satisfies the requirements for appraisers referenced above
and notify the other of the appraiser within such 10-day
time period, the appraiser selected by it. If Managing
General Partner or Administrative General Partner fails to
select such an appraiser within such 10-day time period, the
appraiser selected by the other shall act alone. The
appraiser or appraisers so selected shall appraise the Fair
Market Value of the Project within thirty (30) days after
their selection. If one appraiser acts, the Fair Market
Value of the Project shall be the amount determined by such
appraiser. If two appraisers act, the Fair Market Value of
the Project shall be the average of the amounts so
determined, so long as the higher appraisal exceeds the
lower appraisal by ten percent (10%) of the amount of the
lower appraisal or less. If, however, the higher appraisal
exceeds the lower appraisal by in excess of such ten percent
(10%), the two appraisers shall appoint a third appraiser
who satisfies the requirements for appraisers referenced
above within fifteen (15) days. If the two appraisers fail
to do so, then either Managing General Partner or
Administrative General Partner may request that the American
Arbitration Association or any successor organization
thereto appoint a third appraiser who satisfies the
requirements for appraisers referenced above. If a third
appraiser has not been appointed by the American Arbitration
Association or its successor within fifteen (15) days after
Managing General Partner's or Administrative General
Partner's request for it to do so, then either Managing
General Partner or Administrative General Partner may apply
to any court of competent jurisdiction for the appointment
of such third appraiser. Such third appraiser, whether
appointed by the original two appraisers, the American
Arbitration Association or its successor, or a court of
competent jurisdiction, shall appraise the Fair Market Value
of the Project within thirty (30) days after his or her
appointment. If the third appraisal exceeds the amount of
the first two appraisals, the Fair Market Value of the
Project shall be the higher of the first two appraisals; if
the third appraisal is less than the lower of the first two
appraisals, the Fair Market Value of the Project shall be
the lower of the first two appraisals; and, in all other
cases, the Fair Market Value of the Project shall be equal
to the amount of the third appraisal. The provisions of
this Section 7.12(F) for determination of the Fair Market
Value of the Project shall be specifically enforceable to
the extent such remedy is available under applicable law and
the determination of such Fair Market Value hereunder shall
be final and binding upon Managing General Partner,
Administrative General Partner and Brandywine Operating
Partnership, L.P. for a one (1) year period. Each of
Managing General Partner and Administrative General Partner
shall
46
pay the fees and expenses of the appraiser selected by
it. The fees and expenses of the third appraiser, if any,
shall be paid one-half (1/2) each by Managing General
Partner and Administrative General Partner. If only one
appraiser is used, the fees and expenses of such appraiser
shall be paid one-half (1/2) each by Managing General
Partner and Administrative General Partner.
G. The term "Equivalent Units" shall mean the number of limited
partnership units of Brandywine Operating Partnership which are convertible, at
the time of issuance, into that number of common shares of beneficial interest
of Brandywine Realty Trust having an aggregate Market Value (as defined below)
equal to the Contributing Partners' Proportionate Share of Fair Market Value of
the Project as of the date which is three (3) days prior to the scheduled
Closing Date. If there are more than one class of interest in Brandywine
Operating Partnership, the class to be issued shall be the class which meets the
requirements of the foregoing sentence and which is designated by Brandywine
Operating Partnership.
H. The term "Contributing Partners' Share of Fair Market Value" is
determined, with respect to each of the Managing General Partner and Limited
Partner, by (1) subtracting from the Fair Market Value of the Project (a) all
principal outstanding and accrued and unpaid interest as of the Closing Date on
the indebtedness of the Partnership (other than additional or contingent
interest payable, if any, on the Public Loans by reason of the transfer and
considered by the appraisers in determining Fair Market Value), but including
principal and interest outstanding as of the Closing Date on the Partners' Loans
and Partners' Priority Loans; and (b) due and unpaid Preferred Cumulative
Returns and BOP Preferred Cumulative Return, and the Additional Capital Balances
of all Partners; (2) multiplying the resulting number by the respective
Participation Percentages of the Managing General Partner and Limited Partner,
respectively; and (3) adding to the result obtained in item (2) the sum of the
following: (a) outstanding principal and interest on any Partners' Loans and
Partners' Priority Loans made by each of such Partners, respectively (b) the
Preferred Cumulative Returns due each of such partners, respectively, and (c)
the Additional Capital Balances of each of such Partners, respectively.
