Exhibit 10.1
PROJECT PARTICIPATION AGREEMENT
THIS PROJECT PARTICIPATION AGREEMENT is dated as of November 3, 1997
and is by and among Brandywine Operating Partnership, L.P. ("BOP"),
Brandywine TB I, L.P. ("BOP Sub I"), Brandywine XX XX, L.P. ("BOP Sub II"),
Brandywine TB III, L.P. ("BOP Sub III"), Xxxxxx X. Xxxxxx ("Xxxxxx"), Two
Xxxxxx Tower Associates ("Two OTA"), Four Xxxxxx Tower Associates ("Four
OTA"), Five Xxxxxx Tower Associates ("Five OTA"), Xxxxxx Tower Land Holding
Associates ("OTLHA") and Xxxxxx Xxxxxx Xxxxxx Corporation ("OTP Corp.").
Background
Two Tower Bridge Associates (the "Two T.B. Partnership") owns the
property and building (the "Two T.B. Project") described on Exhibit A .
Tower Bridge Land Holding Associates I (the "Four T.B. Seller") owns the
property (the "Four T.B. Property") described on Exhibit B. Tower Bridge
Land Holding Associates II (the "Five T.B. Seller") owns the property (the
"Five T.B. Property") described on Exhibit C. OTLHA is a general partner in
the Four T.B. Seller and the Five T.B. Seller. The direct and indirect
interests of Xxxxxx in real estate in the Boroughs of Conshohocken and West
Conshohocken are identified on Exhibit D.
The parties are entering into this Agreement in order to set forth
the terms upon which: (i) BOP Sub II will be admitted as a general partner
of the Two T.B. Partnership; (ii) BOP Sub I and Four OTA will enter into an
Agreement of Limited Partnership (the "Four T.B. Partnership") in order to
purchase and develop the Four T.B. Property; (iii) BOP Sub III and Five OTA
will enter into an Agreement of Limited Partnership (the "Five T.B.
Partnership") in order to acquire an option to purchase the Five T.B.
Property; and (iv) certain related matters will be handled.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
1. Two T.B. Partnership.
a. Attached to this Agreement as Exhibit E is an unexecuted
copy of the Second Amended and Restated Agreement of Limited Partnership of
the Two T.B. Partnership (the "Two T.B. Partnership Agreement"). Upon
satisfaction of the conditions specified in subparagraphs a(i) and (ii)
below, BOP Sub II, Two OTA and Xxxxxx (as limited partner) shall execute the
Two T.B. Partnership Agreement and take the actions provided for therein and
shall complete those exhibits to the Two T.B. Partnership Agreement that are
not included as part of Exhibit E or that require completion or updating
(Exhibits X, X, X-0, X, X, X, X and M).
(i) Funding of a mortgage loan (the "Two T.B. Mortgage
Loan"), secured by the Two T.B. Project, in the principal amount of not less
than $5,000,000 and not more than that number which produces a ratio of (a)
mortgage debt to (b) the sum of
mortgage debt plus equity in the Two T.B. Partnership of 65%. Subject to
paragraph 1.c below, BOP and Two OTA agree to use their best efforts to
obtain the Two T.B. Mortgage Loan as promptly as commercially practicable.
To avoid uncertainty on the matter, BOP and Two OTA agree that a mortgage
loan having terms comparable to the terms contained in Exhibit F would be
acceptable.
(ii) Prepayment of the outstanding indebtedness (the
"AFL-CIO Debt") owing to the AFL-CIO Building Investment Trust (the
"AFL-CIO").
b. Immediately upon execution and delivery of the Four T.B.
Sale Agreement (as defined in paragraph 2 below) by the parties thereto, Two
OTA will deliver to the AFL-CIO the prepayment notice in the form attached
hereto as Exhibit G (the "Prepayment Notice").
c. Until execution and delivery of the Four T.B. Sale
Agreement by the parties thereto, and delivery by Two OTA of the Prepayment
Notice to the AFL-CIO, neither BOP nor BOP Sub II shall have any obligation
to pay a commitment fee to a lender in respect of the Two T.B. Mortgage Loan.
The amount of any commitment fee payable to a lender in respect of the Two
T.B. Mortgage Loan (and any other fees called for in the loan commitment)
shall be paid by BOP or BOP Sub II and shall accrue interest at the rate of
10% from the date made. Upon execution of the Two T.B. Partnership Agreement,
the amount so paid by BOP or BOP Sub II (plus a 10% return) on account of the
commitment fee shall constitute BOP Preference Capital under the Two T.B.
Partnership Agreement and shall (unless simultaneously repaid to BOP or BOP
Sub II) be deemed to have been made pursuant to Section 3.01 of the Two T.B.