I. The term "Market Value" shall mean, as of a given date, the
average of the Closing Price (as defined below) of the common shares of
beneficial interest of Brandywine Realty Trust for the twenty (20) consecutive
trading days ending on such date. The term "Closing Price" on any date shall
mean the last sale price of the common shares of beneficial interest, regular
way, or, in case no such sale takes place on such date, the average of the
closing bid and ask prices of the common shares of beneficial interest, regular
way, in either case as reported in the principal consolidated transaction
reporting system with respect to which such securities are listed or admitted to
trading on the New York Stock Exchange, or such other national securities
exchange or the NASDAQ Stock Market on which the common shares of beneficial
interest are then listed or admitted to trading.
J. The right of contributions set forth in this Section 7.12 is
subject to the following: (1) the filing of an Additional Listing Application
with the New York Stock Exchange and approval of such Application by the New
York Stock Exchange. Administrative General Partner shall use its best efforts
to file such Additional Listing Application and obtain the approval thereof
prior to the third anniversary of the date of this Agreement; and (2)
confirmation with the New York Stock Exchange that no shareholder approval is
required for the granting of the rights
47
set forth herein. Administrative General Partner will use its best efforts
to obtain confirmation that no such shareholder approval is required.
ARTICLE VIII
ADDITIONAL LIMITED PARTNERS
8.01. Additional Limited Partners and Their Contributions.
A. Additional limited partners may be admitted to the Partnership
only upon the written consent of all General Partners.
B. Each such additional limited partner will make such contribution
to the capital of the Partnership and will receive by reason of his or its
contribution such percentage of the income, gains, profits, credits and other
rights of the Partnership as will be set forth in the instrument evidencing the
written consent thereto by all of the General Partners.
ARTICLE IX
INSURANCE
9.01. Coverage. The Managing General Partner shall, during all times
while the Partnership is actively engaged in the operation of the Project, or in
any development or construction operations or other similar activities, cause
the Partnership to carry at the expense of the Partnership, and require all of
its contractors and subcontractors to carry, insurance in amounts, with
deductibles and in companies satisfactory to both General Partners. The General
Partners shall evaluate and decide from time to time as necessary respecting the
coverages then in effect or which should be in effect, and may add, eliminate,
expand or reduce any of the same. Without limiting the generality of the
foregoing, the Managing General Partner shall maintain on behalf of the
Partnership at least the following minimum coverages, unless otherwise agreed to
in writing by all the General Partners:
A. Insurance which shall comply with the Workers' Compensation and
employer's liability laws of all states in which the Partnership shall have
employees;
B. Comprehensive general liability insurance covering all operations
of the Partnership, having a combined single limit of not less than $1,000,000
per occurrence for bodily injury (including death) and property damage;
C. Automobile liability insurance covering all owned, non-owned and
hired vehicles used in the operations of the Partnership, having limits for
bodily injury (including death) not less than $2,000,000 per occurrence and
limits for property damage not less than $1,000,000 per occurrence;
D. Umbrella liability insurance, concurrent with the coverages named
in Sections 9.0l.A., 9.0l.B. and 9.0l.C. above, in such amount, if any as any
first mortgagee of the Project shall require or such other amount as Managing
General Partner shall deem prudent;
48
E. During construction activities at the Project, builders all-risk
extended coverage insurance (such to be maintained in an appropriate amount
until replaced by the coverage described in Section 9.0l.F below);
F. Fire, extended coverage, vandalism and malicious mischief
insurance in an amount based upon the replacement value of the Project
(excluding roads, foundations, parking areas, paths, walkways and like
improvements), including coverage for loss of contents and further coverage for
loss of rentals;
G. Title insurance with respect to the Land, Project, and all other
real estate of the Partnership; and
H. Boiler and machinery insurance, including coverage for loss of
rentals.
9.02. Certificates; Notices.
A. The Managing General Partner shall furnish to the General
Partners duplicate copies of policies and/or certificates of insurance
certifying to the insurance then in effect (i) on or before the execution of
this Agreement, (ii) upon the renewal or replacement of existing coverage or the
obtaining of additional coverage, and (iii) at any other time upon the request
of any General Partner on ten (10) days prior written notice.
B. Each insurance policy of the Partnership shall contain a
provision requiring the insurer to notify the Partnership, in writing and at
least thirty (30) days in advance, of any material change in the policy and of
any notice of cancellation; and upon its receipt of any such notice the Managing
General Partner shall promptly forward a copy of the same to each General
Partner.
9.03. Concerning Liability Insurance. With respect to all liability
policies of the Partnership, the Managing General Partner shall obtain such
liability policies or endorsements thereto naming not only the Partnership as
insured, but also naming all Partners and the manager or managing agent of the
Project as additional insureds.
9.04. Miscellaneous. The Managing General Partner, on behalf of the
Partnership, shall use its best efforts and take such steps as are within its
control to (i) secure an endorsement or endorsements on all of the insurance
policies referred to herein to the effect that all insurance coverage of any
Partner, carried by such Partner in its individual capacity, will be considered
excess coverage, (ii) require all of the Partnership's architects, engineers and
other design professionals to maintain errors and omissions coverage, (iii)
require all of the Partnership's contractors and subcontractors to comply fully
with the Occupational, Safety and Health Act of 1970, as amended from time to
time, and (iv) require all of the Partnership's contractors to indemnify the
Partnership and save it harmless and to submit evidence of contractual liability
insurance in amounts sufficient, in its reasonable opinion, to secure such
indemnity; all with the understanding, nevertheless, that the Managing General
Partner shall be obligated to secure and obtain all or any portion of the
foregoing to the extent the same are, in the Managing General Partner's
judgment, available at reasonable cost.
49
ARTICLE X
DISSOLUTION AND TERMINATION
10.01. Dissolution.
A. The Partnership will be dissolved:
(i) upon the death, retirement, withdrawal, legal incompetency,
removal, or bankruptcy of an individual General Partner or the retirement,
bankruptcy, withdrawal, removal or dissolution of a corporate or partnership
General Partner, unless (a) all remaining General Partners (if any remain)
unanimously elect to continue the business of the Partnership, or (b) if no
General Partner remains, the Limited Partners unanimously consent to the
continuation of the business of the Partnership and unanimously select a
successor general partner; or
(ii) upon the affirmative vote or written consent of all of the
General Partners; or
(iii) upon the sale of the Project and all of the Land, and
the repayment and satisfaction in full of any financing undertaken by the
Partnership in respect thereof; or
(iv) at 12:00 midnight on July 1, 2050;
provided, however, that the Partnership shall not terminate until its affairs
have been wound up and its assets distributed as provided herein.
B. If the business of the Partnership is continued pursuant to
Section 10.01.A(i) above, (i) the Partnership will continue until the end of the
term for which it is formed (as set forth in Section 10.0l.A. above), or until
the subsequent death, legal incompetency, removal, bankruptcy, retirement,
withdrawal or dissolution of a remaining or successor general partner, in which
event the election to continue, as above set forth, will again be effective; and
(ii) in any such case the incompetent, removed, retired, withdrawn or bankrupt
General Partner (or his or its legal representative), or the successor in
interest of a deceased or dissolved General Partner, will become a Limited
Partner with the same share of profits and losses of the Partnership and the
same Participation Percentage and distribution priorities as before such event
and, except as expressly provided elsewhere herein, will have all the rights of
a Limited Partner.
C. As used in Sections 10.0l.A. and 10.0l.B. above, the term
"bankruptcy" shall mean (i) the commencement by a General Partner of a voluntary
case under any Chapter of the Bankruptcy Code (Title 11 of the United States
Code), as now or hereafter in effect, or the taking by a General Partner of any
equivalent or similar action by the filing of a petition or otherwise under any
other federal or state law in effect at the time relating to bankruptcy or
insolvency, (ii) the filing of a petition against a General Partner under any
Chapter of the Bankruptcy Code (Title 11 of the United States Code), as now or
hereafter in effect, or the filing of a petition seeking any equivalent or
similar relief against a General Partner under any other federal or state law in
effect at the time relating to bankruptcy or insolvency, and in either case the
failure by such General Partner to secure the discharge of any such petition
within sixty (60) consecutive days from the date of filing, (iii) the making by
a General Partner of a general
50
assignment for the benefit of his, its or any of their creditors, (iv) the
appointment of a receiver, trustee, custodian or similar officer for a
General Partner or for the property of a General Partner and the failure by
such General Partner to secure the discharge of such receiver, trustee,
custodian or similar officer within sixty (60) consecutive days from the date
of appointment,.or (v) the admission in writing by a General Partner of any
inability to pay debts generally as they become due.