Partnership Agreement (whether or not expressly provided therein). Two OTA
shall not be required to pay any portion of the commitment fee or any other
fees called for in the commitment.
d. The parties agree that all the net proceeds of the Two
T.B. Mortgage Loan will be applied to prepayment of the AFL-CIO Debt and that
the additional amount required to fully prepay the AFL-CIO Debt and to pay
actual costs associated with such prepayment will be funded by the capital
contribution required to be made by BOP Sub II pursuant to Section 3.01 of
the Two T.B. Partnership Agreement (which amount shall constitute BOP
Preference Capital under the Two T.B. Partnership Agreement).
e. Prior to the earlier of: (i) execution by BOP Sub II, Two
OTA and Xxxxxx of the Two T.B. Partnership Agreement and (ii) the Termination
Date (as defined in subparagraph g below), Two OTA agrees (a) to operate the
Two T.B. Partnership and the Two T.B. Project in the ordinary course,
consistent with current practice, (b) to obtain the prior consent of BOP to
any new leasing arrangements at the Two T.B. Project (other than as and to
the extent provided in Section 4.09A.(5) of the Two T.B. Partnership
Agreement with respect to "Relocating Tenants"), (c) not to permit additional
encumbrances on the Two T.B. Project, (d) not to permit a change in the
ownership of the Two T.B. Partnership or the Two T.B. Project
2
(other than upon the death of a partner) and (e) not to permit a modification
to use or easement agreements affecting the Two T.B. Project.
f. Two OTA hereby represents and warrants to BOP and BOP Sub
II as to each of the matters contained in Section 4.09 of the Two T.B.
Partnership Agreement. At the time the Two T.B. Partnership Agreement is
signed and BOP Sub II is admitted as a partner in the Two T.B. Partnership,
Two OTA shall again make such representations and warranties, with such
exceptions thereto to be listed on a schedule as shall be necessary to
reflect changes occurring after the date hereof. In addition, Two OTA
represents and warrants that: (i) Exhibit H attached hereto consists of two
letters (the "Debt Letters") from holders of subordinated debt relating to
the Two T.B. Project stating the outstanding principal amount of such
subordinated debt, plus accrued interest, as of the dates specified in such
Debt Letters and (ii) the outstanding principal amount of the AFL-CIO Debt as
of December 31, 1996 is as reflected in the audited balance sheet of the Two
T.B. Partnership as of December 31, 1996. Two OTA represents and warrants
that since the respective date(s) of the Debt Letters, all amounts that have
fallen due on the indebtedness that is the subject of the Debt Letters
(consisting of $8,675.88 (principal and interest) (RDA) and $0 (UDAG),
respectively, in respect of the debt covered thereby) have been paid in full.
g. In the event that BOP and Two OTA, despite use of their
best efforts, have been unable to obtain the Two T.B. Mortgage Loan by March
31, 1999 (the "Termination Date"), the rights and obligations of the parties
under this paragraph 1 shall terminate without further liability.
2. Four T.B. Partnership.
a. Attached to this Agreement as Exhibit I is an unexecuted
copy of the Agreement of Limited Partnership of the Four T.B. Partnership
(the "Four T.B. Partnership Agreement").
b. Immediately following the execution of this Agreement, BOP
Sub I and Four OTA shall execute and deliver the Four T.B. Partnership
Agreement and shall execute and deliver an agreement of sale for the Four
T.B. Property (the "Four T.B. Sale Agreement") with the Four T.B. Seller.
The terms of the Four T.B. Sale Agreement must be mutually agreeable to BOP
and Four OTA.
c. Following acquisition by the Four T.B. Partnership of the
Four T.B. Property pursuant to the Four T.B. Agreement of Sale, BOP shall
advance funds to pay those costs identified on Exhibit J, provided that BOP
shall not be obligated to advance any funds to pay for the costs of
construction of the culvert at the Four T.B. Property until it has been
provided: (x) an updated engineer's certificate certifying that all licenses,
permits and approvals for construction of the culvert have been obtained, (y)
an acceptable guaranteed maximum price construction contract for construction
of the culvert and (z) a waiver of liens in recordable form
3
delivered by the general contractor for the culvert construction. The
amounts so advanced by BOP (the "BOP Advances"): (i) shall accrue interest at
the rate of 10% per annum from the date made, (ii) shall constitute the
obligation of the Four T.B. Partnership, (iii) shall be secured by an
open-end mortgage and security agreement and (iv) shall be repaid by the Four
T.B. Partnership from proceeds of an acquisition and construction loan (the
"Acquisition and Construction Loan") that the Four T.B. Partnership intends
to obtain to fund the cost of acquiring and developing the Four T.B.