10.02. Appointment of Liquidating Partner.
A. Upon the dissolution of the Partnership, if the Partnership's
business is not continued pursuant to Section 10.01. hereof, the Managing
General Partner (provided it then is a General Partner hereof and is not in
breach or default of any of its obligations under this Agreement) shall act as
Liquidating Partner on the terms hereinafter set forth; or if it no longer is a
General Partner hereof or is in breach or default of any of its obligations
under this Agreement, then Administrative General Partner (or its successors or
assigns) shall select a Partner (the "Liquidating Partner") to wind up the
affairs of the Partnership and distribute its assets. Another Partner shall be
selected (in the same manner and for the same purpose) to succeed the Partner
originally selected or any subsequently selected successor whenever the Partner
originally selected or any such subsequently selected successor, as the case may
be, fails for any reason to carry out such purpose. The Partner so selected and
acting hereunder from time to time may be any General Partner or any other
individual, corporation, or general or limited partnership, shall be compensated
for his or its services hereunder (as and to the extent authorized by
Administrative General Partner, but no compensation shall be payable if the
Liquidating Partner is a Partner or is affiliated, directly or indirectly, with
a Partner), and shall proceed diligently to wind up the affairs of the
Partnership and distribute its assets in the manner hereinafter provided.
B. No Partner (other than the Managing General Partner) shall be
required to accept appointment as Liquidating Partner. If no Partner is willing
to accept such appointment, the General Partners shall select a third person to
act in that capacity, and the person so selected shall for all purposes of this
Agreement have the rights, powers and obligations of Liquidating Partner.
10.03. Distributions and Other Matters. Promptly upon the dissolution
of the Partnership, if the Partnership's business is not continued pursuant to
Section 10.01. hereof, the Partners (or their legal representatives, heirs,
successors, or assigns) will cause the cancellation of the Certificate, and the
Liquidating Partner will liquidate the assets of the Partnership and apply and
distribute the proceeds of such liquidation in the following order of priority
to the extent available:
A. To payment of secured debts and liabilities of the Partnership
(other than Partner Loans or Partners Priority Loans) in the order of priority
provided by law; provided that the Liquidating Partner shall first pay, to the
extent permitted by law, liabilities with respect to which any Partner is or may
be personally liable;
B. To payment of unsecured debts and liabilities of the Partnership
(other than Partner Loans or Partners' Priority Loans) in the order of priority
provided by law; provided that the Liquidating Partner shall first pay, to the
extent permitted by law, liabilities with respect to which any Partner is or may
be personally liable;
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C. To payment of the expenses of liquidation of the Partnership in
the order of priority provided by law; provided that the Liquidating Partner
shall first pay, to the extent permitted by law, expenses with respect to which
any Partner is or may be personally liable;
D. To the setting up of such reserves as the Liquidating Partner may
deem reasonably necessary for any contingent or unforeseen liabilities or
obligations of the Partnership arising out of or in connection with the
Partnership business; provided that any such reserve shall be held by the
Liquidating Partner for the purposes of disbursing such reserves in payment of
any of the aforementioned contingencies and, at the expiration of such period as
the Liquidating Partner shall deem advisable (but in no case to exceed eighteen
(18) months from the date of dissolution unless an extension of time is
consented to by the General Partners), to distribute the balance thereafter
remaining in the manner hereinafter provided; and
E. To the Partners in the order set forth in Section 5.02, above.
10.04. Distributions of Property. No Partner may demand or receive
property other than cash in return for its contributions, loans or advances or
upon dissolution as provided herein, except upon the written approval of both
General Partners.
10.05. Actions of the Liquidating Partner; Statements of Account.
A. During the period of liquidation (which will be such reasonable
time as may be required for the orderly completion of liquidation and
distribution as set forth above), the Liquidating Partner, as trustee for the
benefit of all Partners as tenants-in-common, shall take any and all action
necessary or appropriate to complete such liquidation and distribution as
provided in this Article, having for such purpose all of the powers enumerated
in Article IV of this Agreement necessary or appropriate to accomplish the same.
B. The Liquidating Partner will prepare a final statement of the
accounts of the Partnership as of the date of termination, and, as promptly as
possible thereafter, a copy thereof will be furnished to each Partner. Such
statement shall set forth the actual or contemplated application and
distribution of the assets of the Partnership. Upon completion of distribution
as required hereby, a further statement for the period of liquidation will be so
prepared by the Liquidating Partner and furnished to each Partner.