Property. In the event the Acquisition and Construction Loan has not closed
by December 31, 1998, the BOP Advances, together with accrued interest
thereon, shall become due and payable on such date. Prior to repayment in
full of the BOP Advances and accrued interest thereon, the BOP Advances shall
be treated for all purposes as a "Partner Priority Loan" under the Four T.B.
Partnership Agreement.
d. BOP, Xxxxxx and Four OTA agree that an Acquisition and
Construction Loan having terms comparable to the terms contained in Exhibit K
would be acceptable. BOP and Xxxxxx agree to provide the commitments and
collateral required to be furnished by them under the term sheet attached as
Exhibit K in connection with the consummation of the Acquisition and
Construction Loan provided for therein.
e. The terms and conditions attached as Exhibit K require
that a loan commitment for a permanent loan be issued prior to closing under
the Acquisition and Construction Loan. BOP and Four OTP shall use their best
efforts to obtain a permanent loan commitment in the form of Exhibit K-1
attached hereto and made a part hereof as soon as commercially practicable.
3. Five T.B. Partnership.
a. Attached to this Agreement as Exhibit L is an unexecuted
copy of the Agreement of Limited Partnership of the Five T.B. Partnership
(the "Five T.B. Partnership Agreement"). Attached to this Agreement as
Exhibit M is an unexecuted copy of a Purchase Option Agreement, with exhibits
thereto attached (the "Option Agreement") between the Five T.B. Seller and
the Five T.B. Partnership. Concurrently with the closing under the Four T.B.
Sale Agreement, and as a condition to such closing: (i) BOP Sub III and Five
OTA will form the Five T.B. Partnership and (ii) the Five T.B. Seller and the
Five T.B. Partnership will execute the Option Agreement.
b. Exercise of the Option pursuant to the Option Agreement
and extension of the Option from the first to the second anniversary of the
date of the Option Agreement shall each require the joint consent of BOP Sub
III and Five OTA; 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
the Five T.B. Seller, BOP Sub III shall have the sole and exclusive right and
authority to determine, on behalf of the Five T.B. Partnership, whether the
Five T.B. Partnership shall exercise the Option.
4
c. Subject to execution of the Option Agreement, BOP Sub III
agrees to advance the Option payments pursuant to Section 4 of the Option
Agreement. Each such advance shall accrue interest from the date made at the
rate of 10% per annum, compounded annually, and shall be treated as a capital
contribution by BOP Sub III to the Five T.B. Partnership and added to the BOP
Preference Capital under the Five T.B. Partnership Agreement.
d. In the event that the Option is not extended from the
first to the second anniversary of its date of issuance and expires
unexercised, then an amount equal to the aggregate amount contributed or
deemed contributed by BOP Sub III to the capital of the Five T.B. Partnership
in payment of the First Year Option Payment (as defined in Section 4 of the
Option Agreement), together with the 10% accrued return thereon, shall
automatically be deemed to have been contributed to the capital of the Four
T.B. Partnership by or on behalf of BOP Sub I on the expiration of the Option
and shall thereupon become a part of and increase the BOP Preference Capital
under the Four T.B. Partnership.
4. Right of First Offer. Xxxxxx, on behalf of himself and
entities controlled by him, and BOP will execute: (i) the Right of First
Offer Agreements attached as Exhibits N-1 and N-2 (in respect of properties
known, respectively, as Three Tower Bridge and Tower Bridge North)
concurrently with the closing under the Four T.B. Agreement of Sale; and (ii)
the Right of First Offer Agreement attached as Exhibit N-3 (in respect of
Xxxxxx'x partnership interest in the partnership that owns property known as
One Tower Bridge) concurrently with the closing under the Four T.B. Agreement
of Sale.
5. OTLHA Representations and Warranties. OTLHA represents and
warrants for the benefit of BOP and its subsidiaries that: (i) attached
hereto as Exhibit O-1 is a true and correct copy of the Agreement of Limited
Partnership of the Five T.B. Seller and such Agreement is currently in full
force and effect; and (ii) attached hereto as Exhibit O-2 is a true and
correct copy of the Agreement of Limited Partnership of Tower Bridge North
Associates (which Partnership owns the land referred to as Tower Bridge
North, including Six Tower Bridge) and such Agreement is currently in full
force and effect.
6. Miscellaneous.
a. No recourse shall be had for any obligation of Brandywine
Realty Trust, in its capacity as general partner of BOP, under this Agreement
or under any document executed in connection herewith or pursuant hereto, or
for any claim based thereon or otherwise in respect thereof, against any
past, present or future trustee, shareholder, officer or employee of
Brandywine Realty Trust.
x. Xxxxxx represents and warrants that his current direct and
indirect interests in real estate in the Boroughs of Conshohocken and West
Conshohocken are identified on Exhibit D and this representation and warranty
shall survive consummation of the transactions provided for herein.
5
x. Xxxxxx shall have no personal liability for any
obligations arising hereunder other than his obligations arising under
paragraphs 1.a, 2.d, 4 and 6.b. The obligation of Xxxxxx under paragraph 1.a
is to execute the Two T.B. Partnership Agreement as provided therein. The
obligation of Xxxxxx under paragraph 2.d is to provide the guaranty and
collateral required to be provided by him pursuant to the term sheet attached
as Exhibit K. The obligation of Xxxxxx under paragraph 4 is to execute or
cause certain entities to execute the Rights of First Offer Agreement
identified therein at the times specified therein.
d. The parties shall be entitled to the remedy of specific
performance to enforce the obligations of the other parties hereunder in
addition to all other remedies at law and equity.
e. The parties agree that time is of the essence for the
performance of their respective obligations hereunder.
f. The rights and obligations of the parties hereunder shall
be assignable only upon the written consent of the other parties hereto.
g. No person who is not a party to this Agreement shall be
deemed a third-party beneficiary of this Agreement.
h. The parties acknowledge that Brandywine Realty Trust
intends to file this Agreement (and some or all of the exhibits) as an
exhibit to a filing it makes with the Securities and Exchange Commission
("SEC"). Upon execution and delivery of this Agreement, the parties shall
jointly issue a press release and shall jointly issue xxxxxx xxxxx releases
with respect to the subject matter of this Agreement. Brandywine Realty
Trust reserves the right to issue such press releases as it believes are
reasonably necessary to enable it to comply with federal securities laws and
shall endeavor to conform the format of any such press releases to the format
of any press releases reflected in jointly issued press releases. In no
event shall Brandywine Realty Trust be required to review with any other
party hereto or any party to any of the documents referred to herein any
filings it makes with the SEC or any stock exchange.
i. This Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania.
j. This Agreement may be amended only by a writing signed by
the parties hereto.
k. This Agreement, together with the exhibits hereto,
represents the entire agreement of the parties with respect to the subject
matter hereof.
6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
BRANDYWINE OPERATING PARTNERSHIP
By: BRANDYWINE REALTY TRUST, as
general partner
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
------------------------------
Xxxxxxx X. Xxxxxxx, Xx.
Title: Chairman of the Board
BRANDYWINE TB I, L.P.
By: BRANDYWINE TB I, L.L.C., as general
partner
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
------------------------------
Xxxxxxx X. Xxxxxxx, Xx.
Title: Chairman of the Board
BRANDYWINE XX XX, L.P.
By: BRANDYWINE XX XX, L.L.C., as general
partner
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
------------------------------
Xxxxxxx X. Xxxxxxx, Xx.
Title: Chairman of the Board
BRANDYWINE TB III, L.P.
By: BRANDYWINE TB III, L.L.C., as general
partner
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
------------------------------
Xxxxxxx X. Xxxxxxx, Xx.
Title: Chairman of the Board
/s/ Xxxxxx X. Xxxxxx
---------------------------------------------
Xxxxxx X. Xxxxxx
[SIGNATURES CONTINUED ON THE NEXT PAGE]
7
TWO XXXXXX TOWER ASSOCIATES
By: TWO XXXXXX TOWER CORPORATION,
as general partner
By: /s/ Xxxxxx X. Xxxxxx
--------------------------
Xxxxxx X. Xxxxxx
Title: President
FOUR XXXXXX TOWER ASSOCIATES
By: FOUR XXXXXX TOWER CORPORATION,
as general partner
By: /s/ Xxxxxx X. Xxxxxx
--------------------------
Xxxxxx X. Xxxxxx
Title: President
FIVE TOWER ASSOCIATES
By: FIVE XXXXXX TOWER CORPORATION,
as general partner
By: /s/ Xxxxxx X. Xxxxxx
--------------------------
Xxxxxx X. Xxxxxx
Title: President
XXXXXX TOWER LAND HOLDING
ASSOCIATES
By: XXXXXX XXXXXX XXXXXX
CORPORATION, as general partner
By: /s/ Xxxxxx X. Xxxxxx
--------------------------
Xxxxxx X. Xxxxxx
Title: President
XXXXXX XXXXXX XXXXXX CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
--------------------------
Xxxxxx X. Xxxxxx
Title: President
8