ARTICLE XI
NOTICES AND COMMUNICATIONS
11.01. Notices. All notices, demands, requests, calls and other
communications required by or permitted under this Agreement shall be in writing
(whether or not a writing is expressly required hereby), and shall be directed
as follows:
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A. If to the Managing General Partner:
Five Xxxxxx Tower Associates
c/o Oliver Xxxxxx Xxxxxx Corporation
One Tower Bridge
000 Xxxx Xxxxx Xxxxxx
Xxxx Xxxxxxxxxxxx, XX 00000
B. If to Administrative General Partner:
c/o Brandywine Realty Trust
Newtown Corporate Campus
00 Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Chairman
Xxxxxx X. Xxxxxxx, President and Chief Executive
Officer
C. If to Limited Partner:
Xx. Xxxxxx X. Xxxxxx
c/o Oliver Xxxxxx Xxxxxx Corporation
One Tower Bridge
000 Xxxx Xxxxx Xxxxxx
Xxxx Xxxxxxxxxxxx, XX 00000
D. If to the Partnership, in care of each General Partner at its
respective address stated above.
E. Any notice, demand, request, call or other communication required
or permitted to be given or made under this Agreement will be deemed given or
made (i) when delivered by hand delivery at its address set forth above, or (ii)
three business days following its deposit in the U.S. Mail, addressed to such
address, postage prepaid, registered or certified, return receipt requested
(with a copy by regular U.S. mail, first class, postage prepaid), or (iii) on
the next business day following its deposit with Federal Express or another
nationally recognized express delivery service, addressed to such address (with
a copy by regular U.S. mail, first class, postage prepaid).
11.02. Change of Address. Any Partner may specify a different address
by sending to the Partnership a notice as hereinabove provided of such different
address. If the address of the Partnership is changed, a written notice of such
change of address shall be sent by the Managing General Partner by registered or
certified mail to each other Partner.
11.03. Time of Communications. Any notice, demand, request, call or
other communication required or permitted to be given or made to a Partner or to
the Partnership under this Agreement will be deemed given or made (i) when
delivered to such Partner or the Partnership, as the case may be, at its address
set forth in Section 11.01. above, or (ii) three business days following its
deposit in the U.S. Mail, addressed to such address, postage prepaid, registered
or certified, return receipt requested (with a copy by regular U.S. mail, first
class, postage prepaid), or (iii) on the next business day following its deposit
with Federal Express or
53
another nationally recognized express delivery service, addressed to such
address (with a copy by regular U.S. mail, first class, postage prepaid).
ARTICLE XII
MISCELLANEOUS
12.01. Filings. The Partners agree that (i) a signed and acknowledged
certificate shall be filed promptly in such offices as are required by the Act
for the continuation of the Partnership as contemplated by this Agreement; (ii)
they shall sign, acknowledge and file from time to time in such offices (and
elsewhere) all writings to amend the Certificate as are required by the Act for
the carrying out of the terms and provisions of this Agreement; (iii) upon
dissolution and termination of the Partnership, they shall sign, acknowledge and
file in such offices (and elsewhere) the writing required by the Act to cancel
the Certificate; and (iv) they shall from time to time sign, acknowledge and
file any other certificates, instruments and documents, as well as amendments
thereto, under the laws of the Commonwealth of Pennsylvania or of any state or
other jurisdiction in which the Partnership is doing or intends to do business
in connection with the use of the name of the Partnership by the Partnership.
12.02. Power of Attorney.
A. Each Partner, by his or its execution of this Agreement, hereby
irrevocably constitutes, empowers and appoints the Managing General Partner (for
so long as it or its nominee shall remain a General Partner of the Partnership)
and, in the absence of any General Partner, the person designated as Liquidating
Partner pursuant to Section 10.02. hereof, as its true and lawful agent and
attorney-in-fact to make, prepare, execute, sign, acknowledge, certify under
oath and file and record, in its name, place and stead:
(1) the Certificate, as well as amendments thereto and a
statement of cancellation thereof, under the Act, or which may be required by,
or be appropriate under, the laws of any other state or other jurisdiction;
(2) any certificates, instruments and documents (including
fictitious name applications), as well as amendments thereto and statements of
cancellation thereof, as may be required by, or be appropriate under, the laws
of any state or other jurisdiction in which the Partnership is doing or intends
to do business in connection with the use of the name of the Partnership by the
Partnership;
(3) without limiting the generality of the foregoing, any
amendment to the Certificate which is necessary to reflect: (i) a change in the
name or address of the Partnership or in the amount or character of the Capital
Contributions or Additional Capital Contributions of any Partner; (ii) the
admission of a substituted limited partner pursuant to the provisions of Article
VII hereof; (iii) the admission of a general partner or additional limited
partner pursuant to the provisions of Article VII or Article VIII hereof; (iv)
the correction or clarification of any incorrect statement in the Certificate
(or in any amendment thereto); or (v) a change in the time stated in the
Certificate (or in any amendment thereto) for the expiration of the term hereof
or for the return of the contributions of any Partner; and
54
(4) any other instrument which may be required to be filed by
the Partnership under the laws of the United States, any state, or any political
subdivision thereof, or by any governmental or quasi-governmental agency, or
which any General Partner shall deem it advisable to file.
B. Each Partner further agrees, whenever requested so to do,
personally to sign, certify under oath and acknowledge any of the foregoing and
to execute whatever further instruments or other documents as shall be necessary
or appropriate in the reasonable judgment of any Partner.
C. The foregoing powers of attorney are coupled with an interest,
are irrevocable and, to the extent permitted by law, shall survive the death,
dissolution, bankruptcy or legal incompetency of a Partner. The foregoing
powers of attorney shall survive the sale, assignment or transfer by a Partner
of any part or all of his interest in the Partnership.
12.03. Inspections. Any Partner shall have the full right and privilege
at any time, at its own cost and expense, to inspect all or any part of the
Land, Project or other Partnership property.
12.04. Other Remedies. Subject to the provisions of Section 4.0l.E.
hereof and Section 12.06 hereof, any Partner shall have and shall maintain all
rights or remedies it may have against any other Partner, at law or in equity or
by this Agreement, including, without limitation, rights or remedies for or in
respect of conduct constituting a fraud on the Partnership or on any Partner, or
for or in respect of a breach of any fiduciary obligation.
12.05. Partners as Creditors. Any Partner who is a bona fide creditor
of the Partnership as a lender thereto or by reason of any other debtor/creditor
relationship therewith (including, without limitation, creditor status arising
by reason of the making of any Partners' Loan or Partners' Priority Loan) shall
be permitted, in the event of any breach thereof or default thereunder, to take
such action and to exercise and pursue such other rights, powers or remedies
against the Partnership and/or against any other obligor, which rights, powers
or remedies are available to such Partner by law, in equity or by contract; and
the taking of any such action, the exercise and pursuit of any such right, power
or remedy, and the execution or foreclosure on any Partnership property in
connection therewith, shall each be understood to be for the benefit of the
creditor-Partner only and shall not be deemed or understood to cause or permit a
reconstitution of the Partnership for the benefit of any other Partner.
12.06. Independent Ventures. Any Partner and any affiliate of any
Partner may engage in or possess interests current or future in other business
ventures of every nature and description, independently or with others, and
whether such ventures compete with the Project or not, including, without
limitation, the ownership, financing, leasing, operation, management,
syndication, brokerage and development of real property; and neither the
Partnership nor any Partner will have any rights by virtue of this Agreement or
the existence of this Partnership in or to such independent ventures or to the
income or profits derived therefrom.
12.07. Partial Invalidity. The invalidity or unenforceability of a
portion of this Agreement will not affect the validity or enforceability of the
remainder hereof.
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12.08. Governing Law; Parties in Interest. This Agreement will be
governed by and construed according to the laws of the Commonwealth of
Pennsylvania, and will bind and inure to the benefit of the Partners and each of
their respective heirs, successors, assigns, executors, administrators and
personal representatives.
12.09. Amendment. This Agreement may be amended only by the unanimous
written consent of all General Partners, provided, however, that no amendment to
this Agreement which adversely affects the rights or liabilities of the Limited
Partner shall be made without the Limited Partner's prior written consent.
12.10. Execution in Counterpart. This Agreement may be executed in
counterparts, all of which taken together shall be deemed one original.
12.11. Computation of Time. In computing any period of time pursuant to
this Agreement, the day of the act, date of notice, event or default from which
the designated period of time begins to run will not be included. The last day
of the period so computed will be included, unless it is a Saturday, Sunday or a
legal holiday in the Commonwealth of Pennsylvania, in which event the period
runs until the end of the next day which is not a Saturday, Sunday or such legal
holiday.
12.12. Table of Contents; Titles and Captions. The Table of Contents
preceding this Agreement and all article, section or subsection titles or
captions contained herein are for convenience only and are not deemed part of
the context hereof.
12.13. Pronouns and Plurals. All pronouns and any variations thereof
are deemed to refer to the masculine, feminine, neuter, singular or plural as
the identity of the person or persons may require.
12.14. Approval by General Partners. In respect of all provisions of
this Agreement, any reference to approval of the General Partners or consent of
the General Partners shall mean, unless the context hereof shall expressly
require otherwise, the unanimous approval or consent of all of the General
Partners.
12.15. Exhibits. The Exhibits attached hereto form a part of this
Agreement and each is hereby incorporated herein by reference.
12.16. Entire Agreement. This Agreement and the Exhibits hereto contain
the entire understanding and agreement among the Partners, and supersede any
prior understandings and agreements between them respecting the subject matter
hereof. Without limiting the foregoing, this Agreement amends, supersedes and
restates the Original Agreement in its entirety and the Certificate amends,
supersedes and restates the Original Certificate in its entirety.
12.17. Filing with Securities Exchange Commission. The parties hereto
acknowledge and agree that Brandywine Realty Trust, the general partner of the
sole member of the general partner of the Administrative General Partner, may
make such filings as it deems necessary to comply with securities laws with the
Securities Exchange Commission disclosing this transaction.
12.18. Non-Recourse.
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A. No recourse shall be had for any of the obligations of the
Administrative General Partner hereunder or for any claim based thereon or
otherwise in respect thereof against any past, present or future trustee,
shareholder, officer or employee of Brandywine Realty Trust, whether by virtue
of any statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise, all of such liability being expressly waived and released
by each of the other Partners.
B. No recourse shall be had for any of the obligations of the
Managing General Partner hereunder or for any claim based thereon or otherwise
in respect thereof against any past, present or future trustee, shareholder,
officer or employee of Five Xxxxxx Tower Corporation, whether by virtue of any
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise, all of such liability being expressly waived and released by each of
the other Partners.
IN WITNESS WHEREOF, the parties hereto have executed this Second Amended
and Restated Agreement of Limited Partnership the day and year first above
written.
FIVE XXXXXX TOWER ASSOCIATES,
a Pennsylvania limited partnership
By: FIVE XXXXXX TOWER CORPORATION, a Pennsylvania
corporation, its duly authorized general
partner
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Xxxxxx X. Xxxxxx, President
BRANDYWINE TB III, L.P., a Pennsylvania limited
partnership
By: BRANDYWINE TB III, L.L.C., a Pennsylvania
limited liability company
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
-----------------------------
Name: Xxxxxxx X. Xxxxxxx, Xx.
Title: Chairman of the Board
JOINDER AND GUARANTY
BRANDYWINE OPERATING PARTNERSHIP, L.P. hereby joins in this Agreement for
the purpose of confirming that it (i) will perform the obligations required of
Brandywine Operating Partnership, L.P. under Section 7.12 hereof and (ii)
unconditionally guarantees that Administrative General Partner will make the
capital contributions and Partners' Loans required to be made by Administrative
General Partner as set forth in subsection 3.07 hereof.
BRANDYWINE OPERATING PARTNERSHIP, L.P., a Delaware
limited partnership
57
By: BRANDYWINE REALTY TRUST, its duly authorized
general partner
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
-----------------------------
Name: Xxxxxxx X. Xxxxxxx, Xx.
Title: Chairman of the Board
58
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
FIVE TOWER BRIDGE ASSOCIATES
Exhibit "B"
Schedule of Partners' Capital Contributions,
Capital Balances, Capital Accounts, Contribution Percentages and
Participation Percentages, all as of _________________________
Capital Balances
Capital and Contribution Participation
Contributions Capital Accounts Percentages Percentages
-------------- ---------------- ------------- -------------
GENERAL PARTNERS
Administrative
General
Partner $ 65 $ 65 65% 65%
Managing
General
Partner $ 34 $ 34 34% 34%
LIMITED PARTNERS
Limited
Partner $ 1 $ 1 1% 1%
